5


     FOURTH AMENDMENT TO LOAN AGREEMENT


     THIS FOURTH AMENDMENT TO LOAN AGREEMENT (this "Amendment"), made
and entered into as of December 5, 1996, by and between FAIRFIELD
MANUFACTURING COMPANY, INC., a Delaware corporation ("Borrower"), and
GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation ("GE
Capital"), as sole "Lender" under the "Loan Agreement" hereinafter
referred to and as agent for itself and the other "Lenders" who may
hereafter become parties to the Loan Agreement (GE Capital, in such
capacity, the "Agent").


     RECITALS:


     A.   Borrower and GE Capital, as a Lender and as Agent, entered
into 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 March 30, 1995,
but effective as of December 31, 1994 and a Third Amendment to Loan
Agreement, dated as of March 31, 1995 (the "Loan Agreement";
capitalized terms used herein and not defined herein shall have the
meanings ascribed to them in the Loan Agreement) whereby, subject to
the terms and conditions set forth therein, GE Capital, as sole Lender
thereunder, made the Commitment and the Term Loans available to
Borrower;

     B.   Borrower has requested that Lenders make certain additional
financial accommodations available to it under the Loan Agreement in
the form of (i) an extension of the term of the Commitment and certain
modifications in the manner in which the Subsequent Commitment
Increase may be effected (which Subsequent Commitment Increase will be
made at Borrower's election but subject to the terms and conditions
set forth herein), and (ii) a Fifteen Million Dollar ($15,000,000)
increase in the amount of the Term Loans;

     C.   Borrower has further requested that Lenders permit certain
dividends to be paid to Lancer by Borrower and certain loans to be
made to Lancer by Borrower, subject to the terms and conditions set
forth herein;

     D.   Subject to the terms and conditions set forth herein,
including, without limitation, the payment by Borrower to Lenders of
the fees specified herein, Lenders are willing to make such additional
financial accommodations available to Borrower and to permit Borrower
to pay such dividends and make such loans; and

     E.   Borrower and GE Capital, as Agent and sole Lender under the
Loan Agreement, desire to enter into this Amendment in order to (i)
provide for the making by Lenders to Borrower of the financial
accommodations described generally in paragraph B of these recitals
and described more particularly herein, (ii) permit the payment of
certain dividends by Borrower to Lancer and the making of certain
loans by Borrower to Lancer described generally in paragraph C of
these recitals and described more particularly herein, and (iii) amend
the Loan Agreement in certain other respects as hereinafter set forth.

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

     1.   Amendments to Loan Agreement.  Effective upon fulfillment,
to the satisfaction of Lenders, of the conditions precedent set forth
in Section 2 hereof, the Loan Agreement shall be deemed to be amended
as follows:

     (a)  Amendments to Section 1.1 of the Loan Agreement.

          (i)  Section 1.1 of the Loan Agreement shall be deemed to be
     amended by deleting in its entirety the first paragraph only of
     the definition of "Borrowing Base" set forth therein and
     substituting in lieu thereof the following first paragraph:

          "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).

          (ii) Section 1.1 of the Loan Agreement shall be deemed to be
     further amended by deleting the definitions of "Agreement,"
     "Collateral Documents", "Commitment," "Consolidated Excess Cash
     Flow," "Fixed Rate," "Floating Rate," "Loan Documents," "Maturity
     Date," "Monthly Payment Date", "Quarterly Payment Date",
     "Subsequent Commitment Increase", "Subsequent Commitment Increase
     Date", "Term Loan", "Term Loans" and "Term Note" therein in their
     entirety and substituting in lieu thereof the following revised
     definition of "Agreement," "Commitment," "Collateral Documents",
     "Consolidated Excess Cash Flow," "Fixed Rate," "Floating Rate,"
     "Loan Documents," "Maturity Date," "Monthly Payment Date",
     "Quarterly Payment Date", "Subsequent Commitment Increase",
     "Subsequent Commitment Increase Date", "Term Loan", "Term Loans"
     and "Term Note".

