AMENDED AND RESTATED LOAN AGREEMENT



                          Dated as of December 30, 1999

                                      among

                     FAIRFIELD MANUFACTURING COMPANY, INC.,

                            The Lenders Named Herein,

                                       and

                      GENERAL ELECTRIC CAPITAL CORPORATION,

                            as Agent for the Lenders


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                                TABLE OF CONTENTS


ARTICLE 1 DEFINITIONS AND ACCOUNTING TERMS                       1
 SECTION 1.1                                      DEFINED TERMS  1
 SECTION 1.2                               USE OF DEFINED TERMS  27
 SECTION 1.3                                   ACCOUNTING TERMS  27
 SECTION 1.4                                           ROUNDING  27
 SECTION 1.5                             EXHIBITS AND SCHEDULES  28
 SECTION 1.6                                MISCELLANEOUS TERMS  28
ARTICLE 2 AMOUNT AND TERMS OF CREDIT                             28
 SECTION 2.1                                           ADVANCES  28
 SECTION 2.2                                  LETTERS OF CREDIT  29
 SECTION 2.3                                         TERM LOANS  32
 SECTION 2.4                        SPECIAL ADVANCES BY LENDERS  32
 SECTION 2.5            AGENT'S RIGHT TO ASSUME FUNDS AVAILABLE  32
 SECTION 2.6                                         ACCOUNTING  32
 SECTION 2.7                                        SINGLE LOAN  33
 SECTION 2.8                    SUBSEQUENT COMMITMENT INCREASES  33
ARTICLE 3 PRINCIPAL PAYMENTS; INTEREST; FEES                     35
 SECTION 3.1                                 PRINCIPAL PAYMENTS  35
 SECTION 3.2TERMINATION OF COMMITMENT; VOLUNTARY PREPAYMENT OF TERM LOAN   35
 SECTION 3.3                              MANDATORY PREPAYMENTS  36
 SECTION 3.4                                           INTEREST  37
 SECTION 3.5                               FIXED RATE ELECTIONS  37
 SECTION 3.6                                     COMMITMENT FEE  38
 SECTION 3.7                              LETTER OF CREDIT FEES  38
 SECTION 3.8                                       AGENT'S FEES  38
 SECTION 3.9                  INCREASED COST AND REDUCED RETURN  38
 SECTION 3.10                                       LIBOR COSTS  39
 SECTION 3.11                       SPECIAL LIBOR CIRCUMSTANCES  40
 SECTION 3.12                                    FUNDING LOSSES  40
 SECTION 3.13                                      DEFAULT RATE  41
 SECTION 3.14               PAYMENT AND COMPUTATION OF INTEREST  41
 SECTION 3.15                                 NON-BUSINESS DAYS  42
 SECTION 3.16                             PAYMENT FREE OF TAXES  42
 SECTION 3.17                                   FUNDING SOURCES  45
 SECTION 3.18           FAILURE TO CHARGE NOT SUBSEQUENT WAIVER  45
 SECTION 3.19                                    SAVINGS CLAUSE  45
 SECTION 3.20                                PRO RATA TREATMENT  46
 SECTION 3.21                  MANNER AND TREATMENT OF PAYMENTS  46
 SECTION 3.22     AGENT'S RIGHT TO ASSUME PAYMENTS WILL BE MADE  46
 SECTION 3.23                                     SURVIVABILITY  47
ARTICLE 4 REPRESENTATIONS AND WARRANTIES                         47
 SECTION 4.1EXISTENCE AND QUALIFICATION; POWER; COMPLIANCE WITH LAWS  47
 SECTION 4.2AUTHORITY; COMPLIANCE WITH OTHER AGREEMENTS AND INSTRUMENTS  48

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SECTION 4.3REQUIREMENTS OF LAW; PERFORMANCE OF CONTRACTUAL OBLIGATIONS  48
 SECTION 4.4                 NO GOVERNMENTAL APPROVALS REQUIRED  48
 SECTION 4.5                                       SUBSIDIARIES  49
 SECTION 4.6                               FINANCIAL STATEMENTS  49
 SECTION 4.7   NO OTHER LIABILITIES; NO MATERIAL ADVERSE EFFECT  49
 SECTION 4.8                  TITLE TO AND LOCATION OF PROPERTY  49
 SECTION 4.9                                  INTANGIBLE ASSETS  50
 SECTION 4.10                           GOVERNMENTAL REGULATION  50
 SECTION 4.11                             LITIGATION; JUDGMENTS  50
 SECTION 4.12                               BINDING OBLIGATIONS  50
 SECTION 4.13                                        NO DEFAULT  50
 SECTION 4.14                                             ERISA  50
 SECTION 4.15                               REGULATIONS G AND U  52
 SECTION 4.16                                        DISCLOSURE  52
 SECTION 4.17                                     TAX LIABILITY  52
 SECTION 4.18                                SECURITY INTERESTS  53
 SECTION 4.19                                  EMPLOYEE MATTERS  53
 SECTION 4.20                                          SOLVENCY  53
 SECTION 4.21        SUBORDINATION OF SUBORDINATED INDEBTEDNESS  53
 SECTION 4.22                                     REAL PROPERTY  54
 SECTION 4.23                             ENVIRONMENTAL MATTERS  54
 SECTION 4.24                        OWNERSHIP OF CAPITAL STOCK  55
 SECTION 4.25                         BROKERS; TRANSACTION FEES  55
ARTICLE 5 AFFIRMATIVE COVENANTS (OTHER THAN INFORMATION AND REPORTING
          REQUIREMENTS)                                          56
 SECTION 5.1                                    USE OF PROCEEDS  56
 SECTION 5.2PAYMENT OF TAXES AND OTHER POTENTIAL LIENS; COMPLIANCE WITH
            RELATED AGREEMENTS                                   56
 SECTION 5.3                          PRESERVATION OF EXISTENCE  56
 SECTION 5.4             MAINTENANCE OF PROPERTIES AND BUSINESS  57
 SECTION 5.5                           MAINTENANCE OF INSURANCE  57
 SECTION 5.6                               COMPLIANCE WITH LAWS  57
 SECTION 5.7                                  INSPECTION RIGHTS  58
 SECTION 5.8                                       AUDIT RIGHTS  58
 SECTION 5.9            KEEPING OF RECORDS AND BOOKS OF ACCOUNT  58
 SECTION 5.10COMPLIANCE WITH AGREEMENTS; PAYMENT OF INDEBTEDNESS 58
 SECTION 5.11                                ENVIRONMENTAL LAWS  58
 SECTION 5.12               ADDITIONAL REAL PROPERTY COLLATERAL  60
 SECTION 5.13                                       COLLECTIONS  60
ARTICLE 6 NEGATIVE COVENANTS                                     61
 SECTION 6.1   DISPOSITION OF PROPERTY; APPLICATION OF PROCEEDS  61
 SECTION 6.2                RESTRICTIONS ON FUNDAMENTAL CHANGES  62
 SECTION 6.3                                RESTRICTED PAYMENTS  63
 SECTION 6.4                   RESTRICTIONS ON AMENDMENTS, ETC.  64
 SECTION 6.5                                              ERISA  65
 SECTION 6.6            CHANGE IN NATURE OR CONDUCT OF BUSINESS  65

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 SECTION 6.7                                              LIENS  65
 SECTION 6.8                                       INDEBTEDNESS  66
 SECTION 6.9                       TRANSACTIONS WITH AFFILIATES  68
 SECTION 6.10                              SALES AND LEASEBACKS  69
 SECTION 6.11                                MARGIN REGULATIONS  69
 SECTION 6.12                                       INVESTMENTS  69
 SECTION 6.13                                       FISCAL YEAR  69
 SECTION 6.14                            CASH MANAGEMENT SYSTEM  69
 SECTION 6.15                      CANCELLATION OF INDEBTEDNESS  69
 SECTION 6.16                                       COMMINGLING  70
 SECTION 6.17                  RELATED AGREEMENTS; TAX ELECTION  70
 SECTION 6.18                              CAPITAL EXPENDITURES  70
 SECTION 6.19                                  OPERATING LEASES  70
 SECTION 6.20                                     CURRENT RATIO  70
 SECTION 6.21          CONSOLIDATED FIXED CHARGE COVERAGE RATIO  70
 SECTION 6.22                           INTEREST COVERAGE RATIO  71
ARTICLE 7 INFORMATION AND REPORTING REQUIREMENTS                 71
 SECTION 7.1                  FINANCIAL INFORMATION AND REPORTS  71
 SECTION 7.2BORROWING BASE CERTIFICATES AND OTHER COLLATERAL REPORTING 73
 SECTION 7.3             OPERATING LEASES; CAPITAL LEASES, ETC.  74
 SECTION 7.4             OTHER SPECIFIC INFORMATION AND REPORTS  74
 SECTION 7.5          OTHER INFORMATION AND REPORTS (GENERALLY)  77
ARTICLE 8 CONDITIONS                                             77
 SECTION 8.1                        CONDITIONS TO EFFECTIVENESS  77
 SECTION 8.2                                  ANY ADVANCE, ETC.  79
ARTICLE 9 EVENTS OF DEFAULT AND REMEDIES UPON EVENTS OF DEFAULT  79
 SECTION 9.1                                  EVENTS OF DEFAULT  79
 SECTION 9.2                     REMEDIES UPON EVENT OF DEFAULT  82
ARTICLE 10                                             THE AGENT 84
 SECTION 10.1APPOINTMENT AND AUTHORIZATION; NO FIDUCIARY RESPONSIBILITY  84
 SECTION 10.2                              AGENT AND AFFILIATES  84
 SECTION 10.3                         LENDERS' CREDIT DECISIONS  85
 SECTION 10.4                                   ACTION BY AGENT  85
 SECTION 10.5                                LIABILITY OF AGENT  86
 SECTION 10.6                                   INDEMNIFICATION  87
 SECTION 10.7                                   SUCCESSOR AGENT  87
 SECTION 10.8PROPORTIONATE INTEREST OF THE LENDERS IN ANY COLLATERAL  87
ARTICLE 11                                         MISCELLANEOUS 88
 SECTION 11.1                    CUMULATIVE REMEDIES; NO WAIVER  88
 SECTION 11.2                              AMENDMENTS; CONSENTS  88
 SECTION 11.3                         COSTS, EXPENSES AND TAXES  89
 SECTION 11.4                    NATURE OF LENDER'S OBLIGATIONS  90
 SECTION 11.5        SURVIVAL OF REPRESENTATIONS AND WARRANTIES  90
 SECTION 11.6                                           NOTICES  90
 SECTION 11.7                         EXECUTION IN COUNTERPARTS  91
 SECTION 11.8                        BINDING EFFECT; ASSIGNMENT  92

 <PAGE>

 SECTION 11.9       CONFIDENTIALITY OF CONFIDENTIAL INFORMATION  94
 SECTION 11.10                               SHARING OF SETOFFS  94
 SECTION 11.11                            INDEMNITY BY BORROWER  95
 SECTION 11.12                          NONLIABILITY OF LENDERS  96
 SECTION 11.13                       NO THIRD PARTIES BENEFITED  97
 SECTION 11.14               RIGHT OF SETOFF - DEPOSIT ACCOUNTS  97
 SECTION 11.15                               FURTHER ASSURANCES  97
 SECTION 11.16                                      INTEGRATION  98
 SECTION 11.17                                    GOVERNING LAW  98
 SECTION 11.18                       SEVERABILITY OF PROVISIONS  98
 SECTION 11.19                                         HEADINGS  98
 SECTION 11.20                       CONFLICT IN LOAN DOCUMENTS  98
 SECTION 11.21                                  CHOICE OF FORUM  98
 SECTION 11.22   CONSEQUENTIAL DAMAGES; WAIVER OF TRIAL BY JURY 100
 SECTION 11.23                        PURPORTED ORAL AMENDMENTS 100
 SECTION 11.24                                     REFINANCINGS 100


 EXHIBITS
A  -  BORROWER PLEDGE AGREEMENT
B  -  BORROWER SECURITY AGREEMENT
C  -  BORROWING BASE CERTIFICATE
D  -  COMPLIANCE CERTIFICATE
E  -  LANCER PLEDGE AGREEMENT
F  -  LOAN ASSIGNMENT
G  -  MORTGAGE
H  -  OPINION OF DEBEVOISE & PLIMPTON
I  -  PATENT SECURITY AGREEMENT
J  -  REQUEST FOR ADVANCE
K  -  REQUEST FOR FIXED RATE ELECTION
L  -  REQUEST FOR LETTER OF CREDIT
M  -  REVOLVING CREDIT NOTE
N  -  SUBSIDIARY GUARANTY
O  -  SUBSIDIARY SECURITY AGREEMENT
P  -  TERM NOTE
Q  -  TRADEMARK SECURITY AGREEMENT
R  -  U.S. TAX COMPLIANCE CERTIFICATE


SCHEDULES
     4.5  JOINT VENTURES
     4.7  NO MATERIAL ADVERSE EFFECT
     4.8  LOCATIONS OF PROPERTY
     4.9  PATENTS AND TRADEMARKS
     4.11 LITIGATION
     4.14 PENSION PLANS

     <PAGE>

     4.17 TAX MATTERS
     4.19 LABOR MATTERS
     4.22 REAL PROPERTY
     4.23 ENVIRONMENTAL MATTERS
     4.24 OWNERSHIP OF CAPITAL STOCK
     5.5  MINIMUM INSURANCE REQUIREMENTS
     5.11 REMEDIAL ACTIONS
     6.7  EXISTING LIENS
     6.8  EXISTING INDEBTEDNESS
     6.14 BANK ACCOUNTS

     <PAGE>

                       AMENDED AND RESTATED LOAN AGREEMENT

                          Dated as of December 30, 1999

     THIS  AMENDED AND RESTATED LOAN AGREEMENT ("Agreement") is entered into  as
of the date set forth above by and among FAIRFIELD MANUFACTURING COMPANY, INC.,
an Indiana corporation having its principal place of business and chief
executive office at U.S. Route 52 South, Lafayette, Indiana 47903 ("Borrower"),
the lenders named herein (individually, a "Lender" and collectively, the
"Lenders") and GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation
having an office at Suite 600, 3379 Peachtree Road, N.E., Atlanta, Georgia 30326
("GE Capital"), as agent for itself and the other Lenders hereunder (GE Capital,
in such capacity, the "Agent").

                                    RECITALS

     A.   Borrower, Lenders and the Agent are parties to a certain Loan
Agreement, dated  as  of  July  7, 1993, as amended pursuant to a First
Amendment  to  Loan Agreement, dated as of September 30, 1994, a Second
Amendment to Loan Agreement,dated  as  of  March 30, 1995, but effective as of
December 31,  1994,  a  Third Amendment  to Loan Agreement, dated as of
March 31, 1995, a Fourth Amendment  to Loan  Agreement,  dated  as  of
December 5, 1996,  a  Fifth  Amendment  to  Loan Agreement,  dated as of
February 26, 1997, a Sixth Amendment to Loan  Agreement, dated as of
October 12, 1998, and a Seventh Amendment to Loan Agreement dated as of
May 19, 1999 (the "Existing Loan Agreement").

     B.   Borrower, Lenders and the Agent wish to enter into this Agreement in
order to  amend  the  Existing Loan Agreement in certain respects and to
restate  the Existing Loan Agreement, as so amended, in its entirety, in order
to incorporate in a single document the Existing Loan Agreement and all
amendments thereto and to eliminate references to transactions that have been
completed.

                                    AGREEMENT

     In  consideration of the mutual covenants and agreements herein  contained,
the parties hereto covenant and agree as follows:

                                   ARTICLE 1.
                        DEFINITIONS AND ACCOUNTING TERMS

     Section 1.1    Defined Terms.  As used in this Agreement, the following
terms shall have the meanings set forth respectively after each:

     "Account  Debtor"  means any Person who is or who may become  obligated  to
Borrower under, with respect to, or on account of, an Account.

     <PAGE>

     "Accounts"  means all rights to payment for Inventory sold or for  services
rendered arising in the ordinary course of Borrower's business.

     "Acquisition"  means any transaction or series of related  transactions  by
which Borrower and/or any Subsidiary:

(a)  acquires any going business or all or substantially all of the assets
of any  Person, or a line of business or division of a Person, whether through
the purchase of assets, merger or otherwise;

(b)  directly or indirectly acquires control of at least a majority (in number
of votes) of the Capital Stock of a corporation having ordinary voting power in
the election of directors of such corporation; or

(c)  directly or indirectly acquires a twenty percent (20%) or more ownership
interest in any partnership or joint venture.

     "Advance"  means an advance made or to be made to Borrower by the  Lenders,
each  according to that Lender's Pro Rata Share of the Commitment,  pursuant  to
Section 2.1.

     "Affiliate"  means,  with  respect to any Person,  (a)  each  Person  that,
directly or indirectly, owns or controls, whether beneficially, or as a trustee,
guardian  or  other  fiduciary, ten percent (10%) or more of the  Capital  Stock
having  ordinary voting power in the election of directors of such  Person,  (b)
each Person that controls, is controlled by or is under common control with such
Person  or  any Affiliate of such Person and (c) each of such Person's officers,
directors,  joint  venturers  and partners.  For purposes  of  this  definition,
"control" of a Person means the possession, directly or indirectly, of the power
to  direct or cause the direction of its management or policies, whether through
the ownership of voting securities, by contract or otherwise.

     "Agent" means GE Capital, in its capacity as agent for itself and any other
Lenders hereunder, and any successor agent appointed pursuant to Section 10.7.

     "Agent's Deposit Account" means the Agent's deposit account number  50-199-
839  maintained at Bankers Trust Company, New York, New York, ABA  #0210-0103-3,
or  such other deposit account maintained at such bank or at such other bank  as
shall be designated by the Agent from time to time.

     "Agreement"  means  this  Amended and Restated Loan  Agreement,  either  as
originally  executed  or as it may from time to time be supplemented,  modified,
amended, amended and restated, renewed, extended or supplanted.

     "Blocked  Account Agreements" means, collectively, the agreements  executed
by  Borrower,  the  Agent  and  each  bank at  which  a  Collection  Account  is
maintained,  each in form and substance satisfactory to the Agent,  pursuant  to
which,  among  other things (a) Borrower has granted a Lien on  each  Collection
Account  in  favor of the Agent for the benefit of Lenders, (b)  the  Agent  has
authorized  each  bank  at which a Collection Account is  maintained,  prior  to
receipt of notice from the Agent that a Triggering Event has occurred, to  remit
all  Collections on a daily basis to Borrower's Deposit Account and (c) Borrower
has directed each bank at which a

<PAGE>

Collection Account is maintained, from and after receipt by such bank of  notice
from the Agent that a Triggering Event has occurred, to remit all collections in
such Collection Account to the Agent's Deposit Account.

     "Borrower"   means  Fairfield  Manufacturing  Company,  Inc.,  a   Delaware
corporation having its principal place of business and chief executive office at
the address set forth in the introductory paragraph to this Agreement.

     "Borrower's  Deposit Account" means a deposit account to be  maintained  by
Borrower  with  a  bank selected by Borrower and reasonably  acceptable  to  the
Agent.   The  Borrower's Deposit Account on the Closing Date is  account  number
0011649920  maintained  with  BancOne,  Lafayette,  Indiana.   Any  substitution
therefor  subsequent to the Closing Date will be identified to the  Agent  by  a
Senior Officer of Borrower in a letter in similar form.

     "Borrower Pledge Agreement" means the stock pledge agreement, covering  all
Capital  Stock  owned by Borrower, executed by Borrower on the Original  Closing
Date, as amended prior to the date hereof and as the same from time to time  may
be  supplemented, modified, amended, renewed, extended or supplanted.  Copies of
such  agreement and all amendments thereto through the Closing Date are attached
hereto as Exhibit A.

     "Borrower  Security  Agreement"  means the Amended  and  Restated  Security
Agreement,  covering  the Property of Borrower specified  therein,  executed  by
Borrower on March 31, 1995, as amended prior to the date hereof and as the  same
from time  to time may be supplemented, modified, amended, renewed, extended  or
supplanted.   Copies  of such agreement and all amendments thereto  through  the
Closing Date are attached hereto as Exhibit B.

     "Borrowing  Base"  means,  as  of  any date  of  determination,  an  amount
determined  by  the Agent to be equal to the sum of (a) up to  80%  of  Eligible
Accounts, plus (b) up to 60% of Eligible Inventory consisting of finished goods,
finished  parts  or  raw  materials, plus (c) up to 20%  of  Eligible  Inventory
consisting of work in process, all determined by the Agent with reference to the
most  recent  Borrowing  Base Certificate furnished to  the  Agent  pursuant  to
Section  7.2(a) and the additional Collateral reporting furnished to  the  Agent
pursuant  to  Section  7.2(b), adjusted on a daily  basis  at  such  time  as  a
Triggering Event has occurred and is continuing to reflect Collections  and  the
information contained in the daily Collateral reporting furnished to  the  Agent
pursuant to Section 7.2(c).

     The  Agent shall have the right to establish reserves against the Borrowing
Base  as  to such matters, events, conditions or contingencies as to  which  the
Agent, based on the Agent's customary credit considerations, determines reserves
should  be  established hereunder, including, without limitation, reserves  with
respect  to  (a) taxes, charges and assessments of any Governmental  Agency  and
Liens,  (b)  sums  as  to  which  the Agent is permitted  to  make  Advances  on
Borrower's   behalf  under  Section  2.4,  (c)  anticipated  costs  of   repair,
replacement  or restoration of damaged or destroyed Property in accordance  with
the  provisions of Section 6 of the Borrower Security Agreement and  Sections  7
and  8 of the Mortgage, (d) expenses incurred by Borrower in connection with the
transactions contemplated to occur on the Closing Date which have not been  paid
by  Borrower on or before such date and (e) potential liabilities for responding
to  Environmental  Claims,  potential costs of Remedial  Actions  and  potential
decreases in the

<PAGE>

value  of  Collateral,  in  each case occurring as a  result  of  a  Release  of
Contaminants  or  violations  of  Environmental  Laws  at  or  with  respect  to
Borrower's Real Property.

     Borrower acknowledges that the advance ratios against Eligible Accounts and
Eligible  Inventory provided for in this definition of Borrowing Base have  been
established  based  upon  the  Agent's  determination  of  the  loan  values  of
Borrower's  Eligible  Accounts and Eligible Inventory as of  the  date  of  this
Agreement, and that the Agent may, at any time or times hereafter, based on  the
Agent's  customary credit considerations, reduce such advance ratios to  reflect
any  material  adverse change in such loan values not reflected in the  criteria
for  establishing  Eligible Accounts and Eligible Inventory  set  forth  in  the
definitions  thereof or in the reserves against the Borrowing Base  and  against
Eligible  Accounts  and  Eligible Inventory which the  Agent  is  authorized  to
establish hereunder.

     "Borrowing Base Certificate" means a Borrowing Base Certificate in the form
of  Exhibit  C,  properly  completed and executed by a Responsible  Official  of
Borrower.

     "Business  Day" means any day that is not a Saturday, a Sunday,  a  day  on
which banks are required or authorized to be closed in the State of New York  or
the State of Indiana or a day on which the Agent is closed for business.

     "Capital  Expenditures"  means,  for  any  period,  the  aggregate  of  all
expenditures  by  Borrower and its Subsidiaries for the acquisition  or  leasing
pursuant  to Capital Leases of fixed or capital assets or additions to Equipment
(including,   but  not  limited  to,  replacements,  capitalized   repairs   and
improvements  during such period) which should be capitalized under  GAAP  on  a
consolidated balance sheet of Borrower and its Subsidiaries. For the purpose  of
this  definition,  expenditures for Equipment which is purchased  simultaneously
with  the  trade-in, sale or similar disposition of existing Equipment owned  by
Borrower or any of its Subsidiaries or with insurance proceeds shall be included
in  Capital Expenditures only to the extent of the gross amount of such purchase
price less the credit granted by the seller of such Equipment for such Equipment
being  traded  in at such time (or proceeds of resale or similar recoveries)  or
the amount of such insurance proceeds, as the case may be.

     "Capital Lease" means, at the time any determination thereof is to be made,
any  lease of property, real or personal, in respect of which the present  value
of  the minimum rental commitment would be capitalized on a balance sheet of the
lessee in accordance with GAAP.

     "Capital  Stock"  means  any and all shares, interests,  participations  or
other  equivalents  (however  designated)  of  corporate  stock  or  partnership
interests.

     "Cash"  means all monetary items (including currency, coin and bank  demand
deposits) that are treated as cash under GAAP.

     "Cash Collateral Account" has the meaning set forth in Section 2.2(i).

     "Cash  Equivalents"  means (a) securities issued  or  fully  guaranteed  or
insured  by the United States Government or any agency thereof having maturities
of not more than one (1) year after the date of acquisition, (b) certificates of
deposit, time deposits, Eurodollar time deposits and bankers' acceptances having
maturities not more than one (1) year after the date of issuance

<PAGE>

or creation, issued by any financial institution that is a member of the Federal
Reserve   System   having  combined  capital,  surplus  and  undivided   profits
aggregating  not  less than Five Hundred Million Dollars ($500,000,000)  at  the
time  of  investment, (c) commercial paper of an issuer rated at  least  A-1  by
Standard  & Poor's Corporation or P-1 by Moody's Investors Service, Inc.  or  an
equivalent rating category of another nationally recognized rating agency and in
either case having a maturity of 365 days or less, (d) repurchase agreements and
reverse  repurchase agreements relating to marketable direct obligations  issued
or  unconditionally guaranteed by the government of the United States of America
or  issued by any agency thereof and backed by the full faith and credit of  the
United States of America, in each case maturing within 365 days from the date of
acquisition;  provided  that  the  terms of  such  agreements  comply  with  the
guidelines set  forth  in  the  Federal  Financial  Agreements  of  Depository
Institutions With Securities Dealers and Others, as adopted by the  Comptroller
of  the Currency on October 31, 1985, and (e) investments in money market  funds
with assets of Five Billion Dollars ($5,000,000,000) or greater.

     "Certificate   of  Designations"  means  the  Certificate  of  Designations
relating to the Exchangeable Preferred Stock, dated June 16, 1997, as in  effect
in the Closing Date.

     "Change  of  Control"  means (a) the sale, in one or a  series  of  related
transactions, of all or substantially all of Lancer's or Borrower's assets as an
entirety  to  any  Person or related group of Persons, (b) except  as  permitted
under  Section  6.2, the merger or consolidation of Lancer or Borrower  with  or
into  another Person or the consolidation or merger of any other Person with  or
into  Lancer or Borrower, (c) the failure of Lancer at any time (i) to  maintain
in  the aggregate a direct or indirect beneficial interest in Borrower at  least
equal  to  50% of the entire beneficial equity interest held by all  Persons  in
Borrower  or  (ii)  to own beneficially, directly or indirectly,  Capital  Stock
representing voting control of Borrower, or (d) a "Change of Control" as defined
in  the  Senior Subordinated Note Indenture or any other indenture or  governing
instrument with respect to any Subordinated Indebtedness.

     "Closing Date" means the Business Day on which the conditions set forth  in
Article 8 are satisfied and this Agreement becomes effective.

     "Code" means the Internal Revenue Code of 1986, as amended or replaced  and
as in effect from time to time, and any regulations promulgated pursuant thereto
and rulings issued thereunder.

     "Collateral"  means,  collectively, all of the present  and  future  right,
title  and  interest of Borrower and each Subsidiary in and to their  respective
Property  subjected  to  the Liens, or intended to be subjected  to  the  Liens,
created by the Collateral Documents, which Collateral shall include, but is  not
limited  to,  Borrower's and each Subsidiary's accounts,  inventory,  equipment,
instruments,  patents,  patent licenses, trademarks, trademark  licenses,  other
intellectual  property,  contract rights, documents, general  intangibles,  Real
Property and other Property, and proceeds of any of the foregoing.

     "Collateral  Documents" means, collectively, the Security  Agreements,  the
Mortgage,  the Trademark Security Agreement, the Patent Security Agreement,  the
Borrower  Pledge  Agreement and any other pledge agreement, security  agreement,
assignment, deed of trust, mortgage, deed

<PAGE>

to  secure debt or similar instrument executed by Borrower or any Subsidiary  in
favor of the Agent for the benefit of the Lenders to secure the Obligations.

     "Collection  Accounts"  means  one  or more  lockbox  or  deposit  accounts
maintained  in  Borrower's name at one or more banks selected  by  Borrower  and
acceptable to the Agent, in its sole discretion, for the collection of  proceeds
of  Accounts  and Inventory of Borrower and of other Collateral, each  of  which
shall be subject to a Blocked Account Agreement.

     "Collections" means the collected balance from time to time of all proceeds
of  Accounts and Inventory deposited to the Collection Accounts pursuant to  the
terms and conditions of the Blocked Account Agreements.

     "Commitment" means Twenty Million Dollars ($20,000,000), as such amount may
be  increased to Forty Million Dollars ($40,000,000) pursuant to the  Subsequent
Commitment  Increases provided for in Section 2.8, unless and until  reduced  to
zero pursuant to Section 3.2(a).

     "Commitment  Letter" means the commitment letter dated as of May  11,  1993
between Borrower and GE Capital.

     "Commitment Termination Date" means the earliest of (a) the Maturity  Date,
(b)  the date of termination of the Lenders' Commitment by Borrower pursuant  to
Section  3.2(a), and (c) the date of termination of the Lenders'  Commitment  by
the Agent pursuant to Section 9.2.

     "Compliance  Certificate" means a compliance certificate  in  the  form  of
Exhibit D properly completed and executed by a Senior Officer of Borrower.

     "Condemnation" means any condemnation proceeding, exercise of the right  of
eminent  domain  or  conveyance of Property in lieu of or in settlement  of  any
condemnation proceeding or exercise of the right of eminent domain.

     "Consolidated  Cash Flow" means, for any period, without  duplication,  the
sum  of: (a) Consolidated EBITDA for such period, plus (b) all payments made  by
Borrower  and its Subsidiaries pursuant to Operating Leases during such  period,
less  (c) Capital Expenditures made by Borrower and its Subsidiaries during such
period,  plus  (d)  all Tax Capital Contributions made to Borrower  during  such
period  and all other capital contributions made to Borrower during such  period
by  any  of its Affiliates, in each case determined on a consolidated  basis  in
accordance with GAAP.

     "Consolidated Current Assets" means, at any date, all amounts which  would,
in  conformity  with GAAP, be included under current assets  on  a  consolidated
balance  sheet of Borrower and its Subsidiaries as at such date; provided,  that
such amounts shall not include (a) any amounts for any Indebtedness owing by  an
Affiliate  of  Borrower, unless such Indebtedness arose in connection  with  the
sale  of  goods or other property in the ordinary course of business  and  would
otherwise  constitute current assets in conformity with  GAAP,  (b)  the  equity
value  of  any shares of stock issued by an Affiliate of Borrower, (c) the  cash
surrender value of any life insurance policy, (d) any intangibles, (e) Cash  and
Cash  Equivalents  or  (f)  LIFO reserves established with  respect  to  current
Inventory.

<PAGE>

     "Consolidated  Current Liabilities" means, at any date, all  amounts  which
would,  in  conformity  with GAAP, be included under current  liabilities  on  a
consolidated  balance sheet of Borrower and its Subsidiaries as  at  such  date;
provided,  that  such  amounts shall include (a) all Indebtedness  of  any  such
Person  payable  on  demand  or,  at the option  of  the  Person  to  whom  such
Indebtedness is owed, not more than twelve months after such date  and  (b)  all
reserves in respect of liabilities or Indebtedness payable on demand or, at  the
option  of  the Person to whom such Indebtedness is owed, not more  than  twelve
months  after  such date, the validity of which is contested at such  date,  but
shall exclude (w) the current portion of Indebtedness for borrowed money that by
its  terms has a final maturity of, or which is renewable or extendable  at  the
option  of Borrower to a date, more than twelve months after such date, (x)  the
current  portion  of  deferred  taxes and of  taxes  payable,  (y)  intercompany
payables  under the Tax Sharing Agreement and (z) the current portion  of  post-
employment retirement and medical benefits and pensions.

     "Consolidated  EBITDA" means, for any period, the sum of  (a)  Consolidated
Net  Income  for  such  period,  plus  (b)  Consolidated  Net  Interest  Expense
(excluding  Permitted Preferred Stock Dividends) for such period, plus  (c)  all
taxes  computed on a stand-alone basis for Borrower and its Subsidiaries accrued
for  such  period on or measured by income, to the extent treated as expense  in
the  determination  of  Consolidated Net Income for such period,  plus  (d)  all
depreciation  and  amortization of fees or intangibles  of  any  kind  for  such
period,  to  the extent treated as expense in the determination of  Consolidated
Net  Income  for  such period, plus (e) all non-cash accruals or  cash  expenses
relating  to  the  Equity Incentive Plan, to the extent that  such  accruals  or
expenses reduce net income, in each case, determined on a consolidated basis  in
accordance with GAAP.

     "Consolidated  Fixed  Charges" means, for any period, without  duplication,
the  sum  of  (a) Consolidated Net Interest Expense for such period  (including,
without  limitation,  under  Capital Leases, but excluding  Permitted  Preferred
Stock  Dividends), plus (b) all payments made by Borrower and  its  Subsidiaries
pursuant  to Operating Leases during such period, plus (c) all taxes payable  by
Borrower and its Subsidiaries during such period, including all amounts paid  or
payable  to  Lancer under the Tax Sharing Agreement during such period  (without
giving  effect  to  any corresponding capital contribution  or  other  reduction
therein  provided for in Section 7 of the Tax Sharing Agreement), plus  (d)  all
cash  payments made by Borrower to purchase Exchangeable Preferred Stock, during
such  period,  other  than  payments made from  the  proceeds  of  cash  capital
contributions  to  Borrower not made under or with respect to  the  Tax  Sharing
Agreement,  plus  (e) all other payments made by Borrower in  cash  during  such
period as permitted under Section 6.3 (to the extent not added or subtracted  in
calculating  Consolidated  Cash  Flow), other  than  Permitted  Preferred  Stock
Dividends,  in  each case determined on a consolidated basis in accordance  with
GAAP.

     "Consolidated Net Income" means, for any period, the net income  (or  loss)
of  Borrower  and its Subsidiaries for such period, determined on a consolidated
basis  in  accordance  with  GAAP  (after taxes  but  before  dividends  on  the
Exchangeable Preferred Stock, and accretions thereon), but without giving effect
to extraordinary losses or gains for such period or to non-operating or non-cash
items  of  income  or expense (or expenses relating to the LIFO reserve)  during
such period and excluding net income (or loss) of any Person other than Borrower
and its

<PAGE>

Subsidiaries that is included in the determination of such net income (or  loss)
except  to  the  extent of dividends or distributions paid to  Borrower  or  its
Subsidiaries.

     "Consolidated  Net  Interest Expense" means,  for  any  period,  the  gross
interest expense of Borrower and its Subsidiaries for such period, plus (a)  the
portion  of the up-front costs and expenses for Interest Rate Contracts (to  the
extent not included in gross interest expense) fairly allocated to such Interest
Rate  Contracts  as expenses for such period, less (b) interest income  (to  the
extent  not  deducted  from  gross interest expense),  Interest  Rate  Contracts
payments  received and amortized debt discount and deferred financing  fees  (to
the  extent  not  deducted  from gross interest expense)  of  Borrower  and  its
Subsidiaries  for such period plus (c) Permitted Preferred Stock Dividends  paid
in  cash during such period, other than Permitted Preferred Stock Dividends paid
from  the  proceeds of cash capital contributions to Borrower not made under  or
with  respect  to  the Tax Sharing Agreement less (d) amortization  of  deferred
financing costs included in gross interest expense, in each case determined on a
consolidated basis in accordance with GAAP.

     "Consolidated  Working  Capital" means Consolidated  Current  Assets  minus
Consolidated Current Liabilities.

     "Contaminant"  means those substances, materials and items,  in  any  form,
whether  solid,  liquid, gaseous, semisolid or any combination thereof,  whether
waste materials, raw materials, chemicals, finished products, by products or any
other material or article, which are regulated by or form the basis of liability
under  federal,  state  or local environmental, health and  safety  statutes  or
regulations   including,   without  limitation,  hazardous   wastes,   hazardous
substances,   pollutants,  contaminants,  asbestos,  polychlorinated   biphenyls
("PCBs"), petroleum (including, but not limited to, crude oil, petroleum-derived
substances, waste or breakdown or decomposition products thereof or any fraction
thereof) and radioactive substances.

     "Contractual Obligation" means, as to any Person, any obligation under  any
outstanding  Securities issued by that Person or any agreement, indenture,  loan
agreement, credit agreement,  instrument or undertaking to which that Person  is
a party or by which it or any of its Property is bound.

     "Debtor  Relief  Laws" means the Bankruptcy Code of the  United  States  of
America,  as  amended  from time to time, and all other applicable  dissolution,
liquidation,  conservatorship,  bankruptcy, moratorium,  readjustment  of  debt,
compromise, rearrangement, receivership, insolvency, reorganization  or  similar
debtor relief laws from time to time in effect affecting the rights of creditors
generally.

     "Default"  means any event that, with the giving of notice  or  passage  of
time, or both, would be an Event of Default.

     "Default  Rate"  means, at any time, two percent (2%) per  annum  over  the
applicable  interest  rates otherwise in effect hereunder with  respect  to  the
Loans.

     "Dollars" or "$" means United States of America dollars.

