SEVENTH AMENDMENT TO CREDIT

                             AND GUARANTY AGREEMENT

      THIS SEVENTH  AMENDMENT,  dated as of August 3, 1999 (this "Amendment") to
the Existing Credit Agreement referred to below, is among IMO INDUSTRIES INC., a
Delaware corporation (the "Borrower"),  COLFAX CORPORATION (formerly known as II
Acquisition  Corp.),  a Delaware  corporation (the "Parent") and the Lenders (as
defined below) parties hereto.

                             W I T N E S S E T H:
                             -------------------

      WHEREAS,  the Borrower,  the Parent,  certain financial  institutions from
time to time parties thereto  (collectively,  the  "Lenders"),  The Bank of Nova
Scotia, as the Administrative  Agent and the Documentation Agent and NationsBanc
Capital Markets, Inc., as the Syndication Agent have entered into the Credit and
Guaranty  Agreement,  dated as of August  29,  1997 (as  amended,  supplemented,
amended  and  restated  or  otherwise  modified  prior to the date  hereof,  the
"Existing  Credit  Agreement"  and,  as amended  by,  and  together  with,  this
Amendment, the "Credit Agreement"); and

      WHEREAS,  the  Borrower  and the Parent have  requested  that the Existing
Credit  Agreement be amended in certain  respects  and that the Lenders  grant a
waiver of certain  provisions of the Existing  Credit  Agreement and the Lenders
have  agreed to amend the  Existing  Credit  Agreement  and to grant such waiver
(subject to the terms and conditions of this Amendment);

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

                                     PART I

                                   DEFINITIONS

     SUBPART I.1. Use of Defined Terms.  Unless otherwise  defined herein or the
context otherwise requires, terms used in this Amendment, including its preamble
and recitals, have the meanings set forth in the Existing Credit Agreement.


                                     PART II

                            AMENDMENTS AND WAIVERS TO

                          THE EXISTING CREDIT AGREEMENT

      Effective  upon (and subject to) the  occurrence of the Seventh  Amendment
Effective Date (as defined in Subpart 3.1),  certain terms and provisions of the
Existing Credit Agreement are hereby amended,  and the waiver described below is
hereby granted, all in accordance with this Part. Except as so amended, modified
or  waived  by this  Amendment,  the  Existing  Credit  Agreement  and the  Loan
Documents  shall  continue  in full  force and effect in  accordance  with their
terms.

      SUBPART II.1.  Amendment to Article I.  Article I of the Existing Credit
 Agreement is hereby amended in accordance with Subparts 2.1.1 through 2.1.2.

     SUBPART  II.1.1.  Section 1.1 of the  Existing  Credit  Agreement is hereby
amended by adding the following new definition in its  appropriate  alphabetical
sequence:

            "Morse Controls Disposition" means the disposition of the Borrower's
      facility located at 21 Clinton Street, Hudson, Ohio.

      SUBPART  II.1.2.  Section 1.1 of the Existing  Credit  Agreement is hereby
further amended by amending the definition of "Permitted Amount" by deleting the
figure  "$85,000,000" each time it appears therein and, in each case,  inserting
the figure "$105,000,000" in its place.

      SUBPART II.2.  Amendment to Article IV. Clause  (iv)(B) of Section 4.10 of
the  Existing  Credit  Agreement  is  hereby  amended  by  deleting  the  figure
"$85,000,000"  in such clause and  inserting  the figure  "$105,000,000"  in its
place.

      SUBPART II.3. Amendment to Article VII. Clause (b)(ii) of Section 7.2.6 of
the  Existing  Credit  Agreement  is  hereby  amended  by  deleting  the  figure
"$85,000,000"  in such clause and  inserting  the figure  "$105,000,000"  in its
place.

      SUBPART  II.4.  Waiver  Regarding  Section  3.1.2 of the  Existing  Credit
Agreement ("Mandatory Repayments and Prepayments").  Notwithstanding anything to
the  contrary  contained  in  the  Existing  Credit  Agreement   (including  the
definition of the term "Net Disposition Proceeds" or Section 3.1.2 thereto), the
Lenders hereby waive any mandatory  prepayment event which would otherwise arise
in connection  with the receipt by the Borrower of Net  Disposition  Proceeds in
connection with the Morse Controls Disposition.

                                    PART III

                           CONDITIONS TO EFFECTIVENESS

      SUBPART  III.1.  This  Amendment  shall become  effective on the date (the
"Seventh  Amendment  Effective Date") when all of the following  conditions have
been satisfied to the satisfaction of the Administrative Agent.