          "Agreement" means this Loan Agreement, either as originally
          executed or as it may from time to time be supplemented,
          modified, amended, renewed, extended or supplanted
          (including, without limitation, by the First Amendment, the
          Second Amendment, the Third Amendment and the Fourth
          Amendment).

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

          "Commitment" means Twenty Million Dollars ($20,000,000), as
          such amount may be increased to Twenty Five Million Dollars
          ($25,000,000) pursuant to the Subsequent Commitment
          Increases provided for in Section 2.8, unless and until
          reduced to zero pursuant to Section 3.2(a).

          "Consolidated Excess Cash Flow" means, for any period, (a)
          Consolidated Cash Flow for such period, plus (b) any
          decrease in Consolidated Working Capital of Borrower and its
          Subsidiaries during such period, plus (c) the Cash portion
          of extraordinary gains during such period, less (d) any
          increase in Consolidated Working Capital of Borrower and its
          Subsidiaries during such period, less (e) Consolidated Fixed
          Charges (exclusive of Consolidated Net Interest Expense) for
          such period, less (f) net Cash interest expense for such
          periods, less (g) the Cash portion of extraordinary losses
          for such period, less (h) Permitted Dividends declared and
          paid during such period.

          "Fixed Rate" means the LIBOR Rate plus two and one-quarter
          percent (2-1/4%) per annum; provided that, commencing on
          January 1, 1998, the Fixed Rate will mean the LIBOR Rate
          plus the Applicable LIBOR Margin as determined in accordance
          with the following grid:

            If the Ratio of Consolidated    The Applicable LIBOR
Margin
            EBITDA to Consolidated  for Fixed Rate Loans will be:
            Net Interest Expense for the
            Preceding Fiscal Quarter is:    Revolving Credit Loans
Term Loans

             Less than 3.0:1.0    2% per annum   2-1/4% per annum
             3.0:1.0 to 3.5:1.0   1-3/4% per annum    2% per annum
             Greater than 3.5:1.0 1-1/2% per annum    1-3/4% per
annum

          For purposes of calculating the Ratio of Consolidated EBITDA
          to Consolidated Net Interest Expense deferred financing
          costs shall be excluded from Consolidated Net Interest
          Expense.

          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); 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.
          "Floating Rate" means the Index Rate plus three-quarters of
          one percent (3/4 of 1%) per annum.

          "Loan Documents" means, collectively, this Agreement, the
          First Amendment, the Second Amendment, the Third Amendment,
          the Fourth Amendment, 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.

          "Maturity Date" means July 1, 2001.

          "Monthly Payment Date" means the fifteenth day of each
          calendar month after the Closing Date, through and including
          the Commitment Termination Date.

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

          "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.

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

          "Term Note" means any of the amended and restated 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.

          (iii)     Section 1.1 of the Loan Agreement shall be deemed
     further amended by adding therein, in appropriate alphabetical
     order, the following additional definitions:

          "Fourth Amendment" means the Fourth Amendment to the Loan
          Agreement, dated as of December 5, 1996, among Borrower, the
          Agent and GE Capital, as sole Lender.

          "Fourth Amendment Date" means December 5, 1996, or such
          later date as the Fourth Amendment shall have been executed
          and delivered by the parties and all conditions precedent to
          the effectiveness thereof set forth in Section 2 thereof
          shall have been satisfied.

          "New Term Loan" and "New Term Loans" have the respective
          meanings specified in Section 2.3(a).

          "Original Term Loans" means the term loans made by the
          Lenders to Borrower on the Closing Date in the aggregate
          principal amount of $25,000,000.

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

          "Second Amended Mortgage" means the Second Amendment to the
          Mortgage, dated as of the Fourth Amendment Date, executed by
          Borrower on the Fourth Amendment Date.

          "Special Dividend" has the meaning set forth in clause (j)
     of Section 6.3.

          "Special Loan" has the meaning set forth in clause (j) of
          Section 6.3.

          (iv) Section 1.1 of the Loan Agreement shall be deemed
     further amended by deleting therefrom the definition of
     "Commitment Increase".