     "Eligible  Accounts" means the gross outstanding balance, less all  finance
charges,  late  fees  and other fees which are unearned, of Accounts  which  the
Agent, in the exercise of its

<PAGE>

reasonable credit judgment, shall deem eligible, provided that no Account  shall
be deemed eligible if:

     (a)  the Account is an Account in which the Agent does not have a perfected
first priority Lien for the benefit of Lenders pursuant to the Borrower Security
Agreement, or as to which Borrower does not have clear title, free and clear  of
all Liens;

     (b)  the Account has remained unpaid for a period exceeding sixty (60) days
after  the  due  date  of the invoice issued with respect thereto  or  has  been
outstanding for more than one hundred five (105) days after the original date of
invoice, or has been reserved against on Borrower's books;

     (c)  fifty percent (50%) or more of the outstanding Accounts from the
Account Debtor which constituted Eligible Accounts at the time they arose are
not deemed Eligible Accounts hereunder;

     (d)  the Account Debtor is a supplier or creditor of Borrower, in which
event such  Account  will  be deemed ineligible to the extent  of  any  sums
owed  by Borrower to the Account Debtor, or the Account is otherwise subject to
any right of  set-off  by the Account Debtor, in which event such Account will
be  deemed ineligible to the extent of such right of set-off;

     (e)  the Account is an account of the United States government, the
government of  any state of the United States or any political subdivision
thereof, or  any agency or instrumentality of any of the foregoing;

     (f)  the Account Debtor is not Solvent or is the subject of a proceeding
under any Debtor Relief Law;

     (g)   the  Account  is subject to any defense, claim, dispute,  set-off  or
counterclaim by the Account Debtor (in which event such Account shall be  deemed
ineligible  to the extent of the amount of the defense, claim, dispute,  set-off
or  counterclaim,) other than discounts in the ordinary course of business which
are  reflected in the Borrowing Base Certificate, or any material  part  of  the
subject goods has been returned, rejected, lost or damaged;

     (h)   the  Account is not evidenced by an invoice or other writing in  form
acceptable to the Agent in its sole discretion;

     (i)  the Account or Accounts (or any portion thereof which is included in
total Eligible Accounts for purposes of computing the Borrowing Base),
individually or when  aggregated  with all other then outstanding Accounts of
the  same  Account Debtor,  exceed thirty percent (30%) in face value of all
Accounts  of  Borrower then  outstanding,  in  which event such Account or
Accounts  shall  be  deemed ineligible to the extent of such excess;

     (j)  (i)  the Account is denominated in other than Dollars, (ii) the
Account is payable outside the United States, or (iii) the sale represented by
such Account is  to  an  Account Debtor located or principally doing business
in  a  foreign country  other than (A) Account Debtors located in or
principally doing business in  the  Provinces of Ontario, British Columbia and
Alberta in  Canada,  to  the extent that the Agent shall have received an
opinion of Canadian counsel

<PAGE>

satisfactory to the Agent, in form and substance satisfactory to the  Agent,  to
the  effect  that all actions which are necessary or advisable in such  Province
for  the  perfection or enforceability of the Accounts have been duly taken  and
(B)  unless  the  Agent  shall otherwise determine from  time  to  time  in  the
reasonable  exercise  of  its credit judgment, Account  Debtors  located  in  or
principally  doing  business  in  any of Belgium,  Canada  (other  than  in  the
Provinces  of  Ontario, British Columbia and Alberta), France,  Germany,  Italy,
Japan,  the Netherlands, Sweden and the United Kingdom, to the extent  that  the
Accounts  of  such  Account Debtors, in the aggregate,  do  not  exceed  fifteen
percent  (15%)  in  face value of all Accounts of Borrower;  provided,  that  an
Account  which  is otherwise an Eligible Account under all other clauses  hereof
will  not  be  excluded pursuant to this clause (j) if the sale to such  Account
Debtor  is  on letter of credit or acceptance terms acceptable to the Agent  and
the  Agent has received an assignment of Borrower's rights under such letter  of
credit or acceptance or has been irrevocably designated the payee of such letter
of  credit  or  acceptance  or  is  insured  by  the  Foreign  Credit  Insurance
Association  in  form and amount satisfactory to the Agent and the  proceeds  of
such insurance have been assigned to the Agent pursuant to an assignment in form
and substance satisfactory to the Agent;

     (k)  with respect to such Account, any warranty or representation
contained in this  Agreement  or  any of the other Loan  Documents or
applicable  either  to Accounts in general or to any such specific Account has
been breached;

     (l)  the Account Debtor is an Affiliate or employee of Borrower;

     (m)  the sale represented by such Account is on a bill and hold,
undelivered sale, guaranteed sale, sale or return, consignment, or sale on
approval basis;

     (n)  the Agent believes, in the reasonable exercise of its credit judgment,
that the collection of such Account is insecure or that such Account may not be
paid;

    (o)  the Account is subject to any Lien whatsoever, other than Liens in
favor of the Agent;

     (p)   the Account is evidenced by a promissory note, chattel paper or other
instrument;

     (q)  the Account or Accounts exceed any credit limit established by the
Agent for the Account Debtor based on the Agent's customary credit
considerations,  in which  case such Account or Accounts will be deemed
ineligible to the extent of such excess;

     (r)   the  Inventory giving rise to such Account has not been  shipped  and
delivered  to  the  Account Debtor and accepted by the  Account  Debtor  or  the
services  giving  rise to such Account have not been performed by  Borrower  and
accepted by the Account Debtor;

     (s)  Borrower, in order to be entitled to collect the Account, is required
to perform  any  additional  service  for,  or  perform  or  incur  any
additional obligation  to,  the  Account  Debtor  or  collection  is  contingent
upon  the fulfillment of any other condition precedent; or

     (t)  the Account Debtor is located in Indiana, New Jersey or Minnesota or
in any other  state  on  the Closing Date or thereafter imposing the condition
on the right of a creditor to

<PAGE>

collect  accounts  receivable that such creditor  has  either  qualified  to  do
business  in  such  state  or  filed  a  Business  Activities  Report  or  other
appropriate report with the taxing or other designated authorities of such state
for the then current year, unless Borrower has complied with such conditions  on
or  prior  to  the date when such compliance is required under applicable  state
Laws.

     The  Agent  shall  have  the right, based on the Agent's  customary  credit
considerations,  to  establish reserves with respect to specific  categories  of
ineligibility,  in  lieu of determining specific Accounts to  be  ineligible  in
accordance  with  the  foregoing categories, and to establish  reserves  against
eligibility  to  reflect reserves carried on Borrower's books and  to  reconcile
accounting entries.

     "Eligible  Inventory"  means the lower of FIFO  cost  or  market  value  of
Inventory  which the Agent, in the exercise of its credit judgment,  shall  deem
eligible, provided that no Inventory shall be deemed eligible if:

     (a)  the Inventory consists of Inventory in which the Agent does not have a
perfected  first  priority Lien, for the benefit of  Lenders,  or  as  to  which
Borrower does not have clear title, free and clear of all Liens;

     (b)   the Inventory is not (i) located at one of the places of business  of
Borrower listed on Schedule 4.8 which is either owned or leased by Borrower  and
which  is located in a jurisdiction in the continental United States of  America
(or  in the State of Hawaii or Alaska) where all necessary UCC filings have been
made  to  perfect the security interest of the Agent under the Borrower Security
Agreement;  (ii)  located at such other place  business  of  Borrower  which  is
reported to the Agent in writing in accordance with Section 5(b) of the Borrower
Security  Agreement  and which is located in a jurisdiction in  the  continental
United  States  of  America  (or in the State of Hawaii  or  Alaska)  where  all
necessary  UCC  filings have been made to perfect the security interest  of  the
Agent  under the Borrower Security Agreement; or (iii) in transit from one  such
place of business to another;

     (c)  the Inventory does not consist of finished goods Inventory, finished
parts Inventory, raw materials Inventory used in the manufacture of finished
goods or work in process Inventory;

     (d)   the  Inventory  consists of stores, processing  supplies,  packaging,
advertising, promotional materials or other non-product related items;

     (e)  the Inventory consists of uninspected returned goods;

     (f)   the  Inventory is located at any third-party finishing or  processing
location or public warehouse or is otherwise in the possession of a bailee;

     (g)  the Inventory is located at any leased location of Borrower as to
which the Agent  has  not  received a landlord's lien waiver and, to the extent
that  the Agent  shall  so  require,  a consent to the leasehold  mortgage  or
collateral assignment to the Agent of the subject lease, in each case in form
and substance satisfactory to the Agent;

<PAGE>

     (h)  the Inventory is slow moving or obsolete or is otherwise not currently
saleable in the ordinary course of the business of Borrower;

     (i)  the Inventory is under consignment to or from any Person or under any
bill and hold or like arrangement;

     (j)  the Inventory is not of good and merchantable quality, free from
defects which would affect the market value thereof;

     (k)   the Inventory does not meet all standards imposed by any Governmental
Agency having regulatory authority over such Inventory; or

     (l)  with respect to such Inventory, any warranty or representation
contained in this Agreement or any of the other Loan Documents applicable either
to Inventory in general or to such specific Inventory has been breached.

     The  Agent  shall  have  the right, based on the Agent's  customary  credit
considerations,  to  establish reserves with respect to specific  categories  of
ineligibility,  in  lieu  of  determining specific  items  of  Inventory  to  be
ineligible  in  accordance  with  the foregoing  categories,  and  to  establish
reserves against eligibility to reflect reserves carried on Borrower's books and
to reconcile accounting entries.

     "Environmental  Claim"  means any notice of violation  (including,  without
limitation, any notice of expenditures necessary to come into compliance with or
maintain compliance with, any Environmental Law or Environmental Permit),  claim
(whether  based  on strict liability or otherwise), demand, abatement  or  other
order or direction (conditional or otherwise) by any Governmental Agency or  any
Person  for personal injury (including sickness, disease or death), toxic  tort,
tangible  or  intangible  property damage, damage to the environment,  trespass,
damage to natural resources, nuisance, pollution, contamination or other adverse
effects  on the environment, or for fines, penalties or restrictions,  resulting
from or based upon (a) the existence, or the continuation of the existence, of a
Release  or a threatened Release (including, without limitation, sudden or  non-
sudden,  accidental  or  non-accidental  Releases),  of,  or  exposure  to,  any
Contaminant, odor or audible noise or other release or emission in, into or onto
the  environment  (including,  without limitation,  the  air,  soil,  subsurface
strata, drinking water supply, groundwater or any surface water or any sediments
associated with any water body), and in, by, from, or related to any of the Real
Property,  (b)  the  environmental  aspects  of  the  transportation,   storage,
treatment,  disposal, generation, recycling, reclamation, use or other  handling
of  any Contaminants or other materials in connection with the operation of  the
any  of  the  Real  Property or the conduct of Borrower's  or  any  Subsidiary's
business or (c) the violation, or alleged violation, of any applicable statutes,
common   law,  ordinances,  decrees,  agreements,  orders,  rules,  regulations,
Environmental  Permits,  licenses, registrations or approvals  of  or  from  any
Governmental Agency relating to environmental matters connected with the any  of
the Real Property.

     "Environmental Laws" means all applicable federal, state, local or  foreign
laws  relating  to  the environment, natural resources, safety,  health  or  the
regulation  of  Contaminants,  including, without limitation, the  Comprehensive
Environmental Response, Compensation, and

<PAGE>

Liability  Act  (42  U.S.C. 9601 et seq.) ("CERCLA"),  the  Hazardous  Materials
Transportation Act (49 App. U.S.C. 1801 et seq.), the Resource Conservation  and
Recovery  Act (42 U.S.C. 6901 et seq.) ("RCRA"), the Clean Water Act (33  U.S.C.
1251  et  seq.),  the  Clean  Air  Act (42  U.S.C.  7401  et  seq.),  the  Toxic
Substances  Control  Act  (15  U.S.C. 2601 et seq.),  the  Federal  Insecticide,
Fungicide,  and  Rodenticide Act (7 U.S.C. 136 et seq.), the Emergency  Planning
and  Community  Right-to-Know Act (42 U.S.C. 11001 et seq.), the  Safe  Drinking
Water  Act  (42  U.S.C. 201 and 300f et seq.), The Rivers and  Harbors  Act  (33
U.S.C.  401  et  seq.), The Oil Pollution Act (33 U.S.C. 2701 et seq.)  and  the
Occupational  Safety and Health Act (29 U.S.C. 651 et seq.), as such  laws  have
been  and  may  be amended or supplemented from time to time, and any  analogous
future  federal,  state,  local or foreign laws and all  rules  and  regulations
promulgated pursuant to any of such federal, state, local or foreign laws.

     "Environmental Lien" means a Lien in favor of any Governmental  Agency  for
(a)  liability  under Environmental Laws or (b) damages arising from,  or  costs
incurred  by  such Governmental Agency in response to, a Release  or  threatened
Release of a Contaminant.

     "Environmental Material Adverse Effect" means any event, act, condition  or
occurrence  of  whatever  nature  (including, without  limitation,  any  adverse
determination  in  any litigation, arbitration or governmental investigation  or
proceeding)  that  arises of or is related to any Release, any matter  regulated
under  any  Environmental  Law, or any Environmental Claim  where  the  cost  to
Borrower or any of its Subsidiaries to correct, resolve or otherwise address any
environmental  cleanup  obligations,  compliance  costs,  penalties   or   other
liabilities could reasonably be expected to be at least $750,000.

     "Environmental   Permit"   means  any  permit,   approval,   authorization,
registration,  license,  variance or permission  required  from  a  Governmental
Agency having jurisdiction under an applicable Environmental Law.

     "Equipment" means all of Borrower's present and future machinery, equipment
and fixtures.

     "Equity  Incentive Plan" means Borrower's long-term incentive  compensation
plan,  as  such plan may be amended, supplemented or restated by  the  Board  of
Directors  of  Borrower;  provided, however, that any amendment,  supplement  or
restatement which could reasonably be expected to have a Material Adverse Effect
shall require the consent of the Majority Lenders.

     "Equity  Plan  Cap"  means the sum of $5,000,000 in the aggregate  in  each
Fiscal Year and $35,000,000 in the aggregate during the term of this Agreement.

     "ERISA"  means the Employee Retirement Income Security Act of 1974 (or  any
successor  legislation  thereto),  as  amended  from  time  to  time, and any
regulations, rulings or interpretations promulgated or issued thereunder.

     "ERISA  Affiliate" means, with respect to Borrower or any  Subsidiary,  any
trade  or  business (whether or not incorporated) which, together with any  such
entity, is treated as a single employer within the meaning of Section 414 of the
Code.

     "Event of Default" has the meaning set forth in Section 9.1.

<PAGE>

     "Exchange Debentures" has the meaning given to such term in the Certificate
of Designations.

     "Exchangeable  Preferred  Stock," means Borrower's Cumulative  Exchangeable
Preferred Stock, with par value $.01 per share and a liquidation value of $1,000
per  share  and  having such other terms as are set forth in the Certificate  of
Designations pertaining thereto as in effect on the date hereof.

     "Excluded Taxes" has the meaning set forth in Section 3.19.

     "Existing Loan Agreement" has the meaning set forth in the recitals to this
Agreement.

     "Facility Usage" means, as of any date, the sum of (a) the principal amount
of  the Revolving Credit Loan then outstanding, plus (b) the aggregate amount of
all Letter of Credit Obligations then outstanding.

     "Financial  Covenants"  means  the covenants  contained  in  Sections  6.18
through 6.22 of this Agreement.

     "Fiscal Quarter" means each of the four fiscal quarters of Borrower  ending
on  or  about March 31, June 30, September 30 and December 31, respectively,  of
each Fiscal Year.

     "Fiscal  Year"  means  the  fiscal year of  Borrower  ending  on  or  about
December 31 of each calendar year.

     "Fixed  Rate"  means  the LIBOR Rate plus the Applicable  LIBOR  Margin  as
determined in accordance with the following grid:

If     the     Ratio     of    The
Consolidated   EBITDA    to    Applicable
Consolidated Net Interest      LIBOR
Expense for the Four           Margin  for
Consecutive Fiscal Quarters    Fixed  Rate
ending on the last day of      Loans  will be:
the Preceding Fiscal
Quarter is:
                               Revolving            Term Loan
                               Credit Loan          and Other
                                                    Obligations

Greater than or equal to       0.75% per annum      1.00% per annum
2.75

Greater than or equal to       1.00% per annum      1.25% per annum
2.50:1.00

Less than 2.50:1               1.25% per annum      1.50% per annum



     On the Closing Date, the Fixed Rate shall be the LIBOR Rate plus, as to the
Revolving Credit Loan, one and one-quarter percent (1-1/4%) per annum,  and,  as
to  the  Term Loan and all other Obligations (other than Obligations  under  the
Revolving Credit Loan), one and one-half

<PAGE>

percent (1-1/2%) per annum.  Any change in the Applicable LIBOR Margin by virtue
of  the  foregoing  provision with regard to any Fiscal Quarter  shall  be  made
within  five  (5)  days  after  delivery by  Borrower  to  Lender  of  financial
statements  for such Fiscal Quarter pursuant to Section 7.1(b) (commencing  with
the  financial  statements for the Fiscal Quarter ending  September  30,  1999);
provided, however, that any such change shall be deemed to have become effective
on that date thirty (30) days after the end of such Fiscal Quarter.

     "Fixed  Rate Advance" means an Advance or portion thereof bearing  interest
at the Fixed Rate pursuant to Section 3.5(a).

     "Fixed Rate Election" has the meaning set forth in Section 3.5(a).

     "Fixed Rate Loan" means a Fixed Rate Advance or a Fixed Rate Term Loan,  or
both of them, as the context may require.

     "Fixed  Rate  Term Loan" means the Term Loans or portions  thereof  bearing
interest at the Fixed Rate pursuant to Section 3.5(a).

     "Floating  Rate  Advance"  means  an Advance  or  portion  thereof  bearing
interest at the Floating Rate pursuant to Section 3.4.

     "Floating Rate Loan" means a Floating Rate Advance or a Floating Rate  Term
Loan, or both of them, as the context may require.

     "Floating Rate Term Loan" means the Term Loans or portions thereof  bearing
interest at the Floating Rate pursuant to Section 3.4.

     "Floating  Rate" means the Index Rate plus three quarters  of  one  percent
(3/4%) per annum.

     "GAAP"  means,  as  of  any  date,  accounting  principles  referenced   as
"generally  accepted"  in then currently effective Statements  of  the  Auditing
Standards Board of the American Institute of Certified Public Accountants, or if
such  Statements  are not then in effect, accounting principles  that  are  then
approved  by  a significant segment of the accounting profession in  the  United
States  of America, applied on a basis consistent in all material respects  with
those accounting principles applied at prior dates or for prior periods.

     "Governmental Agency" means (a) any international, foreign, federal, state,
county  or  municipal  government, or political  subdivision  thereof,  (b)  any
governmental  agency,  authority,  board,  bureau,  commission,  department   or
instrumentality,  (c)  any  court  or  administrative  tribunal,  (d)  any  non-
governmental  agency  or  entity that is vested by a  governmental  agency  with
applicable jurisdiction over a Person, or (e) any arbitration tribunal or  other
non-governmental authority to whose jurisdiction a Person has given its  general
consent.

     "Guaranty"  means any Contractual Obligation, contingent or  otherwise,  of
any Person with respect to any Indebtedness, obligation or liability of another,
if the primary purpose or intent thereof by the Person incurring the Contractual
Obligation  is  to  provide  assurance to  the  obligee  of  such  Indebtedness,
obligation or liability of another Person that such Indebtedness,

<PAGE>

obligation  or  liability will be paid or discharged,  or  that  any  agreements
relating  thereto  will be complied with, or that the holders  thereof  will  be
protected  (in  whole  or  in part) against loss in respect  thereof  including,
without  limitation,  direct and indirect guarantees, endorsements  (except  for
collection  or  deposit in the ordinary course of business),  notes  co-made  or
discounted,  recourse agreements, take-or-pay agreements, keep-well  agreements,
agreements to purchase or repurchase such Indebtedness, obligation or  liability
or  any  security  therefor  or to provide funds for the  payment  or  discharge
thereof,  agreements  to maintain solvency, assets, level of  income,  or  other
financial  condition,  and  agreements to make  payment  other  than  for  value
received.

     "Indebtedness"  means,  as  applied to any Person  at  any  time,  (a)  all
indebtedness, obligations or other liabilities of such Person (i)  for  borrowed
money  or evidenced by debt securities, debentures, acceptances, notes or  other
similar  instruments,  and  any  accrued interest,  fees  and  charges  relating
thereto,  (ii)  under profit payment agreements or in respect of obligations  to
redeem, repurchase or exchange any Securities of such Person or to pay dividends
in  respect of any Capital Stock, (iii) with respect to letters of credit issued
for  such  Person's account, (iv) to pay the deferred purchase price of Property
or  services,  except  accounts  payable and accrued  expenses  arising  in  the
ordinary course of business, (v) in respect of Capital Leases or (vi) which  are
Guaranties;  (b)  all  indebtedness, obligations or other  liabilities  of  such
Person  or  others secured by a Lien on any Property of such Person, whether  or
not  such  indebtedness, obligations or liabilities are assumed by such  Person;
(c) all indebtedness, obligations or other liabilities of such Person in respect
of  Interest Rate Protection Obligations and foreign exchange contracts, net  of
liabilities  owed to such Person by the counterparties thereon; (d) all  Capital
Stock subject (upon the occurrence of any contingency or otherwise) to mandatory
redemption; and (e) all contingent Contractual Obligations with respect  to  any
of the foregoing.

     "Index  Rate"  means the higher of (a) the highest of the  prime,  base  or
equivalent  rate of interest announced or published from time to time  hereafter
by  any  of  the  five  largest  member banks of the  New  York  Clearing  House
Association (with the understanding that such rates may merely serve as a  basis
upon which effective rates of interest are calculated for loans making reference
thereto  and  that such rates are not necessarily the lowest or  best  rates  at
which  such banks calculate interest or extend credit), and (b) the most  recent
published  annual yield on ninety-day commercial paper (or the average  of  such
yields if more than one is published) sold through dealers by major corporations
in  multiples  of  $1,000, as quoted either in the Federal Reserve  Rate  Report
which  customarily  appears in The Wall Street Journal (Eastern  Edition)  under
"Money  Rates" or, in the event such report shall not so appear, in  such  other
nationally  recognized publication as the Agent may, from time to time,  specify
to  Borrower.  The Index Rate shall initially be determined by the Agent  as  of
the  Business Day preceding the Closing Date, and thereafter shall change as and
when the higher of the rates specified in clauses (a) and (b) above changes.

     "Interest  Rate  Contracts" means interest rate swap  agreements,  interest
rate  cap  agreements, interest rate collar agreements, interest rate  insurance
and other agreements or arrangements designed to protect against fluctuations in
interest rates.

     "Interest Rate Protection Obligations" means the obligations of any  Person
pursuant  to  any  arrangement  with  any  other  Person  whereby,  directly  or
indirectly, such Person is entitled to

<PAGE>

receive  from  time  to time periodic payments calculated by applying  either  a
floating or a fixed rate of interest on a stated notional amount in exchange for
periodic  payments  made by such Person calculated by  applying  a  fixed  or  a
floating rate of interest on the same notional amount and shall include Interest
Rate Contracts.

     "Interest  Period" means, with respect to any Fixed Rate Loan,  the  period
commencing  on  the LIBOR Business Day that Borrower elects in  accordance  with
Section  3.5(a) that the subject Advance or Term Loans, or portion of either  or
both  thereof,  be made as, converted into or renewed as a Fixed Rate  Loan  and
ending on the date one, two, three or six months thereafter; provided, that:

     (a)  except as provided in clauses (b), (c), (d), (e), (f), (g) and (h)
below, each Interest Period shall end on the day in the calendar month at the
end  of such  Interest  Period which numerically corresponds to the first  day
of  such Interest  Period  (i.e., a two month interest period commencing  on
January  15 shall end on March 15);

     (b)  If any Interest Period would otherwise end on the last LIBOR Business
Day in  any week, that Interest Period shall end on the immediately preceding
LIBOR Business Day;

     (c)  if any Interest Period would otherwise end on a day which is not a
LIBOR Business  Day,  that  Interest Period shall be extended to the  next
succeeding LIBOR  Business Day unless the result of such extension would be to
carry  such Interest Period into another calendar month, in which event such
Interest Period shall end on the immediately preceding LIBOR Business Day;

     (d)   any Interest Period that begins on the last LIBOR Business Day  of  a
calendar month (or on a day for which there is no numerically corresponding  day
in  the calendar month at the end of such Interest Period) shall end on the last
LIBOR Business Day of the calendar month at the end of such Interest Period;

     (e)  no Interest Period for the Term Loans shall extend beyond the earlier
of the  Maturity Date or any earlier date fixed for prepayment in full of the
Term Loans pursuant to Section 3.2(b);

     (f)  no Interest Period for any Advance shall extend beyond the earlier of
the Maturity  Date or any date fixed for termination of the Commitment  pursuant
to Section 3.2(a); and

     (g)   Borrower  shall select Interest Periods with respect to Advances,  or
portions  thereof,  so  that  each Advance, or portion  thereof,  will  have  an
Interest Period ending on or before the date on which Borrower intends to or  is
required to repay such Advance, or portion thereof; provided, that, so  long  as
GE  Capital is the only Lender hereunder, Borrower may at its election, in  lieu
of  the  foregoing, maintain such Advances, or portions thereof, as  Fixed  Rate
Loans with a one-month Interest Period.

     "Inventory" means goods held by Borrower for sale or raw materials, work in
process or materials used or consumed in Borrower's business.

<PAGE>

     "Investment" means, when used in connection with any Person, any investment
by  that  Person, whether by means of a purchase or other acquisition of Capital
Stock  or  other Securities of any other Person or by means of a loan,  advance,
capital  contribution,  Guaranty,  or other  debt  or  equity  participation  or
interest  in  any  other  Person, including any  partnership  or  joint  venture
interest in any other Person.  The amount of any Investment shall be the  amount
actually  invested, without adjustment for subsequent increases or decreases  in
the market value or book value of such Investment.

     "Lancer" means Lancer Industries Inc., a Delaware corporation and the owner
of  one  hundred  percent (100%) of the issued and outstanding common  stock  of
Borrower.

     "Lancer Pledge Agreement" means the Stock Pledge Agreement covering all  of
the Capital Stock of Borrower, dated as of March 31, 1995, executed by Lancer in
favor  of  the  Agent, for its benefit and the ratable benefit  of  Lenders,  as
amended  prior  to  the date hereof and as the same from time  to  time  may  be
supplemented,  modified, amended, renewed, extended or  supplanted.   Copies  of
such  agreement and all amendments thereto through the Closing Date are attached
hereto as Exhibit E.

     "Laws"  means,  when used in connection with any Person, collectively,  all
international,  foreign,  federal, state and local  statutes,  treaties,  rules,
regulations, standards, guidelines, ordinances, codes, orders and judgments  (or
any  official interpretation of any of the foregoing) issued by any Governmental
Agency  applicable to that Person and, in the case of Borrower,  shall  include,
without  limitation,  Environmental Laws, labor laws,  occupational  safety  and
health laws, ERISA and tax laws.

     "Leasehold  Real Property" means all leasehold interests in  real  property
hereafter  held  by  Borrower or any Subsidiary, as  lessee,  wherever  located,
together with all rights of the lessee under the related lease.

     "Lender"  means  any  of  the  lenders signatory  to  this  Agreement,  its
successors  and,  upon  the  effective date after  recordation  with  the  Agent
pursuant to Section 11.8 of a Loan Agreement executed by a Lender Assignee, such
Lender Assignee.

     "Lender   Assignee"  means  any  institutional  investor,  bank,  financial
institution or commercial lender that has executed and recorded with the Agent a
Loan Assignment pursuant to Section 11.8(d).

     "Lenders' Commitment" means the collective commitment of the Lenders, prior
to  the Commitment Termination Date, to make Advances and incur Letter of Credit
Obligations pursuant to Article 2 hereof, not to exceed as to all of the Lenders
the  amount  of  the Commitment or as to any Lender its Pro Rata  Share  of  the
amount of the Commitment.

     "Letter of Credit" means any documentary or standby letter of credit issued
at  the  request  and  for the account of Borrower for which  the  Lenders  have
incurred Letter of Credit Obligations pursuant to Section 2.2.

<PAGE>

     "Letter  of  Credit  Application" means such form of  application  for  the
issuance  of  a  Letter of Credit by the Letter of Credit  Issuer  as  shall  be
mutually satisfactory to Borrower, the Letter of Credit Issuer and the Agent.

     "Letter  of Credit Guaranty" means the guaranty by GE Capital on behalf  of
the  Lenders  of the reimbursement obligations of Borrower under any outstanding
Letter of Credit Application up to the maximum amount of $4,000,000.

     "Letter  of  Credit  Issuer" means such bank or  other  legally  authorized
Person  as  shall  be  selected by the Agent from  time  to  time  in  its  sole
discretion to issue Letters of Credit.

     "Letter  of Credit Obligations" means all outstanding obligations  incurred
by Lenders at the request of Borrower, whether direct or indirect, contingent or
otherwise, due or not due, in connection with the issuance or guarantee, by  any
Lender or any other Person, of Letters of Credit, including, without limitation,
the  obligations  of  GE  Capital under any Letter of Credit  Guaranty  and  the
obligations  of  the  Lenders pursuant to Section 2.2(c).  The  amount  of  such
Letter of Credit Obligations shall equal the maximum amount which may be payable
by Lenders thereupon or pursuant thereto.

     "LIBOR Base Rate" means, for any Interest Period, the rate per annum  equal
to  the  offered rate for deposits in Dollars for the applicable Interest Period
which appears on Telerate Page 3750 as of 11:00 a.m. (London, England time)  two
(2) LIBOR Business Days prior to the beginning of such Interest Period.

     "LIBOR  Business  Day"  means a Business Day  on  which  banks  may  accept
deposits of Dollars in the London interbank market.

     "LIBOR Rate" means, for any Interest Period, that rate per annum determined
solely  by  the  Agent  pursuant to the following formula (with  each  component
expressed as a decimal and rounded upward to the nearest 1/100 of 1%):

               LIBOR Base Rate
          1.00-LIBOR Reserve Percentage

     "LIBOR Reserve Percentage" means, with respect to any Interest Period,  the
maximum  percentage then applicable under Regulation D or other applicable  Laws
to  determine reserve requirements of member banks in the Federal Reserve System
with  respect to "eurocurrency liabilities," irrespective of whether any  Lender
is  at the time a member bank of the Federal Reserve System or otherwise subject
to  such  requirements.  The determination by the Agent  of  the  LIBOR  Reserve
Percentage shall be conclusive in the absence of manifest error.

     "Lien"  means  any  mortgage, deed of trust, deed to secure  debt,  pledge,
hypothecation, assignment for security, security interest, encumbrance, lien  or
charge of any kind, whether voluntarily incurred or arising by operation of Law,
by  statute,  by contract, or otherwise, affecting any Property,  including  any
agreement  to  grant any of the foregoing, any conditional sale or  other  title
retention agreement, any lease in the nature of a security interest, and/or  the
filing  of  or  agreement  to  give  any  financing  statement  (other  than   a
precautionary financing

<PAGE>

statement  with  respect  to a lease that is not in the  nature  of  a  security
interest)  under the UCC or comparable Law of any jurisdiction with  respect  to
any Property.

     "Loan  Assignment"  means a Loan Assignment executed by  a  Lender  and  an
assignee of such Lender substantially in the form of Exhibit F and recorded with
the Agent pursuant to Section 11.8.

     "Loan  Availability" means the amount, if any, by which (a) the  lesser  of
(i)  the  amount of the Commitment and (ii) the Borrowing Base, exceeds (b)  the
Facility Usage.

     "Loan  Documents"  means,  collectively, this  Agreement,  the  Notes,  the
Blocked  Account Agreements, the Subsidiary Guaranty, the Collateral  Documents,
the  Lancer  Pledge  Agreement and any other agreements of any  type  or  nature
heretofore  or  hereafter  executed and delivered by  Borrower  or  any  of  its
Affiliates  in  favor  of the Agent or Lenders in any  way  relating  to  or  in
furtherance of this Agreement, in each case either as originally executed or  as
the  same  may  from time to time be supplemented, modified, amended,  restated,
extended or supplanted.

     "Loans" means, collectively, the Revolving Credit Loan and the Term Loans.

     "Majority  Lenders" means, as of any date, Lenders holding Notes evidencing
at  least  51% of the aggregate Indebtedness evidenced by the Notes, or,  if  no
such Indebtedness is outstanding, at least 51% of the Commitment.

     "Material  Adverse Effect" means, with respect to any event, act, condition
or  occurrence  of whatever nature (including any adverse determination  in  any
litigation,  arbitration,  or  governmental  investigation  or  proceeding),   a
material  adverse  change in, a material adverse effect attributable  to,  or  a
material  adverse  effect upon, any of (a) the financial condition,  operations,
business, properties, or prospects of Borrower and its Subsidiaries taken  as  a
whole, (b) the rights and remedies of the Agent or the Lenders under any of  the
Loan Documents or the ability of any Person to perform its obligations under any
of  the Loan Documents, (c) the legality, validity or enforceability of any Loan
Document,  or  (d) the perfection or priority of the Lien of the  Agent  granted
under any of the Loan Documents.

     "Maturity Date" means July 1, 2005.

     "Monthly Payment Date" means the fifteenth day of each calendar month after
the Closing Date, and shall also include the Commitment Termination Date.

     "Mortgage" means the mortgage covering the Owned Real Property executed  by
Borrower  on the Original Closing Date, as amended prior to the date hereof  and
concurrently  herewith and as the same from time to time  may  be  supplemented,
modified, amended, renewed, extended or supplanted.  Copies of such mortgage and
all  amendments thereto through the Closing Date are attached hereto as  Exhibit
G.

     "Multiemployer  Plan" means a "multiemployer plan" as  defined  in  Section
4001(a)(3) of ERISA to which Borrower, any Subsidiary or any ERISA Affiliate  is
making,  is  obligated  to make, or has within the last 6  years  made  or  been
obligated  to  make  contributions on behalf of participants  who  are  or  were
employed by any such entity.

<PAGE>

     "Net Proceeds" means (a) in the case of the disposition by Borrower or  any
Subsidiary  of any Property pursuant to Section 6.1(a)(ii) or (iii) hereof,  all
proceeds  in Cash or Cash Equivalents, including payments in respect of deferred
payment  obligations  when  received in the form of  Cash  or  Cash  Equivalents
(except  to the extent that such obligations are financed or sold with  recourse
to  Borrower or any Subsidiary) net of (i) brokerage commissions and other  fees
and  expenses (including, without limitation, fees and expenses of legal counsel
and  investment  bankers) related to such asset sale, (ii)  provisions  for  all
taxes  payable  (including, without limitation, payments under the  Tax  Sharing
Agreement) as a result of such asset sale, (iii) amounts required to be paid and
which  have  been  paid to any Person (other than Borrower  or  any  Subsidiary)
owning  a  beneficial interest in the Property subject to the asset sale  (which
beneficial  interest is a Permitted Encumbrance hereunder) and (iv)  appropriate
amounts to be provided by Borrower or any  Subsidiary, as the case may be, as  a
reserve  required  in  accordance  with GAAP consistently  applied  against  any
liabilities  associated with such asset sale and retained  by  Borrower  or  any
Subsidiary,  as  the  case  may be, after such asset  sale,  including,  without
limitation,  pension and other post-employment benefit liabilities,  liabilities
related  to  environmental  matters and liabilities  under  any  indemnification
obligations associated with such asset sale; (b) in the case of loss  or  damage
to  any  Property  of Borrower or any Subsidiary or of any Condemnation  of  any
Property of Borrower or any Subsidiary, all Cash proceeds of insurance  paid  on
account  of such loss or damage and all proceeds in Cash or Cash Equivalents  of
such  Condemnation, as and when received by Borrower or such Subsidiary, net  of
(i) all money actually applied to repair or reconstruct the damaged Property  or
Property  affected by the Condemnation, as provided in Section 6 of the Security
Agreement or in Section 7 or 8 of the Mortgage, as applicable, (ii) all  of  the
costs and expenses reasonably incurred or to be incurred in connection with  the
collection  of  such  proceeds, and (iii) any amounts retained  by  or  paid  to
parties  having rights to such proceeds, superior to the rights of  Borrower  or
such  Subsidiary,  and  (c)  in the case of any issuance  of  Capital  Stock  by
Borrower  or  any Subsidiary, the aggregate proceeds in Cash or Cash Equivalents
of  such issuance, as and when received by Borrower or such Subsidiary,  net  of
any  costs,  fees and expenses directly incurred by Borrower in connection  with
such issuance.

     "Notes" means, collectively, the Revolving Credit Notes and the Term Notes.

     "Obligations"  means all present and future obligations of  every  kind  or
nature  of Borrower at any time and from time to time owed to the Agent  or  the
Lenders or any one or more of them under  any one or more of the Loan Documents,
whether  due or to become due, matured or unmatured, liquidated or unliquidated,
or contingent or non-contingent, including obligations of performance as well as
obligations  of  payment, and including, to the extent permitted  by  applicable
Debtor  Relief  Laws,  interest  that accrues  after  the  commencement  of  any
proceeding under any Debtor Relief Law by or against Borrower.

     "Officer's  Certificate" means, when used with reference to any  Person,  a
certificate signed by a Senior Officer of such Person.

     "Original  Closing Date" means July 7, 1993, the "Closing Date"  under  the
Existing Loan Agreement.

     "Operating Leases" has the meaning assigned to it under GAAP.

<PAGE>

     "Opinion  of Borrower's Counsel" means the favorable written legal  opinion
of  Debevoise & Plimpton, special counsel to Borrower, substantially in the form
of  Exhibit  H,  together  with  copies of all factual  certificates  and  legal
opinions upon which such counsel has relied.

     "Owned  Real  Property" means all real property owned by  Borrower  or  any
Subsidiary,  wherever  located,  together  with  all  improvements  thereon  and
appurtenances  thereto, a listing of which as of the date of this Agreement  and
the Closing Date is set forth in Schedule 4.22.

     "Patent  Security Agreement" means the collateral assignment or assignments
covering all patents owned by Borrower or any Subsidiary or in which Borrower or
any  Subsidiary has rights as a licensee, executed on the Original Closing  Date
by Borrower and each Subsidiary owning patents or having rights in patents as  a
licensee, as amended prior to the date hereof and as the same from time to  time
may be supplemented, modified, amended, renewed, extended or supplanted.  Copies
of  such  agreement  and all amendments thereto through  the  Closing  Date  are
attached hereto as Exhibit I.

     "PBGC"  means  the  Pension Benefit Guaranty Corporation or  any  successor
thereto.

     "Pension  Plan"  means  an employee pension benefit  plan,  as  defined  in
Section  (3)(2) of ERISA (other than a Multiemployer Plan), which is subject  to
Title  IV of ERISA, to which Borrower, any Subsidiary or any ERISA Affiliate  is
making,  is  obligated  to make, has within the last  six  years  made  or  been
obligated  to  make  contributions on behalf of participants  who  are  or  were
employed by any such entity.

     "Permitted Encumbrances" has the meaning set forth in Section 6.7.

     "Permitted  Preferred  Stock  Dividends"  has  the  meaning  set  forth  in
clause(i) of Section 6.3.

     "Person"  means  any  entity, whether an individual, trustee,  corporation,
general  partnership, limited partnership, joint stock company,  trust,  estate,
unincorporated organization, business  association, tribe, firm, joint  venture,
Governmental Agency, or otherwise.

     "Plan"  means  any  employee benefit plan, as defined in  Section  3(3)  of
ERISA,  to  which Borrower, any Subsidiary or any ERISA Affiliate is making,  is
obligated  to  make, or has within the last six years made or been obligated  to
make  contributions on behalf of participants who are or were  employed  by  any
such entity.

     "Property"  means  any interest in any kind of property or  asset,  whether
real, personal or mixed, tangible or intangible.

     "Pro  Rata  Share" means, with respect to each Lender, the  percentage  set
forth opposite the name of that Lender on the signature pages hereof.

     "Quarterly  Payment  Date" means the fifteenth day of each  February,  May,
August and November.

