EXECUTION COPY


                      FOURTH AMENDMENT TO
                        CREDIT AGREEMENT

          Fourth Amendment (this "Amendment") dated as of
May 3, 1995 among Imo Industries Inc. (with its successors and
permitted assigns, the "Borrower") and the undersigned Lenders
(as defined below), to the Credit Agreement dated as of August 5,
1994 (as previously amended by the First Amendment thereto dated
as of November 18, 1994, the Second Amendment thereto dated as of
January 11, 1995, and the Third Amendment thereto dated as of
February 17, 1995, and as such agreement may be further amended,
supplemented or modified from time to time, the "Credit
Agreement") among the Borrower, Baird Corporation ("Baird"), Varo
Inc. ("Varo"), Warren Pumps Inc., the institutions from time to
time party thereto as lenders (the "Lenders"), the institutions
from time to time party thereto as issuing banks (the "Issuing
Banks"), and Citibank, N.A., in its capacity as agent and
collateral agent for the Lenders and the Issuing Banks (in such
capacity, the "Agent").

                      W I T N E S S E T H:

          WHEREAS, the parties hereto desire to amend the Credit
Agreement as hereinafter set forth;

          NOW, THEREFORE, in consideration of the above premises,
the Borrower and the undersigned Lenders agree as follows:

          SECTION 1.  Defined Terms.  Capitalized terms used
herein without definition shall have the meanings ascribed to
such terms in the Credit Agreement.

          SECTION 2.  Amendment of Section 9.01.

          (a)  Clause (ix) of Section 9.01 of the Credit
Agreement is, effective as of the Amendment Effective Date,
hereby amended to read in full as follows:

         (ix)  Indebtedness under appeal bonds in connection with
     judgments which do not result in an Event of Default or
     Default or any other breach hereunder; provided that,
     notwithstanding the foregoing, the Borrower may create and
     become liable with respect to an appeal bond in an amount of
     up to $18,000,000 in connection with the case titled
     International Insurance Company, Plaintiff vs. Red and White
     Company, Transamerica Corp., Transamerica
     Delaval, Inc., Imo Delaval, Inc. and Does 1 to 100,
     inclusive, Defendants; and

          (b)  Clause (xiii) of Section 9.01 of the Credit
Agreement is, effective as of the Amendment Effective Date,
hereby amended to read in full as follows:


       (xiii)  Indebtedness incurred by an Unrestricted
     Subsidiary; provided that such Indebtedness (i) is not
     guaranteed or otherwise supported in whole or part
     (other than pursuant to (x) one or more Permitted
     Existing Accommodation Obligations or (y) the
     Accommodation Obligations permitted pursuant to Section
     9.05(viii)) by the Borrower or any Restricted
     Subsidiary and (without limiting the generality of the
     foregoing, but subject to the immediately preceding
     parenthetical clause) neither the Borrower nor any
     Restricted Subsidiary has any liability (contractual or
     otherwise) in respect of such Indebtedness and (ii) is
     not secured in whole or in part by any asset of the
     Borrower or any Restricted Subsidiary;

          SECTION 3.  Amendment of Section 9.05.  Section 9.05 of
the Credit Agreement is, effective as of the Amendment Effective
Date, hereby amended (x) by deleting the word "and" immediately
following clause (vii) thereof, (y) replacing the period at the
end of the clause (vii) of such Section with ";", and
(z) inserting the following clauses (viii) and (ix) at the end of
such Section:

       (viii)  Accommodation Obligations of the Borrower in
     respect of obligations of any Unrestricted Subsidiary;
     provided that the aggregate amount of such
     Accommodation Obligations shall not exceed $12,000,000
     at any one time outstanding; and

         (ix)  appeal bonds permitted in accordance with clause
     (ix) of Section 9.01.

          SECTION 4.  Waiver.  Effective as of the Amendment
Effective Date and continuing through the end of the applicable
appeal period, the undersigned Lenders hereby waive any Default
arising out of any judgment in an amount of up to $12,000,000
which may be rendered against the Borrower in the case referred
to in the proviso to Section 9.01(ix) of the Credit Agreement.

          SECTION 5.  Conditions Precedent to the Effectiveness
of this Amendment.  This Amendment shall become effective as of
the date hereof on the date (the "Amendment Effective Date") when
the following conditions precedent have been satisfied (unless
waived by the Lenders):

          5.01  The Agent shall have received a copy of this
Amendment duly executed by the Borrower and the Requisite
Lenders.

          5.02  Each of the representations and warranties of the
Borrower and the Guarantors contained in the Credit Agreement and
in the other Loan Documents shall be true and correct on and as
of the Amendment Effective Date, except to the extent that any
such representation or warranty expressly relates to a prior
date, in which case, such representation and warranty shall be
true and correct as of such earlier date.

          5.03  All corporate and other proceedings, and all
documents, instruments and other legal matters in connection with
the transactions contemplated by this Amendment, shall be
satisfactory in all respects in form and substance to the Agent.

          5.04  No Default or Event of Default shall have
occurred and be continuing on the Amendment Effective Date.

          5.05  All fees and expenses payable on or prior to the
Amendment Effective Date shall have been paid to the Lenders, the
Issuing Banks and the Agent.

          SECTION 6.  Representations and Warranties.  The
Borrower hereby represents and warrants to the Lenders, the
Issuing Banks and the Agent that (a) as of the date hereof no
Default or Event of Default under the Credit Agreement shall have
occurred and be continuing and (b) all of the representations and
warranties of the Borrower and the Guarantors contained in the
Credit Agreement and in any other Loan Document continue to be
true and correct as of the date of execution hereof, as though
made on and as of such date, except to the extent that such
representations or warranties expressly relate to prior dates, in
which case, such representations and warranties shall be true and
correct as of such earlier dates.

          SECTION 7.  Reference to and Effect on the Loan
Documents.

          7.01  Upon the effectiveness of this Amendment, on and
after the date hereof, each reference in the Credit Agreement to
"this Agreement", "hereunder", "hereof" or words of like import,
and each reference in the other Loan Documents to the Credit
Agreement, shall mean and be a reference to the Credit Agreement
as amended hereby.

          7.02  Except as specifically amended above, all of the
terms of the Credit Agreement and all other Loan Documents shall
remain unchanged and in full force and effect.

          7.03  The execution, delivery and effectiveness of this
Amendment shall not, except as expressly provided herein, operate
as a waiver of any right, power or remedy of any Lender, any
Issuing Bank or the Agent, nor constitute a waiver of any
provision of the Credit Agreement or any of the Loan Documents.

          SECTION 8.  Costs and Expenses.  The Borrower agrees to
pay on demand in accordance with the terms of Section 14.02 of
the Credit Agreement all costs and expenses in connection with
the preparation, reproduction, execution and delivery of this
Amendment, including the reasonable fees and out-of-pocket
expenses of Sidley & Austin, counsel for the Agent.

          SECTION 9.  Execution in Counterparts.  This Amendment
may be executed and delivered in any number of counterparts and
by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original
and all of which taken together shall constitute one and the same
original agreement.