      SUBPART III.1.1.  Execution of Counterparts.  The Administrative Agent
                        -------------------------
shall have received copies of this Amendment, duly executed and delivered by the
Borrower, the Parent and the Lenders.

      SUBPART III.1.2.  Affirmation and Consent.  The Administrative Agent
                        -----------------------
shall  have  received  an   affirmation   and  consent  in  form  and  substance
satisfactory to it, duly executed and delivered by each Subsidiary Guarantor.

      SUBPART  III.1.3.  Satisfactory  Legal  Form.  All  documents  executed or
submitted  pursuant  hereto shall be  satisfactory  in form and substance to the
Administrative  Agent and its counsel.  The Administrative Agent and its counsel
shall have  received  all  information  and such  counterpart  originals or such
certified or other copies of such materials,  as the Administrative Agent or its
counsel  may  reasonably  request,   and  all  legal  matters  incident  to  the
transactions  contemplated  by  this  Amendment  shall  be  satisfactory  to the
Administrative Agent and its counsel.

                                     PART IV

                         REPRESENTATIONS AND WARRANTIES

      In order to  induce  the  Lenders  and the  Issuers  to  enter  into  this
Amendment,   the  Borrower  and  the  Parent   represent   and  warrant  to  the
Administrative Agent, each Issuer and each Lender as set forth in this Part.

      SUBPART IV.1. Compliance with Warranties. After giving effect to the terms
of this Amendment,  (a) the  representations and warranties set forth herein, in
Article VI of the Credit  Agreement and in each other Loan Document 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, in which
case they were true and correct as of such  earlier  date) and (b) the  Borrower
shall  be in  full  compliance  with  Section  4.03  of  the  Subordinated  Note
Indenture.

      SUBPART IV.2. Due  Authorization,  Non-Contravention,  etc. The execution,
delivery and  performance  by the Borrower and the Parent of this  Amendment and
other  documents  delivered  pursuant  hereto are within the  Borrower's and the
Parent's corporate powers,  have been duly authorized by all necessary corporate
action,  and do not (i) contravene either the Borrower's or the Parent's 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 or the Parent,  or (iii) result in, or require
the creation or imposition of, any Lien (except as contemplated in or created by
the Loan Documents).

      SUBPART IV.3.  Validity,  etc.  This  Amendment has been duly executed and
delivered by the Borrower and the Parent and  constitutes  the legal,  valid and
binding obligation of the Borrower and the Parent 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.

      SUBPART IV.4.  Compliance With Existing Credit Agreement.  As of the
                     -----------------------------------------
Seventh  Amendment  Effective  Date,  both before and after giving effect to the
terms of this Amendment, no Default has occurred and is continuing.

                                     PART V

                            MISCELLANEOUS PROVISIONS

      SUBPART  V.1.   Ratification  of  and  Limited  Amendment  to  the  Credit
Agreement. The Existing Credit Agreement, as amended hereby, is hereby ratified,
approved and confirmed in each and every respect by the parties  hereto.  Except
as specifically  amended or modified  herein,  the Existing Credit Agreement and
the other Loan  Documents  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 or amendment of any right, power
or privilege of the Administrative  Agent and the Lenders nor shall the entering
into of this  Amendment  preclude  the Lenders  from  refusing to enter into any
further or future amendments.

      SECTION  V.2.  Consent  and  Acknowledgment  of  Guarantor,  etc.  By  its
signature  below,  the Parent in its  capacity as a guarantor  and as grantor of
collateral security under certain Loan Documents, hereby acknowledges,  consents
and agrees to this  Amendment and hereby  ratifies and confirms its  obligations
under its guaranty and each Loan  Document  executed and  delivered by it in all
respects.

      SUBPART V.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 Amendment.

     SUBPART  V.4.  Expenses.  The  Borrower  agrees  to pay  all  out-of-pocket
expenses  incurred by the  Administrative  Agent (including fees and expenses of
counsel  to the  Administrative  Agent)  in  connection  with  the  preparation,
negotiation, execution and delivery of this Amendment.

      SUBPART  V.5.  Headings;   Counterparts.  The  various  headings  of  this
Amendment are inserted for convenience  only and shall not affect the meaning or
interpretation of this Amendment or any provisions hereof. This 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.

      SUBPART V.6.  Governing Law;  Entire  Agreement.  THIS AMENDMENT  SHALL BE
DEEMED TO BE A CONTRACT  MADE UNDER AND GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK.  This 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.

     SUBPART V.7. Loan Document Pursuant to Credit Agreement.  This Amendment is
a Loan.  Document  executed  pursuant  to the  Credit  Agreement  and  shall  be
construed,  administered  and  applied in  accordance  with all of the terms and
provisions of the Credit Agreement.


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