<PAGE>

     "Real  Property"  means,  collectively, the Owned  Real  Property  and  the
Leasehold  Real Property, in each case whether now or hereafter owned or  leased
by Borrower or any Subsidiary.

     "Registration  Statement"  means  the  Amendment  No.  1  to   Registration
Statement  on Form S-4 filed by Borrower with the SEC on July 2, 1999 (No.  333-
80431), as amended or supplemented, together with all Exhibits thereto.

     "Regulation  D",  "Regulation  G" and "Regulation  U"  mean,  respectively,
Regulations  D, G and U of the Board of Governors of the Federal Reserve  System
as  from  time  to  time in effect and all official rulings and  interpretations
thereunder or thereof.

     "Related  Agreements"  means  the  Tax  Sharing  Agreement  and  any  other
agreement  related to the Tax Sharing Agreement, whether existing  on  the  date
hereof or hereafter.

     "Release"  means any release, spill, emission, leaking, pumping,  emptying,
dumping,   injection,  abandonment,  deposit,  disposal,  discharge,  dispersal,
leaching  or  migration  of Contaminants (including, but  not  limited  to,  the
abandonment or discarding of Contaminants in barrels, drums or other containers)
into  the  indoor  or outdoor environment or into or out of any  Real  Property,
including the movement of Contaminants, into, under, on, through or in the  air,
soil, subsurface strata, surface water, groundwater, drinking water supply,  any
sediments associated with any water bodies or any other environmental medium.

     "Remedial  Action"  means all actions required to  (a)  clean  up,  remove,
treat,  dispose  of or in any other way address Contaminants in  the  indoor  or
outdoor  environment, (b) prevent the Release or threat of Release  or  minimize
the  further  Release  of Contaminants  so they do not migrate  or  endanger  or
threaten  to  endanger  public  health or  welfare  or  the  indoor  or  outdoor
environment,  (c) respond to or otherwise mitigate Releases or (d) perform  pre-
remedial  studies and investigations and post-remedial monitoring  and  care  in
respect of actions contemplated in the preceding clauses (a), (b) and (c).

     "Reportable  Event"  means  any  of  the  reportable  events  described  in
Section  4043  of ERISA and the regulations issued from time to time  thereunder
(other  than a reportable event not subject to the provisions for 30-day  notice
to the PBGC under such regulations).

     "Request for Advance" means a request for an Advance substantially  in  the
form  of  Exhibit  J signed by a Responsible Official of Borrower  and  properly
completed to provide all information required to be included therein.

     "Request  for Fixed Rate Election" means a request that (a) an  Advance  or
the  Term  Loans  or portions of either or both thereof be made initially  as  a
Fixed Rate Loan, (b) any Advance or the Term Loans or portions of either or both
thereof be converted from a Floating Rate Loan or Loans to a Fixed Rate Loan  or
Loans,  or  (c)  any  Advance or the Term Loans or portions of  either  or  both
thereof  be  renewed  as  a Fixed Rate Loan or Loans for a  subsequent  Interest
Period, substantially in the form of Exhibit K, signed by a Responsible Official
of  Borrower  and properly completed to provide all information required  to  be
included therein.

<PAGE>

     "Request  for  Letter of Credit" means a request for  a  Letter  of  Credit
substantially  in  the  form of Exhibit L, signed by a Responsible  Official  of
Borrower  and  properly  completed to provide all  information  required  to  be
included therein.

     "Requirement of Law" means, with respect to any Person, (a) the articles or
certificate  of  incorporation and bylaws or other organizational  or  governing
documents  of  such  Person, (b) any Law applicable to  such  Person  including,
without  limitation, any Environmental Law, and (c) any judgment, award, decree,
writ  or  determination of a Governmental Agency, applicable to or binding  upon
such  Person  or  any  of its Property or to which such Person  or  any  of  its
Property is subject.

     "Responsible Official" means any corporate officer of Borrower or any other
responsible  official  of  Borrower duly acting  on  behalf  of  Borrower.   Any
document  or  certificate hereunder that is signed or executed by a  Responsible
Official  of Borrower shall be conclusively presumed to have been authorized  by
all  necessary  corporate and/or other action on the part of Borrower,  and  the
Agent  and  Lenders shall be entitled to rely in good faith on the authorization
to act of any such Person reasonably believed by the Agent or any Lender to be a
Responsible Official of Borrower.

     "Restricted  Payment" means (a) any dividend or other distribution,  direct
or  indirect, on account of any shares of any class of Capital Stock of Borrower
now or hereafter outstanding, except a dividend payable solely in shares of that
class  of  stock or in any class of stock junior to the holders of  that  class,
(b)  any  redemption, retirement, sinking fund or similar payment,  purchase  or
other  acquisition for value, direct or indirect, of any shares of any class  of
Capital  Stock  of  Borrower now or hereafter outstanding, (c)  any  payment  or
prepayment of principal of, premium, if any, or interest, fees or other  charges
on  or  with  respect to, and any redemption, purchase, retirement,  defeasance,
sinking  fund or similar payment and any claim for rescission with  respect  to,
the  Subordinated  Indebtedness,  (d) any  payment  made  to  redeem,  purchase,
repurchase  or retire, or to obtain the surrender of, any outstanding  warrants,
options  or other Securities of Borrower now or hereafter outstanding,  (e)  any
Investment by Borrower or any Subsidiary in the holder of five percent  (5%)  or
more of any Capital Stock or other Securities of Borrower or any Subsidiary if a
purpose of such Investment is to avoid characterization of the transaction as  a
Restricted  Payment,  and  (f)  any payment by Borrower  or  any  Subsidiary  of
management or similar fees to any Affiliate, and any payment by Borrower or  any
Subsidiary of any expenses of any Affiliate.

     "Retiree Welfare Plan" means any Welfare Plan maintained by Borrower or any
Subsidiary providing for continuing coverage or benefits for any participant  or
any  beneficiary  of  a  participant  after such  participant's  termination  of
employment, other than continuation coverage provided pursuant to Section  4980B
of the Code or Part 6 of Title I of ERISA.

     "Revolving  Credit  Loan"  means the outstanding principal  amount  of  the
Advances from time to time.

     "Revolving Credit Note" means any of the promissory notes, substantially in
the  form of Exhibit M, issued by Borrower in favor of a Lender evidencing  such
Lender's  Pro  Rata  Share of all Advances made to Borrower,  pursuant  to  such
Lender's Pro Rata Share of the Commitment.

<PAGE>

     "Right  of  Others"  means, as to any Property in which  a  Person  has  an
interest, (a) any legal or equitable right, title or other interest (other  than
a  Lien)  held  by  any other Person in or with respect to  that  Property,  and
(b) any option or right held by any other Person to acquire any right, title  or
other  interest  in or with respect to that Property, including  any  option  or
right to acquire a Lien.

     "SEC"  means  the  Securities  and Exchange Commission  and  any  successor
Governmental Agency.

     "Securities"  means  any Capital Stock, shares, voting trust  certificates,
bonds,   debentures,   notes  or  other  evidences  of   Indebtedness,   limited
partnership  interests, or any warrant, option or other  right  to  purchase  or
acquire any of the foregoing.

     "Securities  Act"  means the Securities Act of 1933, as  amended,  and  the
rules and regulations of the SEC thereunder.

     "Securities  Exchange Act" means the Securities Exchange Act  of  1934,  as
amended, and the rules and regulations of the SEC thereunder.

     "Security  Agreements" means, collectively, the Borrower Security Agreement
and the Subsidiary Security Agreement.

     "Senior Officer" means the (a) chief executive officer, (b) chief operating
officer,  (c)  chief financial officer or (d) chief administrative  officer,  in
each case whatever the title nomenclature may be, of the Person designated.

     "Senior  Subordinated  Note Indenture" means the  Indenture,  dated  as  of
May  19,  1999,  between  Borrower and First Union National  Bank,  as  trustee,
pursuant  to  which the Senior Subordinated Notes were issued and  governed,  as
such  Indenture has been amended, modified or supplemented through  the  Closing
Date  and  as such Indenture may be amended, modified or supplemented hereafter,
subject to the limitations set forth in Section 6.4.

     "Senior Subordinated Notes" means, collectively, the $100,000,000 aggregate
original principal amount of Senior Subordinated Notes due 2008, issued pursuant
to  the  Senior Subordinated Note Indenture, as such notes have been amended  or
modified  through  the Closing Date and as such notes may be amended,  modified,
supplemented,  extended  or renewed hereafter, subject to  the  limitations  set
forth in Section 6.4.

     "Solvent" means, when used with respect to any Person, that at the time  of
determination: (a) the fair market value of its assets is in excess of the total
amount   of   its   liabilities  (including,  without   limitation,   contingent
liabilities), (b) the present fair saleable value of its assets is greater  than
its  probable liability in its existing debts as such debts become absolute  and
mature,  (c)  it  is  then able and expects to be able to pay  its  Indebtedness
(including,  without limitation, contingent Indebtedness and other  commitments)
as  they  mature, and (d) it has capital sufficient to carry on its business  as
conducted and as proposed to be conducted.

     "Subordinated  Indebtedness"  means the Indebtedness  evidenced  by  or  in
respect  of  (a) the Senior Subordinated Notes, and (b) any refinancing  of  the
Senior Subordinated Notes

<PAGE>

with  the  prior written consent of the Majority Lenders on terms and conditions
satisfactory to the Majority Lenders (but in no event less favorable to Borrower
than  the  terms  and  conditions  of  the  Senior  Subordinated  Notes),  which
Indebtedness  shall not exceed the principal amount then outstanding  under  the
Senior  Subordinated Notes and shall be subordinated in right of payment to  the
Obligations in a manner reasonably satisfactory to the Majority Lenders.

     "Subsequent Commitment Increase" and "Subsequent Commitment Increases" have
the meanings set forth in Section 2.8.

     "Subsequent  Commitment Increase Date" and "Subsequent Commitment  Increase
Dates" have the meanings set forth in Section 2.8.

     "Subsidiary" means any Person of which at least a majority of Capital Stock
having  ordinary  voting power for the election of directors or other  governing
body  of  said  Person  is owned by Borrower directly or  through  one  or  more
Subsidiaries.

     "Subsidiary  Guaranty"  means the guaranty of the Obligations  executed  by
each  Subsidiary  on the Original Closing Date, as amended  prior  to  the  date
hereof and as the same may from time to time be supplemented, modified, amended,
renewed,  extended or supplanted.  Copies of such agreement and  all  amendments
thereto through the Closing Date are attached hereto as Exhibit N.

     "Subsidiary  Security Agreement" means the security agreement  executed  by
each  Subsidiary  on the Original Closing Date, as amended  prior  to  the  date
hereof and as the same may from time to time be supplemented, modified, amended,
renewed,  extended or supplanted.  Copies of such agreement and  all  amendments
thereto through the Closing Date are attached hereto as Exhibit O.

     "Tax  Capital Contribution" means any capital contribution made to Borrower
by  Lancer  or  any other Affiliate of Borrower or deemed to have been  made  to
Borrower by Lancer or any other Affiliate of Borrower pursuant to Section  7  of
the Tax Sharing Agreement.

     "Taxes" has the meaning set forth in Section 3.16.

     "Tax  Sharing Agreement" means the Tax Sharing Agreement, dated as of  July
18,  1990,  between  Borrower  and Lancer, as same  may  hereafter  be  amended,
modified or supplemented, subject to the limitations set forth in Section 6.17.

     "Term  Loan"  and  "Term Loans" each has the meaning specified  in  Section
2.3(a).

     "Term Note" means any of the promissory notes, substantially in the form of
Exhibit P, issued by Borrower in favor of a Lender evidencing the Term Loan made
by such Lender.

     "T-H  Licensing"  means  T-H Licensing, Inc., a  Delaware  corporation  and
wholly-owned subsidiary of Borrower.

     "Title Company" means Stewart Commonwealth Title Guaranty Company.

<PAGE>

     "Trademark   Security  Agreement"  means  the  collateral   assignment   or
assignments  covering all trademarks and trade names owned by  Borrower  or  any
Subsidiary  or  in which Borrower or any Subsidiary has rights  as  a  licensee,
executed  on  the  Original Closing Date by Borrower and each Subsidiary  owning
trademarks  or  tradenames or having rights in trademarks  or  tradenames  as  a
licensee, and as amended prior to the date hereof as the same from time to  time
may  be  supplemented,  modified, amended, extended  or  supplanted  (including,
without  limitation,  in  connection with the execution  and  delivery  of  this
Agreement).   Copies  of such agreement and all amendments thereto  through  the
Closing Date are attached hereto as Exhibit Q.

     "Triggering Event" means the existence or occurrence of either or  both  of
the following events:

     (a)  an Event of Default shall occur and be continuing.

     (b)  Loan Availability shall be less than $1,000,000.

     "UCC"  means  the Uniform Commercial Code of the State of New York,  as  in
effect from time to time or, if the Uniform Commercial Code of the State of  New
York  refers  any  matter  to  the  laws of another  jurisdiction,  the  Uniform
Commercial Code of that jurisdiction, as in effect from time to time.

     "Welfare Plan" means any Plan maintained by Borrower or any Subsidiary that
is an employee welfare benefit plan as defined in Section 3(1) of ERISA.

     Section 1.2    Use of Defined Terms.  Any defined term used in the plural
shall refer  to  all members of the relevant class, and any defined term used
in the singular shall refer to any one or more of the members of the relevant
class.

     Section 1.3    Accounting Terms.  All accounting terms not specifically
defined in this Agreement shall be construed in conformity with, and all
financial data required to be submitted by this Agreement shall be prepared in
conformity with, GAAP except as otherwise specifically prescribed herein.  In
the event that GAAP changes during the term of this Agreement such that any of
the defined terms set forth  in  Section 1.1 (as used in Article 6) or the
Financial  Covenants  would then  be calculated in a different manner or with
different components or  would render  the  same  not  meaningful criteria for
evaluating Borrower's  financial condition, (a) Borrower and Lenders agree to
negotiate in good faith in order to amend  this  Agreement in such respects as
are necessary to conform the  defined terms  set  forth  in  Section  1.1 (as
used in Article  6)  and  the  Financial Covenants  so  that  the  criteria for
evaluating the  matters  contemplated  by Article  6  (including  the  Financial
Covenants) are substantially the same criteria as were effective prior to such
change in GAAP, and (b) Borrower  shall be  deemed to be in compliance with the
Financial Covenants during the  120  day period  following  any such change in
GAAP if and to the  extent  that  Borrower would  have  been  in  compliance
therewith under GAAP as in effect  immediately prior to such change.

     Section  1.4    Rounding.  All ratios required to be maintained by Borrower
pursuant  to  the  Financial  Covenants shall  be  calculated  by  dividing  the
appropriate component by the other component, carrying the result to  one  place
more than the number of places by which such ratio

<PAGE>

is  expressed in the Financial Covenants and rounding the result up or  down  to
the nearest number (with a round-up if there is no nearest number) to the number
of places by which such ratio is expressed in the Financial Covenants.

     Section 1.5    Exhibits and Schedules.  All Exhibits and Schedules to  this
Agreement, either as originally existing or as the same may from time to time be
supplemented,  modified, or amended, are incorporated herein  by  reference.   A
matter  disclosed on any Schedule shall be deemed disclosed on all Schedules  to
the  extent  that  it is specifically cross-referenced in any  other  applicable
Schedule, but not otherwise.

     Section 1.6    Miscellaneous Terms.  The term "or" is disjunctive; the term
"and"  is  conjunctive.   The  term "shall" is  mandatory;  the  term  "may"  is
permissive.  Masculine terms also apply to females; feminine terms also apply to
males.  The term "including" is by way of example and not limitation.

                                   ARTICLE 2.
                           AMOUNT AND TERMS OF CREDIT

     Section 2.1    Advances.

     (a)  Subject to the terms and conditions set forth in this Agreement, at
any time and from time to time from the Closing Date to (but not  including) the
Commitment Termination Date, each Lender agrees, severally and for itself alone,
that  it  shall,  pro  rata according to that Lender's Pro  Rata  Share  of  the
Commitment, make Advances to Borrower in such amounts as Borrower may request in
accordance with Section 2.1(b); provided that, after giving effect to each  such
Advance, the Facility Usage does not exceed the lesser of (i) the Commitment  or
(ii)  the Borrowing Base.  Subject to the limitations set forth herein, Borrower
may  borrow,  repay  and reborrow under this Section 2.1(a) without  premium  or
penalty.

(b)  Subject to the next succeeding sentence, each Advance shall be made
pursuant to a Request for Advance which shall (i) specify the requested (A) date
of such Advance and (B) amount of such Advance, which shall be in an aggregate
principal amount of $3,000,000 or any larger integral multiple of $1,000,000 in
the case of Fixed Rate Advances (provided, that any such Fixed Rate Advance may
be requested in an aggregate principal amount of $1,000,000 or integral
multiples thereof at any time while GE Capital is the only Lender hereunder) and
of $100,000 and integral multiples thereof in the case of Floating Rate
Advances; and (ii) be given by Borrower to the Agent no later than 11:00 a.m.,
Atlanta time, on the Business Day preceding the proposed Advance in the case of
a Floating Rate Advance and no later than 11:00 a.m. Atlanta time, three (3)
LIBOR Business Days preceding the proposed Advance in the case of a Fixed Rate
Advance.  In the event that any such Advance or portion thereof is to be a Fixed
Rate Advance, Borrower shall concurrently make a Fixed Rate Election with
respect thereto in accordance with Section 3.5(b).  Unless the Agent has, in its
sole and absolute discretion, notified Borrower to the contrary, an Advance may
also be made pursuant to a request therefor by telephone by a Responsible
Official of Borrower, received by the Agent by the time required for a Request
for Advance, in which case Borrower shall confirm such request by promptly
mailing to the Agent a Request for Advance conforming to the preceding sentence
and concurrently telecopying to the Agent a copy of such Request for Advance.

<PAGE>

     (c)  Promptly following receipt of a Request for Advance, the Agent shall
notify each  Lender  by  telephone or telecopier of the date of the  Advance
and such Lender's  Pro  Rata  Share of the Advance.  Not later than 11:00  a.m.,
Atlanta time, on the date specified for any Advance, each Lender shall make its
Pro Rata Share  of  the  Advance available to the Agent by wire transfer  of
immediately available  funds  to  the  Agent's Deposit Account.   Upon
fulfillment  of  the applicable conditions set forth in Article 8, each Advance
shall be made by  the Agent  by  wire  transfer of immediately available funds
to  Borrower's  Deposit Account,  to the extent actually received from the
Lenders.  No Lender shall be responsible  for the failure of any other Lender to
make the Pro Rata  Share  of any Advance to be made by such other Lender.

(d)  Each Lender's Pro Rata Share of the Advances made to Borrower pursuant to
Section 2.1(a) shall be evidenced by that Lender's Revolving Credit Note,
subject to the provisions of Section 2.6.

(e)  A Request for Advance shall be irrevocable upon the Agent's first
notification thereof.

     Section 2.2    Letters of Credit.

     (a)  Subject to the terms and conditions hereof, at any time and from time
to time from the Closing Date to (but not including) the Commitment  Termination
Date, the Agent shall arrange for the issuance by the Letter of Credit Issuer of
such  Letters  of  Credit as Borrower may request by a  Request  for  Letter  of
Credit;  provided that, after giving effect to the Letter of Credit  Obligations
incurred  by  the Lenders as a result thereof, (i) the aggregate amount  of  all
Letter  of  Credit Obligations then outstanding does not exceed  $4,000,000  and
(ii)  the  Facility  Usage does not exceed the lesser of (A) the  Commitment  or
(B)  the Borrowing Base.  No Letter of Credit shall be arranged for by the Agent
hereunder except to the extent necessary in connection with transactions in  the
ordinary course of business of Borrower.  The expiration date  of any Letter  of
Credit  shall not extend beyond the earliest of (i) one year from  the  date  of
issuance thereof, (ii) the Maturity Date (except for any Letter of Credit  which
automatically renews on an annual basis pursuant to its terms, provided that the
aggregate face amounts of all such Letters of Credit shall not exceed $1,000,000
at  any  time  outstanding), and (iii) any date fixed  for  termination  of  the
Commitment pursuant to Section 3.2(a).

(b)  Each Request for Letter of Credit shall be submitted to the Agent at least
five (5) Business Days prior to the date when required, accompanied by a Letter
of Credit Application executed by a Responsible Official.  Upon issuance of a
Letter of Credit by the Letter of Credit Issuer, the Agent shall notify the
Lenders of the amount and terms thereof within a reasonable time thereafter.

(c)  Upon the incurrence of any Letter of Credit Obligation by GE Capital, each
other Lender shall be deemed to have purchased from GE Capital a participation
therein and in any rights of GE Capital under the related Letter of Credit
Application, in an amount equal to that Lender's Pro Rata Share of the amount of
the Letter of Credit Obligations so incurred.  Without limiting the scope and
nature of each Lender's participation in any Letter of Credit Obligations, to
the extent that GE Capital has not been reimbursed by Borrower for any payment
required to be made by GE Capital in respect of any Letter of Credit
Obligations, each Lender shall,

<PAGE>

according  to its Pro Rata Share, reimburse GE Capital promptly upon demand  for
the  amount  of such payment.  The obligation of each Lender to so reimburse  GE
Capital  shall  be absolute and unconditional and shall not be affected  by  the
occurrence of a Default, an Event of Default, the Commitment Termination Date or
any  other occurrence or event, nor be modified or diminished for any reason  or
in any manner whatsoever, including, without limitation, by virtue of any claim,
action  or defense that Borrower may have or assert against the Letter of Credit
Issuer  in  respect of the payment of any draft or demand under  any  Letter  of
Credit  or  against  GE  Capital  in respect of  its  reimbursement  obligations
hereunder.   Any  such reimbursement shall not relieve or otherwise  impair  the
obligation  of  Borrower to reimburse GE Capital for the amount of  any  payment
made  by GE Capital in respect of any Letter of Credit Obligations together with
interest as hereinafter provided.

     (d)  Borrower agrees to pay to GE Capital, within one (1) Business Day
after demand  therefor, a principal amount equal to any payment made by GE
Capital in respect  of  any  Letter of Credit Obligations, together with
interest  on  such amount  from  the  date of any payment made by GE Capital
through the date of payment  by Borrower at the Floating Rate or, if then in
effect, at the  Default Rate.   The principal amount of any such payment made by
Borrower to GE  Capital shall  be used to reimburse GE Capital for the payment
made by it in respect of such  Letter of Credit Obligation.  Each Lender that
has reimbursed  GE  Capital pursuant  to  Section 2.2(c) for its Pro-Rata Share
of any payment  made  by  GE Capital in respect of any Letter of Credit
Obligation shall thereupon acquire a participation, to the extent of such
reimbursement, in the claim of  GE  Capital against Borrower under this Section
2.2(d).

(e)  If Borrower fails to make any payment required by Section 2.2(d), the Agent
may, without notice to or the consent of Borrower, notify each Lender that an
Advance is to be made by Lenders under Section 2.1 in an aggregate amount equal
to the amount paid by GE Capital in respect of its Letter of Credit Obligations
in accordance with the procedures provided in Section 2.1(c) (or may deem any
reimbursement made by Lenders pursuant to Section 2.2(c) to constitute the
funding of such Advance) and, for this purpose, the conditions precedent set
forth in Sections 8.1 and 8.2 shall not apply.  The proceeds of such Advance
shall be paid to GE Capital to reimburse it for the payment made by it in
respect of such Letter of Credit Obligations.

(f)  The issuance of any supplement, modification, amendment, renewal or
extension to or of any Letter of Credit shall be treated in all respects the
same as the issuance of a new Letter of Credit, and each such Letter of Credit,
and all Letter of Credit Obligations in respect thereof, shall in each case
remain subject to this Section 2.2.

(g)  The obligation of Borrower to pay to GE Capital the amount of any payment
made by GE Capital in respect of any Letter of Credit Obligation shall be
absolute, unconditional and irrevocable, and Borrower's unconditional
obligations to GE Capital hereunder shall not be modified or diminished for any
reason or in any manner whatsoever, including, without limitation, by virtue of
any claim, action or defense that Borrower may have or assert against the Letter
of Credit Issuer in respect of the payment of any draft or demand under any
Letter of Credit.  Borrower hereby agrees that any action taken by GE Capital,
if taken in good faith, under or in connection with a Letter of Credit or in
respect of GE Capital's Letter of Credit Obligations, or the drafts or
acceptances thereunder, shall be binding on Borrower and shall not

<PAGE>

impose  any  resulting liability on GE Capital, other than as a  result  of  the
gross negligence or willful misconduct of GE Capital.

     (h)  As between Borrower and the Letter of Credit Issuer, each Letter of
Credit shall be issued pursuant to and shall be subject to the provisions of
the respective  Letter of Credit Application.  As between Borrower and  GE
Capital, the  provisions of this Agreement, to the extent in conflict with any
provision of  any  Letter  of  Credit  Application, shall  control.
Notwithstanding  the foregoing, GE Capital shall be fully subrogated to all
rights of the Letter of Credit  Issuer  under  each Letter of Credit
Application, upon  discharging its Letter  of  Credit  Obligations  in respect
of the Letter of Credit issued thereunder.

(i)  In the event that any Letter of Credit Obligation, whether or not then due
and payable, shall for any reason be outstanding on the Commitment Termination
Date, then:

          (i)  Borrower will pay to the Agent (A) Cash or Cash Equivalents in an
amount equal to the then outstanding Letter of Credit Obligations or (B) provide
a back-up letter of credit or guaranty from a financial institution satisfactory
to the Agent in such amount, in form and substance satisfactory to the Agent.
Such Cash or Cash Equivalents, in the case of clause(A) above, shall be held by
the Agent in a cash collateral account (the "Cash Collateral Account").  The
Cash Collateral Account shall be held in the name of the Agent (as a cash
collateral account), for its benefit and the ratable benefit of the Lenders, and
shall be under the sole dominion and control of the Agent and subject to the
terms of this  Section 2.2(i).  Borrower hereby pledges, and grants to the
Agent a security interest in, all Cash or Cash Equivalents held in the Cash
Collateral Account from time to time and all proceeds thereof, as security for
the payment of all amounts due in respect of the Letter of Credit Obligations,
whether or not then due.

(ii) From time to time after Cash or Cash Equivalents are deposited in the Cash
Collateral Account, the Agent may apply such Cash or Cash Equivalents then held
in the Cash Collateral Account to the payment of any amounts, in such order as
the Agent may elect, as shall be or shall become due and payable by Borrower to
the Agent, GE Capital or any other Lender in respect of such Letter of Credit
Obligations.

(iii) The Agent shall invest the Cash in the Cash Collateral Account or
deposit such Cash in an interest-bearing account, as the Agent deems appropriate
in its sole discretion.  Interest and earnings on the Cash or Cash Equivalents
in the Cash Collateral Account shall become a part of the Cash Collateral
Account and shall be held and disbursed by the Agent in accordance with this
Section 2.2(i).

(iv) Neither Borrower nor any Person claiming on behalf of or through Borrower
shall have any right to withdraw any of the Cash or Cash Equivalents held in the
Cash Collateral Account, except that upon the termination of any Letter of
Credit Obligations in accordance with their terms and the payment of all amounts
payable by Borrower to the Agent, GE Capital and the other Lenders in respect
thereof, any Cash or Cash Equivalents remaining in the Cash Collateral Account
in excess of the then remaining Letter of Credit Obligations shall be returned
to Borrower.

<PAGE>

     (j)  The Letter of Credit Issuer shall be entitled to the benefits
accorded by Article 10 to the Agent, mutatis mutandis.

     Section 2.3    Term Loans.

     (a)  Pursuant to the Existing Loan Agreement, Lenders made to Borrower term
loans (individually the "Term Loan" and, collectively, the "Term Loans") in  the
principal amount of $35,000,000, the outstanding principal balance of  which  on
the date hereof is $10,000,000.  Borrower may not reborrow the Term Loans or any
portion thereof once repaid.

(b)  Each Lender's Term Loan is evidenced by that Lender's Term Note, subject to
the provisions of Section 2.6.

     Section 2.4    Special Advances by Lenders.  If Borrower fails to make  any
payment of interest, fees, expenses, costs or other sums required to be paid  to
the  Agent  or  any Lender or Lenders under the terms of this Agreement  or  any
other Loan Document, the Agent may, without the consent of Borrower, notify each
Lender  that  an Advance is to be made by the Lenders under Section  2.1  in  an
amount equal to the sum due from Borrower to the Agent or such Lender or Lenders
and,  for this purpose, the conditions precedent set forth in Sections  8.1  and
8.2 shall not apply.  The proceeds of such Advance shall be paid to the Agent or
such  Lender  or  Lenders for application to the payment of  the  sum  due  from
Borrower to the Agent, such Lender or Lenders.

     Section 2.5    Agent's Right to Assume Funds Available.  Unless the Agent
shall have been notified by any Lender at least one Business Day prior to the
date  on which any Advance is to be made to Borrower that such Lender does not
intend to make  available to the Agent such Lender's Pro Rata Share of such
Advance,  the Agent may assume that such Lender has made such amount available
to the Agent on the  date  of  the Advance and the Agent may, in reliance upon
such  assumption, make available to Borrower a corresponding amount.  If such
corresponding amount is  not  in fact made available to the Agent by such
Lender, the Agent shall be entitled  to recover such corresponding amount on
demand from such  Lender. If such  Lender  does not pay such corresponding
amount forthwith upon the  Agent's demand  therefor, the Agent shall notify
Borrower and Borrower shall pay such corresponding amount to the Agent.  The
Agent shall also be entitled to  recover from  such Lender interest on such
corresponding amount in respect of each day from  the  date  such corresponding
amount was made available by the Agent to Borrower to the date such
corresponding amount is recovered by the Agent, at a rate  per annum equal to
the rate per annum then in effect with respect to the Revolving  Credit  Loan.
Nothing herein shall be deemed to relieve  any  Lender from its obligation
to fulfill its Pro Rata Share of the Lenders' Commitment hereunder or to
prejudice any  rights which the Agent or  Borrower  may  have against any
Lender as a result of any default by such Lender hereunder.

     Section  2.6    Accounting.  The Agent will provide to Borrower  a  monthly
accounting of transactions under Articles 2 and 3 of this Agreement.   Each  and
every such accounting shall (absent manifest error) be deemed final, binding and
conclusive  upon  Borrower in all respects as to all matters reflected  therein,
unless  Borrower, within thirty (30) days after the date any such accounting  is
received  by Borrower, shall notify the Agent in writing of any objection  which
Borrower  may  have  to  any  such accounting, describing  the  basis  for  such
objection with specificity.  In that event, only those items expressly  objected
to in such notice shall be deemed

<PAGE>

to  be  disputed by Borrower.  The Agent's good faith determination, based  upon
the  facts  available, of any item objected to by Borrower in such notice  shall
(absent  manifest  error) be final, binding and conclusive on  Borrower,  unless
Borrower  shall commence a judicial proceeding to resolve such objection  within
thirty(30) days following the Agent's notifying Borrower of such determination.

     Section 2.7    Single Loan.  The Term Loans, the Advances, the Letter of
Credit Obligations  and all other Obligations of Borrower arising under this
Agreement shall  constitute one general obligation of Borrower secured by a
first priority security interest in the Collateral (subject only to Permitted
Encumbrances).

     Section 2.8    Subsequent Commitment Increases.

     (a)  Subsequent Commitment Increases.  Subject to the satisfaction of each
of the  conditions  set  forth  in Section 2.8(b), at Borrower's  written
request, delivered  by  Borrower to the Agent at least fifteen (15)  days
prior to the requested  increase  date  and  specifying the  requested
increase  date (each individually  a  "Subsequent  Commitment Increase  Date"
and collectively the "Subsequent Commitment Increase Dates"), the Commitment
shall be increased (each individually a "Subsequent Commitment Increase" and
collectively the "Subsequent Commitment Increases") on no more than four
Subsequent Commitment Increase Dates by  an  amount  not  in  excess of Twenty
Million Dollars ($20,000,000) in the aggregate as to all Subsequent Commitment
Increases.

(b)  Conditions Precedent to Subsequent Commitment Increases.  The obligations
of the Lenders to make the Subsequent Commitment Increases available to Borrower
are subject to the following conditions precedent each of which shall be
satisfied prior to or on the applicable Subsequent Commitment Increase Date:

(i)  There shall be no more than four (4) Subsequent Commitment Increases.

(ii) Each Subsequent Commitment Increase shall be in a minimum amount of Five
Million Dollars ($5,000,000).

(iii) The Agent shall have received all of the following, each dated as of
the applicable Subsequent Commitment Increase Date and all in form and substance
satisfactory to the Agent and legal counsel for the Agent:

(1)  amendments to the then existing Revolving Credit Note executed
by Borrower in favor of each Lender pursuant to which the principal amount of
the Revolving Credit Note held by each Lender shall be increased by an amount
equal to such Lender's Pro Rata Share of the Subsequent Commitment Increase;

(2)  an Officer's Certificate affirming that the conditions set forth in clauses
(iv), (v), (vi), (vii) and (viii) below have been satisfied;

(3)  to the extent deemed necessary by the Agent, an amendment to the Mortgage
giving effect to the Subsequent Commitment Increase, executed by Borrower, and
in form acceptable for recordation with the appropriate Governmental Agency;

<PAGE>

(4)  to the extent deemed necessary by the Agent, assurance from the
Title Company that it is committed to cause such amendment to the Mortgage to
be recorded, and, upon recordation of such amendment to issue an endorsement to
the title insurance policy issued by the Title Company with regard to the
Mortgage, in a form acceptable to the Agent, insuring the continued validity and
priority of the Mortgage as a lien upon the Owned Real Property, subject to
only those title exceptions which are set forth in such title insurance policy
and such other title exceptions as may be approved by the Agent in its sole
discretion; and

(5)  such other assurances, certificates, documents, consents or opinions (in
addition to those described hereinbelow) as the Agent may reasonably require.

(iv) The representations and warranties contained in Article 4 shall
be true and correct in all material respects on and as of the Subsequent
Commitment Increase Date  as though made on and as of that date (except to the
extent that such representations and warranties relate solely to an earlier date
and except as affected by transactions expressly contemplated by this
Agreement).

(v)  There shall not then be pending or, to the best knowledge of Borrower,
threatened, any litigation, arbitration, injunction, proceeding, governmental
investigation or inquiry against or affecting Borrower or any Property of
Borrower before any Governmental Agency that could reasonably be expected to
have a Material Adverse Effect.

(vi) Each of Lancer, Borrower and each of Borrower's Subsidiaries shall be in
compliance with all the terms and provisions of the Loan Documents to which it
is party, and no Default or Event of Default shall have occurred and be
continuing.

(vii)     Since the Closing Date, there shall not have occurred:  (A) any event
or circumstance that could reasonably be expected to have a Material Adverse
Effect, or (B) any dividends or other distributions made to the stockholders of
Borrower, except as permitted by Section 6.3 of this Agreement or Section 7(b)
of the Lancer Pledge Agreement.

(viii)    Lenders shall be satisfied that Borrower and its Subsidiaries are in
compliance with all applicable Laws, including, without limitation, all
Environmental Laws and all Laws pertaining to labor, occupational safety and
health and ERISA matters except to the extent that noncompliance could not
reasonably be expected to have a Material Adverse Effect.  Lenders shall be
satisfied that the consummation of the Subsequent Commitment Increase will not
cause Borrower or any Subsidiary to violate any Contractual Obligation to which
it is party or by which it is bound or any Laws applicable to it.

(ix) Lenders shall be satisfied that Borrower's incurrence of Indebtedness
pursuant to the Subsequent Commitment Increase is permissible pursuant to
Section 4.06 of the Senior Subordinated Note Indenture, and that after giving
effect thereto, each of the representations and warranties set forth in
Section 4.21 shall continue to be true and

 <PAGE>

correct  in all respects and shall have received such assurances in  regard
thereto   as   Lenders   shall  request,  including,  without   limitation,
certifications of Senior Officers of Borrower and an opinion of  Borrower's
counsel  with  regard  to such matters, each to be in  form  and  substance
satisfactory to Lenders.

          (x)  Borrower shall pay to Lenders a fee for each Subsequent
Commitment Increase in an amount of one-fourth percent (.25%) of the amount of
such increase which fee shall be fully-earned and non-refundable on the date of
such increase.

                                   ARTICLE 3.
                       PRINCIPAL PAYMENTS; INTEREST; FEES

     Section 3.1    Principal Payments.

     (a)  All Collections which in accordance with the provisions of the Blocked
Account  Agreements  are  remitted  to the  Agent's  Deposit  Account  from  the
Collection  Accounts  at  a time when a Triggering Event  has  occurred  and  is
continuing shall be applied on a daily basis to the prepayment of the  Revolving
Credit  Loan  and,  from  and  after the Commitment  Termination  Date,  to  the
repayment  of  any  and all other Obligations of Borrower.   The  entire  unpaid
balance of the Revolving Credit Loan shall be due and payable in full in Cash on
the Commitment Termination Date.

(b)  The aggregate principal amount of the Term Loans shall, if not sooner paid,
be payable in full on the Maturity Date.
     Section 3.2    Termination of Commitment; Voluntary Prepayment of Term
Loan.

     (a)  Borrower may voluntarily terminate the Lenders' Commitment at any time
by giving at least 90 days'prior written notice to the Agent of its intent to
terminate  the  Lenders' Commitment and the effective date of such  termination.
On  such  effective  date, upon compliance by Borrower with  the  provisions  of
Section  2.2(i),  the Commitment shall reduce to zero, and  in  accordance  with
Section 3.3(a), Borrower shall immediately pay any outstanding principal  amount
of the Revolving Credit Loan, together with any accrued and unpaid interest, any
accrued and unpaid commitment fees pursuant to Section 3.6, and any accrued  and
unpaid  letter  of  credit fees pursuant to Section 3.7, and, if  the  Revolving
Credit  Loan, or any portion thereof, is then being maintained as a  Fixed  Rate
Loan  and  is  paid  prior to the last day of its Interest Period,  any  amounts
payable pursuant to Section 3.12, in Cash.

(b)  The Term Loans may, at any time and from time to time, voluntarily be
prepaid at the election of Borrower, in whole or in part, without penalty, but
with accrued and unpaid interest thereon on the amount so prepaid, provided that
(i) the Agent must have received written notice (or telephonic notice confirmed
promptly in writing) of any prepayment at least 90 days before the date of
prepayment, in the case of a full prepayment, and at least 5 days before the
date of prepayment, in the case of a partial  prepayment, and (ii) any
prepayment of all or any portion of the Term Loans while being maintained as
Fixed Rate Loans prior to the last day of the Interest Period shall be subject
to Section 3.12.

<PAGE>

     Section 3.3    Mandatory Prepayments.