          SECTION 10.  Governing Law.  THIS AMENDMENT SHALL BE
INTERPRETED, AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO
DETERMINED, IN ACCORDANCE WITH THE INTERNAL LAW OF THE STATE OF
NEW YORK.

          IN WITNESS WHEREOF, this Amendment has been duly
executed on the date set forth above.


                              IMO INDUSTRIES INC.


                              By:/s/ G.M. Dobson
                                 Name:
                                 Title: Vice President and Treasurer


                              CITIBANK, N.A., as Agent and as
                                a Lender


                              By:/s/ Timothy L. Freeeman
                                 Name:
                                 Title: Vice President


                              THE BANK OF NEW YORK COMMERCIAL
                                CORPORATION


                              By: /s/ Stephen V. Mangiante
                                 Name:
                                 Title: Vice President


                              GENERAL ELECTRIC CAPITAL
                                CORPORATION


                              By: /s/ Catherine L. Midkiff
                                 Name:
                                 Title: V.P. Commercial Finance


                              HELLER FINANCIAL, INC.


                              By: /s/ Albert J. Forzano
                                 Name:
                                 Title: VP

                              NATIONAL WESTMINSTER BANK Plc


                              By:/s/ Ian M. Cressy
                                 Name:
                                 Title: Senior Vice President


                              SANWA BUSINESS CREDIT CORPORATION


                              By: /s/Peter L. Skavla
                                 Name:
                                 Title: Vice President


                              TRANSAMERICA BUSINESS CREDIT
                                CORPORATION


                              By: /s/ Perry Vavoules
                                 Name:
                                 Title: Vice President

Acknowledged and agreed
to:

BAIRD CORPORATION


By:/s/ G.M. Dobson
   Name:
   Title: Vice President and Treasurer


VARO INC.


By:/s/ G.M. Dobson
   Name:
   Title: Vice President and Treasurer


WARREN PUMPS INC.


By:/s/ G.M. Dobson
   Name:
   Title: Vice President, Chief Financial Officer
          and Treasurer


                                                   EXECUTION COPY


                       FIFTH AMENDMENT TO
                        CREDIT AGREEMENT

          Fifth Amendment (this "Amendment") dated as of
August 14, 1995 among Imo Industries Inc. (with its successors
and permitted assigns, the "Borrower") and the undersigned
Lenders (as defined below), to the Credit Agreement dated as of
August 5, 1994 (as previously amended by the First Amendment
thereto dated as of November 18, 1994, the Second Amendment
thereto dated as of January 11, 1995, the Third Amendment thereto
dated as of February 17, 1995, the Fourth Amendment thereto dated
as of May 3, 1995, and as such agreement may be further amended,
supplemented or modified from time to time, the "Credit
Agreement") among the Borrower, Baird Corporation ("Baird"), Varo
Inc. ("Varo"), Warren Pumps Inc., the institutions from time to
time party thereto as lenders (the "Lenders"), the institutions
from time to time party thereto as issuing banks (the "Issuing
Banks"), and Citibank, N.A., in its capacity as agent and
collateral agent for the Lenders and the Issuing Banks (in such
capacity, the "Agent").

                      W I T N E S S E T H:

          WHEREAS, the parties hereto desire to amend the Credit
Agreement as hereinafter set forth;

          NOW, THEREFORE, in consideration of the above premises,
the Borrower and the undersigned Lenders agree as follows:

          SECTION 1.  Defined Terms.  Capitalized terms used
herein without definition shall have the meanings ascribed to
such terms in the Credit Agreement.

          SECTION 2.  Amendment of Section 9.03.  Section 9.03 of
the Credit Agreement is, effective as of the Amendment Effective
Date, hereby amended by (x) deleting the word "and" immediately
following clause (ix) thereof; (y) replacing the period at the
end of the clause (x) with "; and", and (z) inserting the
following clause at the end of such section:

          (xi) Liens granted by the Borrower on bank deposits
     denominated in Dollars supporting loans by banks in China in
     connection with the joint venture in China between the
     Borrower, through its Morse Controls Division, and Xiangfan
     Dong Feng Motor Instrument Co., Ltd.; provided that such
     deposits shall be in an aggregate amount not to exceed
     $2,000,000.

          SECTION 3.  Amendment of Section 9.04.  Section 9.04 of
the Credit Agreement is, effective as of the Amendment Effective
Date, hereby amended by (x) replacing the period at the end of
clause (x) with a semicolon, (y) replacing the period at the end
of clause (xi) of such Section with "; and", and (z) inserting
the following clause (xii) at the end of such Section:

          (xii) Investments by the Borrower in the joint venture
     in China between the Borrower, through its Morse Controls
     Division, and Xiangfan Dong Feng Motor Instrument Co., Ltd.;
     provided, that the aggregate amount of such Investments,
     determined with respect to each such Investment at the time
     such Investment is made, shall not exceed $2,000,000.

          SECTION 4.  Amendment of Section 9.05.  Section 9.05 of
the Credit Agreement is, effective as of the Amendment Effective
Date, hereby amended by (x) deleting the word "and" immediately
following clause (viii) thereof, (y) replacing the period at the
end of clause (ix) of such Section with "; and", and (z)
inserting the following clause at the end of such Section:

          (x) Accommodation Obligations of the Borrower
     consisting of letters of credit, guaranties and/or
     cross-guaranties of loans by banks in China to the
     joint venture in China between the Borrower, through
     its Morse Controls Division, and Xiangfan Dong Feng
     Motor Instrument Co., Ltd.; provided, that the
     aggregate amount of such Accommodation Obligations
     shall not exceed $4,000,000 at any one time
     outstanding.

          SECTION 5.  Amendment of Section 9.09.  Section 9.09 of
the Credit Agreement is, effective as of the Amendment Effective
Date, hereby amended by inserting the following at the end of
clause (b) of such Section:

               , other than the joint venture in China between
          the Borrower, through its Morse Controls Division, and
          Xiangfan Dong Feng Motor Instrument Co., Ltd.

          SECTION 6.  Conditions Precedent to the Effectiveness
of this Amendment.  This Amendment shall become effective as of
the date hereof on the date (the "Amendment Effective Date") when
the following conditions precedent have been satisfied (unless
waived by the Lenders):

          6.01  The Agent shall have received a copy of this
Amendment duly executed by the Borrower and the Requisite
Lenders.

          6.02  Each of the representations and warranties of the
Borrower and the Guarantors contained in the Credit Agreement and
in the other Loan Documents shall be true and correct on and as
of the Amendment Effective Date, except to the extent that any
such representation or warranty expressly relates to a prior
date, in which case, such representation and warranty shall be
true and correct as of such earlier date.

          6.03  All corporate and other proceedings, and all
documents, instruments and other legal matters in connection with
the transactions contemplated by this Amendment, shall be
satisfactory in all respects in form and substance to the Agent.

