FIRST AMENDMENT TO CREDIT AGREEMENT


         This First Amendment to Credit Agreement (this  "Amendment") is entered
into as of May  12,  1997,  among  LANCER  PARTNERSHIP,  LTD.,  a Texas  limited
partnership ("Operating Subsidiary"), and NUEVA DISTRIBUIDORA LANCERMEX, S.A. de
C.V., a corporation  organized  under the laws of Mexico  ("Mexico  Subsidiary")
(Operating   Subsidiary  and  Mexico  Subsidiary  are  hereinafter  referred  to
individually  as  a  "Borrower"  and   collectively  as   "Borrowers");   LANCER
CORPORATION,  a Texas  corporation  ("Parent  Company");  LAN-LEASING,  INC.,  a
Delaware corporation,  ("Lan-Leasing"),  LANCER CAPITAL CORPORATION,  a Delaware
corporation  ("Lancer  Capital"),  LANCER  INTERNATIONAL  SALES,  INC.,  a Texas
corporation  ("Lancer  International"),  (Lan-Leasing,  Lancer  Capital,  Lancer
International  and  Operating  Subsidiary,   individually,   a  "Guarantor"  and
collectively, the "Guarantors"); and THE FROST NATIONAL BANK, a national banking
association, individually and as agent for the Banks acting in the manner and to
the extent provided in Article 8 (in such capacity,  the "Agent"),  NATIONSBANK,
N.A.,  successor to THE BOATMEN'S NATIONAL BANK OF ST. LOUIS, a national banking
association,  individually, and each of the lenders which becomes a party hereto
as  provided  in Section  10.7  (individually,  a "Bank" and  collectively,  the
"Banks").


                                    Recitals

         A. Borrowers,  the Parent  Company,  the Agent and the other Banks have
heretofore  entered  into the  Credit  Agreement  dated as of July 15,  1996 (as
amended,  modified,  restated and  supplemented  from time to time,  the "Credit
Agreement").

         B. Borrower has requested that the Banks agree to permanently  increase
their aggregate Revolving Commitments from $17,500,000 to $25,000,000.

         C. The Banks are willing to agree to such requested change on the terms
and conditions set forth in this Amendment.

                                   Agreements

         In  consideration  of the  foregoing  premises,  the mutual  agreements
contained  herein  and other  good and  valuable  consideration  and  reasonably
equivalent value, the receipt and sufficiency of which are hereby  acknowledged,
the parties hereto agree as follows:

                  1. Definitions. Unless otherwise defined herein, terms defined
in the Credit  Agreement and used herein shall have the respective  meanings set
forth in the Credit Agreement.

                  2.  Amendments.  The  Credit  Agreement  is hereby  amended as
follows:

                  (a) Extension of Permanent Increase in Revolving  Commitments.
         To  reflect  the  permanent   increase  in  the   aggregate   Revolving
         Commitments  of all Banks  from  $17,500,000  to  $25,000,000,  Annex A
         attached to the Credit  Agreement is hereby  amended and replaced  with
         Annex A  attached  to this  Amendment.  All  references  in the  Credit
         Agreement and other Loan  Documents to the "Revolving  Commitments"  of
         the Banks shall thereafter refer to such revised amounts.

                  (b) Renewal Revolving Notes. To evidence  Revolving Loans made
         to  Operating  Subsidiary  by each Bank up to the amount of such Bank's
         Revolving  Commitment,  as revised hereby,  Operating  Subsidiary shall
         execute and deliver to each Bank a Renewal  Revolving  Note in the form
         attached  hereto as Exhibit A, payable to the order of such Bank and in
         a stated principal amount equal to such Bank's Revolving Commitment, as
         revised hereby. On the date hereof,  Borrower shall execute and deliver
         to each Bank such a Renewal  Revolving Note as a renewal,  modification
         and  increase  of the  existing  Revolving  Note  issued  to such  Bank
         pursuant  to  the  Credit  Agreement.  All  references  in  the  Credit
         Agreement and the other Loan Documents to the "Revolving  Notes" of the
         Banks shall hereafter refer to the Renewal Revolving Notes executed and
         delivered  pursuant to this Amendment,  as further  amended,  modified,
         restated, supplemented, renewed, extended, increased, refinanced and/or
         replaced from time to time.