     (a)  The outstanding principal amount of the Revolving Credit Loan shall be
immediately  payable  in  Cash in an amount equal to any  amount  by  which  the
Facility Usage at any time exceeds the lesser of (i) the Commitment or (ii)  the
Borrowing Base.  Any payment made hereunder shall be applied to the Advances  in
the order in which such Advances are made.

(b)  The Term Loans shall be prepaid in amounts equal to one hundred percent
(100%) of the Net Proceeds of any disposition of Property by Borrower or any of
its Subsidiaries permitted pursuant to Section 6.1(a)(iii) or consented to by
the Majority Lenders in writing and of any insurance proceeds or payments of
compensation in respect of any loss, damage or Condemnation to or of any
Property of Borrower and its Subsidiaries which the Agent retains as provided in
Section 6 of each of the Security Agreements or in Section 7 or 8 of the
Mortgage, as applicable.  Borrower shall promptly notify the Agent of such
proposed disposition or of any receipt of Net Proceeds of insurance or of any
Condemnation (including the amount of the estimated Net Proceeds to be received
by Borrower in respect thereof) and promptly upon receipt of such Net Proceeds
shall make the prepayment required hereby.  In addition, the Term Loans shall be
prepaid in amounts equal to one hundred percent (100%) of the Net Proceeds, or
any portion thereof, of any disposition of Property by Borrower or any of its
Subsidiaries permitted pursuant to Section 6.1(a)(ii) to the extent that such
Net Proceeds, or any portion thereof, are not applied to the purchase price of
replacement Equipment within one hundred eighty (180) days after the date of
disposition, and in any event, to the extent that such Net Proceeds exceed the
sum of Three Million Dollars ($3,000,000) in the aggregate in any Fiscal Year.

(c)  The Term Loans shall be prepaid in amounts equal to one hundred percent
(100%) of any cash reversions to Borrower or any Subsidiary from the termination
of any Pension Plan or other employee benefit plan.  Borrower shall make such
prepayment promptly upon receipt by Borrower or any Subsidiary of any such
amount.

(d)  The Commitment shall terminate and the Revolving Credit Loan and the Term
Loans shall be prepaid in full, together with accrued and unpaid interest
thereon, any accrued and unpaid commitment fees pursuant to Section 3.6, any
accrued and unpaid letter of credit fees pursuant to Section 3.7, and any
amounts payable as provided in Section 3.12, immediately upon the occurrence of
a Change of Control.

     Section 3.4    Interest.

     (a)  Interest shall be payable on the outstanding daily unpaid principal
amount of (i) each Advance from the date thereof until payment in full of such
Advance, and  (ii) each Term Loan from the date thereof until payment in full of
the Term Loan  and, in each case shall accrue and be payable at the applicable
rates set forth herein with respect to Advances and the Term Loans, before and
after default, before and after maturity, before and after judgment, and before
and after the commencement of any proceeding under any Debtor Relief Law, with
interest on overdue interest to bear interest at the Default Rate to the  extent
permitted by applicable laws.

(b)  Except as otherwise provided in Sections 3.5, 3.13 and 3.19, the Revolving
Credit Loan and the Term Loans shall bear interest at the Floating Rate.

<PAGE>

     Section 3.5    Fixed Rate Elections.

     (a)   Provided  that  no Default or Event of Default has  occurred  and  is
continuing,  Borrower  may elect that the Term Loans or a portion  thereof  bear
interest  at the Fixed Rate, and provided that no Triggering Event has  occurred
and  is  continuing  as to which the Agent has elected to  exercise  its  rights
pursuant  to Section 5.13, Section 7.2(c), or both, Borrower may elect that  any
Advance  or a portion thereof bear interest at the Fixed Rate, in each case  for
such  Interest Period as Borrower shall select; provided that (i)  Borrower  may
not have more than three Interest Periods in effect at any time with respect  to
the  Term  Loans or more than three interest periods in effect at any time  with
respect  to  the Revolving Credit Loan, and (ii) Borrower may not make  such  an
election  unless  the principal amount of the Advance or Term Loans  or  portion
thereof  as  to which such election is made shall be in an aggregate amount  not
less  than  $3,000,000 or any integral multiple of $1,000,000 in excess  thereof
(provided, that the principal amount as to which such election is made may be in
an aggregate principal amount of $1,000,000 or integral multiples thereof at any
time  while  GE  Capital is the only Lender hereunder); and (iii) the  aggregate
amount  of  Fixed Rate Loans to which any Interest Period relates shall  not  be
reduced,  by  payment,  prepayment  or otherwise  to  be  less  than  $3,000,000
(provided, that, subject to the requirements of Section 3.12, such amount may be
reduced to zero at any time while GE Capital is the only Lender hereunder).  Any
election  made  pursuant  to  this clause (a) is called  herein  a  "Fixed  Rate
Election".

(b)  Subject to the requirements of clause (a) above, Borrower may make a Fixed
Rate Election in accordance with the following procedures:  (i) no later than
11:00 A.M., Atlanta time, three LIBOR Business Days prior to the proposed Fixed
Rate Election, Borrower shall provide to the Agent by telephone (confirmed by
telecopier) a notice that it proposes to make a Fixed Rate Election, specifying
the amount of the Advances or Term Loans or both as to which Borrower proposes
to make the Fixed Rate Election, and (ii) no later than 11:00 A.M., Atlanta
time, two LIBOR Business Days prior to the proposed Fixed Rate Election (after
Borrower has received from the Agent quotations of the Fixed Rates then
available for the various Interest Periods), Borrower shall make a Fixed Rate
Election pursuant to a Request for Fixed Rate Election which shall (A) be
forwarded to the Agent by telecopier and by reputable overnight courier, (B)
request (x) that an Advance requested by Borrower or the Term Loans, or portions
of either or both thereof, be made initially as a Fixed Rate Loan, (y) that the
subject Advance or the Term Loans or portions of either or both thereof be
converted from a Floating Rate Loan to a Fixed Rate Loan, or (z) that the
subject Advance or the Term Loans or portions of either or both thereof selected
by Borrower be renewed as a Fixed Rate Loan for an additional Interest Period
following the expiration of the then current Interest Period, and (C) specify
(x) the requested date of such Fixed Rate Election, (y) the Advance or Term
Loans or portions of either or both thereof as to which such Fixed Rate Election
is made, and (z) the Interest Period selected by Borrower.

(c)  Except as otherwise provided in Sections 3.11, 3.13 and 3.19, at all times
during an Interest Period selected by Borrower in a Request for Fixed Rate
Election, the Revolving Credit Loan and the Term Loans or the portion of either
or both thereof selected by Borrower shall bear interest at the Fixed Rate, as
elected by Borrower.

     Section 3.6    Commitment Fee.  Borrower shall pay to the Agent, for the
account of each Lender, a commitment fee with respect to the Commitment in an
amount equal to the

<PAGE>

quotient  of  (a) an amount equal to (i) the average daily amount by  which  the
Commitment  exceeds the Facility Usage during the preceding month multiplied  by
(ii)  one-quarter of one percent (1/4 of 1%) divided by (b) 360.  The commitment
fee  payable hereunder shall accrue daily and be payable monthly in  arrears  on
each Monthly Payment Date and on the Commitment Termination Date.

     Section 3.7  Letter of Credit Fees.  In the event that Lenders shall incur
any Letter of Credit Obligations, Borrower shall pay to the Agent (a) for the
account  of the Agent, the fees and charges paid by the Agent to the  Letter  of
Credit Issuer in connection with the Letters of Credit in respect of which  such
Letter  of  Credit Obligations were incurred, and (b) for the  account  of  each
Lender according to that Lender's Pro Rata Share of the Commitment, a letter  of
credit fee in an amount equal to the quotient of (i) an amount equal to (A)  the
sum of the daily outstanding amount of such Letter of Credit Obligations on each
day during the month then ending, multiplied by (B) two and one-half percent (2-
1/2%),  divided  by (ii) 360.  Letter of Credit fees shall accrue  daily  during
each  month during which Letter of Credit Obligations are outstanding  hereunder
and  be  payable  monthly  in arrears on the Monthly Payment  Date  and  on  the
Commitment Termination Date.

     Section 3.8    Agent's Fees.  Borrower shall pay to the Agent, for its
account, an agency fee in the amount provided in the separate fee letter between
Borrower and the Agent, at such times as are provided therein.

     Section 3.9    Increased Cost and Reduced Return.

     (a)  If (i) the introduction of or any change in Law or in the
interpretation or administration  thereof occurring after the date hereof, or
(ii) the  compliance with any guideline or request from any central bank or
other  governmental authority (whether or not having the force of law) does or
shall impose,  modify or  hold  applicable any reserve, special deposit,
compulsory  loan  or  similar requirement against assets held by, or deposits
or other liabilities in  or  for the  account of, advances or loans by, or other
credit extended by, or any other acquisition of funds by, any office of any
Lender, and the result of any of the foregoing  is  to  reduce the amount of any
sum received or receivable by such Lender (or its lending office) under this
Agreement by an amount deemed by such Lender  to  be  material, then, within
fifteen (15) days after demand by such Lender (with a copy to the Agent),
Borrower shall pay to such Lender for such additional amount or amounts as will
compensate such Lender for such reduction.  If Lender becomes entitled to claim
any additional amounts  pursuant to this Section 3.9(a), it shall promptly
notify the Borrower of the event by reason of which it became so entitled.

(b)  If any Lender reasonably determines that either (i) the introduction of or
any change in any Law or in the interpretation or administration of any Law by
any Governmental Agency charged with the interpretation or administration
thereof after the date of this Agreement relating to the regulation of banks or
commercial lenders or (ii) compliance with any guideline or request issued or
made after the date hereof from any such Governmental Agency relating to the
regulation of banks or commercial lenders  (whether or not having the force of
law) has or would have the effect of reducing the rate of return on the capital
of that Lender or any corporation controlling that Lender as a consequence of or
with reference to that Lender's funding, incurring or maintaining its allocable
portion of any Commitment, Advance, Letter of Credit Obligation,

<PAGE>

Term  Loans or other extension of credit or transaction hereunder below the rate
which  that  Lender or such other corporation could have achieved but  for  such
introduction,  change or compliance (taking into account the  policies  of  that
Lender or corporation with regard to capital), then Borrower shall from time  to
time,  upon  demand  by  that  Lender, pay to  that  Lender  additional  amounts
sufficient  to compensate  that Lender or other corporation for such  reduction.
Each  Lender  agrees promptly to notify Borrower of any event or condition  that
would   cause   Borrower  to  pay  any  additional  amount  pursuant   to   this
Section  3.09(b), within six (6) months after the occurrence of  such  event  or
condition.   Any  notice  by  any Lender hereunder shall  be  accompanied  by  a
certificate from that Lender setting forth in reasonable detail the  nature  and
calculation of the relevant amounts.

     Section 3.10   LIBOR Costs. Upon notice from any Lender, Borrower shall
promptly reimburse that Lender for any increase after the date of this Agreement
in its costs,  including taxes (other than any tax, or changes in the rate of
any  tax, based upon the income, profits, receipts or business of that Lender,
or upon any personal property or franchise of that Lender, or any similar tax
which may be levied  upon that Lender, or any change in the rate of any such
similar tax by the United States, or any other government having jurisdiction,
or any political subdivision  or taxing authority of any thereof, and other than
withholding tax covered by Section 3.16), fees, charges, and/or reserve
requirements directly or indirectly resulting from or relating to funding,
incurring or maintaining such Lender's Term Loan and/or Pro Rata Share of the
Revolving Credit Loan or portions of either or both thereof, as applicable, as a
Fixed Rate Loan due to any  changee after the date of this Agreement in any Law,
guideline or interpretation or application thereof by any Governmental Agency.
As used in the preceding sentence, "reserve requirements" shall be calculated
after taking into account any compensation received by that Lender through the
computation of the  LIBOR  Reserve  Percentage.   Amounts payable  to  any
Lender  under  this Section  3.10  shall be determined solely by that Lender on
the assumption that such  Lender  funded and maintained 100% of its Term Loan
and/or  its  Pro  Rata Share  of  the Revolving Credit Loan, or portions of
either or both thereof, as applicable, in the London interbank market for a
corresponding amount of Dollars and  term, regardless of whether that Lender did
so in fact.  In attributing any Lender's  general  costs relating to any
transaction under this Agreement, or averaging  any  cost over a period of time,
that Lender may use any reasonable attribution and/or averaging method it deems
appropriate and  practical.   Any notice  under  this  Section  3.10 shall be
given to Borrower as promptly as practicable after it obtains knowledge of such
change, with a copy to the Agent, and shall be accompanied by a certificate from
that Lender setting forth in reasonable detail the nature and calculation of
the relevant amounts.

     Section 3.11   Special LIBOR Circumstances.

     (a)   If  any  change in any Law by any Governmental Agency  or  any  other
circumstance relating to the London interbank market shall at any  time  in  the
reasonable opinion of any Lender make it unlawful or impractical for that Lender
to  fund or maintain its Term Loan or its Pro Rata Share of the Revolving Credit
Loan  or  portion of either or both thereof, as a Fixed Rate Loan in the  London
interbank market for a corresponding amount of Dollars or  term, or to  continue
that funding or maintaining, or to determine or charge interest rates based upon
the  LIBOR  Rate, that Lender shall promptly notify the Agent, who shall  notify
Borrower  and the other Lenders. Upon the giving of such notice, the  obligation
of  that  Lender  to  fund or maintain its Term Loan or Pro Rata  Share  of  the
Revolving Credit Loan or portion of either or both

<PAGE>

thereof,  as a Fixed Rate Loan shall terminate, and such Lender's Term  Loan  or
its  Pro  Rata Share of the Revolving Credit Loan or portion of either  or  both
thereof,  as applicable, then being maintained as a Fixed Rate Loan, shall  bear
interest  at the Floating Rate commencing on the day following the last  day  of
the  applicable Interest Period or on such earlier date as shall be required  by
Law.

     (b)  In the event that, prior to the first day of any Interest Period in
respect of any Fixed Rate Loan, by reason of circumstances affecting the London
interbank  market,  either  (i) the Agent shall have determined  in  good  faith
(which  determination shall be conclusive and binding upon all parties  hereto),
that  (A)  Dollar deposits of the relevant amount and for the relevant  Interest
Period for such Fixed Rate Loan are not available to those Lenders authorized to
accept such deposits in the London interbank market, or (B) the LIBOR Base  Rate
applicable  to such Interest Period cannot be ascertained, or (ii) the  Majority
Lenders  shall have determined in good faith and so notified the Agent that  the
LIBOR  Rate  will  not adequately reflect the cost to such Majority  Lenders  of
funding  or  maintaining  the  Revolving  Credit  Loan  or  the  Term  Loans  as
applicable,  as  a  Fixed Rate Loan or Loans, the Agent shall promptly  give  to
Borrower  and  the  Lenders notice of such determination,  whereupon  Borrower's
right  to  make  a Fixed Rate Election by submitting a Request  for  Fixed  Rate
Election  pursuant  to Section 3.5(a) shall be suspended for  so  long  as  such
circumstances  shall exist.  At all times during the period of such  suspension,
the  entire  outstanding principal amount of the Revolving Credit Loan  and  the
Term Loans and shall be Floating Rate Loans.

     Section 3.12   Funding Losses.  In order to induce each Lender to fund  and
maintain  its Pro Rata Share of the Revolving Credit Loan and its Term  Loan  or
portion of either or both thereof, as applicable, as a Fixed Rate Loan,  on  the
terms  provided herein and in consideration of the entering into by  Lenders  of
funding arrangements from time to time in contemplation thereof, whether or  not
funded in the London interbank market, if any Fixed Rate Loan is repaid in whole
or  in part (except so long as GE Capital is the only Lender hereunder any Fixed
Rate Loan having an Interest Period of one month) on any day other than the last
day of the Interest Period therefor (whether any such repayment is made pursuant
to  any  provision of this Agreement or any other Loan Document or is the result
of acceleration, by operation of law or otherwise), Borrower shall indemnify and
hold harmless each Lender from and against and in respect of any and all losses,
costs and expenses resulting from, or arising out of or imposed upon or incurred
by such Lender by reason of the liquidation or reemployment of funds acquired or
committed  to be acquired by such Lender to fund or maintain its Pro Rata  Share
of  the  Revolving Credit Loan or its Term Loan, or portion of  either  or  both
thereof, as applicable, as a Fixed Rate Loan or Loans, pursuant to such Lender's
customary  funding  arrangements.  The amount of any losses, costs  or  expenses
resulting  in  an  obligation of Borrower to make  a  payment  pursuant  to  the
foregoing  sentence shall not include any losses attributable  to  any  Lender's
lost  profit, but shall represent the excess, if any, of (a) such Lender's  cost
or deemed cost of obtaining funding for the amount necessary to fund or maintain
its Pro Rata Share of the Revolving Credit Loan or its Term Loan, or portion  of
either or both thereof, as applicable, as a Fixed Rate Loan or Loans pursuant to
such  Lender's  customary funding arrangements, whether or  not  funded  in  the
London  interbank market, as reasonably determined by each Lender (which may  be
computed by any Lender on the basis of such funds having been borrowed at a rate
equal to one percent (1%) over the interest rate on United States Treasury bills
or  notes with a maturity that most closely approximated the end of the relevant
Interest Period as quoted by Telerate News Service (page 5)

<PAGE>

at the close of business on the date when the Term Loans or the Revolving Credit
Loan  or portion of either or both thereof were made as, converted to or renewed
as  a  Fixed  Rate Loan), over (b) the return such Lender would receive  on  its
reemployment of such funds, as reasonably determined by each Lender  (which,  if
such   Lender's  cost  of  obtaining  funding  is  computed  pursuant   to   the
parenthetical to clause (a) above, may be computed by any Lender on the basis of
its  reinvestment of such funds in United States Treasury bills or notes with  a
maturity that most closely approximates the end of the relevant Interest  Period
as quoted by Telerate News Service (page 5) at the close of business on the date
of  repayment of such Fixed Rate Loan); provided, that if any Lender  terminates
any  funding  arrangements in respect of its Pro Rata  Share  of  the  Revolving
Credit  Loan  or  its  Term  Loan, or portion of  either  or  both  thereof,  as
applicable,  when maintained as a Fixed Rate Loan or Loans, the amount  of  such
losses,  costs and expenses shall also include the cost to such Lender  of  such
termination.  The determination of such amount by any Lender, when evidenced  by
a  certificate from that Lender giving a reasonably detailed calculation of  the
amount  of  said cost, expense, claim, penalty, liability, loss, fee, damage  or
other charge, shall be presumed correct in the absence of manifest error.

     Section 3.13   Default Rate.  So long as an Event of Default shall have
occurred and be continuing, the Obligations (including accrued and unpaid
interest to the extent permitted by applicable Laws), shall, at the option of
the  Agent evidenced  by its written notice to Borrower making specific
reference  to  this Section 3.13, bear interest at the applicable Default Rates.
The provisions  of this  Section 3.13 are intended to compensate Lenders for
additional credit risk and not as a penalty.

     Section 3.14   Payment and Computation of Interest. Interest shall be
payable on the Loans at the rate or rates herein specified on each Quarterly
Payment Date and on the Commitment Termination Date, in the case of the
Revolving Credit Loan; on each Quarterly Payment Date and on the Maturity Date,
in the case of the Term Loans; and on each Monthly Payment Date from and after
the occurrence of  an  Event of Default, in the case of any of the Loans.  In
addition to (and not  in  lieu of) the payments described in the preceding
sentence, interest on each Fixed Rate Loan at the applicable Fixed Rate shall be
payable on the last day of the Interest Period with respect to such Fixed Rate
Loan.  All computations of interest hereunder shall be calculated on the basis
of a year of 360  days  and the actual number of days elapsed.  Any Advance or
Term Loan or portion thereof that is repaid on the same day on which it is
made shall bear interest  for  one  day.  Interest shall in all events be
calculated and paid through the due date therefor, including, without
limitation, any due date which is not a Business Day.

     Section 3.15   Non-Business Days.  If any payment to be made by Borrower
shall come due on a day other than a Business Day, payment shall be made on the
next preceding Business Day, and shall be computed through the last day of any
period for which such payment is to accrue.

     Section 3.16   Payment Free of Taxes.  All payments of principal,
interest and fees  and  all  other amounts to be made by Borrower pursuant to
this Agreement shall be paid without deduction for, and free from, any tax,
imposts, levies, duties, deductions, or withholdings of any nature now or at any
time hereafter imposed  by  any  governmental authority or by any taxing
authority thereof or therein excluding in the case of the Agent and each Lender,
taxes imposed on or measured by its net income, branch profits tax or franchise
taxes imposed on it by the

<PAGE>

jurisdiction  under the laws of which the Agent or such Lender is  organized  or
any political subdivision thereof and, in the case of each Lender, taxes imposed
on  its  income,  branch  profits and franchise taxes  imposed  on  it,  by  the
jurisdiction  of  such  Lender's  applicable Lending  Office  or  any  political
subdivision  thereof  (all  such non-excluded taxes,  imposts,  levies,  duties,
deductions  or withholdings of any nature being "Non-Excluded Taxes").   In  the
event  that  Borrower is required by applicable law to make any such withholding
or deduction of Non-Excluded Taxes with respect to any amount payable hereunder,
Borrower  shall  pay  such  deduction or withholding to  the  applicable  taxing
authority,  shall promptly furnish the Agent or any Lender in respect  of  which
such  deduction  or  withholding  is  made  all  receipts  and  other  documents
evidencing  such  payment  and  shall pay  to  the  Agent  or  such  Lender,  as
applicable,  additional amounts as may be necessary in  order  that  the  amount
received  by  the  Agent  or  such  Lender, as applicable,  after  the  required
withholding  or  other payment shall equal the amount the Agent or  such  Lender
would  have  received  had  no  such withholding or  other  payment  been  made;
provided, that Borrower shall not be required to pay any such additional amounts
to  any Lender that is not organized under the laws of the United States or  any
state  thereof  if  such  Lender fails to comply with the  requirements  of  the
following  paragraph.  If no withholding or deduction of Non-Excluded Taxes  are
payable  in respect to any amount payable hereunder, Borrower shall furnish  any
Lender,  at  such  Lender's request, a certificate from each  applicable  taxing
authority  or  an opinion of counsel acceptable to such Lender, in  either  case
stating  that  such  payments are exempt from or not subject to  withholding  or
deduction  of Non-Excluded Taxes.  If Borrower fail to provide such original  or
certified  copy  of  a  receipt  evidencing payment  of  Non-Excluded  Taxes  or
certificate(s)  or opinion of counsel of exemption, Borrower  hereby  agrees  to
compensate  such  Lender  for,  and  indemnify  it  with  respect  to,  the  tax
consequences  of Borrower's failure to provide evidence of tax payments  or  tax
exemption.  Before making any claim pursuant to this Section, such Lender  shall
designate a different lending office if such designation will avoid the need for
giving  such  notice and will not, in the judgment of such Lender, be  otherwise
disadvantageous to such Lender.  Each Lender will promptly notify Borrower of  a
change  in  such  Lender's tax status that would require  Borrower  to  withhold
and/or pay any amounts under this Section 3.16.

     Each   Lender  that  is  not  a  United  States  person  (as   defined   in
Section 7701(a)(30) of the Code):

     (i)  (A) before the first payment date after it becomes a party to this
     agreement  deliver to Borrower and the Agent two duly completed  copies  of
     Internal Revenue Service Form W-8BEN, in the case of a Lender claiming
     treaty benefits  with respect to payments under this Agreement and any
     Notes, or Internal Revenue Service Form W-8ECI, in the case of a Lender
     claiming payments under this Agreement and any Notes are effectively
     connected with the conduct of a trade or business within the United States,
     or successor applicable form, as the case may be, covering all amounts
     receivable by it under this Agreement and any Notes, together with such
     other forms, documentation or certifications as may  be  necessary  to
     establish an available exemption from deduction or withholding of U.S.
     federal income taxes with respect to payments under this Agreement and any
     Notes, (B) deliver to the Borrower and the Agent two further copies of any
     such form, documentation or certification on or before the date that any
     such form, documentation or certification expires or becomes obsolete
     and after the occurrence of any event requiring a change in the most recent
     form previously delivered by it to the

     <PAGE>

     Borrower;  and (C) obtain such extensions of time for filing and completion
     of  such  forms,  documentation  or certifications  as  may  be  reasonably
     requested by the Borrower or the Agent; or

          (ii) in the case of any such Lender that is not a "bank" within the
     meaning of Section 881(c)(3)(A) of the Code and that cannot comply with the
     requirements of clause (i) above, (A) represent to Borrower (for the
     benefit of Borrower and the Agent) that it is not a bank within the meaning
     of Section 881(c)(3)(A) of the Code, (B) furnish to Borrower on or before
     the date of any payment by Borrower, wit a copy to the Agent, (x) a
     certificate substantially in the form of Exhibit R (any such certificate,
     a "U.S. Tax Compliance Certificate") and (y) two accurate and complete
     original signed copies of Internal Revenue Service Form W-8BEN, or
     successor applicable form certifying to such Lender's legal entitlement at
     the  date of such certificate to an exemption from U.S. withholding tax
     under the provisions of Section 871(h) or 881(c) of the Code with respect
     to payments to be made under this Agreement and any Notes (and deliver to
     Borrower and the Agent two further copies of such form on or before the
     date it expires or becomes obsolete and after the occurrence of any event
     requiring a change in the most recently provided form and, if necessary,
     obtain any extensions of time reasonably requested by Borrower or the
     Agent  for completing such forms) and (c) upon reasonable request by
     Borrower, to provide to Borrower (for the benefit of Borrower and the
     Agent) such other forms as may be  reasonably required in order to
     establish the legal entitlement of such Lender to an exemption from
     withholding with respect to payments under this Agreement and any Notes;

unless in  any such case any change in treaty, law or regulation  has  occurred
after the  date such Person becomes a Lender hereunder which renders  all  such
forms inapplicable or which would prevent such Lender from duly completing  and
delivering any such form with respect to it and such Lender so advises  Borrower
and  the  Agent.  Such Lender shall certify (i) in the case of a Lender claiming
treaty benefits with respect to payments under this Agreement and any Notes,  or
in  the  case of a Lender claiming amounts receivable by it under this Agreement
and  any Notes are effectively connected with the conduct of a trade or business
within  the  United States, that it is entitled to receive payments  under  this
Agreement  and  any Notes without deduction or withholding of any United  States
federal  income taxes and (ii) that it is entitled to an exemption  from  United
States  backup withholding tax.  Each Person that shall become a Lender Assignee
or  a  participant  pursuant to subsection 11.8(c) or 11.8(f)  shall,  upon  the
effectiveness of the related transfer, be required to provide all of the  forms,
documentation  or certifications required pursuant to this subsection,  provided
that  in  the  case  of a participant such participant shall  furnish  all  such
required  forms, documentation or certifications to the Lender  from  which  the
related  participation shall have been purchased, and such Lender shall in  turn
furnish  all such required forms (including without limitation Internal  Revenue
Service  Form  W-81MY), documentation and certifications  to  Borrower  and  the
Agent, together with such other forms, documentation or certifications as may be
necessary  to establish an available exemption from deduction or withholding  of
U.S. federal income taxes on payments under this Agreement and any Notes.

     If  notwithstanding  compliance by any Lender with the  provisions  of  the
preceding  paragraph,  Borrower  is unable to  establish  that  such  Lender  is
entitled to receive payments under

<PAGE>

this  Agreement  without deduction or withholding of any United  States  federal
income  taxes  and  withholding taxes, or to file the  forms  provided  by  such
Lender,  and,  in  any  event during such period of time  as  such  request  for
exemption  is  pending, Borrower shall nonetheless remain  obligated  under  the
terms of the first paragraph of this Section 3.16.

     If  any  Lender or the Agent shall become aware in its sole and good  faith
judgment  that  it  is entitled to receive a refund in respect  of  Non-Excluded
Taxes  as to which it has received additional amounts from Borrower pursuant  to
this Section 3.16, it shall promptly notify Borrower of the availability of such
refund and within 30 days after receipt of a request by Borrower, apply for such
refund  at Borrower's expense.  If any Lender or the Agent receives a refund  in
respect  of  Non-Excluded Taxes as to which it has received  additional  amounts
from Borrower pursuant to this Section 3.16, it shall promptly repay such refund
to such Borrower, provided, however, that if any Lender or the Agent receives  a
refund  which  it  must subsequently return to the applicable  taxing  authority
after  Borrower has already been repaid, Borrower agrees to promptly return  the
amount of such repayment to the Lender or Agent.

     Without  prejudice  to  the  survival of any other  agreement  of  Borrower
hereunder, the agreements and obligations of Borrower and the Lenders  contained
in  this  Section  3.16 shall be applicable with respect to any Lender  Assignee
pursuant to Section 11.8(b) and participant pursuant to Section 11.8(f), and any
calculations  required  by such provisions (i) shall  be  made  based  upon  the
circumstances  of  such Lender Assignee or participant, and  (ii)  constitute  a
continuing agreement and shall survive the termination of this Agreement and the
payment in full or cancellation of the Notes.

     For  the purposes of this Section 3.16 and Section 3.9, a change in treaty,
law,  rule  or  regulation shall not include the new United  States  withholding
regulations  (Treasury Decision 8734 and Treasury Decision  8804)  which  become
effective on January 1, 2000.

     Section 3.17   Funding Sources.  Nothing in this Agreement shall be deemed
to obligate any Lender to obtain the funds for its share of any Loan in the
London interbank  market or in any other particular place or manner or to
constitute a representation by any Lender that it has obtained or will obtain
the funds for its Loans in the London interbank market or in any other
particular place or manner, but  any Lender shall, for purposes hereof, be
entitled to compute the amounts  due to it under Sections 3.10, 3.11 and 3.12 as
if such funds had been obtained  in the London interbank market, without any
requirement of tracing or matching such funds.

     Section 3.18   Failure to Charge Not Subsequent Waiver.  Any failure by the
Agent  or  any Lender to require payment of any interest (including interest  at
the Default Rate), fee, cost or other amount payable under any Loan Document, or
to calculate any amount payable by a particular method, on any occasion shall in
no  way  limit  or  be deemed a waiver of the Agent's or any Lender's  right  to
require  full  payment of any such interest, fee, cost or other  amount  payable
under  any Loan Document, or to calculate any amount payable by another  method,
on any other or subsequent occasion.

     Section 3.19   Savings Clause.  Notwithstanding anything to the contrary
set forth  in  this Article 3, if at any time until payment in full of  all  of
the Obligations, any of the Floating Rate, the  Fixed Rate or the Default  Rate,
by itself or when aggregated with any of the fees or other

<PAGE>

amounts  payable by Borrower under any of the Loan Documents that are deemed  or
construed  to be interest under applicable Law, as the case may be, exceeds  the
highest  rate of interest permissible under any Laws which a court of  competent
jurisdiction shall, in a final determination, deem applicable to any Lender with
respect to its Pro Rata Share of the Revolving Credit Loan or its Term Loan,  as
the  case may be (each a "Maximum Lawful Rate"), then in such event and so  long
as  the Maximum Lawful Rate would be so exceeded, such rate of interest shall be
reduced to the Maximum Lawful Rate; provided that if at any time thereafter  the
Floating Rate, the Fixed Rate or either of the Default Rates, as applicable,  is
less  than  the Maximum Lawful Rate, Borrower shall continue to pay interest  to
such  Lender hereunder at the Maximum Lawful Rate until such time as  the  total
interest  received by such Lender from the making of its Pro Rata Share  of  the
Revolving  Credit  Loan and its Term Loan is equal to the total  interest  which
such  Lender  would have received had the Floating Rate, the Fixed Rate  or  the
Default Rates, as applicable, been (but for the operation of this Section  3.19)
the  interest  rates payable to such Lender since such Lender  became  a  Lender
hereunder.   Thereafter, the interest rates payable to such Lender with  respect
to  its Pro Rata Share of the Revolving Credit Loan and its Term Loans, shall be
the  applicable  Floating Rate, Fixed Rate or the applicable  Default  Rate,  as
applicable, unless and until the Floating Rate, the Fixed Rate or the applicable
Default  Rate,  as applicable, again exceeds the Maximum Lawful Rate,  in  which
event this Section 3.19 shall again apply.  In no event shall the total interest
received by any Lender pursuant to the terms hereof exceed the amount which such
Lender  could  lawfully  have  received had  the  interest  due  hereunder  been
calculated  for the full term hereof at the Maximum Lawful Rate.  In  the  event
that the Maximum Lawful Rate is calculated pursuant to this Section 3.19, (a) if
required  by applicable Laws, such interest shall be calculated at a daily  rate
equal  to the Maximum Lawful Rate divided by the number of days in the  year  in
which  such  calculation  is  made, and (b) if  permitted  by  applicable  Laws,
Borrower  and  Lender  shall  (i) characterize any nonprincipal  payment  as  an
expense,  fee  or  premium  rather  than as  interest,  (ii)  exclude  voluntary
prepayments and the effects thereof, and (iii) amortize, pro rate, allocate  and
spread  in  equal or unequal parts the total amount of interest  throughout  the
entire contemplated term of the Obligations so that interest for the entire term
does not exceed the Maximum Lawful Rate.  In the event that a court of competent
jurisdiction, notwithstanding the provisions of this Section 3.19, shall make  a
final determination that any Lender has received interest hereunder or under any
of  the Loan Documents in excess of the Maximum Lawful Rate with respect to  its
Pro Rata Share of the Revolving Credit Loan or its Term Loan, such Lender shall,
to  the extent permitted by applicable Law, promptly apply such excess, first to
any interest due and not yet paid under its Notes, second to any due and payable
principal of its Notes, third to the remaining principal amount of its Notes and
fourth  to other unpaid Obligations, and  thereafter shall refund any excess  to
Borrower or as a court of competent jurisdiction may otherwise order.

     Section 3.20   Pro Rata Treatment.  Each payment and prepayment of
principal on, and  each payment of interest on, the Revolving Credit Loan shall
be applied pro rata,  as  among  Lenders, according to the respective Pro Rata
Share of each Lender. Each payment and prepayment of principal on, and each
payment  of interest  on,  the  Term  Loans shall be applied pro  rata, as
among  Lenders, according to the ratio of each Lender's Term Loan to all Term
Loans.

     Section 3.21   Manner and Treatment of Payments.  Each payment hereunder or
on the  Notes or under any other Loan Document shall be made to the Agent,
without setoff,

<PAGE>

deduction  or counterclaim, by wire transfer of immediately available  funds  to
the  Agent's  Deposit  Account, for the attention of  Control  Desk  Supervisor,
Southeast  Region  Office re: Fairfield Manufacturing  Company,  Inc.,  for  the
account of each of the Lenders or the Agent, as the case may be, not later  than
12:00  noon, Atlanta time, on the day of payment (which must be a Business Day).
All payments received after 12:00 noon, Atlanta time, on any particular Business
Day, shall be deemed received on the next succeeding Business Day.  All payments
shall  be  made in lawful money of the United States of America.  The amount  of
all payments received by the Agent for the account of a Lender shall be promptly
paid  by  the Agent to that Lender in immediately available funds.  All payments
made  by Borrower pursuant to this Section 3.21 shall be credited by each Lender
for  purposes  of  computing interest hereunder on  the  day  payment  has  been
received  or deemed received by the Agent in accordance with this Section  3.21.
Notwithstanding anything herein to the contrary, Borrower shall give  the  Agent
(i) with regard to prepayments of the Revolving Credit Loan in amounts in excess
of  $2,000,000 but less than $10,000,000, one (1) Business Day's advance written
notice of such prepayment so long as GE Capital is the only Lender hereunder and
two  (2)  Business Days' advance written notice of such prepayment if there  are
Lenders  in addition to GE Capital hereunder and (ii) with regard to prepayments
of  the  Revolving  Credit  Loan in amounts in excess  of  $10,000,000  two  (2)
Business  Days' advance written notice of such prepayment so long as GE  Capital
is the only Lender hereunder and three (3) Business Days' advance written notice
of  such  prepayment  if there are Lenders in addition to GE Capital  hereunder;
provided  that the foregoing shall not apply with regard to prepayments pursuant
to Section 3.1(a) hereof.

     Section 3.22   Agent's Right to Assume Payments Will be Made.  Unless the
Agent shall have been notified by Borrower at least one Business Day prior to
the date on  which any payment to be made by Borrower hereunder is due that
Borrower does not  intend to remit such payment, the Agent may, in its
discretion, assume that Borrower  has  remitted  such payment when so due and
the Agent may,in its discretion  and in reliance upon such assumption, make
available to each Lender on  such  payment  date an amount equal to such
Lender's share of  such  assumed payment.  If Borrower has not in fact remitted
such payment to the Agent, each Lender shall forthwith on demand repay to the
Agent the amount of such assumed payment made available to such Lender, together
with interest thereon in respect of  each day from and including the date such
amount was made available  by  the Agent  to such Lender to the date such amount
is repaid to the Agent at  a  rate per annum equal to the rate or rates per
annum then in effect with respect to the Loans in respect of which such payment
is due.

     Section 3.23   Survivability.  All of Borrowers' obligations under Sections
3.9, 3.10,  3.12  and  3.16  shall survive the payment in  full  of  all
Obligations hereunder,  provided  that any Lender making a claim under  Section
3.12 shall notify Borrower of such claim not later than 90 days following date
of payment in full of the Obligations.

                                   ARTICLE 4.
                         REPRESENTATIONS AND WARRANTIES

     Borrower represents and warrants to the Agent and Lenders that:

     Section 4.1    Existence and Qualification; Power; Compliance With Laws.
Each of  Lancer, Borrower and Borrower's Subsidiaries is a corporation duly
organized and validly

<PAGE>

existing  and in good standing under the Laws of the state of its incorporation.
Each  of  Lancer, Borrower and Borrower's Subsidiaries is duly  qualified  as  a
foreign corporation, and is in good standing, in each jurisdiction in which  the
conduct  of its business or the ownership or leasing of its Property makes  such
qualification necessary, except where the failure so to qualify  and  to  be  in
good  standing  could  not  reasonably be expected to have  a  Material  Adverse
Effect.   The chief executive office and principal place of business of Borrower
and  (except  as otherwise indicated in the Subsidiary Security Agreement)  each
Subsidiary is located at U.S. Route 52 South, Lafayette, Indiana 47903.  Each of
Lancer,  Borrower and Borrower's Subsidiaries has the requisite corporate  power
and  authority  to conduct its business as now being conducted and  to  own  its
Property,  and, in the case of Lancer, Borrower and Borrower's Subsidiaries,  to
execute  and deliver each Loan Document to which it is party and to perform  its
obligations thereunder.  Each of Lancer, Borrower and Borrower's Subsidiaries is
in compliance in all respects with all Laws applicable to it or to its business,
except  where  failure  to comply could not reasonably be  expected  to  have  a
Material  Adverse Effect, has obtained all authorizations, consents,  approvals,
orders,  licenses  and  permits  (including, without  limitation,  Environmental
Permits)   from,   and   has   accomplished  all  filings,   registrations   and
qualifications with, or obtained exemptions from any of the foregoing from,  any
Governmental  Agency  that  are necessary for the transaction  of  its  business
except  where  the  failure to obtain such authorizations, consents,  approvals,
orders,  licenses  and permits or to accomplish such filings, registrations  and
qualifications  could  not reasonably be expected to  have  a  Material  Adverse
Effect.