          6.04  No Default or Event of Default shall have
occurred and be continuing on the Amendment Effective Date.

          6.05  All fees and expenses payable on or prior to the
Amendment Effective Date shall have been paid to the Lenders, the
Issuing Banks and the Agent.

          SECTION 7.  Representations and Warranties.  The
Borrower hereby represents and warrants to the Lenders, the
Issuing Banks and the Agent that (a) as of the date hereof no
Default or Event of Default under the Credit Agreement shall have
occurred and be continuing and (b) all of the representations and
warranties of the Borrower and the Guarantors contained in the
Credit Agreement and in any other Loan Document continue to be
true and correct as of the date of execution hereof, as though
made on and as of such date, except to the extent that such
representations or warranties expressly relate to prior dates, in
which case, such representations and warranties shall be true and
correct as of such earlier dates.

          SECTION 8.  Reference to and Effect on the Loan
Documents.

          8.01  Upon the effectiveness of this Amendment, on and
after the date hereof, each reference in the Credit Agreement to
"this Agreement", "hereunder", "hereof" or words of like import,
and each reference in the other Loan Documents to the Credit
Agreement, shall mean and be a reference to the Credit Agreement
as amended hereby.

          8.02  Except as specifically amended above, all of the
terms of the Credit Agreement and all other Loan Documents shall
remain unchanged and in full force and effect.

          8.03  The execution, delivery and effectiveness of this
Amendment shall not, except as expressly provided herein, operate
as a waiver of any right, power or remedy of any Lender, any
Issuing Bank or the Agent, nor constitute a waiver of any
provision of the Credit Agreement or any of the Loan Documents.

          SECTION 9.  Costs and Expenses.  The Borrower agrees to
pay on demand in accordance with the terms of Section 14.02 of
the Credit Agreement all costs and expenses in connection with
the preparation, reproduction, execution and delivery of this
Amendment, including the reasonable fees and out-of-pocket
expenses of Sidley & Austin, counsel for the Agent.

          SECTION 10.  Execution in Counterparts.  This Amendment
may be executed and delivered in any number of counterparts and
by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original
and all of which taken together shall constitute one and the same
original agreement.

          SECTION 11.  Governing Law.  THIS AMENDMENT SHALL BE
INTERPRETED, AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO
DETERMINED, IN ACCORDANCE WITH THE INTERNAL LAW OF THE STATE OF
NEW YORK.

          IN WITNESS WHEREOF, this Amendment has been duly
executed on the date set forth above.


                              IMO INDUSTRIES INC.


                              By: /s/ G.M. Dobson
                                 Name:
                                 Title: Vice President and Treasurer


                              CITIBANK, N.A., as Agent and as
                                a Lender


                              By: /s/ Timothy L. Freeman
                                 Name:
                                 Title: Vice President


                              THE BANK OF NEW YORK COMMERCIAL
                                CORPORATION


                              By: /s/ Stephen V. Mangiante
                                 Name:
                                 Title: Vice President


                              GENERAL ELECTRIC CAPITAL
                                CORPORATION


                              By: /s/ Catherine L. Midkiff
                                 Name:
                                 Title: V.P. Commercial Finance


                              HELLER FINANCIAL, INC.


                              By: /s/ John Capperella
                                 Name:
                                 Title: V.P.


                              NATIONAL WESTMINSTER BANK Plc


                              By:/s/ Ian M. Cressy
                                 Name:
                                 Title: Senior Vice President


                              SANWA BUSINESS CREDIT CORPORATION


                              By: /s/ Peter L. Skavla
                                 Name:
                                 Title: Vice President


                              TRANSAMERICA BUSINESS CREDIT
                                CORPORATION


                              By: /s/ Perry Vavoules
                                 Name:
                                 Title: Vice President

Acknowledged and agreed
to:

BAIRD CORPORATION


By:/s/ G.M. Dobson
   Name:
   Title: Vice President & Treasurer


VARO INC.


By:/s/ G.M. Dobson
   Name:
   Title: Vice President & Treasurer




WARREN PUMPS INC.


By:/s/ G.M. Dobson
   Name:
   Title: Vice President, Chief Financial
          Officer and Treasurer




                                                   EXECUTION COPY



                       SIXTH AMENDMENT TO
                        CREDIT AGREEMENT

          Sixth Amendment (this "Amendment") dated as of
December 11, 1995 among Imo Industries Inc. (with its successors
and permitted assigns, the "Borrower") and the undersigned
Lenders (as defined below), to the Credit Agreement dated as of
August 5, 1994 (as previously amended by the First Amendment
thereto dated as of November 18, 1994, the Second Amendment
thereto dated as of January 11, 1995, the Third Amendment thereto
dated as of February 17, 1995, the Fourth Amendment thereto dated
as of May 3, 1995, and the Fifth Amendment thereto dated as of
August 14, 1995, and as such agreement may be further amended,
supplemented or modified from time to time, the "Credit
Agreement") among the Borrower, Baird Corporation ("Baird"), Varo
Inc. ("Varo"), Warren Pumps Inc., the institutions from time to
time party thereto as lenders (the "Lenders"), the institutions
from time to time party thereto as issuing banks (the "Issuing
Banks"), and Citibank, N.A., in its capacity as agent and
collateral agent for the Lenders and the Issuing Banks (in such
capacity, the "Agent").

                      W I T N E S S E T H:

          WHEREAS, the parties hereto desire to amend the Credit
Agreement as hereinafter set forth;

          NOW, THEREFORE, in consideration of the above premises,
the Borrower and the undersigned Lenders agree as follows:

          SECTION 1.  Defined Terms.  Capitalized terms used
herein without definition shall have the meanings ascribed to
such terms in the Credit Agreement.

          SECTION 2.  Amendment of Section 1.01.

          (a)  The definition of "Borrowing Base" contained in
Section 1.01 of the Credit Agreement is, effective as of the
Amendment Effective Date, hereby amended to read in full as
follows:

          "Borrowing Base" means, as of any date of determina
     tion, an amount equal to (i) eighty-five percent (85%) of
     the face amount of (x) Eligible Receivables (net of maximum
     discounts, allowances, retainage and any other amounts
     deferred with respect thereto) of the Borrower at such time
     plus (y) Eligible Receivables (net of maximum discounts,
     allowances, retainage and any other amounts deferred with
     respect thereto) of Warren Pumps at such time, plus (ii) the
     applicable percentage(s) set forth in Schedule 1.01.8 of (x)
     Eligible Raw Materials of the Borrower at such time and (y)
     Eligible Raw Materials of Warren Pumps at such time, plus
     (iii) the applicable percentage(s) set forth in Schedule
     1.01.8 of (x) Eligible Work In Process of the Borrower at
     such time plus (y) Eligible Work In Process of Warren Pumps
     at such time, plus (iv) the applicable percentage(s) set
     forth in Schedule 1.01.8 of (x) Eligible Finished Goods of
     the Borrower at such time plus (y) Eligible Finished Goods
     of Warren Pumps at such time, plus (v) one hundred percent
     (100%) of the aggregate amount of cash proceeds of
     Collateral on deposit in the Concentration Account and the
     Investment Account at such time, plus (vi) the lesser of (x)
     one hundred percent (100%) of the aggregate values set forth
     in Schedule 1.01.12 of Eligible Fixed Assets at such time
     and (y) $20,000,000.  For purposes of this definition,
     Eligible Receivables, Eligible Raw Materials, Eligible
     Finished Goods, Eligible Work In Process and Eligible Fixed
     Assets, as of any date of determination, shall be determined
     after deduction of all Eligibility Reserves then effective
     with respect to such items.