                  (c)      Limitation  on  Indebtedness.  Section 6.2 is hereby
                 amended to read in its entirety as follows:

                           SECTION 6.2 Limitation on  Indebtedness.  Neither any
                  Borrower nor Parent  Company will, and Parent Company will not
                  permit any Company to, incur, create,  contract,  assume, have
                  outstanding, permit or suffer to exist, Guarantee or otherwise
                  be or become, directly or indirectly, liable in respect of any
                  Indebtedness,  except the following (collectively,  "Permitted
                  Indebtedness"):

                                    (i)     the Obligations;

                                    (ii) current  liabilities for Taxes incurred
                           in the ordinary  course of business which are not yet
                           due and payable;

                                    (iii) trade payables arising in the ordinary
                           course of business;

                                    (iv)    Indebtedness listed in Schedule 6.2;

                                    (v)  forward  contracts  and other  currency
                           hedging  instruments  executed  to hedge  existing or
                           anticipated exposure to currency fluctuations; and

                                    (vi)  the  issuance  or sale of  convertible
                           senior notes by the Parent Company, provided that (A)
                           such notes are issued or sold for cash only,  (B) the
                           net  cash  proceeds  of such  issuance  or  sale  are
                           applied to repay certain Loans in accordance with the
                           Section  2.8 (d),  (C) the net cash  proceeds of such
                           issuance or sale do not exceed an amount equal to the
                           sum of (x) the aggregate principal amount of all Term
                           A  Loans  then  outstanding  and  (y)  the  aggregate
                           principal  amount  of  all  Acquisition   Loans  then
                           outstanding,  (D) such notes do not  mature  prior to
                           July 15, 2001, (E) such notes are unsecured,  and (F)
                           the  provisions  of such  notes,  including,  but not
                           limited to, the payment of principal  thereunder  and
                           the representations and warranties contained therein,
                           are approved in writing by all the Banks.

                  3. In order to induce  the  Agent and the Banks to enter  into
this Amendment,  each Borrower  hereby  represents and warrants to the Agent and
the Banks that, as of the date of this Amendment,  (a) the  representations  and
warranties  set forth in the Credit  Agreement  and each other Loan Document are
true and  correct  as if made on and as of the date  hereof  (other  than  those
representations  and warranties  expressly  limited by their terms to a specific
date),  (b) no Default or Event of Default has occurred and is  continuing,  and
(c) no event has occurred since the date of the most recent financial statements
delivered  pursuant  to Section  5.1 of the Credit  Agreement  that has caused a
Material Adverse Effect.

                  4. Each Borrower hereby  acknowledges and agrees that no facts
events,  status or  conditions  presently  exist  which,  either now or with the
passage of time or the giving of notice or both,  presently  constitute  or will
constitute a basis for any claim or cause of action against any of the Banks, or
any  defense  to the  payment  of any of  the  indebtedness  evidenced  or to be
evidenced by any of the Loan Documents.

                  5. Parent Company  covenants and agrees that, as to the Parent
Guaranty  executed and delivered by Parent Company in favor of the Banks as part
of the Loan Documents,  (a) the Parent Guaranty is an unconditional guarantee of
payment  and  performance  and  not  of  collection,  (b)  the  Parent  Guaranty
represents the primary,  absolute and unconditional obligation of Parent Company
and (c) the Parent  Guaranty is a continuing  guarantee and shall remain in full
force and effect until the  termination of the  obligations of the Banks to make
Loans and the indefeasible payment in full of the Obligations (as defined in the
Parent Guaranty).

                  6.  Each  Guarantor  covenants  and  agrees  that,  as to  the
Affiliate  Guaranty  executed and  delivered  by such  Guarantor in favor of the
Banks  as  part  of the  Loan  Documents,  (a)  such  Affiliate  Guaranty  is an
unconditional  guarantee of payment and performance  and not of collection,  (b)
such  Affiliate  Guaranty  represents  the primary,  absolute and  unconditional
obligation of such  Guarantor,  and (c) such Affiliate  Guaranty is a continuing
guarantee and shall remain in full force and effect until the termination of the
obligations of the Banks to make Loans and the  indefeasible  payment in full of
the Obligations (as defined in each such Affiliate Guaranty).

                  7. As to the Stock Pledge Agreement  executed and delivered by
Parent  Company  in favor of the Banks as a part of the Loan  Documents,  Parent
Company  hereby  ratifies and  confirms the liens and security  interests of the
Banks in and to all collateral covered by the Stock Pledge Agreement as security
for the prompt and full payment and  performance of the  obligations  secured by
the Stock Pledge  Agreement.  In  furtherance  of the  foregoing,  all liens and
security interests of the Stock Pledge Agreement (which are hereby  acknowledged
to be valid and subsisting)  are hereby carried  forward,  continued,  extended,
modified  and renewed to secure the prompt and full payment and  performance  of
the obligations secured by the Stock Pledge Agreement.