     Section 4.2    Authority; Compliance With Other Agreements and Instruments.
The execution,  delivery and performance by each of Lancer, Borrower and
Borrower's Subsidiaries  of  the  Loan  Documents to which  it  is  party  have
been duly authorized by all necessary corporate actions, and do not and will
not:

(a)   Require any consent or approval of any partner, stockholder, security
holder or creditor of such Person (including, without limitation, the holders of
the Senior Subordinated Notes) not heretofore obtained;

(b)  Violate or conflict with any provision of any such Person's articles or
certificate of incorporation or bylaws;

(c)  Result in or require the creation or imposition of any Lien or Right of
Others upon or with respect to any Property now owned or leased by any such
Person, other than in favor of the Lenders;

(d)  Violate any Requirement of Law applicable to any such Person; or

(e)  Conflict with, result in a breach of or default under, or with the giving
of notice or the lapse of time or both, constitute a breach of or default under,
or cause or permit the acceleration of any obligation owed under or require the
termination of (i) the Senior Subordinated Note Indenture or the Senior
Subordinated Notes or (ii) any other Contractual Obligation of any such Person.

     Section 4.3    Requirements of Law; Performance of Contractual Obligations.

<PAGE>

(a)  Neither Lancer, Borrower nor any Subsidiary of Borrower is in violation of,
or default under, any Requirement of Law applicable to such Person, its Property
or  business, including, without limitation any Environmental Law or  any  other
Law, in any respect that could reasonably be expected to have a Material Adverse
Effect.

(b)  Neither Lancer, Borrower nor any Subsidiary of Borrower has received any
notice nor has actual knowledge that (i) it is in default in the performance,
observance or fulfillment of any of the obligations, covenants or conditions
contained in any Contractual Obligation applicable to it or (ii) any condition
exists which, with the giving of notice or lapse of time or both, would
constitute a default with respect to such Contractual Obligation, except where
such default or defaults, singly or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.

(c)  Neither Borrower nor any of its Subsidiaries is a party to or bound by any
Contractual Obligation or subject to any charter or corporate restriction or any
Requirement of Law which could reasonably be expected to have a Material Adverse
Effect.

     Section 4.4    No Governmental Approvals Required.  No authorization,
consent, approval, order, license or permit from, or filing, registration or
qualification with, any Governmental Agency is required to authorize  or  permit
under  applicable  Laws  the  execution, delivery  and  performance  by  Lancer,
Borrower  or  any  Subsidiary of Borrower of the Loan Documents  to  which  such
Person  is  party  or  the  consummation by such  Persons  of  the  transactions
contemplated hereby and thereby, except for filings necessary to  perfect  Liens
in the Collateral, as provided for in Section 8.1.  No contract between Borrower
or any of its Subsidiaries and any Governmental Agency prohibits assignment.

     Section  4.5    Subsidiaries.  Borrower has no Subsidiaries other than  T-H
Licensing  and  except  as listed on Schedule 4.5, no  interests  in  any  joint
venture or partnership with any other Person.

     Section 4.6    Financial Statements.  Borrower has furnished to the Lenders
(a)  Borrower's  consolidated balance sheets for its Fiscal Year  ending  on  or
about  December  31,  1998  and Borrower's related  consolidated  statements  of
operations, stockholders' equity and cash flows for its Fiscal Year ending on or
about    December   31,   1998,   accompanied   by   the   audit   opinion    of
PricewaterhouseCoopers LLP, (b) Borrower's unaudited consolidated balance  sheet
for  its  Fiscal  Quarter ending on or about September 30, 1999  and  Borrower's
related  consolidated statements of operations, stockholders'  equity  and  cash
flows  for such Fiscal Quarter, and (c) Borrower's operating and financial  plan
for  the  three  Fiscal  Years  ending after the Closing  Date.   The  financial
statements  described in clauses (a) and (b) above fairly present the  financial
position and results of operations of Borrower, on a consolidated basis,  as  at
the  dates  and  for the periods indicated in accordance with GAAP  consistently
applied.

     Section  4.7    No Other Liabilities; No Material Adverse Effect.   Neither
Borrower  nor any Subsidiary has any liability or contingent liability  that  is
material to Borrower or such  Subsidiary that is not reflected in, reserved  for
or  against  or  otherwise  disclosed in the financial statements  described  in
Section 4.6, and, since September 30, 1999, except as described in

<PAGE>

Schedule 4.7 hereto, no event or circumstance has occurred that could reasonably
be expected to have a Material Adverse Effect.

     Section 4.8    Title to and Location of Property.  Borrower and its
Subsidiaries have good and marketable title to the owned Property reflected
in the financial statements described in Section 4.6 and valid leasehold title
to the leased Property  (if any) reflected in such financial statements, in each
case, other than Property subsequently sold or disposed of in the ordinary
course of business, free and clear of all Liens, other than Permitted
Encumbrances.  Neither Borrower nor any Subsidiary owns any Property in any
jurisdiction other than the jurisdictions set forth in Schedule 4.8.  All of the
Property owned by, leased to or used by Borrower or any Subsidiary is in good
operating condition and  repair (except as described on Schedule 4.7 attached
hereto), ordinary wear and tear excepted, is free and clear of any known defects
except such defects as do  not substantially interfere with the continued use
thereof in the conduct of normal  operations, and is able to serve the function
for which it is currently being  used.   Borrower  and its Subsidiaries have the
right to peaceful and undisturbed possession under all leases of Property
necessary for the operation of their respective businesses and assets, none of
which contains any unusual or burdensome  provisions which could reasonably be
expected to have a Material Adverse  Effect, and all such leases are valid and
subsisting and in full force and  effect  except to the extent that failure to
be in full force and effect could not reasonably be expected to have a Material
Adverse Effect.

     Section 4.9    Intangible Assets.  Borrower and its Subsidiaries own or
possess the right to use all trademarks, trade names, copyrights, patents,
patent rights, computer software, licenses and other intangible assets that are
used or are necessary in the conduct of their respective businesses as now
operated.  To the best of Borrower's knowledge, no such intangible asset (a)
conflicts with the valid trademark, trade name, copyright, patent, patent right
or intangible asset of any other Person or (b) has been infringed upon, to the
extent that such conflict or infringement could reasonably be expected to have
a Material Adverse Effect.  Schedule 4.9 sets forth all patents, patent
applications, trademarks and trade names used by Borrower and its Subsidiaries
as of the date of this Agreement and the Closing Date.

     Section 4.10   Governmental Regulation.  Neither Borrower nor any
Subsidiary is subject to regulation under the Public Utility Holding Company Act
of 1935, the Federal Power Act, the Interstate Commerce Act, the Investment
Company  Act  of 1940  or  any other Law limiting or regulating its ability to
incur Indebtedness for money borrowed.

     Section 4.11   Litigation; Judgments.  Except for matters set forth in
Schedule 4.11, there are no actions, suits, proceedings or investigations
pending or, to Borrower's knowledge, threatened against or affecting Lancer,
Borrower or any Subsidiary or any Property of any of them before any
Governmental Agency relating to this Agreement, the other Loan Documents or the
transactions contemplated hereby or which, if determined adversely  to  such
Person  could reasonably be expected to have a Material Adverse Effect.  There
is, to the best knowledge of Borrower, no reasonable basis for any action, suit,
proceeding or investigation  against Lancer, Borrower, or any Subsidiary of
Borrower or any Property of any of them before any Governmental Agency which,
if  determined adversely  to  such  Person, could reasonably be expected  to
have a Material Adverse  Effect.   Neither Lancer, Borrower nor any Subsidiary
of Borrower is subject to, or in default with respect to, any final judgment,
writ, injunction,

<PAGE>

restraining  order or other order of any nature, decree, rule or  regulation  of
any  Governmental Agency which could reasonably be expected to have  a  Material
Adverse Effect.

     Section 4.12   Binding Obligations.  Each of the Loan Documents will,  when
executed and delivered by Lancer, Borrower or any Subsidiary of Borrower, to the
extent  that  each is a party thereto, constitute the legal, valid  and  binding
obligation of such Person pursuant thereto, enforceable against such  Person  in
accordance with its terms.

     Section  4.13    No Default.  No event has occurred and is continuing  that
constitutes a Default or an Event of Default.

     Section 4.14   ERISA.

     Except as disclosed on Schedule 4.14:

     (a)  Except for premiums payable in the ordinary course of business that
are not past due, neither Borrower, nor any Subsidiary is subject to any
liability nor is  Borrower aware of any facts which could reasonably be expected
to result in liability to any such Person resulting directly or indirectly or
in any way connected with any failure on the part of Borrower, any Subsidiary or
any ERISA Affiliate to comply with the applicable provisions of ERISA, the Code,
and other applicable Laws with respect to a Plan of any such entity, including,
but not limited  to, the continuation of health coverage requirements under
Part 6 of Title  I  of  ERISA and Code Section 4980B with respect to any Welfare
Plan of Borrower, any Subsidiary or any ERISA Affiliate, which liabilities
either singly or in the aggregate could reasonably be expected to have a
Material Adverse Effect;

(b)  Neither Borrower nor any Subsidiary maintains or has liability with respect
to, or obligation to pay benefits from or under, any Retiree Welfare Plan;

(c)  Neither Borrower nor any Subsidiary maintains or has liability with respect
to, or obligation to pay benefits from or under, any unfunded Plan which
provides benefits to a select group of management or highly compensated
employees upon the termination of employment;

(d)  With respect to any Plan of Borrower, any Subsidiary or any ERISA
Affiliate, there are no delinquencies, omissions or misrepresentations with
respect to any returns, reports or premiums required to be filed with or paid to
any Governmental Agency, including, but not limited to, the Internal Revenue
Service, the Department of Labor and the PBGC, which could reasonably be
expected to have a Material Adverse Effect;

(e)  With respect to any Pension Plan (or a money purchase plan of Borrower, any
Subsidiary or an ERISA Affiliate), (i) all contributions required by Section 412
of the Code, Section 302 of ERISA, the terms of any collective bargaining
agreement and the terms of any such plan, have been timely made, and (ii) as of
the most recent valuation date for each such plan, the present value of the
total accrued benefits (both vested and nonvested) does not exceed the fair
market value of the assets of such plan by more than $2,000,000;

(f)  With respect to each Plan of Borrower or any Subsidiary other than a
Pension Plan, no contributions due from Borrower or any Subsidiary are
delinquent or, if there are any

<PAGE>

delinquencies, the adverse consequences of such delinquencies, such as financial
penalties  or, in the case of insurance premiums, potential losses of  coverage,
could  not singly or in the aggregate reasonably be expected to have a  Material
Adverse Effect;

(g)  With respect to each Pension Plan, there have been no Reportable
Events and Borrower is not aware of any facts which would reasonably be expected
to  result in any Reportable Events under circumstances that could reasonably be
expected to have a Material Adverse Effect;

(h)  With respect to each Multiemployer Plan, no events have occurred which,
with the giving of notice under Section 4219 of ERISA, either singly or in the
aggregate, would result in withdrawal liability that could reasonably be
expected to have a Material Adverse Effect;

(i)  Within the last six years, no Pension Plan has been terminated and there
has been no complete or partial withdrawal within the meaning of Section 4201 of
ERISA from any Multiemployer Plan under circumstances that resulted in
liability to the PBGC, a trustee appointed under Section 4042(b) of ERISA, a
Pension Plan, a Multiemployer Plan or any other Person which liability remains
unsatisfied; and

(j)  Neither Borrower, any Subsidiary nor any ERISA Affiliate within the last
five years has engaged in any transaction which  resulted in a Pension Plan
being transferred outside of the "controlled group" (within the meaning of
Section 4001(a)(14) of ERISA) of such Person.

     Section 4.15   Regulations G and U.  No part of the proceeds of any Term
Loan or Advance hereunder will be used to purchase or carry, or to  extend
credit to others for the purpose of purchasing or carrying, any "margin stock"
(as such term is defined in Regulations G and U) in violation of Regulations  G
or U.  Neither Borrower nor any Subsidiary is engaged principally, or as  one
of  its important  activities, in the business of extending credit for  the
purpose of purchasing or carrying any such "margin stock".

     Section 4.16   Disclosure.  Neither this Agreement, any other Loan
Document, the Registration Statement or any written statement made by or on
behalf of Borrower to  the  Agent or the Lenders in connection with this
Agreement, any other Loan Document  or the transactions contemplated by the
Registration Statement or in connection with the making of any Advance, the
issuance of any Letter of Credit, the incurrence of any Letter of Credit
Obligation or the making of any Term Loan contains  any  untrue  statement of a
material fact or  omits a material fact necessary in order to make the statement
made not misleading in light of all the circumstances  existing at the date the
statement was made.  There is no fact known to Borrower which would constitute a
Material Adverse Effect that has not been  disclosed in writing to Lenders.
Borrower acknowledges that Lenders are relying on the truth and accuracy of all
disclosures made by or on behalf of Borrower (including, without limitation, in
the  Registration  Statement), in making the extensions of credit contemplated
by this Agreement, and specifically authorizes such reliance.

     Section 4.17   Tax Liability.  Borrower and its Subsidiaries have filed all
tax returns which are required to be filed, and all federal income tax  returns
of Borrower and its Subsidiaries for each period beginning on or after August
21, 1989, have been filed on a consolidated basis

<PAGE>

with Lancer in accordance with the terms of the Tax Sharing Agreement.  Borrower
and  its Subsidiaries have paid, or made provision for the payment of, all taxes
with  respect to the periods, Property or transactions covered by said  returns,
or  pursuant  to  any assessment received by Borrower or any Subsidiary,  except
such  taxes,  if  any,  as  are being contested in  good  faith  by  appropriate
proceedings  and  as  to  which  adequate reserves  have  been  established  and
maintained,  and taxes or assessments not yet past due.  Borrower timely  filed,
or  caused  to  be  timely filed, with the appropriate office  of  the  Internal
Revenue  Service a full and complete protective carryover basis  election  under
Section  338  of  the Code and the Treasury Regulations promulgated  thereunder,
with  respect  to  its  acquisition by Central Alabama Grain  Company  to  avoid
properly the potential application of such Section of the Code.  Borrower has no
knowledge of any proposed tax assessment against Borrower or any Subsidiary that
could  reasonably be expected to have a Material Adverse Effect, which  has  not
been  reserved against and is not  being actively contested in good faith by  or
on behalf of Borrower.  As of the date of this Agreement, except as described in
Schedule  4.17,  neither Borrower nor any Subsidiary, nor any  Person  on  their
behalf,   has  executed or filed with any Governmental Agency any  agreement  or
other document extending, or having the effect of extending, the period for  the
assessment or collection of any tax.  All deficiencies which have been  asserted
against  Borrower or any Subsidiary as a result of any federal, state, local  or
foreign tax examination for each taxable year in respect of which an examination
has  been  conducted  by the Internal Revenue Service have been  fully  paid  or
finally  settled  or are being contested in good faith, and no  issue  has  been
raised  in  any  such  examination which, by application of similar  principles,
reasonably  can be expected to result in assertion of a material deficiency  for
any  other  year not so examined which has not been reserved for  in  Borrower's
financial statements to the extent, if any, required by GAAP.

     Section 4.18   Security Interests.  The Collateral Documents have created
valid and enforceable Liens in the Collateral described therein in favor of the
Agent, for  the benefit of the Lenders, as security for the Obligations which
have been perfected by the filing of financing statements in the offices in the
jurisdictions listed in the schedules to the Security Agreements and, the filing
or recording of the Mortgage, the Patent Security Agreement and the  Trademark
Security Agreement,  with  the appropriate Governmental  Agencies.   The  Liens
created pursuant to such Collateral Documents constitute fully perfected  first
Liens on, and security interests in, all right, title and interest of  Borrower
or its Subsidiary in the Collateral described therein except as set  forth  in
such Collateral Documents and except for Permitted Encumbrances.

     Section 4.19   Employee Matters.  Neither Borrower nor any of its
Subsidiaries is  engaged  in any unfair labor practice that could reasonably be
expected to have a Material Adverse Effect.  There is (a) no unfair labor
practice complaint pending  against Borrower, or any of its Subsidiaries or, to
the best knowledge of Borrower, threatened against any of them, before the
National Labor Relations Board, and no grievance or significant arbitration
proceeding arising out of or under any collective bargaining agreement is so
pending against Borrower or any of its Subsidiaries or, to the best knowledge of
Borrower, threatened against any of them, (b) no strike, labor dispute, slowdown
or stoppage pending against Borrower or any of its Subsidiaries or, to the best
knowledge of Borrower, threatened  against  Borrower or any of its Subsidiaries
and (c) to the best knowledge of Borrower, except as set forth in Schedule 4.19,
no union representation question exists with respect to the employees of
Borrower, or any of its Subsidiaries and, to the best knowledge of Borrower, no
union organizing activities are taking

<PAGE>

place,  except, with respect  to any matter specified in clause (a), (b) or  (c)
above, either individually or in the aggregate, such as could not reasonably  be
expected to have a Material Adverse Effect.

     Section 4.20   Solvency.  After giving effect to the entering into by
Borrower of this Agreement and the other Loan Documents, the making of any
Advance, the incurrence of any Letter of Credit Obligation and the funding of
the Term Loans, Lancer, Borrower and each Subsidiary is Solvent.

     Section 4.21   Subordination of Subordinated Indebtedness.

     This  Agreement  and  the other Loan Documents to  which  Borrower  or  any
Subsidiary  is party, and, to the extent permissible under Section 4.06  of  the
Senior  Subordinated  Note  Indenture, all further  amendments,  amendments  and
restatements, renewals, extensions, restructurings, supplements,  modifications,
refinancings,  refundings,  or replacements hereof and  thereof  constitute  the
"Credit Agreement" within the meaning of the Senior Subordinated Note Indenture,
and the Term Loans, the Revolving Credit Loan, the Letter of Credit Obligations,
and  all  other Obligations of Borrower to the Agent and the Lenders under  this
Agreement,  the Notes and any of the other Loan Documents, and,  to  the  extent
permissible pursuant to Section 4.06 of the Senior Subordinated Note  Indenture,
all  further  amendments,  amendments  and restatements,  renewals,  extensions,
restructurings,   supplements,  modifications,  refinancings,   refundings   and
replacements  of  any  of  the foregoing, constitute  "Senior  Indebtedness"  of
Borrower within the meaning of the Senior Subordinated Note Indenture,  and  the
holders  thereof from time to time shall be entitled to all of the rights  of  a
holder   of  "Senior  Indebtedness"  pursuant  to  Article  11  of  the   Senior
Subordinated Note Indenture.

     Section 4.22   Real Property.  Schedule 4.22 correctly sets forth a summary
description of all Owned Real Property and all Leasehold Real Property.

     Section 4.23   Environmental Matters.  Except as described in Schedule 4.23
(to the extent applicable), (a) the operations, facilities and properties of
Borrower and each Subsidiary comply in all material respects with all applicable
Environmental  Laws;  (b)  Borrower  and  each  Subsidiary  have  obtained   all
Environmental   Permits  necessary  for  the  operation  of   their   respective
businesses,  except  where the failure to obtain such  Permits  would  not  have
either  a  Material Adverse Effect or an Environmental Material Adverse  Effect,
and  all such Environmental Permits are valid and in good standing except  where
the  failure to be valid and in good standing would not have either  a  Material
Adverse  Effect or an Environmental Material Adverse Effect and, to the best  of
Borrower's  knowledge,  are  not the subject of any modification  or  revocation
proceeding,  and Borrower and each Subsidiary are in compliance in all  material
respects   with  all  terms  and  conditions  of  such  Environmental   Permits;
(c)  neither  Borrower  nor  any Subsidiary is the subject  of  any  outstanding
written  order  or  agreement  with any Governmental  Agency  or  private  party
respecting (i) any Environmental Laws, (ii) any Remedial Actions, or  (iii)  any
Environmental  Claims  arising  from the Release  or  threat  of  Release  of  a
Contaminant;  (d)  neither Borrower nor any Subsidiary is a party  defendant  or
respondent in any judicial or administrative proceeding alleging a violation  of
any  Environmental  Law,  asserting any Environmental  Claim  arising  from  the
Release  or  threat  of  Release of a Contaminant or relating  to  any  Remedial
Action; (e) to the best of Borrower's knowledge, none of the operations,

<PAGE>

properties  or  facilities of Borrower or any Subsidiary  or  any  of  the  past
operations, properties or facilities of Borrower or any Subsidiary  is  (i)  the
subject  of any federal or state investigation (other than periodic and ordinary
inspections)   evaluating  any  matter  regulated  by  any  Environmental   Law,
including, without limitation, a determination of whether any Remedial Action is
needed to respond to a Release of any Contaminant into the environment under any
Environmental  Law  or  (ii)  listed or proposed for  listing  on  the  National
Priorities List pursuant to CERCLA, on the Comprehensive Environmental Response,
Compensation  and  Liability  Information  System  ("CERCLIS")  or  any  similar
published  state list of sites requiring investigation or clean-up; (f)  neither
Borrower  nor  any  Subsidiary (as to any of the present or past  facilities  or
operations of Borrower or any Subsidiary) or, to the best knowledge of Borrower,
any  predecessor  of  Borrower or any Subsidiary, has filed any  written  notice
under  any  Environmental Law indicating past or present treatment, storage,  or
disposal of a hazardous waste or solid waste or reporting a spill or Release  of
a  Contaminant into the environment under any Environmental Law and  except  for
Releases of Contaminants which occurred after the date that Borrower or  any  of
its Subsidiaries sold, transferred, assigned or otherwise  disposed  of  its
interests in any previously operated, owned or leased Property, there have  been
no  unreported  Releases  of  Contaminants at, on or under  Property  now  or
previously operated, owned or leased by Borrower or any of its Subsidiaries; (g)
to the best of Borrower's knowledge, neither Borrower nor any Subsidiary has any
contingent liability in connection with any Release or threat of Release of  any
Contaminant  into the environment; (h) neither Borrower nor any  Subsidiary  has
received  any written notice or claim to the effect that it is or may be  liable
to  any  Person as a result of the Release or threat of Release of a Contaminant
into  the  Environment if such liability would have either  a  Material  Adverse
Effect or an Environmental Material Adverse Effect; (i) as of the Closing  Date,
none  of  Borrower's  or  any Subsidiary's operations  involve  the  generation,
storage, transportation, treatment, recycling, reclamation, handling or disposal
of  hazardous  waste,  as defined under 40 C.F.R. Parts  260-270  or  any  state
equivalent;  (j)  neither  Borrower  nor any  Subsidiary  has  disposed  of  any
Contaminant by placing it in, on or under the ground, subsurface strata, surface
waters or groundwaters of any Real Property owned, leased or used by Borrower or
any Subsidiary and, to the best of Borrower's knowledge, neither has any lessee,
other  prior  owner  or  other  Person; (k) neither  Borrower  nor  any  of  its
Subsidiaries   has   directly   transported  or  directly   arranged   for   the
transportation of Contaminants to any location which is listed or  proposed  for
listing on the National Priorities List pursuant to CERCLA, on the CERCLIS or on
any  similar published state list or which is the subject of federal,  state  or
local  enforcement  actions or other investigations which  may  lead  to  claims
against  Borrower  or such Subsidiary for any remedial work, damage  to  natural
resources  or  personal injury, including claims under CERCLA, except  for  such
claims  which could not reasonably be expected to have either a Material Adverse
Effect  or  an  Environmental  Material Adverse  Effect;  (l)  to  the  best  of
Borrower's  knowledge,  none  of Borrower's or any  Subsidiary's  Real  Property
contains or ever contained, any underground storage tanks, surface impoundments,
asbestos-containing  materials  or  polychlorinated  biphenyls;   and   (m)   no
Environmental  Lien  in  favor of any Governmental  Agency  has  been  filed  or
attached to any of Borrower's or any Subsidiary's Real Property and, to the best
of Borrower's knowledge, there are no conditions or facts in existence that with
the  passage  of  time could give rise to the filing or attachment  of  such  an
Environmental Lien.

     Section 4.24   Ownership of Capital Stock.  Schedule 4.24 sets forth, as of
the date of this Agreement and the Closing Date, the number of issued and
authorized shares of each class of Capital Stock of Borrower and T-H Licensing,
and the ownership of such shares.  Except as

<PAGE>

set  forth  in  Schedule 4.24, no Capital Stock (or any securities, instruments,
warrants,  option  or  purchase rights, conversion or  exchange  rights,  calls,
commitments or claims of a character convertible into or exercisable for Capital
Stock)  of  Borrower or T-H Licensing is subject to issuance under any security,
instrument,  warrant, option or purchase rights, conversion or exchange  rights,
call, commitment or claim of any character.

     Section 4.25   Brokers; Transaction Fees.  Neither Borrower nor any of  its
Subsidiaries  has  any  obligation to any Person in  respect  of  any  finder's,
broker's  or investment banker's fee in connection herewith or with any  of  the
transactions contemplated hereby.

                                   ARTICLE 5.
                              AFFIRMATIVE COVENANTS
               (OTHER THAN INFORMATION AND REPORTING REQUIREMENTS)

     So  long  as any Term Loan or Advance remains unpaid, any Letter of  Credit
Obligation  remains  outstanding, any other Obligation  remains  unpaid  or  any
portion  of  the  Commitment remains outstanding, unless  the  Majority  Lenders
otherwise consent in writing:

     Section 5.1    Use of Proceeds.  Borrower shall use the proceeds of
Advances made hereunder only for working capital and for other general corporate
purposes of Borrower permitted hereunder; and use Letters of Credit arranged
for hereunder  only  to support certain insurance obligations of  Borrower  and
for other general corporate purposes of Borrower; in each case to the  extent
that such purpose is not otherwise prohibited by this Agreement.

     Section 5.2    Payment of Taxes and Other Potential Liens; Compliance  with
Related Agreements.

     (a)  Borrower shall, and shall cause each Subsidiary to, pay (i) all taxes,
assessments  and other governmental charges imposed upon it or  on  any  of  its
Property  or in respect of any of its franchises, businesses, income or Property
before  any penalty or interest accrues thereon, and (ii) all claims (including,
without limitation, claims for labor, services, materials and supplies) for sums
which  have  become due and payable and which by Law have or may become  a  Lien
upon  any  of Borrower's or any Subsidiary's Properties; provided that  no  such
taxes, assessments, and governmental charges referred to in clause (i) above  or
claims  referred to in clause (ii) above need to be paid if being  contested  in
good  faith  by  appropriate  proceedings  promptly  instituted  and  diligently
conducted  and  if  adequate  reserves shall have been  set  aside  therefor  in
accordance with GAAP;

(b)  Borrower shall  file consolidated tax returns with Lancer in accordance
with the terms of the Tax Sharing Agreement and otherwise shall comply with and
perform, and cause each Subsidiary to comply with and perform, all of the
covenants and agreements applicable to Borrower and its Subsidiaries under the
Related Agreements.

     Section 5.3    Preservation of Existence.  Borrower shall, and shall cause
each Subsidiary to, (a) preserve and maintain its corporate existence under the
laws of the state of its incorporation and all authorizations, rights,
franchises, privileges, consents, approvals, orders, licenses, permits or
registrations from any Governmental Agency that are necessary for the

<PAGE>

transaction  of  its business; and notify the Agent in writing,  promptly  after
learning  thereof, of the suspension, cancellation, revocation or discontinuance
of  or  of  any pending or threatened action or proceeding seeking  to  suspend,
cancel,   revoke  or  discontinue  any  such  authorization,  right,  franchise,
privilege,  consent,  approval, order, license or permit, and  (b)  qualify  and
remain  qualified as a foreign corporation in each jurisdiction  in  which  such
qualification  is  necessary in view of its business or  the  ownership  of  its
Properties except if failure to qualify or remain qualified could not reasonably
be  expected to have a Material Adverse Effect.  Nothing contained herein  shall
prohibit a merger or consolidation of T-H Licensing with and into Borrower or  a
transfer  of  the  assets  of T-H Licensing to Borrower otherwise  permitted  by
Section 6.2(a).

     Section 5.4    Maintenance of Properties and Business.

     (a) Borrower shall, and shall cause each Subsidiary to, maintain, preserve
and protect (i) all of their respective tangible Properties that are used or
useful in the conduct of their respective businesses in good order and
condition, subject to wear and tear in the ordinary course of business, and not
permit any waste of any material item of their respective Properties, and (ii)
except where the failure to do so could not reasonably be expected to have a
Material Adverse Effect,  all  trademarks,  trade  names,  copyrights,  patents,
patent rights, computer software, licenses and other intangible assets that are
used or useful in the conduct of their respective businesses.

(b)  Except as permitted pursuant to the last sentence of Section 5.3, Borrower
shall, and shall cause each of its Subsidiaries to, use its reasonable efforts,
in the ordinary course and consistent with past practice, to preserve its
business organization and preserve the goodwill and  business of the customers,
suppliers, and others having business relations with it.

     Section 5.5    Maintenance of Insurance.  Borrower shall, and shall cause
each Subsidiary to, maintain liability, casualty and other  insurance  (subject
to customary  deductibles and retentions) with responsible insurance  companies
in such amounts and against such risks as is carried by  responsible  companies
engaged in similar businesses and owning similar assets in the general areas  in
which  Borrower  and  its Subsidiaries operate and, in any  event,  the  minimum
insurance  coverages and risks assured against described in  Schedule  5.5;  and
provide  to  the  Agent  a  certified copy of each  policy  providing  for  such
insurance,  together with an endorsement thereto providing  that  the  insurance
companies  issuing such policies will give the Agent at least thirty  (30)  days
prior  written notice of cancellation, non-renewal or any other material change;
maintain the Agent for the benefit of the Lenders as loss payee, as its interest
appears,  with  respect to insurance covering the Collateral and  maintain  each
Lender as an additional insured on its liability insurance policies.

     Section 5.6    Compliance With Laws.  Borrower shall, and shall cause  each
Subsidiary  to,  comply  with  all  Requirements  of  Law,  including,   without
limitation,  all  Environmental  Laws,  except  (a)  noncompliances  with   such
Requirements of Law as are being contested in good faith or as to which  a  bona
fide dispute may exist and as  which  could not reasonably be expected to have a
Material  Adverse Effect or (b) inadvertent noncompliances with Requirements  of
Law which could not reasonably be expected to have a Material Adverse Effect.

<PAGE>

     Section 5.7   Inspection Rights. Borrower shall, upon reasonable notice, at
any  time  during customary business hours and as often as reasonably requested,
or  if  an Event of Default has occurred and is continuing, at any time  without
advance  notice,  permit  the Agent or any Lender, or any  authorized  employee,
agent or representative thereof, to examine, audit and make copies and abstracts
from  the records and books of account of, and to visit and inspect the Property
of,  Borrower and each Subsidiary, under the guidance of a Responsible  Official
of  Borrower  or  such  Subsidiary, and to discuss  the  affairs,  finances  and
accounts of Borrower and each Subsidiary with any of its officers, key employees
or accountants.  Borrower hereby authorizes the Agent and its representatives to
communicate  directly with Borrower's accountants, after notifying  Borrower  of
its  intent to do so, and authorizes Borrower's accountants to disclose  to  the
Agent  and  its  representatives  any and all  financial  statements  and  other
information  of  any  kind,  including copies of any management  letter  or  the
substance  of any oral information, that such accountants may have with  respect
to  the  Collateral or Borrower's and its Subsidiaries' condition (financial  or
otherwise), operations, properties, performance and prospects.  Borrower, on  or
before  the  Closing Date, shall deliver a letter addressed to such  accountants
instructing them to disclose such information.

     Section 5.8   Audit Rights.  Borrower shall permit the Agent, or any
authorized employee,  agent or representative thereof, at Borrower's expense,
to audit the Collateral from time to time as often as the Agent may reasonably
 request.

     Section 5.9    Keeping of Records and Books of Account.  Borrower shall,
and shall cause each Subsidiary to, make and keep books, records and accounts
which reflect in reasonable detail all transactions as necessary to permit
preparation of financial statements in conformity with GAAP.  If an Event of
Default has occurred and is continuing, Borrower, upon the Agent's request,
shall turn over copies of any such records to the Agent or its representative.

     Section 5.10   Compliance With Agreements; Payment of Indebtedness.
Borrower shall, and shall cause each Subsidiary to, promptly and fully comply
with  all Contractual Obligations under all agreements, indentures, leases
and/or instruments to which Borrower or any Subsidiary is a party, whether such
agreements, indentures, leases or instruments are with the Lenders  or  another
Person,  where the failure so to comply could reasonably be expected to  have  a
Material  Adverse Effect.  Without limitation of the foregoing,  Borrower  shall
pay, and shall cause each Subsidiary to pay, all Indebtedness in respect of such
Contractual  Obligations, subject to the subordination provisions  contained  in
the  Senior  Subordinated Note Indenture or any other instruments or  agreements
evidencing Indebtedness of Borrower or any Subsidiary.

     Section 5.11   Environmental Laws.

     (a)   Borrower shall and shall cause each Subsidiary to (i) comply  in  all
material  respects  with  the  Environmental  Laws  and  Environmental   Permits
applicable to it; (ii) notify the Agent in writing promptly after knowledge, and
in  any event within five days after knowledge, in the event of any: (A) Release
or  threat  of Release which is or must be reported to any Governmental  Agency,
(B)   Environmental  Claims  in  connection  with  any  of  Borrower's  or   any
Subsidiary's  Real Property, (C) government investigation (other  than  periodic
and  ordinary  inspections) of matters regulated pursuant to  any  Environmental
Law,  (D)  actual  or threatened Environmental Lien, (E) proposed  real  estate,
stock or other commercial transaction that could

<PAGE>

reasonably  be  expected to give rise to any Environmental  Claim  or  potential
liability  under  any  Environmental Law, or (F) any  other  matter  related  to
Borrower's  or  any Subsidiary's Real Property that is related to  Environmental
Laws  and could reasonably be expected to have a Material Adverse Effect  or  an
Environmental Material Adverse Effect, including, without limitation, any change
to  any  applicable Environmental Law and any change or proposed change  to  any
applicable   Environmental Permit; (iii) promptly, and in any event within  five
days  after  submission, forward to the Agent a copy of  any  notice  or  report
submitted by Borrower or any Subsidiary to any Governmental Agency in connection
with  (A)  any Release, (B) any threat of Release, (C) any Environmental  Claim,
(D)  any written allegation which may give rise to an Environmental Claim or (E)
any  other matter relating to the Environmental Laws which would have a Material
Adverse Effect or an Environmental Material Adverse Effect; (iv) forward to  the
Agent  promptly, and in any event within five days after receipt, a copy of  any
order,  notice, Environmental Permit or other written communication received  by
Borrower  or  any  Subsidiary from any Governmental Agency or  other  Person  in
connection  with  (A)  any  Release,  (B)  any  threat  of  Release,   (C)   any
Environmental  Claim,  (D) any written allegation which  may  give  rise  to  an
Environmental Claim, or (E) any other matter relating to the Environmental  Laws
which  could   reasonably be expected to have a Material Adverse  Effect  or  an
Environmental Material Adverse Effect; and (v) promptly, and in any event within
five  days  after  submission,  notify the  Agent  of  any  application  for  an
Environmental Permit submitted by Borrower or any Subsidiary to any Governmental
Agency.

     (b)  Borrower shall conduct, and cause to be conducted, the ongoing
operations of Borrower and its Subsidiaries in a manner that will not give rise
to the imposition of liability, or require expenditures, under or in connection
with any Environmental Laws, except for any liabilities or expenditures which,
in the aggregate, could not reasonably be expected to have a Material Adverse
Effect.

(c)  Borrower shall refrain from disposing of any "hazardous waste" (as that
term is defined under RCRA) or "hazardous substance" (as that term is defined
under CERCLA) at, on, in or under any of the Real Property.

(d)  In any Fiscal Year, at the request of the Agent, Borrower shall retain an
environmental contractor of recognized standing to perform an environmental
compliance audit ("Environmental Audit") of the facilities, properties and
operations of Borrower and its Subsidiaries in order to demonstrate that
Borrower is in compliance with paragraphs (a), (b) and (c) of this Section 5.11.
The work performed by the contractor in conducting the Environmental Audit shall
be of sufficient scope and quality, and the results presented in such a format,
as to permit Lenders readily to ascertain such compliance on the part of
Borrower.   In performing the Environmental Audit, the retained environmental
contractor shall, at a minimum, determine all rules, regulations, requirements,
standards, and limitations of the Environmental Laws, and the provisions of all
Environmental Permits, applicable to all Contaminants used, produced, generated,
discharged or emitted by the operations or activities of Borrower and its
Subsidiaries and all Contaminants known to be present at or on the properties or
facilities of Borrower and its Subsidiaries, and shall determine the compliance
of Borrower and its Subsidiaries with such applicable rules, regulations,
requirements, standards and limitations.  If the Agent requests any
Environmental Audit in accordance with the provisions of this Section 5.11(d),
Borrower shall deliver to the Agent not later than sixty (60) days after the
date of such request, a written report

<PAGE>

setting  forth the results of such Environmental Audit.  In the event  that  the
Environmental Audit discloses any non-compliance with any  Environmental Laws or
any  condition  that could give rise to an Environmental Claim (whether  or  not
such  non-compliance or condition would constitute a breach of paragraph (a)  of
this  Section 5.11), Borrower shall promptly take such action as Borrower  shall
deem necessary or appropriate, in consultation with the environmental contractor
retained by it and with external legal counsel, to remedy such noncompliance.

     The  reports  setting forth the results of Environmental  Audits  shall  be
furnished to the Agent solely for the purpose of evidencing Borrower's  and  its
Subsidiaries' compliance with the provisions of paragraphs (a), (b) and  (c)  of
this  Section  5.11 and shall not create, nor be intended to imply,  any  right,
duty  or  obligation  on behalf of the Agent or any of Lenders  in  any  respect
whatsoever, including, without limitation, any right, duty or obligation on  the
part  of  the  Agent  or  any of Lenders in any manner  to  participate  in  the
management  or operations of Borrower or its Subsidiaries, nor be  construed  to
imply  that  the Agent or any of Lenders has any power whatsoever to affect  the
decisions  and  activities  of  Borrower or its  Subsidiaries  with  respect  to
compliance with applicable Environmental Laws.