          (b)  The definition of "Borrowing Base Certificate"
contained in Section 1.01 of the Credit Agreement is, effective
as of the Amendment Effective Date, hereby amended to read in
full as follows:

          "Borrowing Base Certificate" means a certificate, in
     substantially the form of Exhibit C attached hereto and made
     a part hereof, setting forth Eligible Receivables, Eligible
     Raw Materials, Eligible Work In Process, Eligible Finished
     Goods and Eligible Fixed Assets.

          (c)  The definition of "Consolidated Net Worth"
contained in Section 1.01 of the Credit Agreement is, effective
as of the Amendment Effective Date, hereby amended to read in
full as follows:

          "Consolidated Net Worth" means, with respect to any
     Person, at any time, (i) consolidated stockholders' equity
     of such Person and its consolidated Subsidiaries, determined
     in accordance with GAAP, plus (ii) any minimum pension
     liability adjustment applicable to such Person in accordance
     with GAAP plus (iii) any negative (or minus any positive)
     cumulative foreign currency translation adjustments
     applicable to such Person in accordance with GAAP; provided
     that, in calculating Consolidated Net Worth for purposes of
     Section 10.01, any increase in Consolidated Net Worth
     resulting from the sale of Roltra-Morse S.p.A. or Varo's
     electronic systems division shall be excluded.

          (d)  The definition of "EBITDA" contained in Section
1.01 of the Credit Agreement is, effective as of the Amendment
Effective Date, hereby amended to read in full as follows:

          "EBITDA" means, for any period on a consolidated basis
     for any Person and its Subsidiaries, (i) the sum of the
     amounts for such period for such Person and its Subsidiaries
     on a consolidated basis of (A) Consolidated Net Income, (B)
     depreciation, amortization expense and other non-cash
     charges, (C) Consolidated Cash Interest Expense, (D) charges
     for federal, state, local and foreign income taxes, (E)
     extraordinary losses which have been deducted in the
     determination of Consolidated Net Income and (F) net income
     (if any) of less than wholly-owned Subsidiaries which has
     been attributed to minority interests in accordance with
     GAAP, minus (ii) extraordinary gains not already excluded
     from the determination of Consolidated Net Income, minus
     (iii) net loss (if any) of less than wholly-owned
     Subsidiaries which has been attributed to minority interests
     in accordance with GAAP; provided that, in calculating
     EBITDA for purposes of determining Excess Cash Flow, the
     Fixed Charge Coverage Ratio and the Interest Coverage Ratio,
     any increase in EBITDA resulting from the sale of Roltra-
     Morse S.p.A or Varo's electronic systems division shall be
     excluded.

          (e)  The following definition of "Eligible Fixed
Assets" is, effective as of the Amendment Effective Date, hereby
inserted into Section 1.01 of the Credit Agreement in the
appropriate alphabetical order:

          "Eligible Fixed Assets" means Property of the Borrower
     set forth in Schedule 1.01.12 (i) with respect to which the
     Agent has a valid and perfected first priority Lien,
     (ii) with respect to which no warranty contained in any of
     the Loan Documents has been breached and (iii) which the
     Agent, in its reasonable credit judgment, deems to be
     Eligible Fixed Assets, based on such credit and collateral
     considerations as the Agent may deem appropriate.

          (f)  The definition of "Eligible Receivable" contained
in Section 1.01 of the Agreement is, effective as of the
Amendment Effective Date, hereby amended by deleting the proviso
at the end of such definition and by replacing the semicolon
immediately preceding such proviso with a period.

          (g)  The definition of "Eligibility Reserves" contained
in Section 1.01 of the Agreement is, effective as of the
Amendment Effective Date, hereby amended to read in full as
follows:

          "Eligibility Reserves" means, as of five (5) days after
     the date of written notice of any determination thereof to
     the Borrower by the Agent, or to the Borrower and the Agent
     by the Class A Requisite Lenders, such amounts as the Agent,
     or the Class A Requisite Lenders, as the case may be, in the
     exercise of its or their reasonable credit judgment and in
     accordance with its or their customary criteria, may from
     time to time establish against the gross amounts of Eligible
     Receivables, Eligible Raw Materials, Eligible Work In
     Process, Eligible Finished Goods and Eligible Fixed Assets
     to reflect risks or contingencies arising after the Closing
     Date which may affect such items and which have not already
     been taken into account in the determination of Eligible
     Receivables, Eligible Raw Materials, Eligible Work In
     Process, Eligible Finished Goods or Eligible Fixed Assets,
     as the case may be.

          (h)  The definition of "Revolving Credit Commitment"
contained in Section 1.01 of the Credit Agreement is, effective
as of the Amendment Effective Date, hereby amended to read in
full as follows:

          "Revolving Credit Commitment" means, with respect to
     any Lender, the obligation of such Lender to make Revolving
     Loans and to participate in Letters of Credit and Swing
     Loans pursuant to the terms and conditions hereof, which
     obligation shall not exceed the principal amount set forth
     opposite such Lender's name under the heading "Revolving
     Credit Commitment" on Schedule 1.01.1 or the signature page
     of the Assignment and Acceptance by which it became a
     Lender, as modified from time to time pursuant to the terms
     hereof or to give effect to any applicable Assignment and
     Acceptance, and "Revolving Credit Commitments" means the
     aggregate principal amount of the Revolving Credit
     Commitments of all the Lenders, the maximum aggregate
     principal amount of which shall not exceed $60,000,000, as
     reduced from time to time pursuant to the terms hereof.

          (i)  The following new definitions are, effective as of
the Amendment Effective Date, hereby added to Section 1.01 of the
Credit Agreement in the appropriate alphabetical order:

          "Letter of Credit Availability" means, at any
     particular time, the amount by which the Letter of Credit
     Sublimit exceeds the Letter of Credit Obligations
     outstanding at such time.

          "Letter of Credit Sublimit" means thirty million
     Dollars ($30,000,000).

          (j)  The definitions of "Eligible Letter of Credit" and
"Release Status" contained in Section 1.01 of the Credit
Agreement are, effective as of the Amendment Effective Date,
hereby deleted in their entirety.

