<PAGE>

                                EMPLOYMENT AGREEMENT

          This agreement is made as of this 1st day of May, 1998, by and 
between Microtel International, Inc., a Delaware corporation with offices at 
4290 E. Brickell Street, Ontario, California, 91761-1511 (the "Employer" or 
the "Company"), and James P. Butler, who resides at 7716 East Fieldcrest 
Lane, Orange, California, 92869, (the "Employee").

                                     WITNESSETH

       WHEREAS, the Employee desires to be employed by the Employer, and the 
Employer desires to employ the Employee upon the terms and conditions 
hereinafter set forth;

            NOW, THEREFORE, in consideration of the foregoing and of the 
mutual promises, covenants and agreements hereinafter contained the parties 
hereto agree as follows:

I. EMPLOYMENT

           1.1 EMPLOYMENT. Subject to the provisions for termination as 
hereinafter provided, the terms of this agreement shall begin on the date 
first written above and shall terminate on May 1, 2001 (the "Employment 
Period").

           1.2 RENEWAL. Subject to the provisions for termination as 
hereinafter provided, this agreement shall be automatically renewed for two 
(2) successive one (1) year terms commencing on May 1, 2001, (the"Renewal 
Periods") unless, during the following periods, either party to this 
Agreement shall notify the other party in writing of its desire not to renew 
this Agreement; provided, however, any action required to be taken with 
respect to this Employment Agreement by the Employer shall only be taken 
after the Executive Compensation and Management Development Committee of the 
Board of Directors of the Employer approves such action. The required notice 
periods in order to prevent an automatic renewal of this Agreement shall be 
as follows:

<TABLE>
<CAPTION>

Period During Which Notice Of
Non-Renewal Must Be Given                                      Renewal Period
-------------------------                                      --------------
<S>                                                          <C>
       3/1/99 to 5/1/00                                      5/1/01 to 5/1/02
       3/1/00 to 5/1/00                                      5/1/01 to 5/1/02

</TABLE>

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                                       - 2 -


           1.3 DUTIES. Subject to Section 1.4, the Employee hereby promises 
to perform and discharge well and favorably the duties of Senior Vice 
President and Chief Financial Officer and to perform services in such 
additional capacities as may be directed by the Chairman and Chief Executive 
Officer, and concurred in by the Company's Board of Directors (the "Board") 
in accordance herewith. As Chief Financial Officer, the Employee's duties 
shall consist of the usual and customary duties of his position and he shall 
be subject to the direction and control of the Chairman and Chief Executive 
Officer and shall at all times have the authority as shall reasonably be 
required to enable him to discharge such duties in an efficient manner.

           1.4 REDESIGNATION. The Chairman and Chief Executive Officer may, 
in his discretion, with the concurrence of the Board, elect or appoint the 
Employee to offices or positions other than, or in addition to, Chief 
Financial Officer (hereinafter the "Redesignation") by providing the Employee 
with prompt written notice of the Redesignation. If any Redesignation and 
related addition to and/or reduction of Employee's duties results in a 
substantial net change in the scope of the Employee's responsibilities, the 
Employee may elect, in his sole discretion, not to accept such Redesignation 
and to resign upon providing written notice of his resignation to the 
Employer not less than thirty (30) days after the Employee has been provided 
with written notice of the Redesignation. In such event, if such 
Redesignation occurs during the Employment Period, the Employer shall pay the 
Employee his annual salary, as provided herein, for one (1) year  following 
the effective date of such resignation or until January 1, 2001, whichever is 
the longer period. In the event that the Redesignation shall occur at any 
time after the Employment Period, and during one of the Renewal Periods, the 
Employer shall pay the Employee his annual salary, as provided herein, for 
one (1) year  following the effective date of such resignation. All sums 
owing hereunder in the event of a Redesignation and a subsequent resignation 
by the Employee shall be due and payable within thirty (30) days of the 
effective date of such resignation.