     Section 5.12   Additional Real Property Collateral.  Borrower shall notify
the Agent in writing promptly upon its or any Subsidiary's acquisition or
leasing of any Real Property, and, at the Agent's request, shall promptly
thereafter execute and deliver to the Agent, for the benefit of Lenders,  or
cause its Subsidiary to execute and deliver to the Agent, for the benefit of
Lenders, a mortgage, deed of trust, deed to secure debt, assignment or other
appropriate instrument evidencing a Lien upon any such Real Property, together
with such title insurance policies (mortgagee's form), certified surveys,
appraisals and local counsel opinions with respect thereto and such other
agreements, documents and instruments which the Agent deems necessary or
desirable, the same to be  in form  and  substance  substantially the same as
the Mortgage (with appropriate state  law variations) and to be subject only to
(a) Permitted Encumbrances and (b)  such other Liens as the Agent may approve in
its sole discretion, it being understood that the granting of such additional
security for the Obligations is a  material inducement to the execution and
delivery of this Agreement by each Lender.

     Section 5.13   Collections.  Borrower shall deposit into the Collection
Accounts on a daily basis any monies, checks, notes, drafts or other items of
payment received by Borrower relating to or which constitute proceeds of
Accounts, Inventory or other Collateral, and to the extent that one or more of
the Collection Accounts consists of a lockbox, will direct all of its Account
Debtors to remit all payments on Accounts directly to the appropriate lockbox or
lockboxes.   Prior  to Borrower's deposit of proceeds of Accounts  or  Inventory
into the Collection Accounts, Borrower shall hold all such amounts in trust  for
the benefit of  Lenders.  Borrower shall take all actions necessary at all times
hereafter to maintain the Collection Accounts, including the payment of all fees
charged by the banks at which such accounts are maintained.   Borrower
acknowledges and agrees that, from and after the occurrence of, and  during  the
continuance of, a Triggering Event, only the Agent shall have  any  power  of
withdrawal with respect to the Collection Accounts and Borrower shall  not  have
any right, title or interest in such accounts or the sums deposited therein.  In
accordance with the provisions of the Blocked Account Agreements Borrower  will
instruct each bank at which a Collection Account is maintained that,  from  and
after the occurrence of, and during the continuance of, a Triggering Event,  if
the Agent so directs, such bank is to remit the collected balance in such
account on a

<PAGE>

daily  basis, in immediately available funds, to the Agent's Deposit Account  or
as  the  Agent  shall  otherwise direct for application to  the  Obligations  as
provided in Section 3.1(a).

                                   ARTICLE 6.
                               NEGATIVE COVENANTS

     So long as any Term Loan or Advance remains unpaid, or any Letter of Credit
Obligation  remains outstanding or any other Obligation remains  unpaid  or  any
portion  of  the  Commitment remains outstanding (unless  the  Majority  Lenders
otherwise consent in writing):

     Section 6.1    Disposition of Property; Application of Proceeds.

     (a)  Borrower shall not, and shall not permit any Subsidiary to, sell,
assign, transfer, lease, convey or otherwise dispose of any of its Property
(including, without limitation, Accounts), whether now owned or hereafter
acquired, or any income or profits therefrom, or enter into any agreement to do
so, except:

(i)  sales of Inventory in the ordinary course of business;

(ii) dispositions in the ordinary course of business of used, worn-out or
surplus Equipment and sales of Equipment to the extent that such sales are
credited against the purchase price of replacement Equipment or the proceeds of
such sale are applied within one hundred eighty (180) days after the date of
such sale to the purchase price of such replacement Equipment; provided that
neither the aggregate book value of Equipment disposed of or sold as permitted
under this clause (ii), nor the aggregate amount of sales proceeds received in
respect thereof, exceeds Three Million Dollars ($3,000,000) in any one Fiscal
Year; and

(iii)     dispositions not otherwise permitted hereunder which are made for fair
market value and the Net Proceeds of which are applied as provided in
Section 3.3, provided that  (A) at the time of any disposition, no Default or
Event of Default shall have occurred and be continuing or shall result from such
disposition, (B) the aggregate sales price from such disposition shall be paid
in Cash and (C) neither the aggregate book value of such assets nor the
aggregate amount of sales proceeds received in respect thereof exceeds Five
Hundred Thousand Dollars ($500,000) in any one Fiscal Year.

(b)  Net Proceeds of dispositions of Property made as permitted under
subclauses (a)(ii) and (a)(iii) of this Section 6.1 shall be paid by Borrower to
the Agent for  application  in  prepayment of the Term Loans to  the  extent
required by Sections 3.3(b).  Proceeds of dispositions of Property made pursuant
to the other provisions of clause (a) shall be deposited in the Collection
Accounts as required by Section 5.13.

     Section 6.2    Restrictions on Fundamental Changes.  Borrower shall not,
and shall not permit any Subsidiary to, (a) enter into any merger or
consolidation, (b) liquidate, wind-up or dissolve (or suffer any liquidation or
dissolution), (c) convey, lease, sell, transfer or otherwise dispose of, in one
transaction or a series of transactions, all or substantially all of Borrower's
or any Subsidiaries' business or Property, whether now owned or hereafter
acquired, (d)

<PAGE>

consummate any Acquisition, (e) create any Subsidiary, (f) transfer any  of  its
assets  to any Subsidiary created hereafter (including, without limitation,  any
Subsidiary  created with the Majority Lenders' prior written  consent),  or  (g)
change its corporate, capital, legal or divisional structure, except that:

     (i)  any Subsidiary of Borrower may merge or consolidate with or into,
     or transfer assets to, Borrower (provided that Borrower shall be the
     continuing or surviving corporation) or with, into or to any one or more
     Subsidiaries of Borrower (provided that if any transaction shall be between
     a Subsidiary and a wholly-owned Subsidiary, the wholly-owned Subsidiary
     shall be the continuing or surviving corporation or transferee) if
     immediately after giving effect thereto no Default or Event of Default
     would exist;

(ii) any Subsidiary may convey, lease, sell, transfer or otherwise dispose of
any or all of its assets (upon voluntary liquidation or otherwise) to Borrower
or another wholly-owned Subsidiary of Borrower if immediately after giving
effect thereto no Default or Event of Default would exist;

(iii)     Borrower or any Subsidiary may enter into distributorship agreements,
marketing, licensing and other arrangements relating to or complementary with
Borrower's business as presently conducted which will not require a capital
investment or contribution by Borrower, and with respect to which neither
Borrower nor any of its Subsidiaries will incur any Indebtedness (except as
otherwise expressly permitted under this Agreement);

(iv) Borrower or any Subsidiary may enter into joint ventures or partnerships
related to or complementary with Borrower's business as presently conducted if
(A) such joint ventures or partnerships will, in the good faith judgment of
Borrower, be advantageous to Borrower, (B) Borrower does not make capital
investments in excess of, or contribute assets having a fair value in excess of,
$3,000,000 for any one such joint venture or partnership or $5,000,000 for all
such joint ventures or partnerships, subject, in each case, to the additional
limitations on Capital Expenditures set forth in Section 6.18 (and provided that
expenditures permitted under this clause (iv) to the extent not Capital
Expenditures will be deducted from Borrower's gross income in determining
Consolidated Net Income for purposes of this Agreement), (C) neither Borrower
nor any of its Subsidiaries incurs any Indebtedness with respect to any such
joint venture or partnership and (D) immediately after giving effect thereto no
Default or Event of Default would exist; and

(v)  Borrower may contribute to T-H Licensing patents, trademarks, trade names,
service marks, copyrights and rights with respect to the foregoing, provided
that T-H Licensing licenses back to Borrower the exclusive right to use the
same.
     Section 6.3    Restricted Payments.  Borrower shall not, and shall not
permit any Subsidiary to, make any Restricted Payment except (a) regularly
scheduled payments of interest in respect of the Senior Subordinated Notes
(but only to the extent permitted to be made pursuant to Section  11.03  of the
Senior Subordinated Note Indenture), (b) purchases, redemptions or other
acquisitions of shares of its common stock or warrants or options to acquire
any such shares with

<PAGE>

proceeds received from the substantially concurrent issue of new shares  of  its
common  stock,  (c) payments to Lancer or any Affiliate of Lancer of  Borrower's
allocated  portion  of  the  Lancer  consolidated  group's  corporate   expenses
(including  (x)  expenses for fees actually paid or payable at market  rates  to
attorneys, accountants, consultants   and   other    professionals,    and
(y)  reimbursement of salary and compensation expenses of Lancer  employees  who
provide  substantially  all of their employment services to  Borrower)  actually
incurred  in  connection with Lancer's or any Affiliates of Lancer's performance
of  management,  consulting,  monitoring and financial  advisory  services  with
respect  to  Borrower or any Subsidiary; provided, however, that  such  payments
(excluding   reimbursement  of  the  expenses  referred  to  in  the   preceding
parenthetical)  shall  be  in  an amount not in  excess  of  $1,600,000  in  the
aggregate  in any Fiscal Year (inclusive of an amount not in excess of  $100,000
in  any  Fiscal  Year  permitted to be retained and paid  by  T-H  Licensing  as
provided in clause(A)(2) of the second paragraph of Section 6.9(c) hereof),  (d)
payments  in respect of the Equity Incentive Plan to the extent permitted  under
Section  6.9, (e) payments in discharge of mortgage obligations of its employees
to the extent that Borrower is permitted to assume such obligations under clause
(m) of Section 6.8, (f) payments by Borrower under the Tax Sharing Agreement  to
the  extent  permitted  under  Section 6.9, (g) reasonable  directors'  fees  to
directors  of Borrower who are not employees of Borrower in an aggregate  amount
not to exceed $300,000 in any Fiscal Year, (h) loans and advances by Borrower to
its employees permitted under Section 6.12; (i) cash dividends declared and paid
by  Borrower  on  the  Exchangeable Preferred  Stock;  provided  that  (A)  such
dividends  are declared and paid in accordance with the terms of the Certificate
of  Designations as in effect on the Closing Date; (B) no Default  or  Event  of
Default  has  occurred  and is continuing hereunder or  would  result  from  the
declaration and payment of such dividend; (C) such dividends are permitted to be
paid  under Section 4.08 of the Senior Subordinated Note Indenture as in  effect
on  the  Closing Date (without requiring the obtaining of any waiver or  consent
from the holders of the Senior Subordinated Notes); and (D) the Agent shall have
received all of the following prior to the declaration and payment of each  such
dividend, all in form and substance satisfactory to the Agent and legal  counsel
for  the Agent:  (1) an Officer's Certificate affirming that the conditions  set
forth in clauses (A), (B) and (C) above have been satisfied with respect to such
dividend  (and attaching all calculations necessary to demonstrate  satisfaction
of  the condition set forth at clause (C) above); (2) such documentation as  the
Agent  may  request  to  confirm that such dividend has  been  duly  authorized,
including  certificates  of corporate resolutions, certificates  of  Responsible
Officials  and  the like; (3) upon the written request of the Agent,  the  legal
opinion  of  Debevoise & Plimpton, special counsel to Borrower, with respect  to
such  dividend,  in  form and substance reasonably satisfactory  to  the  Agent,
together  with copies of all factual certificates and legal opinions upon  which
such  counsel  has relied; and (4) upon the written request of  the  Agent,  the
favorable  written  opinion  of  Chartered  Capital  Advisors,  Inc.,  valuation
consultants to Borrower or other valuation consultants selected by Borrower  and
acceptable to Lender, as to the solvency of Borrower after giving effect to  the
declaration  and  payment  of  such dividend  (any  such  dividend  meeting  the
requirements of clauses (A)-(D) above, a "Permitted Preferred Stock  Dividend");
(j)  payments  to  Lancer or any Affiliate of Lancer for consulting,  investment
banking,  advisory  or other services performed by Lancer or any  Affiliates  of
Lancer  in  connection  with material and extraordinary transactions,  including
material  acquisitions and dispositions, of Borrower or any of its  Subsidiaries
(including reimbursement of expenses of Lancer or Affiliates of Lancer for  fees
actually  paid or payable at market rates to attorneys, accountants, consultants
and other professionals in connection with such services); provided,

<PAGE>

however,  that  (i)  such  payments (excluding  reimbursement  of  the  expenses
referred to in the preceding parenthetical) do not exceed in any Fiscal Year the
greater  of (x) $1,500,000 or (y) fifty percent (50%) of Borrowers' Consolidated
Net  Income  before  payment  of Permitted Preferred  Stock  Dividends  for  the
preceding Fiscal Year, but not to exceed $5,000,000, (ii) no Default or Event of
Default  has occurred and is continuing or will result from the payment  of  any
such  amount  and (iii) this provision shall not be deemed to be  a  consent  by
Lenders to the consummation of any transaction prohibited by the Loan Agreement;
(k) payments to Lancer or the Lancer Employee Stock Ownership Plan, the proceeds
of  which  are  used  to  redeem  shares of  common  stock  of  Lancer  held  by
participants  in the Lancer Employee Stock Ownership Plan so long  as  (i)  such
payments  do  not  exceed  $500,000  in the aggregate  in  any  Fiscal  Year  or
$2,000,000  in  the  aggregate in the Fiscal Year (if any) in  which  Borrower's
employees'  participation  in  the  Lancer  Employee  Stock  Ownership  Plan  is
terminated; (ii) such payments do not exceed $5,500,000 in the aggregate  during
the  term  of  this Agreement and (iii) at the time of the making  of  any  such
payment no Default or Event of Default shall have occurred and be continuing  or
will  result  from the making of such payment; and (l) purchases by Borrower  or
any  Subsidiary  of  Borrower  of the Exchangeable  Preferred  Stock  or  Senior
Subordinated  Notes  so long as (i) the face amount of such purchases  does  not
exceed  $15,000,000 in the aggregate in any Fiscal Year and (ii) at the time  of
the  making  of  any  such purchase, no Default or Event of Default  shall  have
occurred and be continuing or will result from the making of such purchase.

     Section 6.4    Restrictions on Amendments, Etc.  Borrower shall not (a)
amend, modify or change, or consent or agree to any amendment, modification or
change to, the Senior Subordinated Note Indenture, any Senior Subordinated Note
or any of the terms relating to Subordinated Indebtedness (other than (i)  any
such amendment, modification or change which would extend the maturity or reduce
the amount  of  any payment of principal thereof or which would reduce the
rate or extend  the  date of payment of interest thereon or other amounts with
respect thereto and (ii) amendments of the type described in Sections 8.01(2),
(3), (4) and (8) of the Senior Subordinated Note Indenture, provided, however,
that any amendment, modification or change with respect to the  definitions  of
"Credit Agreement", "Designated Senior Indebtedness", "Senior Indebtedness",
"Guarantor Senior Indebtedness" or "Senior Credit Facility" (as defined in the
Senior Subordinated Note Indenture) or with respect to Article Eleven  of  the
Senior Subordinated Note Indenture shall require the consent of the Majority
Lenders); (b) designate  any  "Senior  Indebtedness" other than the Obligations
as "Designated  Senior  Indebtedness" (as such terms  are  defined  in  the
Senior Subordinated Note Indenture) or (c) amend, modify or change, or consent
or agree to  any amendment, modification or change to, the Certificate of
Designations or any  of  the terms relating to the Exchangeable Preferred Stock
(other than any such amendment, modification or change which would extend the
maturity date or reduce the amount of any liquidation preference or redemption
amount or which would reduce  the  dividend rate or extend the date of payment
of dividends thereon or other amounts with respect thereto).

     Section 6.5    ERISA.  Borrower shall not, and shall not permit any
Subsidiary to:

     (a)   Terminate any Pension Plan when such termination reasonably could  be
expected to result in liability to Borrower or any Subsidiary in excess of Three
Million Dollars ($3,000,000);

<PAGE>

     (b)  With respect to any Pension Plan (or money purchase plan of Borrower,
any Subsidiary  or  any ERISA Affiliate), fail timely to make any  contributions
as required  by the terms of such plan and Code Section 412 and ERISA Section
302, if the consequence of such failure could reasonably be expected to have a
Material Adverse Effect;

(c)  With respect to any Multiemployer Plan, make a complete or partial
withdrawal (within the meaning of Section 4201 of ERISA) from any such plan that
in the aggregate could reasonably be expected to have a Material Adverse Effect;

(d)  Take or fail to take any action with respect to a Plan, including, but not
limited to, amending a Plan or establishing a Plan where such actions or
failures to act singly or in the aggregate could reasonably be expected to have
a Material Adverse Effect; or

(e)  Modify, establish or become obligated to contribute to a Plan (other than a
Pension Plan or Multiemployer Plan) if as a result of such action the estimated
present value of the liability  to pay benefits under such Plan will exceed the
fair market value of any assets set aside to fund such benefits in an amount
that could reasonably be expected to have a Material Adverse Effect.

     Section 6.6    Change in Nature or Conduct of Business.  Borrower shall
not, and shall  not  permit any Subsidiary to, make any material change in  its
business other than a reasonable extension of such business to add complementary
product lines or markets.

     Section 6.7    Liens.  Borrower shall not, and shall not permit any
Subsidiary to, directly or indirectly, create, incur, assume or permit to exist
any Lien on or  with  respect  to  any of its Property, except the following
(collectively, "Permitted Encumbrances"):

(a)  Liens created by the Loan Documents;

(b)  Liens existing on the date of this Agreement and described on Schedule 6.7;

(c)  those Liens which are "Permitted Encumbrances" under the Mortgage;

(d)  Liens (other than Environmental Liens and Liens in favor of the PBGC) with
respect to taxes, assessments or governmental charges or claims, the nonpayment
of which is permitted under Section 5.2;

(e)  Statutory Liens of landlords and Liens of suppliers, mechanics, carriers,
materialmen, warehousemen or workmen and other Liens imposed by law and created
in the ordinary course of business, arising in respect of claims, the nonpayment
of which is permitted under Section 5.2;

(f)  Liens incurred or deposits made in the ordinary course of business in
connection with worker's compensation, unemployment insurance or other types of
social security benefits or to secure other similar obligations;

(g)  Liens (including the interest of a lessor under a Capital Lease) to which
any Property is subjected at the time of Borrower's acquisition thereof (or
within thirty (30) days

<PAGE>

after  the  acquisition thereof), securing Indebtedness permitted under  Section
6.8(d)  arising  in respect of the purchase or lease of such Property;  provided
that  in  each  case, (i) such Lien does not extend to or cover or  include  any
other  Property of Borrower or a Subsidiary, (ii) the fair market value  of  the
Property  subject  to  such Lien is no less than the  principal  amount  of  the
Indebtedness  to  be  secured by such Lien, (iii) such Lien  secures  only  such
permitted  Indebtedness and no other Indebtedness of Borrower or  a  Subsidiary,
and  (iv)  such  Lien  is promptly released upon the payment  in  full  of  such
Indebtedness;

(h)  Liens arising under Section 302(f) of ERISA or Section 412(n) of the
Code where  the  delinquent contribution which gave rise to the Lien is  paid
within thirty (30) days of its original due date;

(i)  any interest or title of a lessor, or secured by a lessor's interest, under
any lease permitted by this Agreement;

(j)  deposits to secure the performance of bids, trade contracts (other than for
borrowed money), leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature incurred in the
ordinary course of business, which do not in the aggregate materially detract
from the value of the encumbered asset or materially impair the use thereof in
the operation of the business of Borrower or any Subsidiary thereof; and

(k)  zoning restrictions, easements, encroachments, rights of way, licenses or
other restrictions on the use of the Real Property or other minor irregularities
in title thereto, as long as the same do not materially impair the use, value of
marketability of the Real Property.

     Section 6.8    Indebtedness.  Borrower shall not, and shall not permit  any
Subsidiary  to, enter into any Guaranty or create, incur, assume  or  permit  to
exist  any  other  Indebtedness, whether recourse or  nonrecourse,  and  whether
superior  or junior, resulting from borrowings, loans, advances or the  granting
of credit, whether secured or unsecured, except the following:

(a)  the Obligations;

(b)  the Subordinated Indebtedness;

(c)  Indebtedness existing on the Closing Date described on Schedule 6.8;

(d)  purchase money Indebtedness incurred by Borrower to finance Capital
Expenditures and the acquisition of Property under Capital Leases subsequent to
the date of this Agreement to the extent that (i) the aggregate amount of such
Indebtedness incurred during the term of this Agreement does not exceed
$1,000,000 and (ii) at the time that any such liability in respect of purchase
money Indebtedness or Capital Leases is to be incurred, no Default or Event of
Default shall have occurred and be continuing or will result therefrom;

(e)  Indebtedness incurred in connection with Operating Leases permitted under
Section 6.19;

(f)  the Subsidiary Guaranty;

<PAGE>

(g)   Indebtedness of Borrower to T-H Licensing, arising as a result of the
making  by  T-H  Licensing  of loans to Borrower as  described  in  Section  6.9
(subject to the limitations set forth therein).

(h)  Indebtedness of Borrower to Lancer under the Tax Sharing Agreement;

(i)  Subject to the limitations on Capital Expenditures set forth in Section
6.18, Indebtedness of Borrower in respect of Capital Leases so long as the
aggregate amount of such Indebtedness does not exceed the greater of
(i) $5,000,000 or (ii) four and one-half percent (4.5%) of the amount of the
gross property, plant and equipment of Borrower and its subsidiaries determined
on a consolidated basis, as shown on the balance sheet of Borrower as of the end
of the most recently ended Fiscal Quarter of Borrower, in accordance with GAAP
consistently applied;

(j)  Indebtedness of the Borrower or its Subsidiaries in an amount not in excess
of $10,000 at any time outstanding arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument inadvertently
(except in the case of daylight overdrafts) drawn against insufficient funds in
the ordinary course of business; provided, that such Indebtedness is
extinguished within 5 business days of incurrence;

(k)  Interest Rate Protection Obligations of Borrower covering Indebtedness of
Borrower; provided, however, that (i) any Indebtedness to which any such
Interest Rate Protection Obligations relate bears interest at fluctuating
interest rates and is otherwise permitted to be incurred under this Section 6.8
and (ii) the notional amount of any such Interest Rate Protection Obligations
does not exceed the principal amount of the Indebtedness to which such Interest
Rate Protection Obligation relates;

(l)  Unsecured Indebtedness of the Borrower in an aggregate amount not in excess
of $3,000,000 at any time outstanding; and

(m)  Indebtedness of Borrower in an aggregate amount not in excess of Five
Hundred Thousand Dollars ($500,000) at any time outstanding resulting from the
guaranty by Borrower of, or assumption by Borrower of, residential mortgage
indebtedness of its employees in connection with the relocation of such
employees.

     Section 6.9    Transactions with Affiliates.  Borrower shall not, and shall
not permit any Subsidiary to, directly or indirectly, enter into or permit to
exist any transaction with any Affiliate of Borrower on terms that are less
favorable to Borrower or such Subsidiary than those that might be obtained in
an arm's-length transaction at the time from Persons who are not an Affiliate,
except  as permitted under Sections 6.3 and 6.8 and as follows:

(a)  Borrower may make payments (i) to the Persons provided under the Equity
Incentive  Plan  in amounts not in excess of the Equity Plan  Cap  and  (ii)  to
Lancer  as required by the Tax Sharing Agreement, provided, that as to  each  of
clauses  (i) and (ii), no Event of Default shall have occurred and be continuing
(other  than an Event of Default of which Borrower has given the Agent at  least
thirty  (30)  days notice prior to the making of such payment and  as  to  which
Borrower has not received a notice from the Agent, given at the request  of  the
Majority Lenders requiring that such payment not be made); and

<PAGE>

(b)  Borrower may, notwithstanding that an Event of Default may have occurred
and be continuing, make any payment prior to any acceleration of the Obligations
pursuant  to Section 9.2 which is due to Lancer under the Tax Sharing  Agreement
to  the extent that such payment does not exceed the amount of a then-current or
past  due  obligation of the "Lancer Group" to pay tax to a Governmental  Agency
which  is  attributable to the "Separate Return Tax Liability" of the "Fairfield
Group" (as such terms are defined in the Tax Sharing Agreement).

(c)  Borrower may pay royalties to T-H Licensing on a quarterly or annual basis
in the amounts provided in that certain letter agreement dated as of December
29, 1989 between Borrower and T-H Licensing as in effect on the Closing Date;
provided that (i) except as provided below, any such payment is returned by T-H
Licensing to Borrower as a loan within forty-five (45) days after receipt by T-H
Licensing, (ii) no principal, interest or other payment is payable or paid on
any such loans until the Obligations have been paid in full and the Loan
Agreement has been terminated, except that Borrower may pay interest to T-H
Licensing on such loans at a rate not in excess of the rate then in effect with
respect to the New Term Loans so long as, except as provided below, any such
interest payment is returned by T-H Licensing to Borrower as a loan within sixty
(60) days after receipt by T-H Licensing and (iii) each such loan is evidenced
by a promissory note which is delivered by T-H Licensing to the Agent as
additional collateral under the Subsidiary Security Agreement.

     Notwithstanding  the  foregoing, (A) T-H  Licensing  may  retain  from  the
amounts  otherwise required to be loaned to Borrower as provided in  clause  (i)
above,  (1)  amounts not in excess of $100,000 per quarter and $500,000  in  the
aggregate  during  the term of this Agreement so long as all  such  amounts  are
deposited  in T-H Licensing's Account No. 28096 at Wilmington Trust Company  and
are  not  withdrawn by T-H Licensing for any purpose and (2) an  amount  not  in
excess  of $100,000 per year which may be used by T-H Licensing for the  purpose
of  making the payments to Lancer and its Affiliates specified in clause (c)  of
Section  6.3  hereof (subject to the aggregate limitation of $1,600,000  on  all
such  payments by Borrower and its Subsidiaries specified therein) and  (B)  T-H
Licensing  may  retain  from the amounts otherwise  required  to  be  loaned  to
Borrower  as provided in clause (ii) above, amounts required to pay  its  patent
registration fees and reasonable legal expenses incurred in the ordinary  course
of business.

     Section 6.10   Sales and Leasebacks.  Borrower shall not become, and shall
not permit any Subsidiary to become, liable, by assumption or by Guaranty, with
respect  to  any lease, whether an Operating Lease or a Capital  Lease,  of  any
Property (whether real, personal or mixed) which it sold or transferred or is to
sell  or  transfer  to  any  other  Person  or  which  it  intends  to  use  for
substantially the same purposes as any other Property which has been or is to be
sold or transferred by it to any other Person in connection with such lease.

     Section 6.11   Margin Regulations.  Borrower shall not use all or any
portion of the  proceeds of any Advance or Term Loan made under this Agreement
to purchase or carry "margin stock" (as such term is defined in Regulations
G and U).

     Section 6.12   Investments.  Except as permitted under Section 6.2,
Borrower shall not, and shall not permit any Subsidiary to, make or suffer to
exist  any Investment  except (a) Investments consisting of Cash Equivalents or
investments in money market funds organized under the laws of the United States
of America or any state thereof that invest substantially all of

<PAGE>

their assets in Cash Equivalents (which, in each case, have been duly pledged to
the   Agent)  at  any  time  when  a  Triggering  Event  is  not  in  existence,
(b)  Investments  consisting of advances to employees  of  Borrower  for  travel
expenses, relocation and similar purposes in the ordinary course of business  in
amounts  not  to exceed $250,000 to all employees in the aggregate at  any  time
outstanding  (exclusive of mortgage guarantees and assumptions  permitted  under
Section 6.8(m)), (c) Investments consisting of Accounts, (d) in the case of  T-H
Licensing, the loans described in Section 6.9(c) and (e) Investments
representing  Capital  Stock Obligations issued to  Borrower  in  settlement  of
claims  against  any other Person by reason of a composition or readjustment  of
debt  or a reorganization under Chapter 11 of the Bankruptcy Code of the  United
States of America of any Account Debtor.

     Section 6.13   Fiscal Year.  Borrower shall not change its Fiscal Year  for
accounting  or tax purposes from the fiscal year ending on or about December  31
of  each  calendar year and shall not, and shall not permit any  Subsidiary  to,
make  any  significant  change in accounting treatment or  reporting  practices,
except as required by GAAP.

     Section 6.14   Cash Management System.  Borrower shall not maintain any
bank account other than those accounts set forth in Schedule 6.14 and the
Collection Accounts, or authorize or direct any Person to take any action with
respect to amounts deposited in the Collection Accounts in contravention of the
provisions of this  Agreement, the Security Agreement, the Blocked Account
Agreements, or any  other Loan Document.  Borrower shall not direct any Account
Debtor to remit payments to any bank account or lockbox other than a Collection
Account.

     Section 6.15   Cancellation of Indebtedness.  Borrower shall not, and shall
not permit  any Subsidiary to, cancel any material claim or debt owing to it,
except for reasonable consideration in the ordinary course of business.

     Section  6.16   Commingling.  Borrower shall not maintain corporate deposit
accounts jointly with any Affiliate or other Person or commingle any funds  with
funds of any Affiliate or other Person.

     Section 6.17   Related Agreements; Tax Election.  Borrower shall not (a)
take or fail  to take any action under the Related Agreements which could
reasonably be expected to have a Material Adverse Effect or (b) amend,
supplement, waive or otherwise relinquish any material right under, or otherwise
modify any provision of, any Related Agreement which could reasonably be
expected to have a Material Adverse Effect.  Borrower shall not make, and shall
not permit any Subsidiary of Borrower to make, any payment to Lancer or its
Affiliates with respect to federal tax obligations except at the times and in
the amounts required by the Tax Sharing Agreement.

     Section 6.18   Capital Expenditures.  Borrower shall not, and shall not
permit any  Subsidiary to, make or commit to make Capital Expenditures in any
Fiscal Year which exceed in the aggregate for Borrower and its Subsidiaries the
sum  of $15,000,000; provided that, in the event that, for any Fiscal Year, the
maximum aggregate  amount  set  forth above exceeds the amount of  Capital
Expenditures actually  made in such Fiscal Year, the unused portion of such
permitted  amount for such Fiscal Year may be carried forward and used solely
in the next

<PAGE>

succeeding  Fiscal  Year for Capital Expenditures, but  only  after  the  entire
amount actually scheduled for use in such succeeding Fiscal Year shall have been
used.

     Section 6.19   Operating Leases.  Borrower shall not, and shall not permit
any Subsidiary to, become liable in any way, whether directly or by assignment
or Guaranty, for the obligations of the lessee under any Operating Lease, except
Operating  Leases of Borrower and its Subsidiaries in existence on  the  Closing
Date  and  any renewal, extension or refinancing thereof, and after the  Closing
Date,  any Operating Leases entered in to by Borrower or any of its Subsidiaries
in the ordinary course of business in a manner and to the extent consistent with
past  practice, provided, that the aggregate annual rental payments for all such
Operating Leases shall not exceed $3,000,000 in any Fiscal Year.

     Section 6.20   Current Ratio.  Borrower will not permit (as of the end of
any Fiscal Quarter) the ratio of Consolidated Current Assets to Consolidated
Current Liabilities to be less than 1.25:1.00.

     Section 6.21   Consolidated Fixed Charge Coverage Ratio.  Borrower will not
permit  the  ratio of (a) Consolidated Cash Flow for any Fiscal Quarter  to  (b)
Consolidated Fixed Charges for such Fiscal Quarter to be less than the ratio set
forth below next to the Fiscal Year in which such Fiscal Quarter occurs:

      FISCAL YEAR ENDING                      RATIO

        December 31, 1999                    .90:1.00

        December 31, 2000 and               1.00:1.00
        each Fiscal Year thereafter


     For  purposes of this Section 6.21, Consolidated Cash Flow and Consolidated
Fixed Charges shall be calculated based upon the period of four Fiscal Quarters
ending on the date of calculation.

     Section 6.22   Interest Coverage Ratio.  Borrower shall not permit the
ratio of (a)  Consolidated EBITDA for any Fiscal Quarter to (b) Consolidated Net
Interest Expense  for such Fiscal Quarter to be less than the ratio set forth
below  next to the applicable Fiscal Quarter set forth below:

<PAGE>

      FISCAL QUARTER                       RATIO

        All Fiscal  Quarters             1.50:1.00
        through the Fiscal
        Quarter ending
        December 31, 2001

        Fiscal Quarters                  1.60:1.00
        Ending March 31,
        2002 and June 30, 2002

        All Fiscal Quarters              1.75:1.00
        thereafter



     For purposes of this Section 6.22, Consolidated EBITDA and Consolidated Net
Interest  Expense  shall  be calculated based upon the  period  of  four  Fiscal
Quarters ending on the date of calculation.

                                   ARTICLE 7.
                     INFORMATION AND REPORTING REQUIREMENTS

     So  long  as any Term Loan or Advance remains unpaid, any Letter of  Credit
Obligation  remains  outstanding, any other Obligation  remains  unpaid  or  any
portion  of  the  Commitment remains outstanding, unless  the  Agent  (with  the
approval of the Majority Lenders) otherwise consents in writing:

     Section 7.1    Financial Information and Reports.  Borrower shall deliver
to the Agent and each of the Lenders at Borrower's sole expense:

(a)  Monthly Financial Statements.  As soon as practicable, and in any event
within  thirty  (30)  days  after the end of each month,  (i)  the  consolidated
balance  sheet  of  Borrower as at the end of such month and  (ii)  consolidated
statements of operations, stockholders' equity and cash flows, in each case  for
such month and for the portion of the Fiscal Year ended with such month, all  in
sufficient  detail  to  calculate compliance with the Financial  Covenants,  and
presented  in  a manner comparing such financial statements to the corresponding
period of the prior Fiscal Year.

(b)  Quarterly Financial Statements.  As soon as practicable, and in any event
within forty-five (45) days after the end of each  Fiscal Quarter (other than
the fourth Fiscal Quarter in any Fiscal Year), (i) the consolidated balance
sheet of Borrower as at the end of such Fiscal Quarter and (ii) consolidated
statements of operations, stockholders' equity and cash flows, in each case for
such Fiscal Quarter and for the portion of the Fiscal Year ended with such
Fiscal Quarter, all in detail sufficient to calculate compliance with the
Financial Covenants, and presented in a manner comparing such financial
statements to the corresponding period of the prior Fiscal Year.

<PAGE>

(c)  Annual Financial Statements.  As soon as practicable, and in any event
within  ninety (90) days after the end of each Fiscal Year, (i) the consolidated
balance  sheet  of  Borrower as at the end of such Fiscal  Year,  and  (ii)  the
related consolidated statements of income, stockholders' equity and cash  flows.
Such   financial  statements  shall  be  prepared  in  accordance   with   GAAP,
consistently applied (except for those changes with which the independent public
accountants of Borrower have concurred and shall have disclosed in the notes  to
such  financial statements) and shall be accompanied by a report and opinion  of
Pricewaterhouse  Coopers,  LLP  or  other  independent  public  accountants   of
recognized  national standing selected by Borrower and approved by the  Majority
Lenders  which report and opinion shall be prepared in accordance with generally
accepted  auditing  standards  as at such date, shall  not  be  subject  to  any
qualifications  or  exceptions  (except for  exceptions  addressing  changes  in
accounting principles), and shall be accompanied by a computation by Borrower of
its  Consolidated Excess Cash Flow for such Fiscal Year and by a certificate  of
such  accountants stating that (A) Borrower's computation of Consolidated Excess
Cash  Flow  for  such Fiscal Year is in accordance with the provisions  of  this
Agreement  and  GAAP,  and  (B)  in  performing  the  audit  necessary  for  the
certification  of  such financial statements and such report,  such  accountants
have  obtained no actual knowledge that Borrower is not in compliance  with  the
Financial  Covenants or of any other Default or Event of Default  (or,  if  such
accountants  have obtained actual knowledge of noncompliance with any  Financial
Covenant  or of any other  Default or Event of Default, stating the  nature  and
status of such Default).

(d)  Comparison of Annual Statements and Prior Years Statements; Consolidating
Financial Statement.  Concurrently with the audited financial statements
described in clause (c) above,

(i)  unaudited consolidated statements setting forth the consolidated balance
sheet, statement of operations, statement of stockholders' equity and statement
of cash flows of Borrower for the Fiscal Year to which the audited financial
statements relate presented in a manner comparing such financial statements
to the prior Fiscal Year.

(ii) unaudited consolidating balance sheets of Borrower as at the end of such
Fiscal Year and the related consolidating statements of operations and
stockholders' equity and consolidated statement of cash flows for such Fiscal
Year, all in reasonable detail certified by a Senior Officer of Borrower as
having been used in connection with the preparation of the financial statements
delivered pursuant to the preceding clause (c).

(e)  Management's Discussion and Analysis.  Concurrently with the financial
statements  described in clauses(a), (b) and (c) above, a report  detailing  the
operations  of  Borrower which report shall include a management discussion  and
analysis  of Borrower's performance during such month, Fiscal Quarter or  Fiscal
Year  and an explanation of any material variance from Borrower's business  plan
or  budget  for  such period that is reflected in such financial statements  and
such other matters which the Agent or the Majority Lenders shall request.

(f)  Compliance Certificate.  Concurrently with each of the financial statements
to be delivered pursuant to clauses (a), (b) and (c), Borrower shall deliver a
Compliance Certificate dated as of the last day of the fiscal period covered by
such financial statements to include (i)

<PAGE>

calculations  demonstrating Borrower's compliance with the  Financial  Covenants
and  whether  a  Triggering  Event has occurred, and a  reconciliation  of  such
calculations  to  the  monthly, quarterly or annual financial  statements  being
delivered  with such Compliance Certificate and (ii) calculations demonstrating,
or  certifications as to, Borrower's compliance with Sections 6.1, 6.3, 6.8, 6.9
and  6.12, including with respect to Section 6.1 hereof, a statement of the book
value of, and proceeds received in respect of, Equipment disposed of during  the
then current Fiscal Year to the date of such Compliance Certificate.

(g)  Budgets; Business Plans; Financial Projections.  As soon as practicable and
in  any  event within forty-five (45) days after the commencement of each Fiscal
Year  of  Borrower,  an operating plan for such Fiscal Year,  including  budget,
personnel, facilities and Capital Expenditure projections, and monthly operating
profit  and  cash flow projections incorporating all of the foregoing,  together
with  a description of the material assumptions upon which such projections  and
budgets are based.