                  8. Each Loan  Document is hereby  amended and  modified to the
extent  necessary to give full force and effect to the terms of this  Amendment,
and each such Loan Document shall hereafter be construed and  interpreted  after
giving  full  force  and  effect  to the terms of this  Amendment.  As  amended,
modified and  supplemented  pursuant to this  Amendment,  each Borrower,  Parent
Company and each Guarantor hereby ratify, confirm and restate each Loan Document
and agrees that each such Loan Document to which it is a party shall continue in
full force and effect.  Each of the Loan Documents now or hereafter executed and
delivered  pursuant  to the terms  hereof or pursuant to the terms of the Credit
Agreement,  as amended hereby,  or as further  evidence of or in connection with
the Credit  Agreement,  as  amended  hereby,  are  hereby  amended to the extent
necessary so that any reference in any such documents, instruments or agreements
to the Credit  Agreement shall be a reference to the Credit Agreement as amended
hereby.

                  9.  In the  event  that  any  one or  more  of the  provisions
contained  in  this   Amendment   shall  be  determined   invalid,   illegal  or
unenforceable  in any  respect  for  any  reason,  the  validity,  legality  and
enforceability  of any such  provision or  provisions in every other respect and
the remaining provisions of this Amendment shall not be impaired in any way.

                  10.  When  required or implied by the  context  used,  defined
terms used herein  shall  include the plural as well as the  singular,  and vice
versa.

                  11.  This  Amendment  shall be governed  by and  construed  in
accordance  with the internal laws of the State of Texas and applicable  federal
laws of the United  States of America.  This  Amendment has been entered into in
Bexar County,  Texas and shall be performable  for all purposes in Bexar County,
Texas. The courts within the State of Texas shall have jurisdiction over any and
all disputes arising under or pertaining to this Amendment; and any such dispute
shall be heard in the county or  judicial  district  of the  principal  place of
business of The Frost National Bank.

                  12.  This  Amendment  shall be  binding  upon and inure to the
benefit of all  parties  hereto and their  respective  successors  and  assigns;
provided,  however,  that neither of the Borrowers  nor any of their  respective
successors  or assigns  may,  without  the prior  written  consent of all of the
Banks, assign any rights, powers, duties or obligations hereunder.

                  13.  This   Amendment   may  be  executed  in  any  number  of
counterparts and by different parties hereto on separate  counterparts,  each of
which when so executed  shall be deemed to be an original  and all of which when
taken together shall constitute but one and the same instrument.

                  14.       This Amendment constitutes a Loan Document.

                  15.  Upon  execution  of this  Agreement  by the  Banks,  each
Borrower,  Parent Company and each of the Guarantors shall deliver to the Agent,
in form and substance  satisfactory to the Agent, the certificates and documents
described on Annex B.

                         [signatures on following pages]


<PAGE>


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


<PAGE>




                              OPERATING SUBSIDIARY:

                            LANCER PARTNERSHIP, LTD.

                         By: LANCER CAPITAL CORPORATION


                             By: /s/ John P. Herbots
                              Name: John P. Herbots
                        Title: Vice President of Finance

                               MEXICO SUBSIDIARY:

                         LANCER DE MEXICO, S.A. de C.V.,
                      formerly known as NUEVA DISTRIBUIDORA
                             LANCERMEX, S.A. de C.V.


                             By: /s/ John P. Herbots
                              Name: John P. Herbots
                              Title: Vice President


                                 PARENT COMPANY:

                               LANCER CORPORATION


                             By: /s/ John P. Herbots
                              Name: John P. Herbots
                              Title: Vice President

                                   GUARANTORS:

                                LAN-LEASING, INC.


                             By: /s/ John P. Herbots
                              Name: John P. Herbots
                              Title: Vice President

                           LANCER CAPITAL CORPORATION


                             By: /s/ John P. Herbots
                              Name: John P. Herbots
                              Title: Vice President



                        LANCER INTERNATIONAL SALES, INC.


                             By: /s/ John P. Herbots
                              Name: John P. Herbots
                              Title: Vice President


                            LANCER PARTNERSHIP, LTD.