           1.5 OTHER BUSINESS ACTIVITIES. The Employee shall devote his full 
time, attention and energies to the business of the Company and shall not, so 
long as he remains in the employ of the Company, be engaged in any other 
employment or business of substantial nature, whether or not such business 
activity is pursued for gain and profit, without the written consent of the 
Company. Nothing contained herein, however, shall be construed as preventing 
the Employee from (i) making passive investments of his assets in such form 
or manner as he desires, providing such investments: (a) do not require the 
Employee to render services in the operations or affairs of the firms, 
corporations or other entities in which such investments are made, and (b) 
are not made in any business directly or indirectly competing with the 
Employer or its subsidiaries or affiliated corporations, if any,

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unless the stock of such company is listed on a national stock exchange and 
the Employee owns less than three percent (3%) of the outstanding voting 
securities, or (ii) becoming a member of the Board of Directors of any other 
corporation that the Employee desires, provided that the corporation upon 
whose Board the Employee is a member of is not, in the sole discretion of the 
Employer's Board of Directors, in competition with the business of the 
Employer.

           The Company shall provide the Employee with adequate office and 
support staff to accomplish the objectives for which he is employed and in 
order to perform the duties as set forth herein.

II. COMPENSATION

           2.1 ANNUAL SALARY. The Employer shall pay to the Employee in 
compensation for Employee's services hereunder, a base salary at an annual 
rate of $125,000, payable in equal periodic installments in accordance with 
the customary payroll policy of the Employer. The Employee shall also be 
eligible to receive merit or promotional increases in accordance with the 
Employer's annual review, or other general review of its officer compensation.

          2.2 EXPENSES. The Employer agrees to reimburse the Employee against 
his receipts for all reasonable business expenses incurred by him during the 
Employment Period or Renewal Periods in connection with the performances of 
his services hereunder.

          2.3 BONUSES.  The Employer agrees that the Employee will be 
entitled to participate in any bonus or similar plan approved by the 
Employer's Board of Directors.

          2.4 STOCK OPTIONS AND OTHER INCENTIVE PLANS. The Employee shall 
continue to be eligible to participate in any Incentive Stock Option or 
Non-Qualified Stock Option Plan or other incentive plans duly approved by the 
Board of Directors for implementation within the Company.

          2.5 ADDITIONAL BENEFITS. The Employee shall be entitled to the 
customary and usual medical, insurance, fringe and other benefits made 
available to the Employer's employees generally.

III. TERMINATION

          3.1 TERMINATION DUE TO DEATH. If during the Employment Period or 
Renewals thereof, Employee shall die, this Agreement shall terminate, except 
that the compensation or other amounts payable hereunder, to or for the 
benefit of Employee shall be paid for one (1) year following the death of the 
Employee to such person or persons as Employee 

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                                       - 4 -


may designate by notice to the Employer from time to time or, in the absence 
of such designation, to his legal representatives.

            3.2 TERMINATION DUE TO DISABILITY. If during the Employment 
Period, or Renewals thereof, Employee shall become physically or mentally 
disabled, whether totally or partially, so that he is unable substantially to 
perform his services hereunder (i) for a period of 180 consecutive days, or 
(ii) for shorter periods aggregating 180 days during any period of eighteen 
consecutive months , the Employer may at any time after the last day of the 
180 consecutive days of disability or the day on which the shorter periods of 
disability shall have equalled an aggregate of 180 days, by 10 days written 
notice to Employee (but before Employee has recovered from such disability), 
terminate this Agreement. Notwithstanding such disability, the Employer shall 
continue to pay Employee compensation or other amounts payable hereunder,  to 
or for the benefit of Employee up to and including the date one (1) year  
after the effective date of such termination.

           3.3 TERMINATION FOR CAUSE. The Employer may at any time during the 
Employment Period and any Renewals thereof, by notice, terminate this 
Agreement and discharge the Employee for cause, whereupon the Employer's 
obligation to pay any compensation, severance allowance, or other amounts 
payable hereunder to or for the benefit of Employee shall terminate on the 
date of such discharge, notwithstanding anything herein contained to the 
contrary. As used herein, the term "for cause" shall be deemed to mean and 
include chronic alcoholism; drug addiction; misappropriation of any money or 
other assets or properties of the Employer or its subsidiaries; wilful 
violation of specific and lawful written directions from his supereior or 
from the Board of Directors of the Employer; failure or refusal to perform 
the services required of Employee under this Agreement; wilful disclosure of 
trade secrets or other confidential information resulting in substantial 
detriment to the Company as documented by the Employer under oath or 
affirmation; conviction in a court of competent jurisdiction of any crime 
involving the funds or assets of the Company including, but not limited to, 
embezzlement and larceny; any civil or criminal conduct or personal 
misbehavior which is detrimental to the image, reputation, welfare or 
security of the Employer where such misconduct or misbehavior and judgment 
have been documented by the Employer under oath or affirmation; and any other 
acts or omissions that constitute grounds for cause under the laws of the 
States of Delaware, California, Massachusetts or Illinois, or such other 
States wherein the Company may have operations.