     (b)  Amendment to Section 2.3 of the Loan Agreement.  Section 2.3
of the Loan Agreement shall be deemed to be amended by deleting such
Section in its entirety and substituting in lieu thereof the following
revised Section 2.3:

          2.3  Term Loans.

          (a)  On July 7, 1993, Lenders made the Original Term Loans
     to Borrower.  The outstanding principal balance of the Original
     Term Loans on the Fourth Amendment Date is $18,000,000.  On the
     Fourth Amendment Date, each Lender shall make an additional term
     loan to Borrower (individually, a "New Term Loan" and,
     collectively, the "New Term Loans") in an amount equal to the
     amount set forth opposite the name of that Lender on the
     signature pages hereof.  The aggregate principal amount of the
     New Term Loans shall be $15,000,000.  The Original Term Loans and
     the New Term Loans shall be consolidated into a single term loan
     in the principal amount of $33,000,000 (individually, the "Term
     Loan" and, collectively, the "Term Loans").  Borrower may not
     reborrow the Term Loans or any portion thereof once repaid.

          (b)  Not later than 11:00 a.m., Atlanta time, on the Fourth
     Amendment Date each Lender shall make its New Term Loan 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 Section 2 of the Fourth Amendment, each
     such New Term Loan shall be made available to Borrower by the
     Agent by wire transfer of immediately available funds as
     instructed by Borrower, to the extent actually received from the
     Lenders.  No Lender shall be responsible for the failure of any
     other Lender to make the New Term Loan to be made by such other
     Lender.

          (c)  Each Lender's Original Term Loan and New Term Loan
     shall be consolidated, renewed and extended, as provided herein,
     and as so consolidated renewed and extended shall be evidenced by
     that Lender's Term Note, subject to the provisions of Section
     2.6.

     (c)  Amendment to Section 2.8 to the Loan Agreement.  The Loan
Agreement shall be deemed further amended by deleting Section 2.8
thereof in its entirety and substituting in lieu thereof the following
revised Section 2.8:

     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 thirty (30) 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 two Subsequent Commitment Increase
     Dates by an amount not in excess of Five Million Dollars
     ($5,000,000) 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 two Subsequent
          Commitment Increases.

               (ii) As to any Subsequent Commitment Increase in excess
          of $2,000,000 the Borrower shall have reduced the
          outstanding principal balance of the Term Loans by the
          amount by which the requested Subsequent Commitment Increase
          exceeds $2,000,000.

               (iii)     Each Subsequent Commitment Increase shall be
          in the maximum amount then obtainable; i.e. the first
          Subsequent Commitment Increase shall be in an amount equal
          to $2,000,000 plus the amount in excess of $2,000,000 by
          which the Borrower has reduced the outstanding principal
          balance of the Term Loans and the second Subsequent
          Commitment Increase shall be in the amount by which Borrower
          has reduced  the outstanding principal balance of the Term
          Loans after the first Subsequent Commitment Increase Date;
          provided, however that the aggregate amount of the
          Subsequent Commitment Increases may not exceed $5,000,000.
               (iv) 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 (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;

                    (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.

               (v)  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).

               (vi) 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.
               (vii)     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.

               (viii)    Since September 30, 1996, 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.

               (ix) 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.

               (x)  Lenders shall be satisfied that Borrower's
          incurrence of Indebtedness pursuant to the Subsequent
          Commitment Increase is permissible pursuant to Section 1010
          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 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.

     (d)  Amendment to Section 3.1 of the Loan Agreement.  The Loan
Agreement shall be deemed to be further amended by deleting in its
entirety clause (b) only of Section 3.1 thereof and substituting in
lieu thereof the following revised clause (b):

          (b)  The aggregate principal amount of the Term Loans shall,
     if not sooner paid, be payable in installments on each Quarterly
     Payment Date, in accordance with the Schedule of Payments set
     forth hereinbelow, commencing on February 15, 1997 and continuing
     through December 31, 2000:
Schedule of Payments