          SECTION 3.  Amendment of Section 2.04.  The preamble to
Section 2.04 of the Credit Agreement is, effective as of the
Amendment Effective Date, hereby amended to read in full as
follows:

          2.04.  Letters of Credit.  Subject to the terms and
     conditions set forth herein, each Issuing Bank hereby
     severally agrees to Issue for the account of the Borrower
     one or more Letters of Credit, up to an aggregate face
     amount with respect to all Issuing Banks at any time
     outstanding equal to the Letter of Credit Availability,
     subject to the following provisions:

          SECTION 4.  Amendment of Section 3.01.
The first sentence of Section 3.01(c)(i) of the Credit Agreement
is, effective as of the Amendment Effective Date, hereby amended
to read in full as follows:

          (c)   Mandatory Prepayments of Revolving Loans. (i)
     Immediately, if (x) the Revolving Credit Obligations are
     greater than the Maximum Revolving Credit Amount or (y) the
     aggregate amount of the Swing Loans, the Revolving Loans and
     the Reimbursement Obligations, is greater than the amount of
     the Swing Loans, the Revolving Loans or the Reimbursement
     Obligations, as the case may be, permitted to exist at such
     time in accordance with the terms of the 12% Debenture
     Indenture or the 12.25% Debenture Indenture, the Borrower
     shall make a mandatory repayment of the Revolving Credit
     Obligations in an amount equal to such excess, such amount
     to be applied in accordance with Section 3.02.

          SECTION 5.  Amendment of Section 4.03.
Section 4.03(a)(ii) of the Credit Agreement is, effective as of
the Amendment Effective Date, hereby amended to read in full as
follows:

          (ii)  [intentionally omitted], and

          SECTION 6.  Amendment of Section 9.17.  Section 9.17 of
the Credit Agreement is, effective as of the Amendment Effective
Date, hereby amended by replacing the reference in the first
proviso thereof to "$40,000,000" with "$80,000,000".

          SECTION 7.  Amendment of Article 10.

          (a)  Section 10.01 of the Credit Agreement is,
     effective as of the Amendment Effective Date, hereby amended to
     read in full as follows: 
                   
            10.01.  Minimum Consolidated Net Worth.  The
     Consolidated Net Worth of the Borrower and its Subsidiaries
     at all times during any period set forth below shall
     not be less than the minimum amount set forth opposite such
     period:

          Period                                  Minimum Amount

     From September 30, 1995 to but
          excluding December 31, 1995             $         0
     From December 31, 1995 to but
          excluding March 31, 1996                $         0
     From March 31, 1996 to but
          excluding June 30, 1996                 $ 4,300,000
     From June 30, 1996 to but
          excluding September 30, 1996            $ 7,400,000
     From September 30, 1996 to but
          excluding December 31, 1996             $10,300,000
     From December 31, 1996 to but
          excluding March 31, 1997                $13,900,000
     From March 31, 1997 to but
          excluding June 30, 1997                 $18,400,000
     From June 30, 1997 to but
          excluding September 30, 1997            $22,900,000

          (b)  Section 10.02 of the Credit Agreement is,
     effective as of the Amendment Effective Date, hereby amended to
     read in full as follows: 
        
          10.02.  Minimum Fixed Charge Coverage Ratio.  The Fixed Charge 
     Coverage Ratio of the Borrower and its Subsidiaries (other than Varo,
     Baird and their respective Subsidiaries) on a consolidated basis, as
     determined as of the last day of each fiscal quarter of the Borrower
     set forth below for the twelve month period ending on such date, shall
     not be less than the minimum ratio set forth opposite such fiscal
     quarter:

          Fiscal Quarter                     Minimum Ratio

     Fourth fiscal quarter of 1995           1.10 to 1
     First fiscal quarter of 1996            1.00 to 1
     Second fiscal quarter of 1996           0.40 to 1
     Third fiscal quarter of 1996            0.60 to 1
     Fourth fiscal quarter of 1996           1.20 to 1
     First fiscal quarter of 1997            1.20 to 1
     Second fiscal quarter of 1997           1.20 to 1

          (c)  Section 10.03 of the Credit Agreement is,
     effective as of the Amendment Effective Date, hereby amended to
     read in full as follows:  
     
          10.03.  Minimum Interest Coverage Ratio.
     The Interest Coverage Ratio of the Borrower and its
     Subsidiaries (other than Varo, Baird and their respective
     Subsidiaries) on a consolidated basis, as determined as of the
     last day of each fiscal quarter of the Borrower set forth below
     for the twelve month period ending on such date, shall not be
     less than the minimum ratio set forth opposite such fiscal
     quarter:

          Fiscal Quarter                     Minimum Ratio

     Fourth fiscal quarter of 1995           1.55 to 1
     First fiscal quarter of 1996            1.60 to 1
     Second fiscal quarter of 1996           1.65 to 1
     Third fiscal quarter of 1996            1.75 to 1
     Fourth fiscal quarter of 1996           2.00 to 1
     First fiscal quarter of 1997            2.40 to 1
     Second fiscal quarter of 1997           2.50 to 1

          SECTION 8.  Amendment of Section 11.01.
Section 11.01(a) of the Credit Agreement is, effective as of the
Amendment Effective Date, hereby amended to read in full as
follows:

          (a)  Failure to Make Payments When Due.  The Borrower
     shall fail to pay (i) when due any principal or interest on
     the Loans (including the Reimbursement Obligations) or (ii)
     any other Obligation, and if such non-payment relates (x) to
     interest, such non-payment continues for a period of three
     (3) days after the due date thereof or (y) to a mandatory
     prepayment under Section 3.01(c)(i)(y), such non-payment
     continues for a period of thirty (30) days after the due
     date thereof or (z) to Obligations other than interest or
     principal, such non-payment continues for a period of five
     (5) Business Days after the due date thereof.

          SECTION 9.  Amendment of Section 13.09.
Section 13.09(c)(i)(B) of the Credit Agreement is, effective as
of December 31, 1994, hereby amended to read in full as follows:

          (B)  [intentionally omitted]; and

          SECTION 10.  Amendment of Schedule 1.01.1.  Section C
of  Schedule 1.01.1 to the Credit Agreement is, effective as of
the Amendment Effective Date, hereby amended to read in full as
follows:

     C.   Revolving Credit Commitment

     Citibank, N.A.                               $ 8,571,428.58
     The Bank of New York Commercial Corporation  $ 8,571,428.57
     General Electric Capital Corporation         $ 8,571,428.57
     Heller Financial, Inc.                       $ 8,571,428.57
     National Westminster Bank Plc                $ 8,571,428.57
     Sanwa Business Credit Corporation            $ 8,571,428.57
     Transamerica Business Credit Corporation     $ 8,571,428.57

          SECTION 11.  New Schedule 1.01.12.  Effective as of the
Amendment Effective Date, Schedule 1.01.12 to this Amendment is
hereby added to the Credit Agreement as Schedule 1.01.12 thereto.

          SECTION 12.  Amendment of Exhibit C.  Exhibit C to the
Credit Agreement is, effective as of the Amendment Effective
Date, hereby replaced with Exhibit C hereto.

          SECTION 13.  Waiver.