     Section  7.2    Borrowing Base Certificates and Other Collateral Reporting.
Borrower  shall deliver to the Agent and each of the Lenders at Borrower's  sole
expense:

(a)  not later than fifteen (15) days after the end of each calendar month, a
Borrowing Base Certificate reflecting the Borrowing Base as at the end  of  such
calendar  month,  and  showing compliance with the terms  thereof  signed  by  a
Responsible Official of Borrower; and

(b)  concurrently with the delivery of each Borrowing Base Certificate, (i) a
detailed aged trial balance of all existing Accounts, specifying each Account
Debtor by name and the aged balance (from invoice date and due date) of all
Accounts due from  such Account Debtor and including a summary of concentrations
for Borrower's twenty (20) largest Account Debtors, (ii) a listing of all
Accounts (A) denominated other than in Dollars, (B) payable outside of the
United States or (C) as to which the Account Debtor is located or principally
doing business outside the United States, specifying the names of the Account
Debtors under such Accounts, the amounts owing by such Account Debtors and the
countries in which such Account Debtors are located and indicating whether a
letter of credit or bankers acceptance has been obtained with respect to such
Account or whether such Account is insured by the Foreign Credit Insurance
Association, (iii) a listing of all Accounts as to which any Governmental Agency
is the Account Debtor, specifying the names of such Account Debtors and the
total amount of Accounts of such Account Debtors, (iv) a listing of all Accounts
as to which any Affiliate or employee of Borrower is the Account Debtor,
specifying the names of such Account Debtors and the total amounts of Accounts
of such Accounts Debtors, (v) a copy of Borrower's Accounts roll-forward for the
month to which such Borrowing Base Certificate relates, (vi) a summary schedule
of Borrower's Inventory based on its most recent perpetual Inventory, (vii) an
aging of accounts payable, specifying the names of the payees of such accounts
payable and the amounts payable thereunder, and (viii) such other supporting
documents satisfactory in form and substance to the Agent as the Agent shall
request confirming that the calculations in the Borrowing Base Certificate are
mathematically correct, all of which shall be certified as true and correct by a
Responsible Official of Borrower; and

(c)  upon the occurrence of a Triggering Event and during the continuance
thereof, in addition to the items provided for in clauses (a) and (b), if the
Agent shall request, on a daily

<PAGE>

basis,  (i)  a  summary  of daily sales, (ii) a summary  of  daily  Collections,
(iii)   a  summary  roll-forward  of  Accounts  activity,  and  (iv)  any  other
information  as  the  Agent shall request to permit the  Agent  to  maintain  an
accurate daily balance of Accounts, all of which shall be certified as true  and
correct by a Responsible Official of Borrower.

     Section 7.3    Operating Leases; Capital Leases, Etc.  On a quarterly
basis, within  fifteen  (15) days after the end of each Fiscal Quarter, Borrower
shall deliver to the Agent and each of the Lenders at Borrower's sole expense:

     (a)   A list showing each of the then existing Capital Leases and Operating
Leases  and  the  amount  of all monthly payments due  in  respect  thereof  and
indicating whether Borrower is current as to payments under all such leases; and

(b)  A schedule setting forth the aggregate amount of all Capital Expenditures
for the Fiscal Year to date.

     Section 7.4    Other Specific Information and Reports.  Borrower shall
deliver to the Agent and each of the Lenders at Borrower's sole expense:

(a)  Taxes, Assessments, etc.  Promptly after Borrower determines to
contest any material  tax, assessment or other material governmental charge or
any  material claim as permitted pursuant to Section 5.2, written notice of such
contest which notice shall include a brief description of the nature of the tax,
assessment, charge  or claim being contested and the action Borrower is taking
with  respect thereto and shall specify (i) the amount of such tax assessment,
charge or claim being  contested,  and  (ii) the amount of the reserve Borrower
has set aside therefor.

(b)  Audit Reports.  Promptly after receipt thereof, copies of any detailed
audit reports or recommendations submitted to Borrower by independent
accountants in connection with the accounts or books of Borrower, or any audit
of any of them.

(c)  Management Reports.  Promptly after receipt thereof, copies of any
management reports delivered to Borrower by Borrower's accountants in connection
with the financial statements delivered pursuant to Section 7.1.

(d)  Reports to Shareholders; SEC Filings.  Promptly after the same are
available, copies of each annual report, proxy or financial statement or other
report or communication sent to the shareholders of Borrower or to the trustee
under any indenture and copies of all annual, regular, periodic and special
reports and registration statements which Borrower may file or be required to
file with the SEC under the Securities Act or the Securities Exchange Act.

(e)  Press Releases.  Promptly after the same are made available to the public,
copies of all press releases made available generally by Borrower to the public
concerning material developments in Borrower's business.

<PAGE>

     (f)  ERISA Matters.

     (i)  Promptly upon Borrower's becoming aware, and in any event within ten
     (10) Business  Days  after becoming aware, (A) of any Reportable Event and
     any additional act or condition arising in connection with any Pension Plan
     if such Reportable  Event  or  act or condition could constitute  grounds
     for the termination  of  any  such plan by the PBGC or for the appointment
     by the appropriate United States district court of a trustee to administer
     such plan; (B)  notice  of  any action, suit or proceeding before any court
     or other governmental agency or authority with respect to any Plan which
     could subject Borrower or any Subsidiary to any tax, penalty, or liability
     under Title I or Title IV of ERISA or Chapter 43 of the Code, except those
     which, singly or in the aggregate, if adversely determined, could not
     reasonably be expected to result in a Material Adverse Effect; and (C)
     notice of any events with respect to a Pension Plan or  Multiemployer Plan
     which could, singly or in the aggregate, reasonably be expected to result
     in liability to Borrower, or any Subsidiary or the imposition of a Lien
     under ERISA or the Code in an amount which could reasonably be expected to
     have a Material Adverse Effect;

(ii) at the same time and in the same manner as such notice must be provided to
either the PBGC, any participant, any beneficiary or any alternate payee, a copy
of any notice required under Sections 101(d), 302(f)(4), 303, 307(e),
4041(b)(1)(A) or 4041(c)(1)(A) of ERISA or under Section 412 of the Code with
respect to a Pension Plan; and

(iii)     upon request by any Lender, a true and complete copy of any annual
report required to be filed pursuant to ERISA and any other information
reasonably requested by any Lender with respect to a Plan.

     (g)  Change of Control.  Not less than thirty (30) days prior to the
occurrence of any event or transaction which could reasonably be expected to
result in a Change of Control, written notice specifying the  nature  of  such
event or transaction.

(h)  Events of Default.  Promptly upon, but in no event more than five (5) days
after, Borrower obtains knowledge (i) of any condition or event which
constitutes an Event or Default or Default   or that any Lender or the Agent has
given any notice with respect to a claimed Default or Event of Default under
this Agreement, (ii) that any Person has given any notice to Borrower or taken
any other action with respect to a claimed default or event or condition of the
type referred to in Section 9.1(d) or (iii) of any event or condition that
constitutes or will constitute a Material Adverse Effect or affect the value of,
or the Agent's interest in, the Collateral in any material respect, an Officer's
Certificate specifying (A) the nature and period of existence of any such
claimed Default, Event of Default,  default, condition or event, (B) the notice
given or action taken by any Person in connection therewith and (C) what action
Borrower has taken, is taking and proposes to take with respect thereto.

(i)  Lawsuits.  (i) Promptly upon Borrower obtaining knowledge of the
institution of, or written threat of, (A) any action, suit, proceeding or
arbitration against or affecting Borrower or any asset of Borrower involving
money or property valued in excess of Seven Hundred Fifty Thousand Dollars
($750,000) or any actions, suits, proceedings or arbitration which in the

<PAGE>

aggregate  involve  money or property value in excess  of  Seven  Hundred  Fifty
Thousand Dollars ($750,000) or (B) any investigation or proceeding before or  by
any  Governmental Agency, which is reasonably likely to have a Material  Adverse
Effect  Borrower  shall provide the Agent with written notice thereof  and  such
other  information as may be reasonably available to enable each Lender and  its
counsel  to evaluate such matters, (ii) as soon as practicable and in any  event
within forty-five (45) days after the end of each  Fiscal Quarter of Borrower, a
litigation status report covering the institution of, or written threat of,  any
action,  suit,  proceeding, governmental investigation or  arbitration  reported
pursuant to clause (h)(A) and (B) above and such other information at such  time
as may be reasonably available to enable each Lender and its counsel to evaluate
such matters, and (iii) in addition to the requirements set forth in clauses (i)
and  (ii) of this clause (i), upon request of the Agent or the Majority Lenders,
written  notice  of  the  status of any action, suit,  proceeding,  governmental
investigation  or arbitration covered by a report delivered pursuant  to  clause
(i)  or (ii) above and such other information as may be reasonably available  to
it to enable each Lender and its counsel to evaluate such matters.

(j)  Insurance.  As soon as practicable and in any event by October 1 of each
year,  (i)  a  report in form and substance reasonably satisfactory  to  Lenders
outlining  all insurance policies and programs currently in effect with  respect
to  the Property and business of Borrower, insurance coverage maintained  as  of
the  date  of  such report by Borrower and the loss payment provisions  of  such
coverage and (ii) evidence that all premiums with respect to such coverage  have
been paid when due.

(k)  Labor Matters.  Promptly, but in any event within five (5) Business Days
after learning thereof, written notice of (i) any material labor dispute to
which Borrower may reasonably be expected to become a party, any strikes,
lockouts or other disputes relating to Borrower's plants and other facilities
and (ii) any liability incurred with respect to the closing of any plant
facility of Borrower.

(l)  Permitted Subordinated Indebtedness.  Upon its receipt thereof, copies of
(i) any notice or other communication delivered by or on behalf of Borrower to
any Person in connection with any agreement or other document relating to
Subordinated Indebtedness or the Exchangeable Preferred Stock at the same time
and by the same means as such notice or other communication is delivered to such
Person and (ii) any material notice or other material communication received by
Borrower from any Person in connection with any agreement or other document
relating to Subordinated Indebtedness or the Exchangeable Preferred Stock
promptly after such notice or other communication is received by Borrower.

     Section  7.5    Other Information and Reports (Generally).  Borrower  shall
provide to the Agent and each Lender such other information, reports, contracts,
schedules, lists, documents, agreements and instruments with respect to (a)  the
Collateral  and  (b)  Borrower's business condition  (financial  or  otherwise),
operations,  performance, properties or prospects as the Agent or  the  Majority
Lenders may from time to time reasonably request.

<PAGE>
                                   ARTICLE 8.
                                   CONDITIONS

     Section 8.1    Conditions to Effectiveness.  This Agreement shall not
become effective (and  the Existing Loan Agreement shall continue in  full
force and effect) unless and until each of the following conditions precedents
have been satisfied:

     (a)  Document Deliveries.  The Agent shall have received all of the
following, each  dated  as  of  the  Closing Date and all in form and substance
reasonably satisfactory to the Agent and legal counsel for the Agent:

          (i)  a reaffirmation of the Subsidiary Guaranty and the Subsidiary
Security Agreement executed by each Subsidiary;

(ii) certificates representing any pledged shares referred to in the Lancer
Pledge Agreement which have not previously been delivered to the Agent and
undated stock powers for such certificates executed in blank;

(iii)     such amendments to the Trademark Security Agreement and the Patent
Security Agreement, executed by Borrower and, as applicable, each Subsidiary, as
the Agent shall request in order to cover any patents or trademarks, not
previously covered thereby each in form acceptable for recordation with the
appropriate Governmental Agency;

(iv) such documentation as the Agent may reasonably require to establish the due
organization, valid existence and good standing of Borrower and each of its
Subsidiaries, the qualification of Borrower and each of its Subsidiaries to
engage in business in each jurisdiction in which it is engaged in business or
required to be so qualified, its authority to execute, deliver and perform any
Loan Documents to which it is a party, and the identity, authority and capacity
of each Responsible Official thereof authorized to act on its behalf, including
certified copies of articles or  Certificates of incorporation and amendments
thereto, bylaws and amendments thereto, certificates of good standing and/or
qualification to engage in business, certificates of corporate resolutions,
incumbency certificates, certificates of Responsible Officials and the like;

(v)  the Opinion of Borrower's Counsel;

(vi) an Officer's Certificate affirming that the conditions set forth in
Sections 8.1(d), 8.1(e), 8.1(f) and 8.1(g) have been satisfied;

(vii)     such other assurances, certificates, documents, consents or opinions
as the Agent may reasonably require.

     (b)   Litigation,  Etc.  The Agent shall be satisfied that  no  litigation,
arbitration,  injunction, proceeding, government investigation or inquiry  which
(i) is related to this Agreement or the Revolving Credit Loan, the Term Loans or
any  of  the other transactions contemplated hereby, or (ii) could, if adversely
determined, constitute a Material Adverse Effect has been commenced nor has been
threatened, and nor will the Agent have been apprised of the

<PAGE>

existence of any basis for such litigation, arbitration, injunction, proceeding,
governmental  investigation or proceeding nor shall Borrower  be  aware  of  any
basis therefor.

     (c)   Legal Fees and Expenses.  The reasonable fees and expenses of counsel
retained  by  the Agent relating to the Loan Documents shall have been  paid  by
Borrower.

(d)  Representations and Warranties.  The Agent shall be satisfied that the
representations and warranties of Borrower contained in Article 4 shall be true
and correct.

(e)  Compliance with Loan Documents; No Default.  Lancer, Borrower and
Borrower's Subsidiaries shall be in compliance with all the terms and provisions
of the Loan Documents to which it is party, and no Default or Event of Default
shall have occurred and be continuing.

(f)  No Material Adverse Effect.  Since September 30, 1999, there shall not have
occurred:  (i) any event or circumstance that could reasonably be expected to
have a Material Adverse Effect, or (ii) any dividends or other distributions
made to the stockholders of Borrower other than as permitted pursuant to Section
6.3 or Section 7(b) of the Lancer Pledge Agreement.

(g)  Compliance with Laws; Agreements.  Lenders shall be satisfied that Borrower
and its Subsidiaries are in compliance with all applicable Laws, including,
without limitation, all Environmental Laws and all Laws pertaining to labor,
occupational safety and health and ERISA matters except to the extent that non-
compliance could not reasonably be expected to have a Material Adverse Effect.
Lenders shall be satisfied that the consummation of the transactions
contemplated by this Agreement will not cause Borrower or any Subsidiary to
violate any Contractual Obligation to which it is party or by which it is bound
or any Law applicable to it.

(h)  Material Agreements.  Borrower shall have provided to the Agent copies of
all management, employment, labor and other material agreements to which
Borrower or any Subsidiary is party, and all of such agreements shall be
satisfactory to Lenders in all respects.

     Section 8.2    Any Advance, Etc.  The obligations of the Lenders to make
any Advance  and to incur any Letter of Credit Obligation subsequent to the
Closing Date are subject to the following additional conditions precedent:

(a)  Requests.  The Agent shall have timely received a Request for Advance
in compliance with Section 2.1(b) or the Agent shall have timely received a
Request for Letter of Credit in compliance with Section 2.2(b), as the case may
be.

(b)  Representations and Warranties.  The representations and warranties
contained in Article 4 shall be true and correct in all material respects on and
as of the date of the Advance or Letter of Credit Obligation as though made on
and as of that date (except to the extent that such representations and
warranties relate solely to an earlier date and except as affected by
transactions expressly contemplated by this Agreement).

(c)  Litigation, Etc.  There shall not be then pending or, to the best knowledge
of Borrower, threatened, any litigation, arbitration, injunction, proceeding,
governmental

<PAGE>

investigation  or  inquiry  against or affecting Borrower  or  any  Property  of
Borrower  before any Governmental Agency that could reasonably  be  expected  to
have a Material Adverse Effect.

(d)  Borrowing Base Certificate, Etc.  The Agent shall have received the most
recent  Borrowing Base Certificate required to be delivered in  accordance  with
Section 7.2(b), together with any and all other reports required to be delivered
in accordance with Sections 7.2(b) and 7.2(c).

(e)  Other Information, Etc.  The Agent shall have received such other
information relating to any matters which are the subject of this Section 8.2 or
the compliance by Borrower with this Agreement as may reasonably be requested by
the Agent.

                                   ARTICLE 9.
                         EVENTS OF DEFAULT AND REMEDIES
                             UPON EVENTS OF DEFAULT

     Section 9.1    Events of Default.  The existence or occurrence of any one
or more of the following events, whatever the reason  therefor and under any
circumstance whatsoever, shall constitute an Event of Default:

     (a)  Failure to Make Payments When Due.  Borrower fails to pay any
principal, premium,  fee  or other Obligation (other than interest) on or before
the date when due hereunder or under any other Loan Document or fails to pay any
interest payable  hereunder  or  under any other Loan Document on or  before
the second Business Day after the date when due; or

(b)  Breach of Representation or Warranty.  Any representation or warranty of
Lancer, Borrower or any Subsidiary made in any Loan Document or in any
certificate delivered pursuant to any Loan Document proves to have been
incorrect in any material respect when made or deemed to have been made; or

(c)  Specific Defaults.  Lancer, Borrower or any Subsidiary fails duly and
punctually to perform or observe any agreement, covenant or obligation binding
on Lancer, Borrower or such Subsidiary, as applicable, pursuant to Section 5.13
or Article 6 of this Agreement (other than Section 6.5) or pursuant to Section
5(a), 5(h) or 5(l) of the Borrower Security Agreement, Section 5(a), 5(h) or
5(l) of the Subsidiary Security Agreement, Section 5, 7(a) 7(b) or 7(c) of the
Lancer Pledge Agreement or Section 4, 6(a), 6(b), or 6(c) of the Borrower Pledge
Agreement; or

(d)  Other Defaults.  Lancer, Borrower or any Subsidiary fails to perform or
observe any other agreement, covenant or obligation binding upon it under this
Agreement or any other Loan Document to which it is a party and such default
shall continue unremedied for a period of fourteen (14) days, in the case of the
provisions of Article 7, and thirty (30) days, in the case of all other
provisions of this Agreement and the other Loan Documents (except as set forth
in Section 9.1(a), (b) or and (c)), after the earlier of (i) the date upon which
Lancer, Borrower or such Subsidiary became aware of such failure or (ii) the
date upon which written notice thereof has been given to Borrower by the Agent
or any Lender; or

<PAGE>

(e)  Default as to Other Indebtedness.  Borrower or any Subsidiary fails to make
any  payment  when  due  (whether  by scheduled maturity,  required  prepayment,
acceleration, demand or otherwise) with respect to any Subordinated Indebtedness
or  any other Indebtedness (other than an Obligation) if the aggregate amount of
such  other  Indebtedness is Five Million Dollars ($5,000,000) or more;  or  any
breach, default or event of default occurs, or any other condition exists  under
any  instrument,   agreement or indenture pertaining to  any  such  Indebtedness
(including, without limitation, a "Change of Control", as defined in the  Senior
Subordinated Note Indenture), if the effect thereof (with or without the  giving
of  notice  or  lapse  of  time or both) is to cause an acceleration,  mandatory
redemption  or  other  required repurchase of such Indebtedness  or  permit  the
holder  or holders of such Indebtedness to accelerate the maturity of  any  such
Indebtedness  or require a redemption or other repurchase of such  Indebtedness;
or  any such Indebtedness shall be otherwise declared to be due and payable  (by
acceleration  or  otherwise) or required to be prepaid,  redeemed  or  otherwise
repurchased  by Borrower or any Subsidiary (other than by a regularly  scheduled
required  prepayment) prior to the stated maturity thereof;  or  the  holder  or
holders  of  any  Lien, in any amount, commences foreclosure of such  Lien  upon
Property  of  Borrower  having a value of Five Million Dollars  ($5,000,000)  or
more; or

(f)  Judgments and Attachments.  (i) Any money judgment, writ or warrant of
attachment or similar process against Borrower or any Subsidiary or any of their
respective assets involving an amount in excess of Two Million Dollars
($2,000,000) is entered and remains undischarged, unvacated, unbonded or
unstayed for a period of thirty (30) days; (ii) any nonmonetary judgment,
injunction or order against Borrower or any Subsidiary or any of their
respective assets which could reasonably be expected to have a Material Adverse
Effect are entered and either (A) enforcement proceedings are commenced by any
Person upon such judgment or order or (B) there shall be any period of ten (10)
consecutive days during which a stay of enforcement of such judgment, injunction
or order, by reason of a pending appeal or otherwise, shall not be in effect or
(iii) any judgment or award of any court or administrative agency awarding
material damages is entered against Borrower in any action under the Securities
Act or the Securities Exchange Act, or any other securities laws, seeking
rescission of the purchase or sale of, any Subordinated Indebtedness, and such
judgment or order becomes final after exhaustion of all available appellate
remedies; or

(g)  Related Agreements.  There occurs any material breach by Borrower or Lancer
under any Related Agreement.

(h)  Dissolution.  Any order, judgment or decree is entered against Lancer,
Borrower or any Subsidiary decreeing its involuntary dissolution or split up and
such order shall remain undischarged or unstayed for a period in excess of
thirty (30) days; or Lancer, Borrower, or any Subsidiary (except as permitted by
Section 6.2) otherwise dissolves or ceases to exist; or

(i)  Loan Documents; Failure of Security.  At any time, for any reason (i) any
Loan Document ceases to be in full force and effect or Lancer, Borrower or any
Subsidiary seeks to repudiate its obligations thereunder or the Liens intended
to be created thereby are, or Lancer, Borrower or any Subsidiary seeks to
render such Liens, invalid and unperfected, or (ii) Liens in favor of the Agent
and/or Lenders contemplated by the Loan Documents or the subordination
provisions of any documents evidencing the Subordinated Indebtedness are, at any
time, for any reason, invalidated or otherwise cease to be in full force and
effect, or such Liens are

<PAGE>

subordinated or otherwise not have the priority contemplated by this  Agreement,
or the other Loan Documents; or

(j)   Subordinated Indebtedness.  Any determination is made by a  court  of
competent jurisdiction that payment of principal or interest or both is  due  to
any  holder  of  any Subordinated Indebtedness which would not be  permitted  by
Section  6.3 or that the Senior Subordinated Notes are not subordinated  to  the
Obligations  in  accordance  with  the terms of  the  Senior  Subordinated  Note
Indenture; or

(k)  Proceedings Under Debtor Relief Laws, Etc.  Lancer, Borrower or any
Subsidiary institutes or consents to any proceeding under a Debtor Relief Law
relating to it or to all or any part of its Property, or is unable or admits in
writing its inability to pay its debts as they mature, or makes an assignment
for the benefit of creditors; or applies for or consents to the appointment of
any receiver, trustee, custodian, conservator, liquidator, rehabilitator, or
similar officer for it or for all or any part of its Property; or any receiver,
trustee, custodian, conservator, liquidator, rehabilitator, or similar officer
is appointed without the application or consent of Lancer, Borrower or any
Subsidiary and the appointment continues undischarged or unstayed for thirty
(30) calendar days; or any proceeding under any Debtor Relief Law relating to
Lancer, Borrower or any Subsidiary or to all or any part of the Property of any
of them is instituted without the consent of Lancer, Borrower or any Subsidiary
and continues undismissed or unstayed for thirty (30) calendar days; or any
judgment, writ, warrant of attachment or execution, or similar process is issued
or levied against all or any material part of the Property of Lancer, Borrower
or any Subsidiary and is not released, vacated, or fully bonded within thirty
(30) calendar days after its issue or levy; or

(l)  ERISA.  The occurrence of any of the following events:

(i)  With respect to any Plan, a prohibited transaction within the meaning
of Section 4975 of the Code or Section 406 of ERISA;

(ii) With respect to any Pension Plan, Borrower, any Subsidiary or any ERISA
Affiliate files a notice to voluntarily terminate any such plan in a distress
termination pursuant to Section 4041(c) of ERISA;

(iii)     With respect to any Multiemployer Plan, Borrower, any Subsidiary or
any ERISA Affiliate incurs any withdrawal liability under Section 4201 of ERISA;

(iv) With respect to any Pension Plan (or money purchase plan), Borrower, any
Subsidiary or any ERISA Affiliate incurs an accumulated funding deficiency
within the meaning of ERISA Section 302 and Code Section 412, or requests a
funding waiver under ERISA Section 303 or Code Section 412;

(v)  With respect to any Pension Plan, the occurrence of any event which
constitutes grounds for termination of any such plan by the PBGC under
subsections (a)(1), (2) or (3) of Section 4041 of ERISA or the appointment by
the appropriate United States district court of a trustee to administer any such
plan; or

<PAGE>

(vi) The termination of a Pension Plan or the appointment by the appropriate
United States district court of a trustee to administer such plan;

provided,  that  the  liability  or  deficiency  of  Borrower,  Lancer  or   any
Subsidiary,  whether or not assessed, exceeds $1,000,000 for any such  event  or
exceeds $1,000,000 in the aggregate for all such events.

(m)  Change of Control.  The occurrence of any Change of Control; or

(n)  Insolvency.  Borrower or any Subsidiary ceases to be Solvent; or

(o)  Ownership Changes; Tax Consolidation.  Any ownership change of Lancer or
Borrower within the meaning of Section 382 of the Code occurs, or for any reason
Lancer fails to file or is ineligible to file a consolidated United States
Federal income tax return with Borrower (showing Borrower and Lancer as part of
an affiliated group of which Lancer is the parent) in accordance with the Tax
Sharing Agreement; or

(p)  Material Adverse Effect.  The occurrence of any condition or event since
the Closing Date which the Majority Lenders determine constitutes a Material
Adverse Effect; or

(q)  Board of Directors.  The holders of the Exchangeable Preferred Stock become
entitled to, and exercise their right to, elect any member of Borrower's board
of directors.

     Section 9.2    Remedies Upon Event of Default.  Without limiting any  other
rights  or remedies of the Agent or the Lenders provided for elsewhere  in  this
Agreement  or  the  Loan  Documents, or by applicable  Law,  or  in  equity,  or
otherwise:

(a)  Upon the occurrence of any Event of Default (other than an Event of
Default described in Section 9.1(l)):

(i)  the Lenders' Commitment and the obligations of Lenders to make Advances or
to incur Letter of Credit Obligations shall be suspended without notice to or
demand  upon Borrower, which is expressly waived by Borrower to the fullest
extent permitted by applicable Laws (except to the extent that the Majority
Lenders may waive the Event of Default or, without waiving, determine, upon
terms and conditions satisfactory to the Majority Lenders, to reinstate the
Lenders' Commitment);

(ii) The Majority Lenders may request the Agent to, and the Agent thereupon
shall, terminate the Lenders' Commitment, declare all or any part of the unpaid
principal of the Notes, all interest accrued and unpaid thereon and all other
Obligations payable under the Loan Documents to be forthwith due and payable,
and direct the Letter of Credit Issuer to declare all amounts due under the
Letter of Credit Applications to be forthwith due and payable, whereupon the
same shall become and be forthwith due and payable, without protest, presentment
for payment, notice of dishonor, demand or further notice of any kind, all of
which are expressly waived by Borrower to the fullest extent permitted by
applicable Laws; and

<PAGE>

(iii)     the Majority Lenders may request the Agent to, and the Agent thereupon
shall, make immediate demand upon Borrower to fund the Cash Collateral Account
contemplated by Section 2.2(i).

(b)  Upon the occurrence of any Event of Default described in Section 9.1(k):

(i)  the Lenders' Commitment and all other obligations of the Agent and the
Lenders and all rights of Borrower under the Loan Documents shall automatically
terminate without notice to or demand upon Borrower, which is expressly waived
by Borrower to the fullest extent permitted by applicable Laws;

(ii) the unpaid principal of the Notes, all interest accrued and unpaid thereon
and all other Obligations payable under the Loan Documents, together with all
amounts due under the Letter of Credit Applications, shall be forthwith due and
payable, without protest, presentment for payment, notice of dishonor, demand or
further notice of any kind, all of which  are expressly waived by Borrower to
the fullest extent permitted by applicable Laws; and

(iii)     Borrower shall fund the Cash Collateral Account contemplated by
Section 2.2(i).

(c)  Upon the occurrence of any Event of Default, the Agent, without notice to
(other  than  as  expressly provided for in any Loan Document)  or  demand  upon
Borrower,  which is expressly waived by Borrower to the fullest extent permitted
by applicable Laws, may proceed to protect, exercise, and enforce the rights and
remedies  of  the Agent and the Lenders under the Loan Documents, in  accordance
with  the terms of the Loan Documents and such other rights and remedies as  are
provided by applicable Laws or in equity.

(d)  The order and manner in which the rights and remedies of the Lenders under
the Loan Documents and otherwise are to be exercised shall be determined by the
Majority Lenders.  All payments received by the Agent and the Lenders, or any of
them, shall be applied first, to the costs and expenses (including reasonable
attorneys' fees and disbursements) of the Agent and of the Lenders, second, to
the payment to the Lenders, in proportion to each Lender's Pro Rata Share, of
the unpaid principal amount owing on all the Obligations, plus accrued and
unpaid interest thereon, third, to the payment to the Agent and the Lenders of
any other Obligations hereunder, in proportion to the amount of such Obligations
owing to the Agent and to the Lenders, and thereafter to Borrower or whomsoever
may be lawfully entitled thereto. Regardless of how each Lender may treat the
payments for its own accounting purposes, for the purpose of computing
Borrower's Obligations hereunder and under the Notes, payments shall be applied
first, to the costs and expenses of the Agent and the Lenders as set forth
above, second, to the payment of accrued and unpaid interest due under any Loan
Documents to and including the date of such application (ratably, and without
duplication, according to the accrued and unpaid interest due under each of the
Loan Documents), and third, to the payment of all other amounts (including
principal and fees) then owing to the Lenders under the Loan Documents.  No
application of the payments will cure any Event of Default or prevent
acceleration, or continued acceleration, of amounts payable under the Loan
Documents or prevent the exercise, or

<PAGE>

continued exercise, of rights or remedies of the Lenders hereunder or thereunder
or as are provided by applicable Laws or in equity.

                                   ARTICLE 10.
                                    THE AGENT

     Section 10.1   Appointment and Authorization; No Fiduciary Responsibility.
Each Lender hereby irrevocably appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under the Loan
Documents as are delegated to the Agent by the terms thereof or are reasonably
incidental thereto, as determined by the Agent.  This appointment and
authorization does not constitute appointment of the Agent as a trustee or
fiduciary for any Lender and, except  as specifically set forth herein to the
contrary, the Agent shall take  such  action  and  exercise  such powers only
in an administrative and ministerial capacity.  Each of the Lenders agrees that
the Agent has no fiduciary relationship with any Lender and that no implied
covenants, functions, responsibilities, duties, obligations or liabilities of
any kind shall be implied in the course of conduct of the Agent's
responsibilities specifically set forth herein or otherwise exist on the part of
the Agent for the benefit of the Lenders.

     Section 10.2   Agent and Affiliates.  GE Capital (and each successor Agent)
has the same rights and powers under the Loan Documents as any other Lender and
may exercise the same as though it were not the Agent; and the term "Lender" or
"Lenders" includes GE Capital in its individual capacity.  GE Capital (and  each
successor  Agent) and its respective Affiliates may lend money to and  generally
engage  in any kind of business with Borrower and any Affiliate of Borrower,  as
if  it  were  not  the  Agent and without any duty to account  therefor  to  the
Lenders.   GE Capital (and each successor Agent) need not account to  any  other
Lender for any monies received by it for reimbursement of its costs and expenses
as  Agent  hereunder,  for  any fee received by it  in  its  capacity  as  Agent
hereunder,  or  for  any  monies received by it in  its  capacity  as  a  Lender
hereunder, except as otherwise provided herein.

     Section 10.3   Lenders' Credit Decisions.  Each Lender agrees that it  has,
independently  and  without reliance upon the Agent, any other  Lender,  or  the
directors,  officers, agents, or employees of the Agent or of any other  Lender,
and  instead  in  reliance upon information supplied to it by or  on  behalf  of
Borrower and upon such other information as it has deemed appropriate, made  its
own independent credit analysis and decision to enter into this Agreement.  Each
Lender  confirms  that  it  has such knowledge and experience  in  business  and
financial  matters  that  it  is  capable of making  such  credit  analysis  and
evaluating  the  merits  and  risks of entering  into  this  Agreement.   It  is
expressly  understood that each Lender is able to bear the  risk  of  loss,  and
assumes all risk of loss in connection with the entering into of this Agreement.
Each  Lender also agrees that it shall, independently and without reliance  upon
the Agent, any other Lender, or the directors, officers, agents, or employees of
the  Agent  or of any other Lender, continue to make its own independent  credit
analyses and decisions in acting or not acting under the Loan Documents.

     Section 10.4   Action by Agent.

(a)  The Agent may assume that no Default or Event of Default has occurred
and is  continuing, unless the Agent has actual knowledge of the Default or
Event of Default, has

<PAGE>

received  notice  from Borrower stating the nature of the Default  or  Event  of
Default, or has received notice from a Lender stating the nature of the  Default
or Event of Default and that Lender considers the Default or Event of Default to
have occurred and to be continuing.

(b)  The Agent has only those obligations under the Loan Documents that are
expressly  set  forth therein.  Without limitation on the foregoing,  the  Agent
shall  have no duty to inspect any Property of Borrower, although the Agent  may
in its discretion periodically inspect any Property from time to time.

(c)  Except for any obligation expressly set forth in the Loan Documents and as
long as the Agent may assume that no Default or Event of Default has occurred
and is continuing, the Agent may, but shall not be required to, exercise its
discretion to act or not act, except that the Agent shall be required to act or
not act upon the instructions of the Majority Lenders (or of all the Lenders, to
the extent required by Section 11.2) and those instructions shall be binding
upon the Agent and all the Lenders; provided, that the Agent shall not be
required to act or not act if to do so would expose the Agent to personal
liability or would be contrary to any Loan Document or to applicable Laws.

(d)  If the Agent has received a notice specified in clause (a), the Agent shall
give notice thereof to the Lenders and shall act or not act upon the
instructions of the Majority Lenders (or of all the Lenders, to the extent
required by Section 11.2); provided that the Agent shall not be required to act
or not act if to do so would be contrary to any Loan Document or to applicable
Law or would result, in the reasonable judgment of the Agent, in risk of
liability to the Agent, and except that if the Majority Lenders (or all the
Lenders, if required under Section 11.2) fail, for three Business Days after the
receipt of notice from the Agent, to instruct the Agent, then the Agent, in its
sole discretion, may act or not act as it deems advisable for the protection of
the interests of the Lenders.

(e)  The Agent shall have no liability to any Lender for acting, or not acting,
as instructed by the Majority Lenders (or all the Lenders, if required under
Section 11.2), notwithstanding any other provision hereof.

(f)  Each Lender hereby irrevocably authorizes the Agent to execute releases of
Liens relating to any Collateral that is the subject of any disposition of
Property permitted by this Agreement.

     Section 10.5   Liability of Agent.  Neither the Agent nor any of its
respective directors, officers, agents or employees shall be liable for any
action taken or not  taken  by them under or in connection with the Loan
Documents, except for their own gross negligence or willful misconduct.  Without
limitation of the foregoing, the Agent and its respective directors, officers,
agents and employees:

     (a)   may treat the payee of any Note as the holder thereof until the Agent
receives  notice  of  the  assignment or transfer thereof  pursuant  to  a  Loan
Assignment, signed by the payee and may treat each Lender as the owner  of  that
Lender's  interest in the Obligations due to Lenders for all  purposes  of  this
Agreement until the Agent receives notice of the assignment or transfer  thereof
pursuant to a Loan Assignment;

<PAGE>

     (b)  may consult with legal counsel, in-house legal counsel, independent
public accountants, in-house accountants and other professionals, or other
experts selected by it, or with legal counsel, independent public accountants,
or other experts for Borrower, and shall not be liable for any action taken or
not taken by it or them in good faith in accordance with the advice of such
legal counsel, independent public accountants, or experts;

(c)  will not be responsible to any Lender for any statement, warranty, or
representation made in any of the Loan Documents or in any notice, certificate,
report, request, or other statement (written or oral) in connection with any of
the Loan Documents;

(d)  except to the extent expressly set forth in the Loan Documents, will have
no duty to ascertain or inquire as to the performance or observance by Borrower
or any other Person of any of the terms, conditions, or covenants of any of the
Loan Documents or to inspect the property, books, or records of Borrower or any
of its Affiliates or other Person;

(e)  will not be responsible to any Lender for the due execution, legality,
validity, enforceability, genuineness, effectiveness, sufficiency, or value of
any Loan Document, any other instrument or writing furnished pursuant thereto or
in connection therewith;

(f)  will not incur any liability by acting or not acting in reliance upon any
Loan Document, notice, consent, certificate, statement, or other instrument or
writing believed by it or them to be genuine and signed or sent by the proper
party or parties; and

(g)  will not incur any liability for any arithmetical error in computing any
amount payable to or receivable from any Lender hereunder, including payment of
principal and interest on the Notes and payment of fees and other amounts;
provided, that promptly upon discovery of such an error in computation, the
Agent, the Lenders and (to the extent applicable) Borrower shall make such
adjustments as are necessary to correct such error and to restore the parties to
the position that they would have occupied had the error not occurred.

     Section 10.6   Indemnification.  Each Lender shall, ratably in accordance
with its Pro Rata Share of the Commitment, indemnify and hold the Agent and its
directors,  officers,  agents,  and  employees  harmless  against  any  and  all
liabilities,  obligations,   losses,  damages,  penalties,  actions,  judgments,
suits,  costs,  expenses,  or disbursements of any  kind  or  nature  whatsoever
(including, without limitation, attorney's fees and disbursements) that  may  be
imposed  on, incurred by, or asserted against it or them in any way relating  to
or  arising out of the Loan Documents (other than losses incurred by  reason  of
the failure by Borrower to pay the Obligations due to Lenders hereunder or under
the  Notes)  or any action taken or not taken by it as Agent thereunder,  except
for  the Agent's gross negligence or willful misconduct.  Without limitation  on
the  foregoing,  each  Lender shall reimburse the Agent  upon  demand  for  that
Lender's  ratable  share  of  any  cost or expense  incurred  by  the  Agent  in
connection    with   the   negotiation,   preparation,   execution,    delivery,
administration,  amendment,  waiver, refinancing, restructuring,  reorganization
(including  a bankruptcy reorganization), or enforcement of the Loan  Documents,
to  the  extent that Borrower is required by Section 11.3 to pay  that  cost  or
expense  but  fails  to  do  so upon demand.  Any such reimbursement  shall  not
relieve  Borrower of its obligations under Section 11.3, and upon any subsequent
recovery of such cost or expense by the

<PAGE>

Agent from Borrower the Agent shall promptly return to each Lender such Lender's
Pro Rata Share of the amounts so paid.

     Section 10.7   Successor Agent.  The Agent may resign as such at any time
by written  notice to Borrower and Lenders, and the Majority Lenders  may,  at
any time when the sum of GE Capital's Pro Rata Share of the Commitment  plus the
outstanding  principal balance of GE Capital's Term Loan equal less  than  fifty
percent(50%)  of  the  sum  of  the Commitment  and  the  aggregate  outstanding
principal balance of all Term Loans remove the Agent by written notice  to  that
effect,  with  the  written  consent  of  Borrower  (which  consent  shall   not
unreasonably  be  withheld).  Any resignation or removal shall become  effective
upon  a  successor's acceptance of appointment as Agent.  In either  event,  the
Majority  Lenders shall appoint a successor Agent or Agents, who  must  be  from
among  the  Lenders;  provided that the Agent shall be  entitled  to  appoint  a
successor Agent from among the Lenders, subject to acceptance of appointment  by
that  successor  Agent, if the Majority Lenders have not appointed  a  successor
Agent within 30 days after the date the Agent gave notice of resignation or  was
removed.   Upon a successor's acceptance of appointment as Agent, the  successor
will  thereupon  succeed  to  and become vested with  all  the  rights,  powers,
privileges,  and duties of the Agent under the Loan Documents, the resigning  or
removed  Agent  will  thereupon be discharged from its  duties  and  obligations
thereafter arising under the Loan Documents, and the provisions of this  Article
10 shall continue to inure to the benefit of the retiring or removed Agent as to
any  actions  taken or omitted to be taken by it while it was serving  as  Agent
under this Agreement and the other Loan Documents.