          Quarterly Payment Date                  Installment

          February 15, 1997   $    750,000
          May 15, 1997   $    750,000
          August 15, 1997     $    750,000
          November 15,1997    $    750,000
          February 15,1998    $    1,000,000
          May 15, 1998   $    1,000,000
          August 15, 1998     $    1,000,000
          November 15, 1998   $    1,000,000
          February 15, 1999   $    1,750,000
          May 15, 1999   $    1,750,000
          August 15, 1999     $    1,750,000
          November 15, 1999   $    1,750,000
          February 15, 2000   $    2,250,000
          May 15, 2000   $    2,250,000
          August 15, 2000     $    2,250,000
          November 15, 2000   $    2,250,000
          December 31, 2000   $    10,000,000

     (e)  Amendment to Section 3.3(b) of the Loan Agreement.  Section
3.3(b) of the Loan Agreement shall be deemed to be amended by deleting
the date therein "December 31, 1993" and substituting in lieu thereof
the date "December 31, 1997."

     (f)  Amendment to Section 3.10 of the Loan Agreement.  The Loan
Agreement shall be deemed to be further amended by deleting Section
3.10 thereof in its entirety and substituting in lieu thereof the
following revised Section 3.10:

          3.10 Agent's Fees.  Borrower shall pay to the Agent, for its
     account, an agency fee in the amount of $50,000 per annum,
     payable on July 1, 1997 and on each anniversary thereof prior to
     the Maturity Date.

     (g)  Amendment to Section 4.20 of the Loan Agreement.
Section 4.20 of the Loan Agreement shall be deemed to be amended by
deleting such Section in its entirety and substituting in lieu thereof
the following revised Section 4.20:

          4.20 Solvency.  After giving effect to the entering into by
     Borrower of this Agreement, the Fourth Amendment and the other
     Loan Documents, the making of any Advance, the incurrence of any
     Letter of Credit Obligation,  the funding of the New Term Loans,
     the declaration and payment of the Special Dividend, the making
     of the Special Loan and the declaration and payment of any
     Permitted Dividend, Borrower and each Subsidiary is Solvent.

     (h)  Amendment to Section 4.21 of the Loan Agreement.  Section
4.21 of the Loan Agreement shall be deemed to be amended by deleting
such Section in its entirety and substituting in lieu thereof the
following revised Section 4.21:
          
          4.21 Subordination of Subordinated Indebtedness.  This
Agreement, as amended by the First Amendment, the Second Amendment,
the Third Amendment and the Fourth Amendment, and the other Loan
Documents to which Borrower or any Subsidiary is party, and, to the
extent permissible under Section 1010 of the Senior Subordinated Note
Indenture, all further amendments, amendments and restatements,
renewals, extensions, restructurings, supplements,  modifications,
refinancings, refundings, or replacements hereof and thereof consti
tute the "Credit Agreement" within the meaning of the Senior Sub
ordinated 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 1010 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 13 of the Senior Subordinated Note
Indenture.

     (i)  New Section 4.26 of the Loan Agreement.  Article 4 of the
Loan Agreement shall be deemed to be further amended by adding the
following Section 4.26 thereto:

          4.26.     The declaration and payment of the Special
     Dividend by Borrower to Lancer and the making of the Special Loan
     by Borrower to Lancer on the Fourth Amendment Date and the use of
     the proceeds thereof by Lancer for the purpose set forth in
     Section 6.3(j) are, and the declaration and payment of each
     Permitted Dividend subsequent to the Fourth Amendment Date and
     the use of the proceeds thereof by Lancer for the purpose set
     forth in Section 6.3(k) will be, within the corporate powers of
     Borrower and Lancer, respectively, have been and will be duly
     authorized by all requisite corporate action on the part of
     Borrower and Lancer, respectively, and do not and will not (a)
     require any consent or approval of any stockholder, security
     holder or creditor of Borrower or Lancer (including, without
     limitation, the holders of the Senior Subordinated Notes) not
     heretofore or theretofore obtained, (b) violate or conflict with
     any provision of the certificate of incorporation or by-laws of
     Borrower or Lancer, (c) result in or require the creation of any
     Lien or Right of Others upon or with respect to any Property of
     Borrower or Lancer, other than in favor of Lenders, (d) violate
     any provision of Law applicable to Borrower or Lancer, (e)
     contravene or conflict with any judgment, award, decree, writ or
     determination of any Governmental Agency applicable to or binding
     upon Borrower or Lancer or any of their respective Property or to
     which Borrower or Lancer or any of their respective Property is
     subject or (f) 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 Borrower or Lancer other than, in the case of
     clause (ii), conflicts, breaches or defaults which, either singly
     or in the aggregate, could not reasonably be expected to have a
     Material Adverse Effect.
     (j)  New Text at End of Article 4 of the Loan Agreement.  Article
4 of the Loan Agreement is hereby further amended by adding the
following paragraph at the end thereof:

          In connection with its execution and delivery of the Fourth
     Amendment, Borrower hereby affirms that each of the
     representations and warranties of Borrower contained in this
     Agreement or in any of the other Loan Documents is correct in all
     material respects as of the Fourth Amendment Date and after
     giving effect to the Fourth Amendment (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).  In addition to induce GE
     Capital to enter into the Fourth Amendment, Borrower represents
     and warrants to the Agent and Lenders as follows:

          (a)  Financial Statements.  Borrower has furnished to the
     Lenders (i) Borrower's audited consolidated balance sheets for
     its Fiscal Year ending December 31, 1995 and Borrower's related
     audited consolidated statements of operations, stockholders'
     equity and cash flows for its Fiscal Year ending December 31,
     1995, (ii) Borrower's unaudited consolidated balance sheet for
     its Fiscal Quarter ending September 30, 1996 and Borrower's
     related consolidated statements of operations, stockholders'
     equity and cash flows for such Fiscal Quarter, and
     (iii) Borrower's operating and financial plan for the five Fiscal
     Years ending after the date hereof, including projected balance
     sheets, statements of operations, and statements of cash flow.
     The financial statements described in clauses (i) and (ii) 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.
     The projections referred to in clause (iii) above were prepared
     on the basis of the estimates and assumptions stated therein and
     represented, at the date thereof, Borrower's good faith pro
     jections of its future financial performance prepared after rea
     sonable investigations; such estimates, assumptions and projec
     tions reflected  Borrower's estimates of the most likely future
     financial results and condition of Borrower, in the light of busi
     ness conditions existing at the date thereof; and any such esti
     mates, assumptions and projections, if prepared as of the Fourth
     Amendment Date, would contain estimates of the future financial
     performance of Borrower which would not materially and adversely
     differ from the respective estimates contained in such financial
     projections.  As of the Fourth Amendment Date, no material
     developments have occurred since the date of such projections
     which would lead Borrower to believe that such projections, taken
     as a whole, are not reasonably attainable, subject to the
     uncertainties and approximations inherent in any projection.

          (b)  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
     clause (a) above, and, since September 30, 1996, no event or
     circumstance has occurred that could reasonably be expected to
     have a Material Adverse Effect.

     (k)  Amendment to Section 6.3 of the Loan Agreement.  Section 6.3
of the Loan Agreement shall be deemed to be amended by deleting the
word "and" before clause (i) thereof and replacing it with a comma,
and by adding thereto the following clauses (j) and (k):

     (j)  a special cash dividend in the amount of $17,000,000, to be
     declared and paid by Borrower to Lancer on the Fourth Amendment
     Date (the "Special Dividend"), and a loan in the amount of
     $3,000,000, having the terms set forth in the promissory note
     evidencing such loan, a copy of which is attached to the Fourth
     Amendment as Exhibit 1, to be made by Borrower to Lancer on the
     Fourth Amendment Date (the "Special Loan"), the proceeds of which
     are to be used by Lancer solely for the purpose of redeeming a
     portion of Lancer's Series C Preferred Stock; and (k) other cash
     dividends declared and paid by Borrower to Lancer subsequent to
     the Fourth Amendment Date; provided that (A) no Default or Event
     of Default has occurred and is continuing hereunder or would
     result from the declaration and payment of such dividend; (B) the
     proceeds of such dividends are used solely for the purpose of
     redeeming a portion of Lancer's Series C Preferred Stock; (C)
     such dividends are permitted to be paid under Section 1011 of the
     Senior Subordinated Note Indenture as in effect on the Closing
     Date; 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 substantially in the form of paragraph 9 of Exhibit 2 to
     the Fourth Amendment, 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 Dividend").