          13.01  Pursuant to Section 10.01 of the Credit
Agreement the Borrower agreed to comply with certain requirements
regarding the Minimum Consolidated Net Worth of the Borrower,
with which requirements the Borrower is not and has not been in
compliance.  To the extent that the Borrower's failure to comply
with Section 10.01 of the Credit Agreement during the period from
and including November 1, 1995 to and including the Amendment
Effective Date constitutes a Default or Event of Default, as the
case may be, under the Credit Agreement, such Default or Event of
Default is, effective as of the Amendment Effective Date, hereby
waived by the undersigned Lenders.

          13.02  To the extent that the Borrower's redemption of
up to $80,000,000 aggregate principal amount of the 12.25%
Debentures constitutes a Default or Event of Default, as the case
may be, under the Credit Agreement, such Default or Event of
Default is, effective as of the Amendment Effective Date, hereby
waived by the undersigned Lenders.

          SECTION 14.  Conditions Precedent to the Effectiveness
of this Amendment.  This Amendment shall become effective as of
the date hereof on the date (the "Amendment Effective Date") when
the following conditions precedent have been satisfied (unless
waived by the undersigned Lenders):

          14.01  The Agent shall have received on or before the
Amendment Effective Date all of the following, all of which,
except as otherwise specifically described below, shall be in
form and substance satisfactory to the Agent and the undersigned
and in sufficient copies for each of the Lenders party to this
Amendment:

          (i)  This Amendment duly executed by the Borrower and
     each of the Lenders which is set forth on the signature
     pages hereto;

          (ii)  New Revolving Credit Notes dated the Amendment
     Effective Date and made by the Borrower in favor of the
     Revolving Credit Lenders in the aggregate principal amount
     of $60,000,000 evidencing the Obligations to repay the
     Revolving Loans;

          (iii)  Any amendments to the Real Property Security
     Documents listed in Section C of the List of Closing
     Documents attached to the Credit Agreement as Exhibit F (the
     "Closing List") which the Agent deems necessary or desirable
     in connection with the increase in the aggregate Revolving
     Credit Commitments from $50,000,000 to $60,000,000, together
     with such endorsements to Title Policies, certified Surveys,
     and local counsel opinions with respect thereto and such
     other agreements, documents and instruments which the Agent
     deems necessary or desirable;

          (iv)  A favorable opinion of Weil, Gotshal & Manges,
     counsel to the Borrower and the Guarantors, dated the
     Amendment Effective Date and addressed to the Agent, the
     Lenders and the Issuing Banks, with respect to such matters
     relating to this Amendment as the Agent may reasonably
     request, including with respect to the 12% Debenture
     Indenture and the 12.25% Debenture Indenture and a favorable
     opinion of Thomas J. Bird, general counsel of the Borrower
     and the Guarantors, dated the Amendment Effective Date and
     addressed to the Agent, the Lenders and the Issuing Banks,
     with respect to such matters relating to this Amendment as
     the Agent may reasonably request; without limiting the
     foregoing, the Borrower and the Guarantors hereby direct
     their counsel, Weil, Gotshal & Manges, and their general
     counsel, Thomas J. Bird, to prepare and deliver to the
     Agent, the Lenders, the Issuing Banks and Sidley & Austin,
     such opinions;

          (v)  An updated Borrowing Base Certificate (including,
     without limitation, information with respect to Eligible
     Fixed Assets), certified as being true, accurate and
     complete as of October 31, 1995 by the chief financial
     officer, treasurer or controller of the Borrower;

          (vi)  Updated organizational documents, good standing
     certificates and Assistant Secretarys' or Assistant Clerks'
     certificates for the Borrower and the Guarantors in
     substantially the respective forms delivered on the Closing
     Date pursuant to Section D of the Closing List, with such
     changes as the Agent may deem appropriate in connection with
     this Amendment;

          (vii) The Borrower shall have paid to the Agent, for
     the account of the Revolving Credit Lenders in accordance
     with their respective Revolving Credit Pro Rata Shares
     (calculated after giving effect to the effectiveness of this
     Amendment), an amendment fee in an amount equal to $150,000;
     and

          (viii)  A certificate of an officer of the Borrower
     dated the Amendment Effective Date certifying as to the
     matters set forth in Sections 14.02 and 14.04 of this
     Amendment and certifying as to the Solvency of the Borrower
     and the Borrower's Subsidiaries after giving effect to the
     transactions contemplated by this Amendment.

          14.02  Each of the representations and warranties of
the Borrower and the Guarantors contained in the Credit Agreement
and in the other Loan Documents (other than any representations
and warranties relating to the Borrower's compliance with Section
10.01 of the Credit Agreement, or to the matters referred to in
Section 13.02 hereof) shall be true and correct on and as of the
Amendment Effective Date, except to the extent that any such
representation or warranty expressly relates to a prior date, in
which case, such representation and warranty shall be true and
correct as of such earlier date.

          14.03  All corporate and other proceedings, and all
documents, instruments and other legal matters in connection with
the transactions contemplated by this Amendment, shall be
satisfactory in all respects in form and substance to the Agent.

          14.04  No Default or Event of Default (other than any
Default or Event of Default relating to the Borrower's compliance
with Section 10.01 or Section 9.17 of the Credit Agreement) shall
have occurred and be continuing on the Amendment Effective Date.

          14.05  All fees and expenses payable on or prior to the
Amendment Effective Date shall have been paid to the Lenders, the
Issuing Banks and the Agent.

          SECTION 15.  Representations and Warranties.  The
Borrower hereby represents and warrants to the Lenders, the
Issuing Banks and the Agent that (a) as of the date hereof no
Default or Event of Default under the Credit Agreement shall have
occurred and be continuing (other than with respect to Section
10.01 or Section 9.17 thereof), (b) all of the representations
and warranties of the Borrower and the Guarantors contained in
the Credit Agreement (other than any representations and
warranties relating to the Borrower's compliance with Section
10.01 of the Credit Agreement, or to the matters referred to in
Section 13.02 hereof) and in any other Loan Document continue to
be true and correct as of the date hereof, as though made on and
as of such date, except to the extent that such representations
or warranties expressly relate to prior dates, in which case,
such representations and warranties shall be true and correct as
of such earlier dates and (c) Imo Industries (UK) Limited ("Imo
UK") is a corporation duly organized, validly existing and in
good standing under the laws of the United Kingdom, (ii) is duly
qualified to do business as a foreign corporation and is in good
standing under the laws of each jurisdiction in which failure to
be so qualified and in good standing shall have or is reasonably
likely to have a Material Adverse Effect, (iii) has all requisite
corporate power and authority to own, operate and encumber its
Securities and other Property and to conduct its business as
presently conducted and as proposed to be conducted and (iv) has
all requisite corporate power and authority to execute, deliver
and perform this Amendment and to continue to perform its
obligations under (x) the English Pledge Agreement (as defined in
the List of Closing Documents attached to the Credit Agreement as
Exhibit F) and (y) any documents or instruments executed in
connection therewith.  The execution, delivery and performance of
this Amendment have been duly authorized by all necessary
corporate action on the part of Imo UK, and this Amendment and
the English Pledge Agreement constitute the legal, valid and
binding obligations of Imo UK, enforceable against Imo UK in
accordance with their respective terms.