     Section 10.8   Proportionate Interest of the Lenders in any Collateral.
The Agent, on behalf of all the Lenders, shall hold in accordance with the Loan
Documents all items of any Collateral or  interests therein received or held  by
the  Agent.  Subject to the Agent's and the Lenders' rights to reimbursement for
their  costs  and expenses under this Agreement (including attorneys'  fees  and
disbursements and other professional services) and subject to the application of
payments  in accordance with Section 9.2(d), each Lender shall have an  interest
in  any  Collateral  or  interests therein in  the  same  proportions  that  the
aggregate  Obligations  owed such Lender under the Loan Documents  bear  to  the
aggregate Obligations owed under the Loan Documents to all the Lenders,  without
priority or preference among the Lenders.

                                   ARTICLE 11.
                                  MISCELLANEOUS

     Section 11.1   Cumulative Remedies; No Waiver.  The rights, powers,
privileges and remedies of the Agent or any Lender provided herein or in any
Note or other Loan Document are cumulative and not exclusive of any right,
power, privilege or remedy provided by Law or equity.  No failure or delay on
the part of the  Agent or any Lender in exercising any right, power, privilege
or remedy may be, or may be deemed to be, a waiver thereof; nor may any single
or partial exercise of any right,  power,  or remedy preclude any other or
further exercise of any other right, power, privilege or remedy.  The terms and
conditions of Article 8 hereof are inserted for the sole benefit of the Lenders,
and the Agent may  (with  the approval of the Majority Lenders) waive them in
whole or in part with or without terms  or  conditions in respect of any Advance
or Letter of Credit  Obligation, without  prejudicing the Lenders' rights to
assert them in whole or in part in respect of any other Advance or Letter of
Credit.

<PAGE>

     Section 11.2   Amendments; Consents.  No amendment, modification,
supplement, termination  or  waiver of any provision of this Agreement  or  any
other Loan Document, and no consent to any departure therefrom by Lancer,
Borrower or any Subsidiary, may in any event be effective unless in writing
signed by the Agent with the written approval of the Majority Lenders, and, in
the case of an amendment or modification, Lancer, Borrower or Borrower's
Subsidiary, as applicable, and then only in the specific instance and for the
specific purpose given; and without the approval in writing of all the Lenders,
no amendment, modification, supplement, termination, waiver or consent may be
effective:

(a)  to amend or modify the principal of, or the rate of interest payable
on, any Obligation or decrease the amount of any fee payable to any Lender; or

(b)  without limitation of the preceding clause (a), to amend or modify the
provisions of Section 3.1, 3.3, 3.6, 3.7, 3.8, 3.9, 3.10, 3.11 or 3.17 in any
manner which would postpone any date fixed for any payment or prepayment of
principal of, or any interest on, any Obligation or any fee; or

(c)  to extend the Maturity Date; or

(d)  to amend or modify the provisions of the definition of "Majority Lenders,"
of Section 9.2(a) with respect to the rights of the Majority Lenders or of
Section 11.2, 11.10 or 11.11; or

(e)  to amend or modify any provision of this Agreement or the Loan Documents
that expressly requires the consent or approval of all the Lenders; or

(f)  to release all or a material portion of the Collateral, other than as set
forth in Section 10.4(f) or as contemplated by the Loan Documents.

     Any  amendment, modification, supplement, termination, waiver,  or  consent
pursuant to this Section 11.2 shall apply equally to, and shall be binding upon,
all the Lenders and the Agent.

     Section 11.3   Costs, Expenses and Taxes.  Borrower shall pay on demand the
reasonable costs and expenses of GE Capital, individually and in its capacity as
Agent,  and  its Affiliates and agents, in connection with (a) the  negotiation,
preparation,  execution  and  delivery of the Loan Documents;  (b)  the  ongoing
administration  (including, without limitation, (i) consultation with  attorneys
in  connection with such ongoing administration and with respect to the  Agent's
rights  and  responsibilities under this Agreement and the other Loan  Documents
and   (ii)  the  Agent's  periodic  audits  of  Borrower),  amendment,   waiver,
refinancing, restructuring, and enforcement or attempted enforcement of any Loan
Documents; (c) any assignment or sale of a participation by GE Capital permitted
by  Section  11.8 and (d) any matter related to any of the foregoing,  including
filing fees, recording fees, search fees, reasonable travel expenses, and  other
out-of-pocket expenses and the reasonable fees and out-of-pocket expenses of any
legal  counsel  and  of any other professionals retained by GE  Capital  in  any
capacity (including, without limitation, King & Spalding, special counsel to the
Agent and GE Capital, any other counsel retained by GE

<PAGE>

Capital   in   any   capacity,  auditors,  accountants,  appraisers,   valuation
consultants,  insurance  and  environmental advisors,  records  research  firms,
management consultants, and  other consultants and agents), including any costs,
expenses  or  fees  incurred  or suffered by GE  Capital  in  any  capacity,  in
connection with or during the course of any bankruptcy or insolvency proceedings
of  Borrower.  Borrower shall also pay on demand the costs and expenses of  each
of the Lenders in connection with the restructuring and enforcement or attempted
enforcement  of  any  Loan Documents and any matter related  thereto,  including
travel  expenses and other reasonable out-of-pocket expenses and  the  fees  and
other reasonable out-of-pocket expenses of any legal counsel retained by any  of
the  Lenders, including any costs, expenses or fees incurred or suffered by  any
of  the  Lenders  in connection with or during the course of any  bankruptcy  or
insolvency proceedings of Borrower.  Borrower shall pay any and  all documentary
tax, stamp tax, intangibles tax, intangible recording tax, ad valorem tax, value
added  tax,  excise  tax and any other similar taxes or levies  and  all  costs,
expenses,  fees  and charges payable or determined to be payable  in  connection
with  the  filing or recording of any Loan Document or any other  instrument  or
writing  to  be  delivered hereunder or thereunder, or in  connection  with  any
transaction  pursuant hereto or thereto, and shall reimburse, hold harmless  and
indemnify the Agent and each Lender from and against any and all loss, liability
or  legal or other expense with respect to or resulting from any delay in paying
or  failure  to pay any tax, cost, expense, fee or charge that any of  them  may
suffer  or  incur  by reason of the failure of Borrower to perform  any  of  its
Obligations.

     Section 11.4   Nature of Lender's Obligations.  Each Lender's obligation to
make any Advance or its Term Loan pursuant hereto is several and not joint or
joint and several and is conditioned upon the performance by each other Lender
of its obligation to make Advances and Term Loans, as the case may be.  A
default by any  Lender  will not increase the Pro Rata Share of the Commitment
attributable to  any  other  Lender  or create any new obligation or otherwise
increase any existing obligation of any other Lender.  Any Lender not in default
may, if it desires, assume in such proportion as the non-defaulting Lenders
agree of the obligations of any Lender in default, but is not obligated to do
so.

     Section 11.5   Survival of Representations and Warranties.  All
representations and warranties contained herein or in any other Loan Document
or in any certificate or other writing delivered by or on behalf of Borrower,
will survive the making of all Advances and Term Loans hereunder and  the
execution and delivery of the Notes, and have been or will be relied upon by the
Agent and each Lender, notwithstanding any investigation made by the Agent or
any Lender or on their behalf.

     Section 11.6   Notices.

     (a)  Except as otherwise expressly provided in any Loan Document, all
notices, requests, demands, directions, and other communications provided for
hereunder and under any other Loan Document must be in writing and must be
mailed, telegraphed, telecopied, delivered, or sent by telex or cable to the
appropriate party at the following address for such party:

          (i)  If to the Agent or GE Capital at

               General Electric Capital Corporation
               Suite 600
               3379 Peachtree Road, N.E.
               Atlanta, Georgia  30326

<PAGE>

               Attention:     Elaine L. Moore
               Senior Vice President and
               Region Operations Manager
               Telecopier Number: (404) 262-9034
               Telephone Number:  (404) 814-3100

          With copies to

               General Electric Capital Corporation
               201 High Ridge Road
               Stamford, Connecticut  06927
               Attention:     Susan L. Poland
               Counsel, Corporate Finance Group
               Telecopier Number: (203) 316-7889
               Telephone Number:  (203) 316-7500

     and

               King & Spalding
               191 Peachtree Street
               Atlanta, Georgia 30303-1763
               Attention:     John Hays Mershon, Esq.
               Telecopier Number: (404) 572-5100
               Telephone Number:  (404) 572-4671

          (ii) If to Borrower, at

               Fairfield Manufacturing Company
               U.S. Route 52 South
               Lafayette, Indiana 47903
               Attention:     Mr. Richard A. Bush
               Vice President
               Telecopier Number:  (765) 477-7812
               Telephone Number:   (765) 474-3474

     <PAGE>

     With a copy to

               Debevoise & Plimpton
               875 Third Avenue
               New York, New York 10022
               Attention:     Ralph R. Arditi, Esq.
               Telecopier Number:  (212) 909-6836
               Telephone Number:   (212) 909-6000

          (iii)     If to any Lender at its address indicated on the signature
pages hereof or in a Loan Assignment.

or  at  such  other  address as may be substituted by  notice  given  as  herein
provided.

     Any  notice,  request, demand, direction, or other communication  given  by
telegram,  telecopier,  telex, or cable must be confirmed  within  48  hours  by
letter mailed or delivered to the appropriate party at its respective address.

     (b)  Except as otherwise expressly provided in any Loan Document if any
notice, request, demand, direction, or other communication required or permitted
by any Loan Document is given by mail it will be effective on the earlier of
receipt or the  third calendar day after deposit in the United States mail with
first class or  airmail postage prepaid; if given by telex or telecopier, when
received; or if given by personal delivery, when delivered.

     Section 11.7   Execution in Counterparts.  Unless the Agent otherwise
specifies with respect to any Loan Document, this Agreement and any other Loan
Document may be executed in any number of counterparts and any party hereto or
thereto may execute any counterpart, each of which when executed and delivered
will be deemed to be an original and all of which counterparts of this Agreement
or any other Loan Document, as the case may be, taken together will be deemed
to be but one and the same instrument.  Neither this Agreement nor any other
Loan Document will be deemed to have been executed and delivered by any party
hereto or thereto  until  counterparts hereof or thereof, as the case may  be,
have been executed by all the parties hereto or thereto and delivered to the
Agent (which delivery may be made by facsimile transmission of the respective
signature pages to this Agreement, followed promptly thereafter by delivery of
executed original signature pages).

     Section 11.8   Binding Effect; Assignment.

     (a)  This Agreement and the other Loan Documents shall be binding upon and
inure to the benefit of Borrower, the Agent, each of the Lenders, and its
successors and assigns, except that Borrower may not assign its rights hereunder
or thereunder or any interest herein or therein without the prior written
consent of all the Lenders.  Each Lender shall have the right to sell or
transfer any participation interest in this Agreement, and the Notes in
accordance with the provisions of this Section 11.8.  Each Lender represents
that it is not acquiring its Note with a view to the distribution thereof
within the meaning of the Securities Act (subject to any requirement that
disposition of such Note must be within the control of such Lender).

<PAGE>

     (b)   From time to time each Lender may, with the prior written consent  of
Borrower (which will not unreasonably be withheld), assign to one or more Lender
Assignees all or a portion of its Pro Rata Share of the Commitment or its Term
Loan; provided that (i) such Eligible Assignee, if not then a  Lender or an
Affiliate of Lender, shall be reasonably acceptable to the  Agent, (ii) such
assignment shall be evidenced by a Loan Assignment, a copy of which shall be
furnished to the Agent for recordation as hereinbelow provided, and (iii) the
effective date of any such assignment shall be as specified in the Loan
Assignment.  Upon the effective date of such  Loan Assignment, the Lender
Assignee named therein shall be a Lender for all purposes of this Agreement,
with the Pro Rata Share of the Commitment or the portion of the  Term  Loans
therein set forth and, to the extent of such Pro Rata Share (in the case  of  an
assignment of the Commitment or portion thereof), the assigning Lender shall  be
released from its obligations under this Agreement.  Borrower agrees  that  it
shall execute and deliver (against delivery by the assigning Lender to Borrower
of its Note) to such Lender Assignee, a Note evidencing that Lender Assignee's
Pro Rata Share of the Commitment or Term Loan, as applicable, and to the
assigning Lender, a Note evidencing the Pro Rata Share of the Commitment or
remaining Term Loan, as applicable, retained by the assigning Lender.  Borrower
also agrees that it shall provide, and cause Lancer and Joseph Littlejohn & Levy
to  provide, any information to any Lender Assignee reasonably deemed necessary
by an assigning Lender in order to effect such assignment, including without
limitation all information delivered pursuant to Article 7 hereof, and shall
cause its Senior Officers and the senior officers of Lancer and partners and
employees of Joseph Littlejohn & Levy, to participate in meetings  with any
Lender Assignee when requested by an assigning Lender.

(c)  By executing and delivering a Loan Assignment, the Lender Assignee
thereunder acknowledges and agrees that (i) other than the representation and
warranty that it is the legal and beneficial owner of the Pro Rata Share of the
Commitment or the Term Loan or portion thereof being assigned thereby free and
clear of any adverse claim, the assigning Lender has made no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness or sufficiency of
this Agreement or any other Loan Document, (ii) the assigning Lender  has made
no representation or warranty and assumes no responsibility with respect to the
financial condition of Borrower or the performance by Borrower of the
Obligations, (iii) it has received a copy of this Agreement, together with
copies of the most recent financial statements delivered pursuant to this
Agreement and such other documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into such Loan Assignment,
(iv) it will, independently and without reliance upon the Agent or any Lender
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement, (v) it appoints and authorizes the Agent to take such
action and to exercise such powers under this Agreement as are delegated to the
Agent by Article 10, and (vi) it will perform in accordance with their terms all
of the obligations which by the terms of this Agreement are required to be
performed by it as a Lender.

(d)  The Agent shall maintain at the Agent's office a copy of each Loan
Assignment delivered to it and a ledger for recordation of the names and
addresses of the Lenders and their respective Pro Rata Shares of the Commitment
and the respective amounts of their Term Loans.  The entries in such ledger
shall be conclusive, in the absence of manifest error, and Borrower,

<PAGE>

the Agent and the Lenders may treat each Person whose name is recorded in the
ledger as a Lender hereunder for all purposes of this Agreement.  Promptly
following any entry in the ledger, the Agent shall provide notice thereof to
Borrower and the Lenders.

(e)  Notwithstanding any provision of this Section 11.8 to the contrary, (i) any
Lender  that is a member of the Federal Reserve system may assign, as collateral
or  otherwise, any of its rights under this Agreement and the other Loan
Documents (including, without limitation, rights to payment of principal  and/or
interest) to any  Federal Reserve Bank of the Federal Reserve System  without
notice to or consent of Borrower and (ii) any Lender (including GE Capital) may
assign its entire  interest in this Agreement, the Notes, the other Loan
Documents, the Commitment, the Letter of Credit Obligations and all other
Obligations  as  part  of the sale or other disposition by such Lender of a
portfolio including one or more other transactions.

(f)  From time to time each Lender may, without notice to the Agent or Borrower,
sell participations in all or any portion of its Term Loan and Notes or its Pro
Rata Share of the Commitment, or both of them, to any institutional investor,
bank, financial institution or other commercial lender; provided that (i) such
Lender's obligations under this Agreement shall remain unchanged, (ii) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iii) the other parties to this Agreement shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement, (iv) any participant shall
not be entitled to require such Lender to take or omit to take any action
hereunder except action with respect to (A) in the case of a participant in the
Term Loan (x) a reduction in the rates of interest payable with respect to such
Term Loan or in any fees in which such participant shares, (y) an extension of
the maturity of such Term Loan or the postponement of any date fixed for the
payment of any interest on, any such Term Loan, or (z) the release of all or any
material portion of the Collateral for such Term Loan, other than in connection
with dispositions of such Collateral permitted by this Agreement, and (B) in the
case of a participant in the Commitment (x) a reduction in the rates of interest
payable with respect to the Revolving Credit Loan or any fees payable with
respect to the Revolving Credit Loan in which such participant shares, (y) an
extension of the Maturity Date or the postponement of any date fixed for the
payment of any interest on the Revolving Credit Loan or (z) the release of all
or any material portion of the Collateral for the Revolving Credit Loan, other
than in connection with dispositions of such Collateral permitted by this
Agreement, and (v) the participant shall be entitled to the cost protection
provisions contained in Sections 3.9, 3.10, 3.12 and 3.16 (provided that the
participant shall comply with all requirements imposed under Section 3.16 as
would apply if the participant were a Lender hereunder).

     Section 11.9   Confidentiality of Confidential Information.  The Agent and
each Lender acknowledges that certain information concerning Borrower which is
obtained by or furnished to the Agent and such Lenders pursuant to this
Agreement may be non-public, proprietary or confidential in nature
("Confidential  Information").  The Agent and each Lender confirm to Borrower,
for itself, that it is the policy and practice of the Agent and each such Lender
to maintain in confidence all Confidential Information which is received by  it
in  connection with the closing and administration of transactions of the kind
contemplated by this Agreement and which is identified to the Agent or such
Lender as such, and that the Agent and each Lender will protect the
confidentiality of all Confidential Information submitted to it by or with
respect to Borrower, commensurate with its efforts to maintain the
confidentiality of its own

<PAGE>

Confidential Information, subject to (a) its need in connection with the closing
and  administration  of  the  transactions contemplated  by  this  Agreement  to
disclose   any   Confidential  Information  to  any  legal  counsel,   auditors,
appraisers,  consultants or other Persons retained by  it  for  the  purpose  of
advising  the  Agent or such Lender in connection therewith;  (b)  its  need  to
disclose any Confidential Information under color of legal authority, including,
without limitation, to any regulatory authority having jurisdiction over its  or
its  operations or to or under the authority of any court deemed by it to be  of
competent  jurisdiction; (c) its right to disclose the Confidential  Information
to  any prospective Lender, assignee or participant which has agreed to maintain
the  confidentiality thereof on a basis substantially similar to that set  forth
herein;  and  (d) the inapplicability of the terms of this Section 11.9  to  any
information furnished to the Agent or any Lender which was (i) in the Agent's or
such  Lender's possession prior to its delivery to the Agent or such  Lender  by
Borrower, or otherwise has been obtained by the Agent or such Lender on  a  non-
confidential basis; or (ii) was or becomes available to the public or  otherwise
part  of  the  public  domain (other than as a result of  the  Agent's  or  such
Lender's  failure to abide hereby); or (iii) was not non-public, proprietary  or
confidential when Borrower delivered it to the Agent or such Lender.

     Section 11.10  Sharing of Setoffs.  Each Lender severally agrees that if
it, through the exercise of the right of setoff, banker's lien, or counterclaim
against Borrower or otherwise, receives payment of the Obligations due it
hereunder and under the Notes that is ratably more than any other Lender,
through  any means, receives in payment of the Obligations held by that  Lender,
then (a) the Lender exercising the right of setoff, banker's lien, or
counterclaim or otherwise receiving such payment shall purchase, and shall be
deemed to have simultaneously purchased, from the other Lender a participation
in the Obligations held by the other Lender and shall pay to the other Lender a
purchase price in an amount so that the share of the Obligations held by each
Lender after the exercise of the right of setoff, banker's lien, or counterclaim
or receipt of payment shall be in the same proportion that existed prior to the
exercise of the right of setoff, banker's lien, or counterclaim or  receipt  of
payment, and (b) such other adjustments and purchases of participations shall be
made from time to time as shall be equitable to ensure that all of the  Lenders
share any payment obtained in respect of the Obligations ratably in accordance
with each Lender's share of the Obligations immediately prior to, and  without
taking into  account, the payment; provided that, if all or any  portion  of  a
disproportionate payment obtained as a result of the exercise of  the  right  of
setoff, banker's lien, counterclaim or otherwise is thereafter  recovered  from
the purchasing Lender by Borrower or any Person claiming through or  succeeding
to the  rights of Borrower, the purchase of a participation shall be  rescinded
and the purchase price thereof shall be restored to the extent of the recovery,
but without interest.  Each Lender that purchases a participation in the
Obligations pursuant to this Section 11.10 shall from and after the purchase
have  the  right  to give all notices, requests, demands, directions  and  other
communications  under  this  Agreement  with  respect  to  the  portion  of  the
Obligations  purchased to the same extent as though the purchasing  Lender  were
the original owner of the Obligations purchased.  Borrower expressly consents to
the foregoing arrangements and agrees that any Lender holding a participation in
an Obligation so purchased may exercise any and all rights of setoff,  banker's
lien or counterclaim with respect to the participation as fully as if the Lender
were the original owner of the Obligation purchased.

     Section 11.11  Indemnity by Borrower.

<PAGE>

     (a)   Borrower agrees to indemnify and hold the Agent and each Lender,  its
successors  and  assigns,  its Affiliates, its directors,  officers,  attorneys,
employees,  and  agents  and the directors, officers, attorneys,  employees  and
agents of its successors and assigns and Affiliates, and all Persons controlling
any  of  them  or their Affiliates within the meaning of the Securities  Act  or
Securities Exchange Act (collectively, "Indemnified Persons") harmless from  and
against  any  and all claims, losses, damages, liabilities and expenses  of  any
kind  or  nature  whatsoever which may be incurred by  or  asserted  against  or
involve  any  Indemnified  Person  in any and all  actions,  suits,  proceedings
(including any investigations or inquiries) or claims with respect to  (i)  this
Agreement,  the other Loan Documents, the Senior Subordinated Note Indenture  or
the Existing Loan Agreement, (ii) any of the transactions contemplated hereunder
or   thereunder  (whether  or  not  consummated),  and  (iii)  the  preparation,
execution, delivery, administration and enforcement of the Loan Documents by the
Agent  or any Lender, and, upon demand by the Agent or any Lender, will  pay  or
reimburse  any such Indemnified Person for any legal or other expenses  incurred
in   connection  with  investigating,  defending  or  preparing  to  defend   or
participate  in  any  such action, suit, proceeding (including  any  inquiry  or
investigation)  or  claim,  whether  commenced  or  threatened  (including  such
expenses  incurred  on  any appeal), it being understood that  each  Indemnified
Person  shall have the right to select its own counsel in connection  with  such
matters  (subject, in the case of Indemnified Persons other than GE Capital,  to
the  provisions  of  clause  (b) below); provided that  Borrower  shall  not  be
responsible for such indemnification to such Indemnified Persons to  the  extent
that  any such claims, losses, damages, liabilities or expenses result from such
Indemnified Person's gross negligence or willful misconduct.  The provisions  of
this  Section 11.11 shall apply whether or not any such Indemnified Person is  a
party  to any such action, suit, proceeding or claim, and are expressly intended
to  include,  but not be limited to, reimbursement of legal and other  expenses,
including expenses incurred in depositions or discovery proceedings (subject  to
the  provisions  of  clause (b) below).  The indemnity obligations  of  Borrower
hereunder shall be in addition to, and not in limitation of, any other liability
or obligation that Borrower may have to any Indemnified Person, at common law or
otherwise, including, but not limited to, any obligation of contribution.

(b)  Any Indemnified Person other than GE Capital shall have the right to employ
counsel in any such proceeding separate from that employed by GE Capital and to
participate in the defense thereof, but the fees and expenses of such separate
counsel shall be at the expense of such Indemnified Person unless (i) the
Indemnified Person is merely appearing as a witness or is otherwise the object
of depositions or other discovery proceedings, (ii) the employment of such
separate counsel has been  specifically authorized by Borrower or (iii) the
named parties to any such action (including any impleaded parties) include such
Indemnified Person and GE Capital or one of its Affiliates and such Indemnified
Person shall have been advised by its counsel that there may be one or more
legal defenses available to such Indemnified Person which are different from or
additional to those available to GE Capital or one of its Affiliates (in which
case, Borrower shall be responsible for the payment of all legal and other fees
incurred by such Indemnified Person in connection therewith).

(c)  The Agent and each Lender agree that in the event that it becomes aware of
any claim for indemnification under this Section 11.11, the Agent or such Lender
shall promptly notify Borrower in writing, but any failure to so notify Borrower
shall not relieve Borrower of any of its obligations hereunder.

<PAGE>

(d)   Notwithstanding any provision of this Agreement to the contrary,  the
provisions of this Section 11.11 shall survive the termination of this Agreement
and  the  repayment  of the Term Loans and the Revolving  Credit  Loan  and  the
payment  and  performance of all other Obligations owed to  the  Agent  and  the
Lenders for the applicable statute of limitations period.

     Section 11.12  Nonliability of Lenders.  Borrower acknowledges and agrees
that:

(a)  Any inspections of any Property of Borrower made by or through the
Agent or the Lenders are for purposes of administration of the Loan Documents
only, and Borrower is not entitled to rely upon the same;

(b)  By accepting or approving anything required to be observed, performed,
fulfilled or given to the Lenders or the Agent pursuant to the Loan Documents,
neither the Lenders nor the Agent shall be deemed to have warranted or
represented the sufficiency, legality, effectiveness or legal effect of the same
or of any term, provision or condition thereof, and such acceptance or approval
thereof shall not constitute a warranty or representation to anyone with respect
thereto by the Lenders or the Agent;

(c)  The relationship between Borrower and the Lenders arising out of or related
to this Agreement is, and shall at all times remain, solely that of a borrower
and lender; neither the Agent nor any of the Lenders shall under any
circumstance be construed to be a partner or a joint venturer of Borrower or any
of its Affiliates; neither the Agent nor any of the Lenders shall under any
circumstance be deemed to be in a fiduciary relationship with Borrower or its
Affiliates in connection with this Agreement, or to owe any fiduciary duty to
Borrower or its Affiliates in connection with this Agreement; neither the Agent
nor any of the Lenders undertakes or assumes any responsibility or duty to
Borrower or its Affiliates to select, review, inspect, supervise,  pass judgment
upon or inform Borrower or its Affiliates of any matter in connection with their
Property or the operations of Borrower or its Affiliates; Borrower and its
Affiliates shall rely entirely upon their own judgment with respect to such
matters; and any review, inspection, supervision, exercise of judgment or supply
of information undertaken or assumed by the Lenders or the Agent in connection
with such matters is solely for the protection of the Agent and the Lenders and
neither Borrower, nor any other Person is entitled to rely thereon; and

(d)  Neither the Agent nor any of the Lenders shall be responsible or liable to
any Person for any loss, damage, liability or claim of any kind relating to
injury or death to Persons or damage to Property or other loss, damage,
liability or claim caused by the actions, inaction or negligence of Borrower
and/or its Affiliates.

     Section 11.13  No Third Parties Benefited.  This Agreement is made for  the
purpose of defining and setting forth certain obligations, rights and duties  of
Borrower,  the Agent and the Lenders with respect to the Revolving Credit  Loan,
Term  Loans, Letter of Credit Obligations and the other Obligations and is  made
for the sole benefit of Borrower, the Agent and the Lenders, and the Agent's and
the  Lenders' successors and assigns.  Except as provided in Sections  11.8  and
11.11,  no  other  Person shall have any rights of any nature  hereunder  or  by
reason  hereof,  including,  without  limitation,  any  right  to  rely  on  any
representation made by Borrower herein

<PAGE>

(except  that counsel to the parties hereto may rely on such representations  in
connection with the issuance of opinions with respect to the Loan Documents).

     Section 11.14  Right of Setoff - Deposit Accounts.  Upon the occurrence of
an Event of Default, Borrower hereby specifically authorizes each Lender, if
any, which is a bank in which Borrower maintains deposit accounts (whether a
general or special deposit account, other than trust accounts) or a certificate
of deposit, to set off any Obligations owed to the Lenders against such deposit
account  or  certificate of deposit without prior notice  to  Borrower  or  such
Subsidiary  (which notice is hereby waived) whether or not such deposit  account
or certificate of deposit has then matured.  Nothing in this Section 11.14 shall
limit  or  restrict the exercise by a Lender of any right to setoff or  banker's
lien under applicable Law.

     Section 11.15  Further Assurances.  Borrower shall, at its expense and
without expense to the Lenders or the Agent, do, execute and deliver such
further acts and documents as any Lender or the Agent from time to time
reasonably requires for the assuring and confirming unto the Lenders or the
Agent the rights hereby created or intended now or hereafter so to be, or for
carrying out the intention or facilitating the performance of the terms of any
Loan Document.

     Section  11.16   Integration.  This Agreement constitutes an amendment  and
restatement of the Existing Loan Agreement.  The execution and delivery of  this
Agreement  shall  not constitute a novation, waiver, release or modification  of
any rights, claims, or remedies of the Agent and Lenders under the Existing Loan
Agreement  or otherwise, or any indebtedness or other obligations owing  to  the
Agent  and  Lenders under the Existing Loan Agreement or otherwise.   Except  as
provided in the preceding two sentences, this Agreement, together with the other
Loan  Documents, comprises the complete and integrated agreement of the  parties
on  the  subject matter hereof and shall supersede all prior agreements, written
or  oral,  on  the  subject  matter hereof including,  without  limitation,  the
Commitment  Letter.  Each Loan Document was drafted with the joint participation
of  the respective parties thereto and shall be construed neither against nor in
favor of any party, but rather in accordance with the fair meaning thereof.

     Section 11.17  GOVERNING LAW.  ALL ADVANCES AND THE TERM LOANS MADE
HEREUNDER HAVE BEEN OR SHALL BE FUNDED FROM AND WILL BE REPAID IN NEW YORK,
NEW YORK, AND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OTHERWISE BEAR A
SUBSTANTIAL RELATIONSHIP TO THE STATE OF NEW YORK.  ACCORDINGLY, THE PARTIES TO
THIS AGREEMENT HAVE CHOSEN THAT, EXCEPT TO THE EXTENT OTHERWISE EXPRESSLY
PROVIDED THEREIN, EACH LOAN DOCUMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND PERFORMED  IN SUCH STATE, AND ANY APPLICABLE LAWS OF THE
UNITED STATES OF AMERICA.

     Section 11.18  Severability of Provisions.  Any provision in any Loan
Document that is held to be inoperative, unenforceable, or invalid as to any
party or in any jurisdiction shall, as to that party or that jurisdiction, be
inoperative, unenforceable, or invalid without affecting the remaining
provisions or the operation, enforceability, or validity of that provision as
to any party or in any other jurisdiction, and to this end the provisions of all
Loan Documents are declared to be severable.

<PAGE>

     Section 11.19  Headings.  Article and Section headings in this Agreement
and the other Loan Documents are included for convenience of reference only and
are not part of this Agreement or the other Loan Documents for any other
purpose.

     Section 11.20  Conflict in Loan Documents.  To the extent there is any
actual irreconcilable conflict between the provisions of this Agreement and
any other Loan Document, the provisions of this Agreement shall prevail.

     Section 11.21  CHOICE OF FORUM.

     (a)  EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF  ANY NEW YORK STATE OR FEDERAL COURT SITTING IN THE COUNTY OF
NEW YORK IN ANY ACTION  OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT, AND EACH HEREBY IRREVOCABLY AGREES THAT
ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED
IN SUCH NEW YORK STATE OR FEDERAL COURT.  BORROWER AGREES THAT SUCH JURISDICTION
SHALL BE EXCLUSIVE WITH RESPECT TO ANY SUCH ACTION OR PROCEEDING BROUGHT BY IT
AGAINST THE AGENT OR ANY LENDER.  NOTWITHSTANDING THE FOREGOING, THE PARTIES
AGREE THAT, WITH RESPECT TO ANY COLLATERAL IN WHICH A SECURITY INTEREST IS
GRANTED BY BORROWER TO THE LENDERS AND THE AGENT LOCATED IN OTHER
JURISDICTIONS, THE AGENT SHALL BE ENTITLED TO COMMENCE ACTIONS IN SUCH
JURISDICTIONS AGAINST BORROWER OR OTHER PERSONS FOR THE PURPOSE OF SEEKING
PROVISIONAL REMEDIES, INCLUDING ACTIONS FOR CLAIM  AND  DELIVERY OF PROPERTY, OR
FOR INJUNCTIVE RELIEF OR APPOINTMENT OF A RECEIVER,  OR  ACTIONS TO FORECLOSE
UPON LIENS GRANTED TO THE LENDERS AND THE AGENT.  EACH PARTY TO ANY LOAN
DOCUMENT, TO THE EXTENT PERMITTED BY APPLICABLE LAWS, HEREBY EXPRESSLY WAIVES
ANY DEFENSE OR OBJECTION TO JURISDICTION OR VENUE BASED ON THE DOCTRINE OF FORUM
NON CONVENIENS, AND STIPULATES THAT ANY NEW  YORK STATE OR FEDERAL COURT SITTING
IN THE COUNTY OF NEW YORK SHALL HAVE IN PERSONAM JURISDICTION AND VENUE OVER
SUCH PARTY FOR THE PURPOSE OF LITIGATING ANY DISPUTE OR CONTROVERSY ARISING OUT
OF OR RELATED TO THE LOAN DOCUMENTS.  IN THE EVENT BORROWER SHOULD COMMENCE OR
MAINTAIN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATED TO THE LOAN
DOCUMENTS IN A FORUM OTHER THAN ONE OF THE FOREGOING COURTS, THE LENDERS AND THE
AGENT SHALL BE ENTITLED TO REQUEST THE DISMISSAL OR STAY OF SUCH ACTION OR
PROCEEDING, AND BORROWER STIPULATES FOR ITSELF THAT SUCH ACTION OR PROCEEDING
SHALL BE DISMISSED OR STAYED.

(b)  Borrower hereby irrevocably designates, appoints and empowers Prentice Hall
Corporation System, Inc., whose present address is 115 Columbus Circle, New
York, New York 10023-7773, as its authorized agent to receive, for and on its
behalf and on behalf of its Property, service of process in the State of New
York when and as such legal actions or proceedings may be brought in the New
York Courts, and such service of process shall be deemed complete upon the date
of delivery thereof to such agent whether or not such agent gives notice thereof
to

<PAGE>

Borrower,  or  upon the earliest of any other date permitted by applicable Law.
It  is understood that a copy of said process served on such agent will as soon
as  practicable be forwarded to Borrower at such address specified in accordance
with  Section 11.6, at such address, but its failure to receive such copy shall
not affect in any way the service of said process on said agent as the agent of
Borrower.  Borrower irrevocably consents to the service of process of any of the
New  York  Courts in any such action or proceeding by the mailing of the  copies
thereof by certified mail, return receipt requested, postage prepaid, to it at
its  address specified in accordance with Section 11.6, such service to become
effective  upon the earlier of (i) the date 10 calendar days after such  mailing
or (ii) any earlier date permitted by applicable Law.  Borrower agrees that  it
will  at  all times continuously maintain an agent to receive service of process
in  the State of New York on behalf of itself and its Property and in the  event
that,  for  any reason, the agent named above or its successor shall  no  longer
serve as its agent to receive service of process in the State of New York on its
behalf,  it shall promptly appoint a successor so to serve and shall advise  the
Agent and the Lenders thereof (and shall furnish to the Agent the consent of any
successor agent so to act).

(c)  Nothing in this Section 11.21 shall affect the right of the Agent or any
Lender  to  bring  proceedings against Borrower  in  the  courts  of  any  other
jurisdiction  or  to serve process in any other manner permitted  by  applicable
Law.

     Section 11.22  CONSEQUENTIAL DAMAGES; WAIVER OF TRIAL BY JURY.  NEITHER THE
AGENT  NOR  ANY LENDER SHALL BE RESPONSIBLE OR LIABLE TO BORROWER OR  ANY  OTHER
PERSON OR ENTITY FOR ANY PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH  MAY
BE ALLEGED AS A RESULT OF THIS AMENDED AND RESTATED LOAN AGREEMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY. BORROWER AND THE AGENT AND EACH OF THE LENDERS
HEREBY  EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION
OR  CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH
OR  RELATED  OR INCIDENTAL TO THE DEALINGS OF SUCH PERSONS OR ANY OF  THEM  WITH
RESPECT TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH  CASE
WHETHER  NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT  OR
TORT OR OTHERWISE; AND EACH SUCH PERSON HEREBY AGREES AND CONSENTS THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY TRIAL COURT WITHOUT
A  JURY,  AND  THAT  ANY  OTHER PARTY TO THIS AGREEMENT  MAY  FILE  AN  ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF  THE
CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

     Section 11.23  PURPORTED ORAL AMENDMENTS.  BORROWER EXPRESSLY ACKNOWLEDGES
THAT THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS MAY ONLY BE AMENDED OR
MODIFIED, OR THE PROVISIONS HEREOF OR THEREOF WAIVED OR SUPPLEMENTED, BY AN
INSTRUMENT IN WRITING THAT COMPLIES WITH SECTION 11.2.  BORROWER AGREES THAT IT
WILL NOT RELY ON ANY COURSE OF DEALING, COURSE OF PERFORMANCE, OR ORAL OR
WRITTEN STATEMENTS BY ANY REPRESENTATIVE OF AGENT OR ANY LENDER THAT DOES

<PAGE>

NOT  COMPLY  WITH SECTION 11.2 TO EFFECT AN AMENDMENT, MODIFICATION,  WAIVER  OR
SUPPLEMENT TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS.

     Section 11.24  Refinancings.  Borrower agrees that Agent and GE Capital
shall have the right of first refusal to serve as agent and to participate as a
lender, respectively, in any debt refinancing of the Obligations hereunder
consummated at any time prior to September 15, 2000, on substantially  the  same
terms and conditions  as offered by any other prospective  agent and lender;
provided, however, that (i) such right of first refusal shall not be applicable
to any proposed refinancing of the Obligations (or portion thereof) using solely
the proceeds of Subordinated Indebtedness or other subordinated indebtedness  of
the  Borrower which is junior in rank to the Obligations and (ii) in  the  event
that any other Indebtedness of Borrower is refinanced contemporaneously with, or
as part of, any refinancing of the Obligations, such right of  first  refusal
shall only  apply  to the refinancing of the Obligations  and  not  such  other
Indebtedness.

<PAGE>

     IN  WITNESS WHEREOF, the parties hereto have caused this Loan Agreement  to
be duly executed as of the date first above written.

                              FAIRFIELD MANUFACTURING COMPANY, INC.

                              By:
                                Name:
                                Title:

                              ATTEST:
                                    Name:
                                    Title:

                              [CORPORATE SEAL]


                              GENERAL ELECTRIC CAPITAL CORPORATION,
                                as a Lender and as Agent

                              By:________________________________________
                                Elaine L. Moore
                                Senior Vice President
                                and Region Operations Manager

                              Dollar Amount of Term Loan:  $10,000,000

                              Pro Rata Share of Commitment:  100%