           3.4 TERMINATION WITHOUT CAUSE.  The Employer may terminate this 
Agreement without cause at any time upon sixty (60) days written notice to 
the Employee. In the event the Employer does terminate this Agreement without 
it being "for cause", the Employee, if requested in writing by the Employer, 
shall continue to render services at full compensation until the effective 
date of such termination. Thereafter, during the Employment Period,  Employee 
shall be paid his annual salary for one  (1) year  following the effective 
date of such termination, or until May 1,  2000, whichever is the longer 

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                                       - 5 -


period. In the event such termination pursuant to this Section 3.4 occurs 
during any of the Renewal Periods, the Employee shall be paid his Annual 
Salary through the expiration of the particular Renewal Term to which the 
Company is obligated under Section 1.2, as well as all  other amounts payable 
hereunder. Termination "without cause" shall include the ceasing of 
operations due to bankrupcy and/or the general inability of the Employer to 
meet the Employer's obligations as they become due.

           3.5 TERMINATION WITHOUT CAUSE FOLLOWING A CHANGE IN CONTROL. This 
Agreement may be terminated by Employer, or successor to Employer, upon 
thirty (30) days written notice to Employee upon the happening of any of the 
following events:

                    a.   Sale by Employer of substantially all of its assets;

                    b.   Sale, exchange or other disposition of two-thirds or
                         more of the outstanding capital stock of the Employer;

                    c.   Merger or reorganization in which shareholders of the
                         Employer immediately prior to such merger or
                         reorganization receive less than fifty percent(50%) of
                         the outstanding voting shares of the successor
                         corporation.

In the event that the Employee's employment is terminated without cause 
within two years following a change of control, the Employer or successor to 
Employer shall:

                    a.   Pay to Employee, in a lump sum within thirty (30) days
                         from date of termination, or, at Employee's election,
                         in installments, the Employee's Annual Salary and all
                         other amounts payable hereunder for one and one-half (1
                         1/2) years following the effective date of such
                         termination or untilMay 1, 2000, whichever is the
                         longer period.

                    b.   In the event such termination occurs during any of the
                         Renewal Periods, pay to Employee his Annual Salary to
                         the expiration of that particular Renewal Period, his
                         Annual Salary for a period of one year  following the
                         end of such Renewal Period, plus all other amounts
                         payable hereunder
                         
                    c.   Pay to Employee the average of the Annual Executive
                         Bonuses awarded to him in  the three  years preceding
                         his termination over the same time span and under the
                         same conditions as Annual Salary.

                    d.   Pay to Employee any Executive Bonus awarded but not yet
                         paid.

                    e.   Continue Employee's coverage in all benefit programs in
                         which he was participating on the date of his
                         termination of employment until the earlier of  (1) the
                         end of the Employment Period or Renewal Period,

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                                       - 6 -


                         or (2) the date he receives equivalent coverage and
                         benefits under a subquent employer.


IV. COVENANTS NOT TO COMPETE

           4.1 The Employee agrees that (i) during the Employment Period and 
any Renewals thereof, or in the event of a termination pursuant to Section 
3.3 and, thereafter for a period of one (1) year or (ii) in the event of a 
termination pursuant to Sections 3.4 or 3.5 and for the period from the 
effective  date of such termination until the expiration of a period of 
twelve months following his resignation upon Redesignation for the Interim 
Period as defined in Section 1.4, he will not act as a principal, agent, 
employee, employer, consultant, control person, stockholder, director or 
co-partner of any person, firm, business entity other than the Employer, or 
in any individual representative capacity whatsoever, directly or indirectly, 
without the express consent of the Employer:

                  (a)  engage or participate or be employed in any business 
whose products or services are competitive with those of the Employer in the 
world; provided, however, that the ownership by the Employee of not more than 
three percent (3%) of a corporation or similar business venture shall not be 
deemed to be a violation of this covenant as long as the Employee does not 
become a controlling person or actively involved in the management of such 
corporation or business venture;

                 (b)  approach, solicit business from, or otherwise do 
business or deal with any customer of the Employer in connection with any 
product or service competitive with any provided by the Employer; provided, 
however, the Employee may approach, solicit business from, or otherwise do 
business or deal with any subsidiary or division of any customer of the 
Employer provided that such customer's division or subsidiary does not 
provide a product or service competitive with any provided by the Employer.