          SECTION 16.  Affirmation of Liens and Guaranties.
Notwithstanding anything contained in the Loan Documents (either
before, on or after the Amendment Effective Date), (i) each of
the Borrower, the Guarantors and Imo UK, by its signature below,
reaffirms the Liens and reconfirms the grant of the liens to the
Agent for the benefit of the Lenders and the Issuing Banks
pursuant to the Loan Documents executed by such Person, which
Liens shall continue in full force and effect during the term of
the Credit Agreement and any renewals thereof and shall continue
to secure the Obligations, and (ii) each of the Guarantors, in
its capacity as guarantor under its Guaranty, hereby consents to
the execution, delivery and performance of this Amendment, and
all of the other Loan Documents to be executed in connection
herewith, reaffirms its respective obligations under its Guaranty
and agrees that such Guaranty shall remain in full force and
effect.

          SECTION 17.  Reference to and Effect on the Loan
Documents.

          17.01  Upon the effectiveness of this Amendment, on and
after the date hereof, each reference in the Credit Agreement to
"this Agreement", "hereunder", "hereof" or words of like import,
and each reference in the other Loan Documents to the Credit
Agreement, shall mean and be a reference to the Credit Agreement
as amended hereby.

          17.02  Except as specifically amended above, all of the
terms of the Credit Agreement and all other Loan Documents shall
remain unchanged and in full force and effect.

          17.03  The execution, delivery and effectiveness of
this Amendment shall not, except as expressly provided herein,
operate as a waiver of any right, power or remedy of any Lender,
any Issuing Bank or the Agent, nor constitute a waiver of any
provision of the Credit Agreement or any of the Loan Documents.

          SECTION 18.  Costs and Expenses.  The Borrower agrees
to pay on demand in accordance with the terms of Section 14.02 of
the Credit Agreement all costs and expenses in connection with
the preparation, reproduction, execution and delivery of this
Amendment, including the reasonable fees and out-of-pocket
expenses of Sidley & Austin, counsel for the Agent.

          SECTION 19.  Execution in Counterparts.  This Amendment
may be executed and delivered in any number of counterparts and
by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original
and all of which taken together shall constitute one and the same
original agreement.

          SECTION 20.  Governing Law.  THIS AMENDMENT SHALL BE
INTERPRETED, AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO
DETERMINED, IN ACCORDANCE WITH THE INTERNAL LAW OF THE STATE OF
NEW YORK.

          IN WITNESS WHEREOF, this Amendment has been duly
executed on the date set forth above.


                              IMO INDUSTRIES INC.


                              By:   /s/ G.M. Dobson
                                 Name:
                                 Title:V.P. and Treasurer


                              CITIBANK, N.A., as Agent and as
                                a Lender


                              By:   /s/ Timothy L. Freeman
                                 Name:
                                 Title:


                              THE BANK OF NEW YORK COMMERCIAL
                                CORPORATION


                              By:  /s/ Stephen V. Mangiante
                                 Name:
                                 Title:


                              GENERAL ELECTRIC CAPITAL
                                CORPORATION


                              By:  /s/ Catherine Midkiff
                                 Name:
                                 Title:


                              HELLER FINANCIAL, INC.


                              By: /s/ T. Bukawski
                                 Name:
                                 Title:

                              NATIONAL WESTMINSTER BANK Plc


                              By: /s/ David E. Yemer
                                 Name:
                                 Title:


                              SANWA BUSINESS CREDIT CORPORATION


                              By: /s/ Peter L. Shavla
                                 Name:
                                 Title:


                              TRANSAMERICA BUSINESS CREDIT
                                CORPORATION


                              By: /s/ Perry Vavoules
                                 Name:
                                 Title:

Acknowledged and agreed
to:

BAIRD CORPORATION


By: _/s/ G.M. Dobson
   Name:
   Title:


VARO INC.


By:_/s/ G.M. Dobson
   Name:
   Title:


WARREN PUMPS INC.


By:_/s/ G.M. Dobson
   Name:
   Title:

IMO INDUSTRIES (UK) LIMITED


By:_/s/ T.J. Bird
   Name:
   Title:Director





                                                   EXECUTION COPY



                      SEVENTH AMENDMENT TO
                        CREDIT AGREEMENT

          Seventh Amendment (this "Amendment") dated as of
March 4, 1996 among Imo Industries Inc. (with its successors and
permitted assigns, the "Borrower") and the undersigned Lenders
(as defined below), to the Credit Agreement dated as of August 5,
1994 (as previously amended by the First Amendment thereto dated
as of November 18, 1994, the Second Amendment thereto dated as of
January 11, 1995, the Third Amendment thereto dated as of
February 17, 1995, the Fourth Amendment thereto dated as of May
3, 1995, the Fifth Amendment thereto dated as of August 14, 1995,
and the Sixth Amendment thereto dated as of December 11, 1995,
and as such agreement may be further amended, supplemented or
modified from time to time, the "Credit Agreement") among the
Borrower, Baird Corporation ("Baird"), Varo Inc. ("Varo"), Warren
Pumps Inc., the institutions from time to time party thereto as
lenders (the "Lenders"), the institutions from time to time party
thereto as issuing banks (the "Issuing Banks"), and Citibank,
N.A., in its capacity as agent and collateral agent for the
Lenders and the Issuing Banks (in such capacity, the "Agent").

                      W I T N E S S E T H:

          WHEREAS, pursuant to a letter dated February 14, 1996,
a copy of which is attached as Exhibit A (the "Letter"), the
Borrower has requested the undersigned, which constitute the
Requisite Lenders, to amend the Credit Agreement along the lines
set forth in the Letter; and

          WHEREAS, the Lenders party hereto have agreed to amend
the Credit Agreement to accommodate the request of the Borrower,
subject to the terms set forth in this Agreement;

          NOW, THEREFORE, in consideration of the above premises,
the Borrower and the undersigned Lenders agree as follows:

          SECTION 1.  Defined Terms.  Capitalized terms used herein without
definition shall have the meanings ascribed to such terms in the
Credit Agreement.

          SECTION 2.  Amendment of Section 1.01.  The definition of
"EBITDA" in Section 1.01 of the Credit Agreement is, effective as
of December 31, 1995, hereby amended by replacing the proviso at
the end of such definition with the following:

          ; provided, that (i) in calculating EBITDA for purposes
     of determining Excess Cash Flow, the Fixed Charge Coverage
     Ratio and the Interest Coverage Ratio, any increase in
     EBITDA resulting from the sale of Roltra-Morse S.p.A. or
     Varo's electronic systems division shall be excluded and
     (ii) for purposes of determining the Interest Coverage Ratio
     with respect to any period, decreases in Consolidated Net
     Income for the fourth fiscal quarter of 1995 associated with
     certain non-operating properties identified on Schedule
     1.01.13 which are being marketed for sale in the amount set
     forth opposite such properties on such Schedule 1.01.13,
     shall be excluded.