     (l)  Amendment to Section 6.9 of the Loan Agreement.  Section 6.9
of the Loan Agreement is hereby amended by deleting subclause (ii) of
clause (c) thereof in its entirety and substituting in lieu thereof
the following revised subclause (ii):

               (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 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.
     (m)  Amendment to Section 6.12 of the Loan Agreement.  Section
6.12 of the Loan Agreement shall be deemed to be amended by deleting
the word "and" before clause (e) thereof and replacing it with a
comma, and by adding at the end of such section the following clause
(f):

          "and (f) Investments consisting of the Special Loan".

     (n)  Amendments to Sections 6.18 and 6.20 through 6.22 of the
Loan Agreement.  Sections 6.18 and 6.20 through 6.22 of the Loan
Agreement shall be deemed to be amended by deleting such Sections in
their entireties and substituting in lieu thereof the following
revised Sections 6.18 through 6.22:

          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 set forth below which exceed in
     the aggregate for Borrower and its Subsidiaries the amount set
     forth below with respect to each such Fiscal Year:

           FISCAL YEAR ENDING  CAPITAL EXPENDITURES
           
            December 31, 1996   $10,000,000
            December 31, 1997   $10,000,000
            December 31, 1998   $10,000,000
            December 31, 1999   $12,000,000
           Each Fiscal Year Thereafter $12,500,000;

     provided that, in the event that the maximum aggregate amount for
     any Fiscal Year 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 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.

          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 the ratio set
     forth below next to the Fiscal Year in which such Fiscal Quarter
     occurs:

          FISCAL YEAR ENDING  RATIO
          
           December 31, 1996   1.25:1.00
           December 31, 1997   1.50:1.00
           December 31, 1998   1.50:1.00
           December 31, 1999   1.50:1.00
          Each Fiscal Year Thereafter   1.75:1.00

          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, 1996   1.00:1.00
           December 31, 1997   0.95:1.00
           December 31, 1998   1.00:1.00
           December 31, 1999   1.00:1.00
          Each Fiscal Year Thereafter   1.00:1.00

          For purposes of this Section 6.21, (a) Consolidated Cash
Flow and Consolidated Fixed Charges shall be calculated based upon the
period of four Fiscal Quarters ending on the date of calculation and
(b) the final $10,000,000 due and payable on the Term Loans on
December 31, 2000 shall not be included in the calculation of
Consolidated Fixed Charges.

          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 Fiscal Year in
     which such Fiscal Quarter occurs:

          FISCAL YEAR ENDING  RATIO
          
           December 31, 1996   2.25:1.00
           December 31, 1997   1.65:1.00
           December 31, 1998   1.75:1.00
           December 31, 1999   2.25:1.00
          Each Fiscal Year Thereafter   2.25:1.00

          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.

     (o)  Amendment to Exhibit P to the Loan Agreement.  Exhibit P to
the Loan Agreement shall be deemed to be amended by deleting such
Exhibit in its entirety and substituting in lieu thereof the revised
Exhibit P attached to this Fourth Amendment.

     2.   Conditions Precedent.  This Amendment shall not become
effective and Lenders shall have no obligation to make the New Term
Loans available to Borrower unless and until each of the following
conditions precedent shall have been fulfilled, to Lenders' and its
counsel's satisfaction:

     (a)  Documents.  The Agent shall have received all of the
following, each dated as of the date hereof and all in form and
substance satisfactory to the Agent and legal counsel for the Agent:

          (i)  a Term Note executed by Borrower in favor of each
     Lender in the amount of such Lender's Pro Rata  Share of the Term
     Loans after giving effect to the making of the New Term Loans,
     which Term Notes (to the extent of the principal balances of the
     then outstanding Promissory Notes evidencing the Original Term
     Loans) shall be issued in consolidation, extension and renewal of
     the Original Term Loans and the New Term Loans;