                 (c)  approach, counsel, solicit, assist to solicit or 
attempt to induce any person who is then in the employ of the Employer, its 
affiliates or subsidiaries to leave the employ of the Employer, or employ, or 
attempt to employ on behalf of any person or entity any such person or 
persons who at any time during the preceding six months was in the employ of 
the Employer;

                 (d)  aid or counsel any other person, firm, corporation or 
business entity to do any of the above.

                  For purposes of this Section 4.1, the term "customer" shall 
mean (I) any person or entity who was a customer of the Employer at any time 
during the last two months of the Employee's employment by the Employer; (ii) 
any prospective customer to 


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                                       - 7 -


whom the Employer had made a presentation, or similar offering of product(s) 
during the last year of the Employee's employment by the Employer.

                 The Employee acknowledges (I) that his position with the 
Employer requires performance of services which are special, unique, 
extraordinary and intellectual in character and places him in a position of 
confidence and trust with the customers and employees of the Employer, 
through which, among other things, he shall obtain knowledge of such 
organization's "technical information" and "know how" and become acquainted 
with their customers, in which matters such organizations have substantial 
proprietary interests, (ii) that the restrictive covenants set forth above 
are necessary in order to protect and maintain such proprietary interests and 
other legitimate business interests of the Company, and (iii) that the 
Employer would not have entered into this agreement unless such covenants 
were included herein.

                 The Employee also acknowledges that the business of the 
Employer presently extends throughout the world, that he has personally 
supervised or engaged in such business on behalf of the Employer, or will do 
so pursuant to the terms of this Agreement, and, accordingly, it is 
reasonable that the restrictive covenants set forth above are not more 
limited as to geographic area than is set forth therein. The Employee also 
represents to the Employer that the enforcement of such covenants will not 
prevent the Employee from earning a livelihood.

                 If any of the provisions of this Section, or any part 
thereof, is hereinafter construed to be invalid or unenforceable, the same 
shall not affect the remainder of such provision or provisions, which shall 
be given full effect, without regard to the invalid portions. If any of the 
provisions of this Section, or any part thereof, is held to be unenforceable 
because of the duration of such provision, the area covered thereby or the 
type of conduct restricted therein, the parties agree that the court making 
such determination shall have the power to modify the duration, geographic 
area and/or other terms of such provision and, as so modified, said provision 
shall then be enforceable. In the event that the courts of any one or more 
jurisdictions shall hold such provisions wholly or partially unenforceable by 
reason of the scope thereof or otherwise, it is the intention of the parties 
hereto that such determination not bar or in any way affect the Employer's 
right to the relief provided for herein in the courts of any other 
jurisdictions as to breaches or threatened breaches of such provisions in 
such other jurisdictions, the above provisions as they relate to each 
jurisdiction being, for this purpose, severable into diverse and independent 
covenants.

V. CONFIDENTIAL INFORMATION

           5.1  DISCLOSURE OF INFORMATION. The Employee recognizes and 
acknowledges that the financial information, trade secrets, technical 
information, and confidential or proprietary information of the Employer, 
including such information as may exist from

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                                       - 8 -


time to time, and information as to the identity of customers or prospective 
customers of the Employer and other similar items, are valuable, special and 
unique assets of the Employer's business, access to and knowledge of which 
are essential to the performance of the duties of the Employee hereunder. The 
Employee will not, during or after the term hereof, in whole or in part, 
disclose such secrets or confidential, technical or proprietary information 
to any person, firm, corporation, association or other entity for any reason 
or purpose whatsoever, nor shall the Employee make use of any such property 
or information for his own purpose or for the benefit of any person, firm, 
corporation or other entity (except the Employer) under any circumstances, 
during or after the term hereof, provided that after the term hereof these 
restrictions shall not apply to such secrets or information which are then in 
the public domain (provided that the Employee was not responsible, directly 
or indirectly, for such secrets or information entering the public domain 
without the consent of the Employer).