          SECTION 3.  Amendment of Section 9.02.  Section 9.02 of the
Credit Agreement is, effective as of the Amendment Effective
Date, hereby amended by (x) deleting the word "and" after the end
of clause (xiv) of such Section, (y) by replacing the period at
the end of clause (xv) of such Section with "; and", and (z) by
inserting the following at the end of such Section:

        (xvi)  the Borrower may sell to a financial institution
     certain machine tools and related equipment manufactured by
     Toyoda which have been acquired by the Borrower for use in
     the Louisburg, North Carolina facility of its Boston Gear
     Division for a purchase price of not less than (x) the
     acquisition cost of such machine tools and related equipment
     and (y) no more than $2,600,000.

          SECTION 4.   Amendment of Section 9.10.  Section 9.10 of the
Credit Agreement is, effective as of the Amendment Effective
Date, hereby amended by inserting the following proviso at the
end of such Section:

          ; provided, however, that the Borrower may enter into
     an Operating Lease with a financial institution of certain
     machine tools and related equipment sold pursuant to Section
     9.02(xvi) and leased by the Borrower for use in the
     Louisburg, North Carolina facility of its Boston Gear
     Division.

          SECTION 5.  New Schedule 1.01.13.  Effective as of December 31,
1995, Schedule 1.01.13 to this Amendment is hereby added to the
Credit Agreement as Schedule 1.01.13 thereto.

          SECTION 6.  Waiver.  To the extent that the Borrower's failure to
comply with Section 10.03 of the Credit Agreement during the
period from and including the last day of the fourth fiscal
quarter of 1995 to and including the Amendment Effective Date
constitutes a Default or Event of Default, as the case may be,
under the Credit Agreement, such Default or Event of Default is,
effective as of the Amendment Effective Date, hereby waived by
the Requisite Lenders.

          SECTION 7.  Conditions Precedent to the Effectiveness of this
Amendment.  This Amendment shall become effective as of the date
(the "Amendment Effective Date") when the following conditions
precedent have been satisfied (unless waived by the undersigned
Lenders):

          7.01.  The Agent shall have received a copy of this
Amendment duly executed by the Borrower and the Requisite
Lenders.

          7.02.  After giving effect to this Amendment, each of
the representations and warranties of the Borrower and the
Guarantors contained in the Credit Agreement and in the other
Loan Documents shall be true and correct on and as of the
Amendment Effective Date, except to the extent that any such
representation or warranty expressly relates to a prior date, in
which case, such representation and warranty shall be true and
correct as of such earlier date.

          7.03.  All corporate and other proceedings, and all
documents, instruments and other legal matters in connection with
the transactions contemplated by this Amendment, shall be
satisfactory in all respects in form and substance to the Agent.

          7.04.  After giving effect to this Amendment, no
Default or Event of Default shall have occurred and be continuing
on the Amendment Effective Date.

          7.05.  All fees and expenses payable on or prior to the
Amendment Effective Date shall have been paid to the Lenders, the
Issuing Banks and the Agent.

          SECTION 8.  Representations and Warranties.  The Borrower hereby
represents and warrants to the Lenders, the Issuing Banks and the
Agent that after giving effect to this Amendment, (a) as of the
Amendment Effective Date no Default or Event of Default under the
Credit Agreement shall have occurred and be continuing and (b)
all of the representations and warranties of the Borrower and the
Guarantors contained in the Credit Agreement and in any other
Loan Document continue to be true and correct as of the date
hereof, as though made on and as of such date, except to the
extent that such representations or warranties expressly relate
to prior dates, in which case, such representations and
warranties shall be true and correct as of such earlier dates.

          SECTION 9.  Reference to and Effect on the Loan Documents.

          9.01.  Upon the effectiveness of this Amendment, on and
after the date hereof, each reference in the Credit Agreement to
"this Agreement", "hereunder", "hereof" or words of like import,
and each reference in the other Loan Documents to the Credit
Agreement, shall mean and be a reference to the Credit Agreement
as amended hereby.

          9.02.  Except as specifically amended above, all of the
terms of the Credit Agreement and all other Loan Documents shall
remain unchanged and in full force and effect.

          9.03.  The execution, delivery and effectiveness of
this Amendment shall not, except as expressly provided herein,
operate as a waiver of any right, power or remedy of any Lender,
any Issuing Bank or the Agent, nor constitute a waiver of any
provision of the Credit Agreement or any of the Loan Documents.

          SECTION 10.  Costs and Expenses.  The Borrower agrees to 
PAY ONdemand in accordance with the terms of Section 14.02 of the
Credit Agreement all costs and expenses in connection with the
preparation, reproduction, execution and delivery of this
Amendment, including the reasonable fees and out-of-pocket
expenses of Sidley & Austin, counsel for the Agent.

          SECTION 11.  Execution in Counterparts.  This Amendment may be
executed and delivered in any number of counterparts and by
different parties hereto in separate counterparts, each of which
when so executed and delivered shall be deemed an original and
all of which taken together shall constitute one and the same
original agreement.

          SECTION 12.  Governing Law.  THIS AMENDMENT SHALL BE INTERPRETED,
AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED,
IN ACCORDANCE WITH THE INTERNAL LAW OF THE STATE OF NEW YORK.

          IN WITNESS WHEREOF, this Amendment has been duly
executed on the date set forth above.


                              IMO INDUSTRIES INC.


                              By: /s/ R.A. Derr II
                                 Name:
                                 Title:Vice President & Treasurer


                              CITIBANK, N.A., as Agent and as
                                a Lender


                              By:  /s/ Timothy L. Freeman
                                 Name:
                                 Title:


                              THE BANK OF NEW YORK COMMERCIAL
                                CORPORATION


                              By: /s/ Stephen V. Mangiante
                                 Name:
                                 Title:


                              GENERAL ELECTRIC CAPITAL
                                CORPORATION


                              By: /s/ Catherine L. Midkiff
                                 Name:
                                 Title:


                              HELLER FINANCIAL, INC.


                              By: /s/ Salvatore A. Salullo
                                 Name:



                              NATIONAL WESTMINSTER BANK Plc


                              By:
                                 Name:
                                 Title:


                              SANWA BUSINESS CREDIT CORPORATION


                              By: /s/ Peter L. Skavla
                                 Name:
                                 Title:


                              TRANSAMERICA BUSINESS CREDIT
                                CORPORATION


                              By: /s/ Perry Vavoules
                                 Name:
                                 Title:

Acknowledged and agreed
to:

BAIRD CORPORATION


By:_/s/ R.A. Derr II
   Name:
   Title:Vice President and Treasurer


VARO INC.


By:_/s/ R.A. Derr II
   Name:
   Title: Vice President and Treasurer


WARREN PUMPS INC.


By:_/s/ R.A. Derr II
   Name:
   Title: Vice President and Treasurer