          (ii) an amendment to the Mortgage giving effect to the
     making of the New Term Loans and the extension of the Maturity
     Date contemplated by this Amendment, executed by Borrower, and in
     form acceptable for recordation with the appropriate Governmental
     Agency;

          (iii)     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;

          (iv) a reaffirmation of the Subsidiary Guaranty and
     Subsidiary Security Agreement signed by T-H Licensing and a
     reaffirmation of the Lancer Pledge Agreement signed by Lancer;

          (v)  an Officer's Certificate affirming that the conditions
     set forth in clauses (b), (c), (d) and (e) below have been
     satisfied;

          (vi) such documentation as the Agent may reasonably require
     to confirm the good standing of Borrower in the respective states
     of their incorporation, the qualification of Borrower 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 this Amendment and any other Loan
     Documents to be executed and delivered in connection herewith to
     which it is party, certificates of good standing and of
     qualification to engage in business, certificates of corporate
     resolutions, incumbency certificates, certificates of Responsible
     Officials and the like;

          (vii)     the legal opinion of  Debevoise & Plimpton,
     special counsel to Borrower, substantially in the form of Exhibit
     2 to this Amendment, together with copies of all factual
     certificates and legal opinions upon which such counsel has
     relied;

          (viii)    the favorable written opinion of Chartered Capital
     Advisors, Inc., valuation consultants to Borrower, as to the
     solvency of Borrower, after giving effect to the execution and
     delivery of this Amendment, the incurrence of the Indebtedness
     contemplated hereby and the declaration and payment of the
     Special Dividend and the making of the Special Loan (treating
     both the Special Dividend and the Special Loan as a "dividend"
     for purposes of the solvency opinion);

          (ix) Lancer's promissory note to Borrower evidencing the
     Special Loan, duly endorsed and delivered to Agent for the
     benefit of the Lenders; and

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

     (b)  Representations and Warranties.  The representations and
warranties contained in Article 4 of the Loan Agreement (as amended
hereby) shall be true and correct in all material respects on and as
of the date hereof 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 the Loan Agreement).

     (c)  Absence of Litigation.  There shall not 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.

     (d)  No Default.  After giving effect to this Fourth Amendment,
Lancer, Borrower and T-H Licensing shall be in compliance with all the
terms and provisions of the Loan Documents to which they are party,
and no Default or Event of Default shall have occurred and be
continuing.

     (e)  No Material Adverse Effect.  Since September 30, 1996, there
shall not have occurred:  (1) any event or circumstance that could
reasonably be expected to have a Material Adverse Effect, or (2) any
dividends or other distributions made to the stockholders of Borrower,
except as permitted by Section 6.3 of the Loan Agreement and
Section 7(b) of the Lancer Pledge Agreement.

     (f)  Compliance with Laws.  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 execution and delivery of this Fourth Amendment and
the consummation of the transactions contemplated hereby 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.

     (g)  Senior Indebtedness.  Lenders shall be satisfied that (i)
Borrower's incurrence of Indebtedness pursuant to the Term Loans is
permissible pursuant to Section 1010 of the Senior Subordinated Note
Indenture and that after giving effect thereto, each of the
representations and warranties set forth in Section 4.21 of the Loan
Agreement shall continue to be true and correct in all respects, and
(ii) the Special Dividend is permissible pursuant to Section 1011 of
the Senior Subordinated Note Indenture and the Special Loan is
permissible pursuant to Sections 1011 and 1016 of the Senior
Subordinated Note Indenture; and Lenders shall have received such
assurances in regard to each of clauses (i) and (ii) above as Lenders
shall request, including  without limitation, certifications of
Borrower and an opinion of Borrower's counsel with regard to such
matters, each to be in form and substance satisfactory to Lenders.

     (h)  Fees.  The Agent shall have received, for the account of
Lenders, a closing fee in the amount of $75,000, which shall be fully-
earned and non-refundable on the date hereof and in addition to and
not in lieu of all other fees, interest and reimbursement for expenses
provided herein and in the Loan Agreement.