         5.2  OWNERSHIP OF INVENTIONS.  All of the Employee's right, title 
and interest in all developments or improvements devised or conceived by the 
Employee, alone or with others, during his working hours, as well as in all 
developments or improvements devised or conceived by the Employee, alone or 
with others, which relate to any business in which the Employer is then 
engaged or contemplating engaging in, regardless of when devised or 
conceived, is the exclusive property of the Employer.  The Employee shall 
promptly disclose all such developments and improvements to the Employer. The 
Employee shall not use or disclose any such developments or improvements, 
other than in furtherance of the Employer's business, without the Employer's 
prior written consent

          5.3  RETURN MEMORANDA.  Employee hereby agrees to deliver promptly 
to the Employer on termination of his employment, or at any other time the 
Employer may so request, all memoranda, notes, records, reports, manuals, 
drawings and other documents (and all copies thereof) relating to the 
Employer's business and all property associated therewith, which he may then 
possess or have under his control. 

VI. INJUNCTIVE RELIEF

           6.1  The Employee acknowledges that the remedy at law for any 
breach or threatened breach of Articles IVand V hereof by the Employee will 
be inadequate, and that, accordingly, the Employer shall, in addition to all 
other available remedies (including without limitation , seeking such damages 
as it can be shown it has sustained by reason of such breach), be entitled to 
injunctive relief without being required to post bond or other security, and 
without having to prove the inadequacy of the available 

remedies at law. The Employee agrees not to plead or defend on grounds of 
adequate remedy at law or any similar defense in any action by the Employer 
against him, or injunctive relief, or for specific performance of any of his 
obligations pursuant to Articles IV and V hereof. Nothing herein shall be 
construed as prohibiting the Employer from pursuing any other remedies for 
such breach or threatened breach.

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                                       - 9 -


VII. MISCELLANEOUS PROVISIONS

           7.1  NOTICES AND COMMUNICATIONS.  All notices and communications 
hereunder shall be in writing and shall be hand-delivered or sent postage 
prepaid by registered or certified mail, return receipt requested, to the 
address first above written or to such other address of which notice shall 
have been given in the manner herein provided.

           7.2  ENTIRE AGREEMENT.  All prior or contemporaneous agreements 
and understandings between the parties with respect to the subject matter of 
this Agreement are superseded by this Agreement, and this Agreement 
constitutes the entire understanding between the parties. This Agreement may 
not be modified, amended, changed or discharged except by a writing signed by 
both parties hereto, and then only to the extent therein set  forth.

           7.3  ASSIGNMENT.  This Agreement may be assigned by the Employer 
and shall be binding upon and inure to the benefit of the Employer's assigns 
and successors. The services to be performed by the Employee pursuant to this 
Agreement may not be assigned by the Employee.

          7.4  WAIVER.  No waiver of any breach of this Agreement or of any 
objection to any act or omission connected herewith shall be implied or 
claimed by any party, or be deemed to constitute a consent to any 
continuation of such breach, act or omission, unless in a writing signed by 
the party against whom enforcement of such waiver or consent is sought, and 
then only to the extent therein set forth.

          7.5  INDEMNIFICATION.  The Employer will indemnify Employee, to the 
maximum extent permitted by applicable law and the By-laws of the Company, 
against all costs, charges and expenses incurred or sustained by him in 
connection with any action, suit or other reason of his being an officer, 
director or employee of the Employer or any subsidiary or affiliate thereof.

           7.6  SECTION HEADINGS.  The Section headings of this Agreement are 
solely for the purpose of convenience and shall neither be deemed a part of 
this Agreement nor used in any interpretation thereof.

           7.7  GOVERNING LAW.  This Agreement and the relationship of the 
parties shall be governed by, and construed in accordance with, the laws of 
the state of Delaware, or until such time as the Company's state of 
incorporation may be changed to another state within the United States, at 
which point the relationship of the parties would then be governed by, and 
construed in accordance with, the laws of the new state of incorporation.

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                                       - 10 -


  IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement as
of the day and year first above written.

                            MICROTEL INTERNATIONAL, INC.

Dated:  ___________    By:__________________________
                         Carmine T. Oliva, Chairman, President and Chief
                         Executive Officer

Dated: ___________     By:__________________________
                         Robert B. Runyon, Chairman, Executive Compensation and
                         Management Development Committee, Board of Directors


Dated: ___________      By:__________________________
                         James P. Butler, Employee