                         By: LANCER CAPITAL CORPORATION


                             By: /s/ John P. Herbots
                              Name: John P. Herbots
                              Title: Vice President



                                     <PAGE>


                                  AGENT/BANKS:

                            THE FROST NATIONAL BANK,
                          Individually and as the Agent


                             By: /s/ Beth M. Weakley
                              Name: Beth M. Weakley
                          Title: Senior Vice President


                       NATIONSBANK, N.A., successor to THE
                      BOATMEN'S NATIONAL BANK OF ST. LOUIS


                            By: /s/ Steven A. Linton
                             Name: Steven A. Linton
                         Title: Assistant Vice President



<PAGE>





0262684.05
                                   Annex A-10

                                     ANNEX A



THE FROST NATIONAL BANK

16.       Domestic Lending Office:

         The Frost National Bank
         100 West Houston Street
         San Antonio, Texas   78205

17.       LIBOR Lending Office:

         The Frost National Bank
         100 West Houston Street
         San Antonio, Texas   78205

18.                                 Term A Commitment:$ 6,100,000

19.                                 Term B Commitment:$ 1,400,000

20.                                 Revolving Commitment:$ 12,500,000

21.                                 Acquisition Commitment:$ 5,000,000

22.                                 Total Commitment:$ 25,000,000

23.       Information for Notices:

         The Frost National Bank
         100 West Houston Street
         San Antonio, Texas   78205
         Attention:        Beth Weakley
         Phone:            (210) 220-5393
         Fax:              (210) 220-4626


<PAGE>


                                     ANNEX A



NATIONSBANK, N.A., successor to
THE BOATMEN'S NATIONAL BANK OF ST. LOUIS



<PAGE>


24.       Domestic Lending Office:

         NationsBank, N.A.
         800 Market Street
         St. Louis, Missouri 63166

25.       LIBOR Lending Office:

         NationsBank, N.A.
         800 Market Street
         St. Louis, Missouri 63166

26.                                 Term A Commitment:$ 6,100,000

27.                                 Term B Commitment:$ 1,400,000

28.                                 Revolving Commitment:$ 12,500,000

29.                                 Acquisition Commitment:$ 5,000,000

30.                                 Total Commitment:$25,000,000

31.       Information for Notices:

         NationsBank, N.A.
         800 Market Street
         St. Louis, Missouri 63166
         Attention:        Juan Cazorla
         Phone:            (314) 466-6695
         Fax:              (314) 466-6499




<PAGE>


                                     ANNEX A




Address for Operating Subsidiary:

         Lancer Partnership, Ltd.
         235 West Turbo
         San Antonio, Texas   78216
         Attention:        Chief Financial Officer
         Phone:            (210) 661-6964
         Fax:              (210) 666-2830


Address for Mexico Subsidiary:

         Nueva Distribuidora Lancermex, S.A. de C.V.
         c/o Lancer Corporation
         235 West Turbo
         San Antonio, Texas   78216
         Attention:        Chief Financial Officer
         Phone:            (210) 661-6964
         Fax:              (210) 666-2830


Address for Parent Company:

         Lancer Corporation
         235 West Turbo
         San Antonio, Texas   78216
         Attention:        Chief Financial Officer
         Phone:            (210) 661-6964
         Fax:              (210) 666-2830


<PAGE>





0262684.05
                                   Annex B-11

                                     ANNEX B


                  32. Each Borrower,  Parent  Company and each  Guarantor  shall
have  provided  to the  Agent a  certificate  signed  by the  secretary  of such
corporation,  which  secretary's  office and  signature  shall be  confirmed  by
another  officer of such  corporation,  dated as of the  effective  date of this
Amendment  attaching  thereto or containing  therein,  and  certifying as to the
following:  (i)  corporate  resolutions,  as in effect and  neither  revoked nor
rescinded,   duly  adopted  by  the  board  of  directors  of  such  corporation
authorizing  the execution,  delivery and  performance of this Amendment and all
other  documents,  instruments  and  agreements  in  connection  therewith  (the
"Amendment  Documents") to which it is or will be a party,  and the transactions
contemplated thereby; and (ii) names,  incumbency and specimen signatures of the
officers of such  corporation  authorized  to execute and deliver the  Amendment
Documents to which such corporation is a party.

                  33. Operating  Subsidiary shall have executed and delivered to
each Bank a Renewal  Revolving  Note in the form  attached  hereto as Exhibit A,
payable to the order of such Bank and in a stated principal amount equal to such
Bank's Revolving Commitment, as revised by this Amendment.

                  34.   All other documents requested by the Agent in connection
with this Amendment.