     3.   Other Agreements

     (a)  Except as set forth expressly herein and above, all terms of
the Loan Agreement and the other Loan Documents shall be and remain in
full force and effect and  shall constitute the legal, valid, binding
and enforceable obligations of Borrower to the Agent and Lenders.  In
furtherance of the foregoing, Borrower acknowledges that from and
after the date hereof, it shall continue to be bound by all provisions
of the Loan Agreement as amended hereby.  To the extent any terms and
conditions in any of the other Loan Documents shall contradict or be
in conflict with any terms or conditions of the Loan Agreement, after
giving effect to this Amendment, such terms and conditions are hereby
deemed modified and amended accordingly to reflect the terms and
conditions of the Loan Agreement as modified and amended hereby.
     
     (b)  Borrower agrees to pay on demand the reasonable fees and out-
of-pocket expenses of counsel to GE Capital incurred in connection
with the preparation, execution, delivery and enforcement of this
Amendment, the closing hereof, and any other transactions contemplated
hereby.
     
     (c)  To induce the Agent and Lenders to enter into this
Amendment, Borrower hereby acknowledges and agrees that, as of the
date hereof, there exists no right of offset, defense or counterclaim
in favor of Borrower as against the Agent or Lenders with respect to
the Obligations.
     
     (d)  This Amendment shall be governed by, and construed in
accordance with the laws of the State of New York applicable to
contracts made and performed in such State and all applicable laws of
the United States of America.
     
     (e)  This Amendment may be executed in two or more counterparts,
all of which shall constitute one and the same agreement.

     4.   Refinancings.  Borrower agrees that Agent and Lender 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
under the Loan Agreement consummated at any time prior to December 5,
1998, 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 the proceeds
of subordinated Indebtedness 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.


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

                                   FAIRFIELD MANUFACTURING
                                     COMPANY, INC.
                                   
                                   By:________________________________
                                   _
                                        Richard A. Bush
                                        Vice President-Finance
                                   
                                   
                                     [CORPORATE SEAL]


                                   GENERAL ELECTRIC CAPITAL
                                      CORPORATION, as Agent
                                   
                                   
                                   By:________________________________
                                     Elaine L. Moore
                                     Senior Vice President,
                                     as duly authorized
                                   
                                   
                                   GENERAL ELECTRIC CAPITAL
                                      CORPORATION, as Lender
                                   
                                   
                                   By:________________________________
                                   _
                                     Elaine L. Moore
                                     Senior Vice President,
                                     as duly authorized
                                   
                                   Pro Rata Share of Commitment:  100%
                                   Amount of New Term Loan:
                                   $15,000,000
                                   
     ACKNOWLEDGMENT OF GUARANTOR


     The undersigned, T-H Licensing, Inc., hereby (a) acknowledges its
receipt of a copy of and consents to the within and foregoing
Amendment, (b) agrees to be bound by the provisions thereof and (c)
acknowledges and agrees that the Subsidiary Guaranty, the Subsidiary
Security Agreement and all other Loan Documents to which the
undersigned is a party shall continue in full force and effect from
and after the execution and delivery of the within and foregoing
Amendment without diminution or impairment.

     IN WITNESS WHEREOF, the undersigned has set its hand and seal as
of the ____ day of _____________, 1996.

                                   T-H LICENSING, INC.
                              
                              
                              
                                   By:______________________________
                                     Name:
                                     Title:

     ACKNOWLEDGMENT OF LANCER

     The undersigned, Lancer Industries Inc., hereby (a) acknowledges
its receipt of a copy of and consents to the within and foregoing
amendment, (b) agrees to be bound by the provisions thereof and (c)
acknowledges and agrees that the Lancer Pledge Agreement shall
continue in full force and effect from and after the execution and
delivery of the within and foregoing Amendment without diminution or
impairment.

     IN WITNESS WHEREOF, the undersigned has set its hand and seal as
of the ____ day of December, 1996.


                              LANCER INDUSTRIES INC.

                              By:_____________________________________
                                    Name:
                                    Title: