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                                                                   EXHIBIT 10.21

                        [SILICON VALLEY BANK LETTERHEAD]

                     ACCOUNTS RECEIVABLE PURCHASE AGREEMENT

         This Accounts Receivable Purchase Agreement (the "Agreement") is made
on this 9th day of April, 2002, by and between Silicon Valley Bank ("Buyer")
having a place of business at the address specified above and XETEL CORPORATION,
a Delaware corporation ("Seller") having its principal place of business and
chief executive office at 2105 Gracy Farms Lane, Austin, TX 78758.

1. DEFINITIONS. When used herein, the following terms shall have the following
meanings.

         "Account Balance" shall mean, on any given day, the gross amount of all
Purchased Receivables unpaid on that day.

         "Account Debtor" shall have the meaning set forth in the California
Uniform Commercial Code and shall include any person liable on any Purchased
Receivable, including without limitation, any guarantor of the Purchased
Receivable and any issuer of a letter of credit or banker's acceptance.

         "Adjustments" shall mean all discounts, allowances, returns, disputes,
counterclaims, offsets, defenses, rights of recoupment, rights of return,
warranty claims, or short payments, asserted by or on behalf of any Account
Debtor with respect to any Purchased Receivable.

         "Administrative Fee" shall have the meaning as set forth in Section 3.3
hereof.

         "Advance" shall have the meaning set forth in Section 2.2 hereof.

         "Collateral" shall have the meaning set forth in Section 8 hereof.

         "Collections" shall mean all good funds received by Buyer from or on
behalf of an Account Debtor with respect to Purchased Receivables.

         "Compliance Certificate" shall mean a certificate, in a form provided
by Buyer to Seller, which contains the certification of the chief financial
officer of Seller that, among other things, the representations and warranties
set forth in this Agreement are true and correct as of the date such certificate
is delivered.

         "Due Diligence Fee" shall have the meaning set for in Section 3.7
hereof.

         "Event of Default" shall have the meaning set forth in Section 9
hereof.

         "Facility Fee" shall have the meaning set forth in Section 3.6 hereof.

         "Finance Charges" shall have the meaning set forth in Section 3.2
hereof.

         "Invoice Transmittal" shall mean a writing signed by an authorized
representative of Seller which accurately identifies the receivables which
Buyer, at its election, may purchase, and includes for each such receivable the
correct amount owed by the Account Debtor, the name and address of the Account
Debtor, the invoice number, the invoice date and the account code.

         "Lockbox" shall have the meaning set forth in Section 6.1(J) hereof.

         "Obligations" shall mean all advances, financial accommodations,
liabilities, obligations, covenants and duties owing, arising, due or payable by
Seller to Buyer of any kind or nature, present or future, arising under or in
connection with this Agreement or under any other document, instrument or
agreement, whether or not evidenced by any note, guarantee or other instrument,
whether arising on account or by overdraft, whether direct or indirect
(including those acquired by assignment) absolute or contingent, primary or
secondary, due or to become due, now owing or hereafter arising, and however
acquired; including, without limitation, all Advances, Finance Charges,
Administrative Fees, interest, Repurchase Amounts, fees, expenses, professional
fees and attorneys' fees and any other sums chargeable to Seller hereunder or
otherwise.

         "Prime Rate" is Buyer's most recently announced "prime rate," even if
it is not Buyer's lowest rate.

         "Purchased Receivables" shall mean all those accounts, receivables,
chattel paper, instruments, contract rights, documents, general intangibles,
letters of credit, drafts, bankers acceptances, and rights to payment, and all
proceeds thereof (all of the foregoing being referred to as "receivables"),
arising out of the invoices and other agreements identified on or delivered with
any Invoice Transmittal delivered by Seller to Buyer which Buyer elects to
purchase and for which Buyer makes an Advance.

         "Refund" shall have the meaning set forth in Section 3.5 hereof.

         "Reserve" shall have the meaning set forth in Section 2.4 hereof.

         "Repurchase Amount" shall have the meaning set forth in Section 4.2
hereof.

         "Reconciliation Date" shall mean the last calendar day of each
Reconciliation Period.

         "Reconciliation Period" shall mean each calendar month of every year.

2.  PURCHASE AND SALE OF RECEIVABLES.

    2.1. OFFER TO SELL RECEIVABLES. During the term hereof, and provided that
there does not then exist any Event of Default or any event that with notice,
lapse of time or otherwise would constitute an Event of Default, Seller may
request that Buyer purchase receivables and Buyer may, in its sole discretion,
elect to purchase receivables. Seller shall deliver to Buyer an Invoice
Transmittal with respect to any receivable for which a request for purchase is
made. An authorized representative of


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Seller shall sign each Invoice Transmittal delivered to Buyer. Buyer shall be
entitled to rely on all the information provided by Seller to Buyer on or with
the Invoice Transmittal and to rely on the signature on any Invoice Transmittal
as an authorized signature of Seller.

     2.2. ACCEPTANCE OF RECEIVABLES. Buyer shall have no obligation to purchase
any receivable listed on an Invoice Transmittal. Buyer may exercise its sole
discretion in approving the credit of each Account Debtor before buying any
receivable. Upon acceptance by Buyer of all or any of the receivables described
on any Invoice Transmittal, Buyer shall pay to Seller 75 (%) percent of the face
amount of each receivable Buyer desires to purchase, net of deferred revenue and
offsets related to each specific Account Debtor. Such payment shall be the
"Advance" with respect to such receivable. Buyer may, from time to time, in its
sole discretion, change the percentage of the Advance. Upon Buyer's acceptance
of the receivable and payment to Seller of the Advance, the receivable shall
become a "Purchased Receivable." It shall be a condition to each Advance that
(i) all of the representations and warranties set forth in Section 6 of this
Agreement be true and correct on and as of the date of the related Invoice
Transmittal and on and as of the date of such Advance as though made at and as
of each such date, and (ii) no Event of Default or any event or condition that
with notice, lapse of time or otherwise would constitute an Event of Default
shall have occurred and be continuing, or would result from such Advance.
Notwithstanding the foregoing, in no event shall the aggregate amount of all
Purchased Receivables outstanding at any time exceed Six Million Five Hundred
Thousand Dollars ($6,500,000).

      2.3. EFFECTIVENESS OF SALE TO BUYER. Effective upon Buyer's payment of an
Advance, and for and in consideration therefor and in consideration of the
covenants of this Agreement, Seller hereby absolutely sells, transfers and
assigns to Buyer, all of Seller's right, title and interest in and to each
Purchased Receivable and all monies due or which may become due on or with
respect to such Purchased Receivable. Buyer shall be the absolute owner of each
Purchased Receivable. Buyer shall have, with respect to any goods related to the
Purchased Receivable, all the rights and remedies of an unpaid seller under the
California Uniform Commercial Code and other applicable law, including the
rights of replevin, claim and delivery, reclamation and stoppage in transit.

     2.4. ESTABLISHMENT OF A RESERVE. Upon the purchase by Buyer of each
Purchased Receivable, Buyer shall establish a reserve. The reserve shall be the
amount by which the face amount of the Purchased Receivable exceeds the Advance
on that Purchased Receivable (the "Reserve"); provided, the Reserve with respect
to all Purchased Receivables outstanding at any one time shall be an amount not
less than 25 (%) percent of the Account Balance at that time and may be set at a
higher percentage at Buyer's sole discretion. The reserve shall be a book
balance maintained on the records of Buyer and shall not be a segregated fund.

3.   COLLECTIONS, CHARGES AND REMITTANCES.

     3.1. COLLECTIONS. Upon receipt by Buyer of Collections, Buyer shall
promptly credit such Collections to Seller's Account Balance on a daily basis;
provided, that if Seller is in default under this Agreement, Buyer shall apply
all Collections to Seller's Obligations hereunder in such order and manner as
Buyer may determine. If an item of collection is not honored or Buyer does not
receive good funds for any reason, the amount shall be included in the Account
Balance as if the Collections had not been received and Finance Charges under
Section 3.2 shall accrue thereon.

     3.2. FINANCE CHARGES. On each Reconciliation Date Seller shall pay to Buyer
a finance charge in an amount equal to 1.000(%) percent per month of the average
daily Account Balance outstanding during the applicable Reconciliation Period
(the "Finance Charges"). Upon Seller achieving the Third AP Milestone, as
defined in Section 6.2, the Finance Charges shall be amended to mean 3.250
percentage points above the Prime Rate, per annum (based on a 360 day year for
the actual number of days elapsed) of the average daily Account Balance
outstanding during the applicable Reconciliation Period. Buyer shall deduct the
accrued Finance Charges from the Reserve as set forth in Section 3.5 below.

     3.3. ADMINISTRATIVE FEE. On each Reconciliation Date Seller shall pay to
Buyer an Administrative Fee equal to 1.000 (%) percent of the face amount of
each Purchased Receivable first purchased during that Reconciliation Period (the
"Administrative Fee"). Upon Seller achieving the First AP Milestone, as defined
in Section 6.2, the Administrative Fee shall be amended to 0.875(%) percent of
the face amount of each Purchased Receivable first purchased during the
Reconciliation Period. Upon Seller achieving the Second AP Milestone, as defined
in Section 6.2, the Administrative Fee shall be amended to 0.750(%) percent of
the face amount of each Purchased Receivable first purchased during the
Reconciliation Period. Furthermore, upon Seller achieving the Third AP
Milestone, as defined in Section 6.2, the Administrative Fee shall be amended to
0.500(%) percent of the face amount of each Purchased Receivable first purchased
during the Reconciliation Period. Buyer shall deduct the Administrative Fee from
the Reserve as set forth in Section 3.5 below.

     3.4. ACCOUNTING. Buyer shall prepare and send to Seller after the close of
business for each Reconciliation Period, an accounting of the transactions for
that Reconciliation Period, including the amount of all Purchased Receivables,
all Collections, Adjustments, Finance Charges, and the Administrative Fee. The
accounting shall be deemed correct and conclusive unless Seller makes written
objection to Buyer within thirty (30) days after the Buyer mails the accounting
to Seller.

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     3.5. REFUND TO SELLER. Provided that there does not then exist an Event of
Default or any event or condition that with notice, lapse of time or otherwise
would constitute an Event of Default, Buyer shall refund to Seller by check
after the Reconciliation Date, the amount, if any, which Buyer owes to Seller at
the end of the Reconciliation Period according to the accounting prepared by
Buyer for that Reconciliation Period (the "Refund"). The Refund shall be an
amount equal to:

         (A) (1) The Reserve as of the beginning of that Reconciliation Period,
             PLUS

             (2) the Reserve created for each Purchased Receivable purchased
             during that Reconciliation Period,
             MINUS

         (B) The total for that Reconciliation Period of:

             (1) the Administrative Fee;

             (2) Finance Charges;

             (3) Adjustments;

             (4) Repurchase Amounts, to the extent Buyer has agreed to accept
             payment thereof by deduction from the Refund;

             (5) the Reserve for the Account Balance as of the first day of the
             following Reconciliation Period in the minimum percentage set forth
             in Section 2.4 hereof; and

             (6) all amounts due, including professional fees and expenses,
             as set forth in Section 12 for which oral or written demand has
             been made by Buyer to Seller during that Reconciliation Period to
             the extent Buyer has agreed to accept payment thereof by deduction
             from the Refund.

In the event the formula set forth in this Section 3.5 results in an amount due
to Buyer from Seller, Seller shall make such payment in the same manner as set
forth in Section 4.3 hereof for repurchases. If the formula set forth in this
Section 3.5 results in an amount due to Seller from Buyer, Buyer shall make such
payment by check, subject to Buyer's rights under Section 4.3 and Buyer's rights
of offset and recoupment.

    3.6.  FACILITY FEE.  A fully earned, non-refundable facility fee of $40,000
(less any amounts under the Due Diligence Fee not used for Buyer's out of pocket
or documentation expenses) shall be due upon execution of this Agreement.

    3.7.  DUE DILIGENCE FEE.  A fully earned, non-refundable due diligence fee
of $10,000 is due immediately (the "Due Diligence Fee") (previously received by
Buyer).

4.  RECOURSE AND REPURCHASE OBLIGATIONS.

    4.1. RECOURSE.  Buyer's acquisition of Purchased Receivables from Seller
shall be with full recourse against Seller. In the event the Obligations exceed
the amount of Purchased Receivables and Collateral, Seller shall be liable for
any deficiency.

    4.2. SELLER'S AGREEMENT TO REPURCHASE.  If Buyers demands, Seller will
repurchase any Purchased Receivable from Buyer for the full face amount or any
unpaid portion. Buyer may require Seller to repurchase a Purchased Receivable
if:

         (A) which remains unpaid ninety (90) calendar days after the invoice
         date; or


         (B) which is owed by any Account Debtor who has filed, or has had filed
         against it, any bankruptcy case, assignment for the benefit of
         creditors, receivership, or insolvency proceeding or who has become
         insolvent (as defined in the United States Bankruptcy Code) or who is
         generally not paying its debts as such debts become due; or

         (C) with respect to which there has been any breach of warranty or
         representation set forth in Section 6 hereof or any breach of any
         covenant contained in this Agreement; or

         (D) with respect to which the Account Debtor asserts any discount,
         allowance, return, dispute, counterclaim, offset, defense, right of
         recoupment, right of return, warranty claim, or short payment;

together with all reasonable attorneys' and professional fees and expenses and
all court costs incurred by Buyer in collecting such Purchased Receivable and/or
enforcing its rights under, or collecting amounts owed by Seller in connection
with, this Agreement (collectively, the "Repurchase Amount").

    4.3. SELLER'S PAYMENT OF THE REPURCHASE AMOUNT OR OTHER AMOUNTS DUE BUYER.
When any Repurchase Amount or other amount owing to Buyer becomes due, Buyer
shall inform Seller of the manner of payment which may be any one or more of the
following in Buyer's sole discretion: (a) in cash immediately upon demand
therefor; (b) by delivery of substitute invoices and an Invoice Transmittal
acceptable to Buyer which shall thereupon become Purchased Receivables; (c) by
adjustment to the Reserve pursuant to Section 3.5 hereof; (d) by deduction from
or offset against the Refund that would otherwise be due and payable to Seller;
(e) by deduction from or offset against the amount that otherwise would be
forwarded to Seller in respect of any further Advances that may be made by
Buyer; or (f) by any combination of the foregoing as Buyer may from time to time
choose.

    4.4. SELLER'S AGREEMENT TO REPURCHASE ALL PURCHASED RECEIVABLES. Upon and
after the occurrence of an Event of Default, Seller shall, upon Buyer's demand
(or, in the case of an Event of Default under Section 9(B), immediately without
notice or demand from Buyer) repurchase all the Purchased Receivables then
outstanding, or such portion thereof as Buyer may demand. Such demand may, at
Buyer's option, include and Seller shall pay to Buyer immediately upon demand,
cash in an amount equal to the Advance with respect to each Purchased Receivable
then outstanding together with all accrued Finance Charges, Adjustments,
Administrative Fees, attorney's and professional fees, court costs and expenses
as provided


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for herein, and any other Obligations. Upon receipt of payment in full of the
Obligations, Buyer shall immediately instruct Account Debtors to pay Seller
directly, and return to Seller any Refund due to Seller. For the purpose of
calculating any Refund due under this Section only, the Reconciliation Date
shall be deemed to be the date Buyer receives payment in good funds of all the
Obligations as provided in this Section 4.4.

5. POWER OF ATTORNEY. Seller does hereby irrevocably appoint Buyer and its
successors and assigns as Seller's true and lawful attorney in fact, and hereby
authorizes Buyer, regardless of whether there has been an Event of Default, (a)
to sell, assign, transfer, pledge, compromise, or discharge the whole or any
part of the Purchased Receivables; (b) to demand, collect, receive, sue, and
give releases to any Account Debtor for the monies due or which may become due
upon or with respect to the Purchased Receivables and to compromise, prosecute,
or defend any action, claim, case or proceeding relating to the Purchased
Receivables, including the filing of a claim or the voting of such claims in any
bankruptcy case, all in Buyer's name or Seller's name, as Buyer may choose; (c)
to prepare, file and sign Seller's name on any notice, claim, assignment,
demand, draft, or notice of or satisfaction of lien or mechanics' lien or
similar document with respect to Purchased Receivables; (d) to notify all
Account Debtors with respect to the Purchased Receivables to pay Buyer directly;
(e) to receive, open, and dispose of all mail addressed to Seller for the
purpose of collecting the Purchased Receivables; (f) to endorse Seller's name on
any checks or other forms of payment on the Purchased Receivables; (g) to
execute on behalf of Seller any and all instruments, documents, financing
statements and the like to perfect Buyer's interests in the Purchased
Receivables and Collateral; and (h) to do all acts and things necessary or
expedient, in furtherance of any such purposes. If Buyer receives a check or
item which is payment for both a Purchased Receivable and another receivable,
the funds shall first be applied to the Purchased Receivable and, so long as
there does not exist an Event of Default or an event that with notice, lapse of
time or otherwise would constitute an Event of Default, the excess shall be
remitted to Seller. Upon the occurrence and continuation of an Event of Default,
all of the power of attorney rights granted by Seller to Buyer hereunder shall
be applicable with respect to all Purchased Receivables and all Collateral.

6.  REPRESENTATIONS, WARRANTIES AND COVENANTS.

    6.1. RECEIVABLES' WARRANTIES, REPRESENTATIONS AND COVENANTS. To induce
Buyer to buy receivables and to render its services to Seller, and with full
knowledge that the truth and accuracy of the following are being relied upon by
the Buyer in determining whether to accept receivables as Purchased Receivables,
Seller represents, warrants, covenants and agrees, with respect to each Invoice
Transmittal delivered to Buyer and each receivable described therein, that:

         (A) Seller is the absolute owner of each receivable set forth in the
         Invoice Transmittal and has full legal right to sell, transfer and
         assign such receivables;

         (B) The correct amount of each receivable is as set forth in the
         Invoice Transmittal and is not in dispute;

         (C) The payment of each receivable is not contingent upon the
         fulfillment of any obligation or contract, past or future and any and
         all obligations required of the Seller have been fulfilled as of the
         date of the Invoice Transmittal;

         (D) Each receivable set forth on the Invoice Transmittal is based on an
         actual sale and delivery of goods and/or services actually rendered, is
         presently due and owing to Seller, is not past due or in default, has
         not been previously sold, assigned, transferred, or pledged, and is
         free of any and all liens, security interests and encumbrances other
         than liens, security interests or encumbrances in favor of Buyer or any
         other division or affiliate of Silicon Valley Bank;

         (E) There are no defenses, offsets, or counterclaims against any of the
         receivables, and no agreement has been made under which the Account
         Debtor may claim any deduction or discount, except as otherwise stated
         in the Invoice Transmittal;

         (F) Each Purchased Receivable shall be the property of the Buyer and
         shall be collected by Buyer, but if for any reason it should be paid to
         Seller, Seller shall promptly notify Buyer of such payment, shall hold
         any checks, drafts, or monies so received in trust for the benefit of
         Buyer, and shall promptly transfer and deliver the same to the Buyer;

         (G) Buyer shall have the right of endorsement, and also the right to
         require endorsement by Seller, on all payments received in connection
         with each Purchased Receivable and any proceeds of Collateral;

         (H) Seller, and to Seller's best knowledge, each Account Debtor set
         forth in the Invoice Transmittal, are and shall remain solvent as that
         term is defined in the United States Bankruptcy Code and the California
         Uniform Commercial Code, and no such Account Debtor has filed or had
         filed against it a voluntary or involuntary petition for relief under
         the United States Bankruptcy Code;

         (I) Each Account Debtor named on the Invoice Transmittal will not
         object to the payment for, or the quality or the quantity of the
         subject matter of, the receivable and is liable for the amount set
         forth on the Invoice Transmittal;

         (J) Each Account Debtor shall promptly be notified, after acceptance by
         Buyer, that the Purchased Receivable has been transferred to and is
         payable to Buyer, and Seller shall not take or permit any action to
         countermand such notification;

         (K) Seller will remit all payment's for accounts to Buyer by the close
         of business on each Friday along with a detailed cash receipts journal
         and shall immediately notify and direct all of the Seller's Account
         Debtor's to make all payment's for Seller's accounts to a lockbox
         account established with Buyer ("Lockbox") or to wire transfer payments
         to a cash collateral account that Buyer controls. It will be considered
         an immediate Event of Default if the Lockbox is not set-up and
         operational within 45 days from the date of this Agreement; and

         (L) All receivables forwarded to and accepted by Buyer after the date
         hereof, and thereby becoming Purchased Receivables, shall comply with
         each and every one of the foregoing representations, warranties,
         covenants and agreements referred to above in this Section 6.1.

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     6.2.  ADDITIONAL WARRANTIES, REPRESENTATIONS AND COVENANTS.  In addition to
the foregoing warranties, representations and covenants, to induce Buyer to buy
receivables and to render its services to Seller, Seller hereby represents,
warrants, covenants and agrees that:

         (A) Seller will not assign, transfer, sell, or grant, or permit any
         lien or security interest in any Purchased Receivables or Collateral to
         or in favor of any other party, without Buyer's prior written consent;

         (B) The Seller's name, form of organization, chief executive office,
         and the place where the records concerning all Purchased Receivables
         and Collateral are kept is set forth at the beginning of this
         Agreement, Collateral is located only at the location set forth in the
         beginning of this Agreement, or, if located at any additional location,
         as set forth on a schedule attached to this Agreement, and Seller will
         give Buyer at least thirty (30) days prior written notice if such name,
         organization, chief executive office or other locations of Collateral
         or records concerning Purchased Receivables or Collateral is changed or
         added and shall execute any documents necessary to perfect Buyer's
         interest in the Purchased Receivables and the Collateral;

         (C) Seller shall (i) pay all of its normal gross payroll for employees,
         and all federal and state taxes, as and when due, including without
         limitation all payroll and withholding taxes and state sales taxes;
         (ii) deliver at any time and from time to time at Buyer's request,
         evidence satisfactory to Buyer that all such amounts have been paid to
         the proper taxing authorities; and (iii) if requested by Buyer, pay its
         payroll and related taxes through a bank or an independent payroll
         service acceptable to Buyer.

         (D) Seller has not, as of the time Seller delivers to Buyer an Invoice
         Transmittal, or as of the time Seller accepts any Advance from Buyer,
         filed a voluntary petition for relief under the United States
         Bankruptcy Code or had filed against it an involuntary petition for
         relief;

         (E) If Seller owns, holds or has any interest in, any copyrights
         (whether registered, or unregistered), patents or trademarks, and
         licenses of any of the foregoing, such interest has been disclosed to
         Buyer and is specifically listed and identified on a schedule to this
         Agreement, and Seller shall immediately notify Buyer if Seller
         hereafter obtains any interest in any additional copyrights, patents,
         trademarks or licenses that are significant in value or are material to
         the conduct of its business;

         (F) Seller shall provide Buyer with a Compliance Certificate (i) on a
         weekly basis to be received by Buyer no later than the 5 days following
         each Friday, and; (ii) on a more frequent or other basis if and as
         requested by Buyer;

         (G) Seller shall provide Buyer, as soon as available, but no later than
         20 days following each Reconciliation Period, an aged listing of
         accounts receivable and accounts payable, a company prepared balance
         sheet and income statement, prepared under GAAP, consistently applied,
         covering Seller's operations during the period;

         (H) On request by Buyer, Seller will promptly furnish any information
         Buyer may reasonably request to determine financial condition of
         Seller, including, but not limited to all of Seller's Obligations, and
         the condition of any of Seller's receivables which may include but are
         not limited to Purchased Receivables;

         (I) Seller will maintain its primary banking relationship with Buyer,
         which relationship shall include Seller maintaining account balances in
         any accounts at or through Buyer representing at least 85% of all
         account balances of Seller at any financial institution; and

         (J) Less than 40% of Seller's aggregate accounts payable shall be over
         90 days from invoice date on or prior to May 31, 2002 ("First AP
         Milestone"). Less than 30% of Seller's aggregate accounts payable shall
         be over 90 days from invoice date on or prior to June 30, 2002 ("Second
         AP Milestone"). Less than 20% of Seller's aggregate accounts payable
         shall be over 90 days from invoice date on or prior to July 31, 2002
         and thereafter ("Third AP Milestone"). The First AP Milestone, the
         Second AP Milestone and the Third AP Milestone shall be referred to
         collectively as the "AP Milestones". For calculation purposes, accounts
         payable due to The Bureau shall be excluded from the AP Milestones.

7. ADJUSTMENTS. In the event of a breach of any of the representations,
warranties, or covenants set forth in Section 6.1, or in the event any
Adjustment or dispute is asserted by any Account Debtor, Seller shall promptly
advise Buyer and shall, subject to the Buyer's approval, resolve such disputes
and advise Buyer of any adjustments. Unless the disputed Purchased Receivable is
repurchased by Seller and the full Repurchase Amount is paid, Buyer shall remain
the absolute owner of any Purchased Receivable which is subject to Adjustment or
repurchase under Section 4.2 hereof, and any rejected, returned, or recovered
personal property, with the right to take possession thereof at any time. If
such possession is not taken by Buyer, Seller is to resell it for Buyer's
account at Seller's expense with the proceeds made payable to Buyer. While
Seller retains possession of said returned goods, Seller shall segregate said
goods and mark them "property of Silicon Valley Bank."

8. SECURITY INTEREST. To secure the prompt payment and performance to Buyer of
all of the Obligations, Seller hereby grants to Buyer a continuing lien upon and
security interest in all of Seller's now existing or hereafter arising rights
and interest in the following, whether now owned or existing or hereafter
created, acquired, or arising, and wherever located (collectively, the
"Collateral"):

         (A) All accounts, receivables, contract rights, chattel paper,
         instruments, documents, investment property, letters of credit, bankers
         acceptances, drafts, checks, cash, securities, and general intangibles
         (including, without limitation, all claims, causes of action, deposit
         accounts, guaranties, rights in and claims under insurance policies
         (including rights to premium refunds), rights to tax refunds,
         copyrights, patents, trademarks, rights in and under license
         agreements, and all other intellectual property);



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         (B) All inventory, including Seller's rights to any returned or
         rejected goods, with respect to which Buyer shall have all the rights
         of any unpaid seller, including the rights of replevin, claim and
         delivery, reclamation, and stoppage in transit;

         (C) All monies, refunds and other amounts due Seller, including,
         without limitation, amounts due Seller under this Agreement (including
         Seller's right of offset and recoupment);

         (D) All equipment, machinery, furniture, furnishings, fixtures, tools,
         supplies and motor vehicles; (E) All farm products, crops, timber,
         minerals and the like (including oil and gas);

         (F) All accessions to, substitutions for, and replacements of, all of
         the foregoing;

         (G) All books and records pertaining to all of the foregoing; and

         (H) All proceeds of the foregoing, whether due to voluntary or
         involuntary disposition, including insurance proceeds.

         Seller is not authorized to sell, assign, transfer or otherwise convey
any Collateral without Buyer's prior written consent, except for the sale of
finished inventory in the Seller's usual course of business. Seller agrees to
sign UCC financing statements, in a form acceptable to Buyer, and any other
instruments and documents requested by Buyer to evidence, perfect, or protect
the interests of Buyer in the Collateral. Seller agrees to deliver to Buyer the
originals of all instruments, chattel paper and documents evidencing or related
to Purchased Receivables and Collateral.

9. DEFAULT. The occurrence of any one or more of the following shall constitute
an Event of Default hereunder.

         (A) Seller fails to pay any amount owed to Buyer as and when due;

         (B) There shall be commenced by or against Seller any voluntary or
         involuntary case under the United States Bankruptcy Code, or any
         assignment for the benefit of creditors, or appointment of a receiver
         or custodian for any of its assets;

         (C) Seller shall become insolvent in that its debts are greater than
         the fair value of its assets, or Seller is generally not paying its
         debts as they become due or is left with unreasonably small capital;

         (D) Any involuntary lien, garnishment, attachment or the like is issued
         against or attaches to the Purchased Receivables or any Collateral;

         (E) Seller shall breach any covenant, agreement, warranty, or
         representation shall constitute an immediate default hereunder;

         (F) Seller is not in compliance with, or otherwise is in default under,
         any term of any document, instrument or agreement evidencing a debt,
         obligation or liability of any kind or character of Seller, now or
         hereafter existing, in favor of Buyer or any division or affiliate of
         Silicon Valley Bank, regardless of whether such debt, obligation or
         liability is direct or indirect, primary or secondary, joint, several
         or joint and several, or fixed or contingent, together with any and all
         renewals and extensions of such debts, obligations and liabilities, or
         any part thereof;

         (G) An event of default shall occur under any guaranty executed by any
         guarantor of the Obligations of Seller to Buyer under this Agreement,
         or any material provision of any such guaranty shall for any reason
         cease to be valid or enforceable or any such guaranty shall be
         repudiated or terminated, including by operation of law;

         (H) A default or event of default shall occur under any agreement
         between Seller and any creditor of Seller that has entered into a
         subordination agreement with Buyer; or

         (I) Any creditor that has entered into a subordination agreement with
         Buyer shall breach any of the terms of or not comply with such
         subordination agreement.

         (J)(i) There is a material adverse change in the business, operations,
         or condition (financial or otherwise) of the Seller, or (ii) there is a
         material impairment of the prospect of repayment of any portion of the
         Obligations or (iii) there is a material impairment of the value or
         priority of Buyer's security interests in the Collateral.

10. REMEDIES UPON DEFAULT. Upon the occurrence of an Event of Default, (1)
without implying any obligation to buy receivables, Buyer may cease buying
receivables or extending any financial accommodations to Seller; (2) all or a
portion of the Obligations shall be, at the option of and upon demand by Buyer,
or with respect to an Event of Default described in Section 9(B), automatically
and without notice or demand, due and payable in full; and (3) Buyer shall have
and may exercise all the rights and remedies under this Agreement and under
applicable law, including the rights and remedies of a secured party under the
California Uniform Commercial Code, all the power of attorney rights described
in Section 5 with respect to all Collateral, and the right to collect, dispose
of, sell, lease, use, and realize upon all Purchased Receivables and all
Collateral in any commercial reasonable manner. Seller and Buyer agree that any
notice of sale required to be given to Seller shall be deemed to be reasonable
if given five (5) days prior to the date on or after which the sale may be held.
In the event that the Obligations are accelerated hereunder, Seller shall
repurchase all of the Purchased Receivables as set forth in Section 4.4.

11. ACCRUAL OF INTEREST. If any amount owed by Seller hereunder is not paid when
due, including, without limitation, amounts due under Section 3.5, Repurchase
Amounts, amounts due under Section 12, and any other Obligations, such amounts
shall bear interest at a per annum rate equal to the per annum rate of the
Finance Charges until the earlier of (i) payment in good funds or (ii) entry of
a final judgment thereof, at which time the principal amount of any money
judgment remaining unsatisfied shall accrue interest at the highest rate allowed
by applicable law.

12. FEES, COSTS AND EXPENSES; INDEMNIFICATION. THE SELLER WILL PAY TO BUYER
IMMEDIATELY ON DEMAND ALL FEES, COSTS AND EXPENSES (INCLUDING FEES OF ATTORNEYS
AND PROFESSIONALS AND THEIR COSTS AND EXPENSES ) THAT BUYER INCURS OR MAY IMPOSE
IN CONNECTION WITH ANY OF THE FOLLOWING: (a) PREPARING, NEGOTIATING ,
ADMINISTERING, AND ENFORCING THIS AGREEMENT OR ANY OTHER AGREEMENT EXECUTED IN
CONNECTION WITH THIS AGREEMENT, INCLUDING ANY AMENDMENTS, WAIVERS OR



                                                                     Page 6 of 9
<PAGE>

CONSENTS, (b) ANY LITIGATION OR DISPUTE (WHETHER INSTITUTED BY BUYER, SELLER OR
ANY OTHER PERSON) ABOUT THE PURCHASED RECEIVABLES, THE COLLATERAL, THIS
AGREEMENT OR ANY OTHER AGREEMENT EXECUTED IN CONNECTION WITH THIS AGREEMENT, (c)
ENFORCING ANY RIGHTS AGAINST SELLER OR ANY GUARANTOR, OR ANY ACCOUNT DEBTOR, (d)
PROTECTING OR ENFORCING ITS INTEREST IN THE PURCHASED RECEIVABLES OR THE
COLLATERAL, (e) COLLECTING THE PURCHASED RECEIVABLES AND THE OBLIGATIONS, AND
(f) THE REPRESENTATION OF BUYER IN CONNECTION WITH ANY BANKRUPTCY CASE OR
INSOLVENCY PROCEEDING INVOLVING SELLER, ANY PURCHASED RECEIVABLE, THE
COLLATERAL, ANY ACCOUNT DEBTOR, OR ANY GUARANTOR. SELLER SHALL INDEMNIFY AND
HOLD BUYER HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS, ACTIONS, DAMAGES,
COSTS, EXPENSES, AND LIABILITIES OF ANY NATURE WHATSOEVER ARISING IN CONNECTION
WITH ANY OF THE FOREGOING.

13. JURY TRIAL WAIVER. SELLER AND BUYER EACH HEREBY (a) WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL ON ANY CLAIM OR ACTION ARISING OUT OF OR IN CONNECTION
WITH THIS AGREEMENT, ANY RELATED AGREEMENTS, OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY; (b) RECOGNIZE AND AGREE THAT THE FOREGOING
WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR IT TO ENTER INTO THIS AGREEMENT;
AND (c) REPRESENT AND WARRANT THAT IT HAS REVIEWED THIS WAIVER, HAS DETERMINED
FOR ITSELF THE NECESSITY TO REVIEW THE SAME WITH ITS LEGAL COUNSEL, AND
KNOWINGLY AND VOLUNTARILY WAIVES ALL RIGHTS TO A JURY TRIAL.

14. SEVERABILITY, WAIVER, AND CHOICE OF LAW. In the event that any provision of
this Agreement is deemed invalid by reason of law, this Agreement will be
construed as not containing such provision and the remainder of the Agreement
shall remain in full force and effect. Buyer retains all of its rights, even if
it makes an Advance after an Event of Default. If Buyer waives an Event of
Default, it may enforce a later default. Any consent or waiver under, or
amendment of, this Agreement must be in writing. Nothing contained herein, or
any action taken or not taken by Buyer at any time, shall be construed at any
time to be indicative of any obligation or willingness on the part of Buyer to
amend this Agreement or to grant to Seller any waivers or consents. This
Agreement has been transmitted by Seller to Buyer at Buyer's office in the State
of California and has been executed and accepted by Buyer in the State of
California.

    THIS AGREEMENT IS GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF CALIFORNIA.

Notwithstanding the choice of law Buyer and Seller agree that if this Agreement
is ever deemed to be subject to Texas law, the transaction governed by this
Agreement is an "account purchase transaction" as defined in Article 5069-1.14
of Vernon's Annotated Texas Statutes and the discount provided in Section 2.2
and all fees and charges under the terms of this Agreement are not and shall not
be deemed to be compensation contracted for, charged or received by Buyer for
the use, forbearance or detention of money. Additionally, if this Agreement is
ever deemed subject to Texas law, then Section 13 entitled Jury Trial Waiver
shall not apply and the following Arbitration provision shall govern.

ARBITRATION. AT THE REQUEST AT ANY TIME OF EITHER PARTY, ANY CONTROVERSIES
CONCERNING THIS AGREEMENT WILL BE SETTLED BY ARBITRATION IN ACCORDANCE WITH THE
UNITED STATES ARBITRATION ACT, AND UNDER THE COMMERCIAL ARBITRATION RULES AND
ADMINISTRATION OF THE AMERICAN ARBITRATION ASSOCIATION. THE UNITED STATES
ARBITRATION ACT WILL SUPPLEMENT CALIFORNIA LAW, AS APPROPRIATE, EVEN THOUGH THIS
AGREEMENT PROVIDES THAT IT IS OTHERWISE GOVERNED BY CALIFORNIA LAW.

15. NOTICES. All notices shall be given to Buyer and Seller at the addresses or
faxes set forth on the first page of this Agreement and shall be deemed to have
been delivered and received: (a) if mailed, three (3) calendar days after
deposited in the United States mail, first class, postage pre-paid, (b) one (1)
calendar day after deposit with an overnight mail or messenger service; or (c)
on the same date of confirmed transmission if sent by hand delivery, telecopy,
telefax or telex.


16. TERM AND TERMINATION. The term of this Agreement shall be for one (1) year
from the date hereof, and from year to year thereafter unless terminated in
writing by Buyer or Seller. Seller and Buyer shall each have the right to
terminate this Agreement at any time. Notwithstanding the foregoing, any
termination of this Agreement shall not affect Buyer's security interest in the
Collateral and Buyer's ownership of the Purchased Receivables, and this
Agreement shall continue to be effective, and Buyer's rights and remedies
hereunder shall survive such termination, until all transactions entered into
and Obligations incurred hereunder or in connection herewith have been completed
and satisfied in full.

17. TITLES AND SECTION HEADINGS.  The titles and section headings used herein
are for convenience only and shall not be used in interpreting this Agreement.

18. OTHER AGREEMENTS. The terms and provisions of this Agreement shall not
adversely affect the rights of Buyer or any other division or affiliate of
Silicon Valley Bank under any other document, instrument or agreement. The terms
of such other documents, instruments and agreements shall remain in full force
and effect notwithstanding the execution of this Agreement. In the event of a
conflict between any provision of this Agreement and any provision of any other
document, instrument or agreement between Seller on the one hand, and Buyer or
any other division or affiliate of Silicon Valley Bank on the other



                                                                     Page 7 of 9
<PAGE>

hand, Buyer shall determine in its sole discretion which provision shall apply.
Seller acknowledges specifically that any security agreements, liens and/or
security interests currently securing payment of any obligations of Seller owing
to Buyer or any other division or affiliate of Silicon Valley Bank also secure
Seller's obligations under this Agreement, and are valid and subsisting and are
not adversely affected by execution of this Agreement. Seller further
acknowledges that (a) any collateral under other outstanding security agreements
or other documents between Seller and Buyer or any other division or affiliate
of Silicon Valley Bank secures the obligations of Seller under this Agreement
and (b) a default by Seller under this Agreement constitutes a default under
other outstanding agreements between Seller and Buyer or any other division or
affiliate of Silicon Valley Bank.



                                                                     Page 8 of 9
<PAGE>



     IN WITNESS WHEREOF, Seller and Buyer have executed this Agreement on the
day and year above written.

SELLER:  XETEL CORPORATION

By
  -----------------------------------------
Title
     --------------------------------------


BUYER:   SILICON VALLEY BANK


By
  -----------------------------------------
Title
     --------------------------------------


                                                                     Page 9 of 9
<PAGE>

                                   EXHIBIT "A"

                             TO FINANCING STATEMENT

          This FINANCING STATEMENT and SECURITY AGREEMENT covers the following
             types or items of property (in addition to, and without limiting
             the types of property set forth on page 1 hereof):

A)       All accounts, receivables, contract rights, chattel paper, instruments,
         documents, investment property, letters of credit, bankers acceptances,
         drafts, checks, cash, securities, deposit accounts, and general
         intangibles (including, without limitation, all claims, causes of
         action, guaranties, rights in and claims under insurance policies
         (including rights to premium refunds), rights to tax refunds,
         copyrights, patents, trademarks, rights in and under license
         agreements, and all other intellectual property);

B)       All inventory, including Seller's rights to any returned or rejected
         goods, with respect to which Buyer shall have all the rights of any
         unpaid seller, including the rights of replevin, claim and delivery,
         reclamation, and stoppage in transit;

C)       All monies, refunds and other amounts due Seller, including, without
         limitation, amounts due Seller under this Agreement (including Seller's
         right of offset and recoupment);

D)       All equipment, machinery, furniture, furnishings, fixtures, tools,
         supplies and motor vehicles;

E)       All farm products, crops, timber, minerals and the like (including oil
         and gas);

F)       All accessions to, substitutions for, and replacements of, all of the
         foregoing;

G)       All books and records pertaining to all of the foregoing; and

H)       All proceeds of the foregoing, whether due to voluntary or involuntary
         disposition, including insurance proceeds.






INTITALS _____________________



<PAGE>

                        [SILICON VALLEY BANK LETTERHEAD]

                            CERTIFICATION OF OFFICERS

         The undersigned, being all the officers of XeTel Corporation, a
Delaware corporation (the "Corporation"), hereby certify to Silicon Valley Bank,
("SVB") that:

         1. The correct name of the Corporation is XeTel Corporation, as set
forth in the Articles of Incorporation.

         2. The Corporation was incorporated on ________, under the laws of the
State of Delaware, and is in good standing under such laws.

         3. The Corporation's place of business and chief executive office being
the place at which the Corporation maintains its books and records pertaining to
accounts, accounts receivables, contract rights, chattel paper, general
intangibles, instruments, documents, inventory, and equipment, is located at:

                  2105 Gracy Farms Lane
                  Austin, TX 78758

         4. The Corporation has other places of business at the following
addressees:

         None

         5. There is no provision in the Certificate of Incorporation, Articles
of Incorporation, or Bylaws of the Corporation, or in the laws of the State of
its incorporation, requiring any vote or consent of shareholders to authorize
the sale of receivables or the grant of a security interest in any assets of the
Corporation. Such power is vested exclusively in the Corporation's Board of
Directors.

6.  The officers of the Corporation, and their respective titles and signatures
are as follows:

        PRESIDENT:

        ------------------------------------------------------------------------
                                  (Signature)

        VICE PRESIDENT:

        ------------------------------------------------------------------------
                                  (Signature)

        SECRETARY:

        ------------------------------------------------------------------------
                                  (Signature)

        TREASURER:

        ------------------------------------------------------------------------
                                  (Signature)

        OTHER OFFICER:
        TITLE:

        ------------------------------------------------------------------------
                                  (Signature)

<PAGE>

         7. Except as indicated in this paragraph 7, each of the officers listed
in paragraph 6 has signatory powers with respect to all the Corporation's
transactions with SVB. Explanation of exceptions:

         8. The undersigned shall give SVB prompt written notice of any change
or amendment with respect to any of the foregoing. Until such written notice is
received by SVB, SVB shall be entitled to rely upon the foregoing in all
respects.

         IN WITNESS WHEREOF, the undersigned have executed this Certification of
Officers on 04/09/02.


PRESIDENT:
          ----------------------------------------------------------------------
VICE PRESIDENT:
               -----------------------------------------------------------------
SECRETARY:
          ----------------------------------------------------------------------
TREASURER:
          ----------------------------------------------------------------------




<PAGE>
                        [SILICON VALLEY BANK LETTERHEAD]

                      SECRETARY'S CERTIFICATE OF RESOLUTION

         The undersigned, as Secretary of XeTel Corporation, a Delaware
corporation (the "Corporation"), hereby certifies to Silicon Valley Bank that at
a meeting duly convened at which a quorum was present the following resolutions
were adopted by the Board of Directors of the Corporation and that such
resolutions have not been modified, amended, or rescinded in any respect and are
in full force and effect as of today's date.

         RESOLVED, that this corporation be and hereby is authorized to sell
this corporation's accounts receivable to Silicon Valley Bank, and to grant
Silicon Valley Bank a security interest in this corporation's assets, including,
without limitation, accounts, accounts receivable, contract rights, chattel
paper, general intangibles, instruments, documents, letters of credit, drafts,
inventory and equipment, presently owned or hereafter acquired and proceeds and
products of the foregoing (the " Collateral," as defined in the Accounts
Receivable Purchase Agreement).

         RESOLVED, that this corporation be and hereby is authorized and
directed to execute and deliver certain agreements in connection with the sale
of receivables, and granting of security interests in the Collateral to Silicon
Valley Bank including, without limitations, an Accounts Receivable Purchase
Agreement and UCC-1 financing statement.

         RESOLVED, that the following named officers of this corporation
("Authorized Officers") be, any of them hereby are, authorized, empowered, and
directed to execute and directed to Silicon Valley Bank on behalf of this
corporation all such further agreements and instruments as may be deemed
necessary or advisable in order to fully effectuate the purposes and intent of
the foregoing resolutions.

<Table>
<Caption>
     Print Names of Authorized Officers:                                    Title:

<S>                                                  <C>
------------------------------------------------     -------------------------------------------------

------------------------------------------------     -------------------------------------------------

------------------------------------------------     -------------------------------------------------

------------------------------------------------     -------------------------------------------------

------------------------------------------------     -------------------------------------------------

------------------------------------------------     -------------------------------------------------
</Table>

                  RESOLVED, that the Secretary or Assistant Secretary of this
corporation be, and hereby is authorized, empowered and directed to certify to
the passage of the foregoing resolutions under the seal of this corporation.

IN WITNESS WHEREOF, the undersigned has duly executed this Certificate this 9th
day of April, 2002.


                 ---------------------------------------------------------------
                 Signature

                 Secretary of XeTel Corporation


<PAGE>

                           FORM OF LANDLORD'S CONSENT


RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:
SILICON VALLEY BANK
3003 Tasman Drive, HF226
Santa Clara, CA  95054
Attn:  Specialty Finance Division/Documentation

                     CONSENT TO REMOVAL OF PERSONAL PROPERTY

KNOW ALL PERSONS BY THESE PRESENTS:

         (a) The undersigned has an interest as owner and landlord in the
following described real property (the "Real Property"): SEE ATTACHMENT 1
ATTACHED HERETO FOR FULL LEGAL DESCRIPTION, commonly known as 2105 Gracy Farms
Lane, Austin, TX 78758

         (b) XeTel Corporation, ("Seller"), has entered into or will enter into
an Accounts Receivable Purchase Agreement with Silicon Valley Bank ("Buyer")
dated as of 04/09/02(as amended and supplemented from time to time, the
"Purchase Agreement"). As a condition to entering into the Purchase Agreement,
require that the undersigned consent to the removal by Buyer of the inventory,
accounts, books and records and other assets covered by the Purchase Agreement
(hereinafter called "Collateral") from the Real Property.

         NOW, THEREFORE, the undersigned consents to the placing of the
Collateral on the Real Property, and agrees with Buyer as follows:

                  1. The undersigned waives and releases each and every right
which undersigned now has, under applicable law or by virtue of the lease for
the Real Property now in effect, to levy or distrain upon for rent, in arrears,
in advance or both, or to claim or assert title to the Collateral that is
already on said Real Property, or may hereafter be delivered or installed
thereon.

                  2. The Collateral shall be considered to be personal property
and shall not be considered part of the Real Property regardless of whether or
by what means it is or may become attached or affixed to the Real Property.

                  3. The undersigned will permit Buyer, or its agent or
representative, to enter upon the Real Property for the purpose of exercising
any right they may have under the terms of the Purchase Agreement or otherwise,
including, without limitation, the right to remove the Collateral; provided,
however, that if Buyer, in removing the Collateral damage any improvements of
the undersigned on the Real Property, Buyer will, at its expense, cause same to
be repaired.

                  4. This agreement shall be binding upon the heirs, successors
and assigns of the undersigned and shall inure to the benefit of each Buyer and
its respective successors and assigns.

         IN WITNESS WHEREOF, the undersigned has executed this instrument at
_____________, this ______________ day of __________________,2002.

                           By:
                              -------------------------------------------------

                           Title:
                                 ----------------------------------------------


                                       6
<PAGE>


                                  ATTACHMENT 1

                          LEGAL DESCRIPTION OF PREMISES

                           [To Be Provided By Seller]




                                       7
<PAGE>


                    INTELLECTUAL PROPERTY SECURITY AGREEMENT


         This Intellectual Property Security Agreement (this "IP Agreement") is
made as of the 9th day of April, 2002 by and between XeTel Corporation
("Grantor"), and Silicon Valley Bank, a California banking corporation ("Bank").

                                    RECITALS

         A.     Bank will make advances to Grantor ("Advances") as described in
the Accounts Receivable Purchase Agreement (the "Purchase Agreement"), but only
if Grantor grants Bank a security interest in its Copyrights, Trademarks,
Patents, and Mask Works. Defined terms used but not defined herein shall have
the same meanings as in the Purchase Agreement.

         B.     Pursuant to the terms of the Purchase Agreement, Grantor has
granted to Bank a security interest in all of Grantor's right title and
interest, whether presently existing or hereafter acquired in, to and under all
of the Collateral.

         NOW, THEREFORE, for good and valuable consideration, receipt of which
is hereby acknowledged and intending to be legally bound, as collateral security
for the prompt and complete payment when due of Grantor's Indebtedness under the
Purchase Agreement, Grantor hereby represents, warrants, covenants and agrees as
follows:

         1.     Grant of Security Interest. As collateral security for the
prompt and complete payment and performance of all of Grantor's present or
future Indebtedness, obligations and liabilities to Bank, Grantor hereby grants
a security interest in all of Grantor's right, title and interest in, to and
under its Intellectual Property Collateral (all of which shall collectively be
called the "Intellectual Property Collateral"), including, without limitation,
the following:

                 (a) Any and all copyright rights, copyright applications,
copyright registrations and like protections in each work or authorship and
derivative work thereof, whether published or unpublished and whether or not the
same also constitutes a trade secret, now or hereafter existing, created,
acquired or held, including without limitation those set forth on Exhibit A
attached hereto (collectively, the "Copyrights");

                 (b) Any and all trade secrets, and any and all intellectual
property rights in computer software and computer software products now or
hereafter existing, created, acquired or held;

                 (c) Any and all design rights which may be available to Grantor
now or hereafter existing, created, acquired or held;

                 (d) All patents, patent applications and like protections
including, without limitation, improvements, divisions, continuations, renewals,
reissues, extensions and continuations-in-part of the same, including without
limitation the patents and patent applications set forth on Exhibit B attached
hereto (collectively, the "Patents");

                 (e) Any trademark and servicemark rights, whether registered or
not, applications to register and registrations of the same and like
protections, and the entire goodwill of the business of Grantor connected with
and symbolized by such trademarks, including without limitation those set forth
on Exhibit C attached hereto (collectively, the "Trademarks")

                 (f) All mask works or similar rights available for the
protection of semiconductor chips, now owned or hereafter acquired, including,
without limitation those set forth on Exhibit D attached hereto (collectively,
the "Mask Works");


                                       8
<PAGE>
                 (g) Any and all claims for damages by way of past, present and
future infringements of any of the rights included above, with the right, but
not the obligation, to sue for and collect such damages for said use or
infringement of the intellectual property rights identified above;

                  (h) All licenses or other rights to use any of the Copyrights,
Patents, Trademarks, or Mask Works and all license fees and royalties arising
from such use to the extent permitted by such license or rights; and

                 (i) All amendments, extensions, renewals and extensions of any
of the Copyrights, Trademarks, Patents, or Mask Works; and

                 (j) All proceeds and products of the foregoing, including
without limitation all payments under insurance or any indemnity or warranty
payable in respect of any of the foregoing.

         2.      Authorization and Request. Grantor authorizes and requests that
the Register of Copyrights and the Commissioner of Patents and Trademarks record
this IP Agreement.

         3.      Covenants and Warranties.  Grantor represents, warrants,
covenants and agrees as follows:

                 (a) Grantor is now the sole owner of the Intellectual Property
Collateral, except for non-exclusive licenses granted by Grantor to its
customers in the ordinary course of business.

                 (b) Performance of this IP Agreement does not conflict with or
result in a breach of any IP Agreement to which Grantor is bound, except to the
extent that certain intellectual property agreements prohibit the assignment of
the rights thereunder to a third party without the licensor's or other party's
consent and this IP Agreement constitutes a security interest.

                 (c) During the term of this IP Agreement, Grantor will not
transfer or otherwise encumber any interest in the Intellectual Property
Collateral, except for non-exclusive licenses granted by Grantor in the ordinary
course of business or as set forth in this IP Agreement;

                 (d) To its knowledge, each of the Patents is valid and
enforceable, and no part of the Intellectual Property Collateral has been judged
invalid or unenforceable, in whole or in part, and no claim has been made that
any part of the Intellectual Property Collateral violates the rights of any
third party;

                 (e) Grantor shall promptly advise Bank of any material adverse
change in the composition of the Collateral, including but not limited to any
subsequent ownership right of the Grantor in or to any Trademark, Patent,
Copyright, or Mask Work specified in this IP Agreement;

                 (f) Grantor shall (i) protect, defend and maintain the validity
and enforceability of the Trademarks, Patents, Copyrights, and Mask Works, (ii)
use its best efforts to detect infringements of the Trademarks, Patents,
Copyrights, and Mask Works and promptly advise Bank in writing of material
infringements detected and (iii) not allow any Trademarks, Patents, Copyrights,
or Mask Works to be abandoned, forfeited or dedicated to the public without the
written consent of Bank, which shall not be unreasonably withheld, unless
Grantor determines that reasonable business practices suggest that abandonment
is appropriate.

                 (g) Grantor shall promptly register the most recent version of
any of Grantor's Copyrights, if not so already registered, and shall, from time
to time, execute and file such other instruments, and take such further actions
as Bank may reasonably request from time to time to perfect or continue the
perfection of Bank's interest in the Intellectual Property Collateral;

                 (h) This IP Agreement creates, and in the case of after
acquired Intellectual Property Collateral, this IP Agreement will create at the
time Grantor first has rights in such after

                                       9
<PAGE>
acquired Intellectual Property Collateral, in favor of Bank a valid and
perfected first priority security interest in the Intellectual Property
Collateral in the United States securing the payment and performance of the
obligations evidenced by the Purchase Agreement upon making the filings referred
to in clause (i) below;

                 (i) To its knowledge, except for, and upon, the filing with the
United States Patent and Trademark office with respect to the Patents and
Trademarks and the Register of Copyrights with respect to the Copyrights and
Mask Works necessary to perfect the security interests created hereunder and
except as has been already made or obtained, no authorization, approval or other
action by, and no notice to or filing with, any U.S. governmental authority of
U.S. regulatory body is required either (i) for the grant by Grantor of the
security interest granted hereby or for the execution, delivery or performance
of this IP Agreement by Grantor in the U.S. or (ii) for the perfection in the
United States or the exercise by Bank of its rights and remedies thereunder;

                 (j) All information heretofore, herein or hereafter supplied to
Bank by or on behalf of Grantor with respect to the Intellectual Property
Collateral is accurate and complete in all material respects.

                 (k) Grantor shall not enter into any agreement that would
materially impair or conflict with Grantor's obligations hereunder without
Bank's prior written consent, which consent shall not be unreasonably withheld.
Grantor shall not permit the inclusion in any material contract to which it
becomes a party of any provisions that could or might in any way prevent the
creation of a security interest in Grantor's rights and interest in any property
included within the definition of the Intellectual property Collateral acquired
under such contracts, except that certain contracts may contain anti-assignment
provisions that could in effect prohibit the creation of a security interest in
such contracts.

                 (l) Upon any executive officer of Grantor obtaining actual
knowledge thereof, Grantor will promptly notify Bank in writing of any event
that materially adversely affects the value of any material Intellectual
Property Collateral, the ability of Grantor to dispose of any material
Intellectual Property Collateral of the rights and remedies of Bank in relation
thereto, including the levy of any legal process against any of the Intellectual
Property Collateral.

         4.     Bank's Rights. Bank shall have the right, but not the
obligation, to take, at Grantor's sole expense, any actions that Grantor is
required under this IP Agreement to take but which Grantor fails to take, after
fifteen (15) days' notice to Grantor. Grantor shall reimburse and indemnify Bank
for all reasonable costs and reasonable expenses incurred in the reasonable
exercise of its rights under this section 4.

         5.     Inspection Rights. Grantor hereby grants to Bank and its
employees, representatives and agents the right to visit, during reasonable
hours upon prior reasonable written notice to Grantor, and any of Grantor's
plants and facilities that manufacture, install or store products (or that have
done so during the prior six-month period) that are sold utilizing any of the
Intellectual Property Collateral, and to inspect the products and quality
control records relating thereto upon reasonable written notice to Grantor and
as often as may be reasonably requested, but not more than one (1) in every six
(6) months; provided, however, nothing herein shall entitle Bank access to
Grantor's trade secrets and other proprietary information.

         6.      Further Assurances; Attorney in Fact.

                 (a) On a continuing basis, Grantor will, subject to any prior
licenses, encumbrances and restrictions and prospective licenses, make, execute,
acknowledge and deliver, and file and record in the proper filing and recording
places in the United States, all such instruments, including appropriate
financing and continuation statements and collateral agreements and filings with
the United States Patent and Trademarks Office and the Register of Copyrights,
and take all such action as may reasonably be deemed necessary or advisable, or
as requested by Bank, to perfect Bank's security interest in all Copyrights,
Patents, Trademarks, and Mask Works and otherwise to carry out the intent

                                       10

<PAGE>

and purposes of this IP Agreement, or for assuring and confirming to Bank the
grant or perfection of a security interest in all Intellectual Property
Collateral.

                (b) Grantor hereby irrevocably appoints Bank as Grantor's
attorney-in-fact, with full authority in the place and stead of Grantor and in
the name of Grantor, Bank or otherwise, from time to time in Bank's discretion,
upon Grantor's failure or inability to do so, to take any action and to execute
any instrument which Bank may deem necessary or advisable to accomplish the
purposes of this IP Agreement, including:

                          (i) To modify, in its sole discretion, this IP
Agreement without first obtaining Grantor's approval of or signature to such
modification by amending Exhibit A, Exhibit B, Exhibit C, and Exhibit D hereof,
as appropriate, to include reference to any right, title or interest in any
Copyrights, Patents, Trademarks or Mask Works acquired by Grantor after the
execution hereof or to delete any reference to any right, title or interest in
any Copyrights, Patents, Trademarks, or Mask Works in which Grantor no longer
has or claims any right, title or interest; and

                          (ii) To file, in its sole discretion, one or more
financing or continuation statements and amendments thereto, relative to any of
the Intellectual Property Collateral without the signature of Grantor where
permitted by law.

         7.     Events of Default.  The occurrence of any of the following shall
constitute an Event of Default under this IP Agreement:

                (a) An Event of Default occurs under the Purchase Agreement; or

                (b) Grantor breaches any warranty or agreement made by Grantor
in this IP Agreement.

         8.     Remedies. Upon the occurrence and continuance of an Event of
Default, Bank shall have the right to exercise all the remedies of a secured
party under the California Uniform Commercial Code, including without limitation
the right to require Grantor to assemble the Intellectual Property Collateral
and any tangible property in which Bank has a security interest and to make it
available to Bank at a place designated by Bank. Bank shall have a nonexclusive,
royalty free license to use the Copyrights, Patents, Trademarks, and Mask Works
to the extent reasonably necessary to permit Bank to exercise its rights and
remedies upon the occurrence of an Event of Default. Grantor will pay any
expenses (including reasonable attorney's fees) incurred by Bank in connection
with the exercise of any of Bank's rights hereunder, including without
limitation any expense incurred in disposing of the Intellectual Property
Collateral. All of Bank's rights and remedies with respect to the Intellectual
Property Collateral shall be cumulative.

         9.     Indemnity. Grantor agrees to defend, indemnify and hold harmless
Bank and its officers, employees, and agents against: (a) all obligations,
demands, claims, and liabilities claimed or asserted by any other party in
connection with the transactions contemplated by this IP Agreement, and (b) all
losses or expenses in any way suffered, incurred, or paid by Bank as a result of
or in any way arising out of, following or consequential to transactions between
Bank and Grantor, whether under this IP Agreement or otherwise (including
without limitation, reasonable attorneys fees and reasonable expenses), except
for losses arising from or out of Bank's gross negligence or willful misconduct.

         10.    Reassignment. At such time as Grantor shall completely satisfy
all of the obligations secured hereunder, Bank shall execute and deliver to
Grantor all deed, assignments, and other instruments as may be necessary or
proper to reinvest in Grantor full title to the property assigned hereunder,
subject to any disposition thereof which may have been made by Bank pursuant
hereto.

         11.     Course of Dealing.  No course of dealing, nor any failure to
exercise, nor any delay in exercising any right, power or privilege hereunder
shall operate as a waiver thereof.

                                       11

<PAGE>
         12.     Attorneys' Fees.  If any action relating to this IP Agreement
is brought by either party hereto against the other party, the prevailing party
shall be entitled to recover reasonable attorneys' fees, costs and
disbursements.

         13.     Amendments.  This IP Agreement may be amended only by a written
instrument signed by both parties hereto.

         14.     Counterparts.  This IP Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute the same instrument.

         15.     Law and Jurisdiction.  This IP Agreement shall be governed by
and construed in accordance with the laws of the State of California, without
regard for choice of law provisions. Grantor and Bank consent to the
nonexclusive jurisdiction of any state or federal court located in Santa Clara
County, California.

         16.    Confidentiality. In handling any confidential information, Bank
shall exercise the same degree of care that it exercises with respect to its own
proprietary information of the same types to maintain the confidentiality of any
non-public information thereby received or received pursuant to this IP
Agreement except that the disclosure of this information may be made (i) to the
affiliates of the Bank, (ii) to prospective transferee or purchasers of an
interest in the obligations secured hereby, provided that they have entered into
comparable confidentiality agreement in favor of Grantor and have deliver a copy
to Grantor, (iii) as required by law, regulation, rule or order, subpoena
judicial order or similar order and (iv) as may be required in connection with
the examination, audit or similar investigation of Bank.

    IN WITNESS WHEREOF, the parties hereto have executed this IP Agreement on
the day and year first above written.

ADDRESS OF GRANTOR:            GRANTOR:

2105 Gracy Farms Lane          XeTel Corporation
Austin, TX 78758

                               By:
                                  ---------------------------------------------
                               Name:
                                    -------------------------------------------
                               Title:
                                     ------------------------------------------



                                       12
<PAGE>


Exhibit "A" attached to that certain Intellectual Property Security Agreement
dated 04/09/02 EXHIBIT "A"

                                   COPYRIGHTS

SCHEDULE A - ISSUED COPYRIGHTS

<Table>
<Caption>
COPYRIGHT                           REGISTRATION                       DATE OF
DESCRIPTION                            NUMBER                          ISSUANCE
-----------                         ------------                       --------
<S>                                 <C>                                <C>


</Table>




SCHEDULE B - PENDING COPYRIGHT APPLICATIONS

<Table>
<Caption>
                                                                          FIRST DATE
COPYRIGHT                  APPLICATION           DATE OF       DATE OF    OF PUBLIC
DESCRIPTION                   NUMBER              FILING      CREATION    DISTRIBUTION
-----------                -----------           --------     ---------   ------------
<S>                         <C>                    <C>        <C>          <C>

</Table>





SCHEDULE C - UNREGISTERED COPYRIGHTS (Where No Copyright Application is Pending)

<Table>
<Caption>

                                                                     DATE AND
                                                                     RECORDATION
                                                                     NUMBER OF
                                                                     IP AGREEMENT TO
                                                                     OWNER OF
                                                    ORIGINAL         GRANTOR (IF
                                                    AUTHOR OR        ORIGINAL AUTHOR
                                                    OWNER OF         OR OWNER OF
                                FIRST DATE          COPYRIGHT        COPYRIGHT IS
COPYRIGHT         DATE OF          OF               (IF DIFFERENT    DIFFERENT FROM
DESCRIPTION       CREATION     DISTRIBUTION         FROM GRANTOR)    GRANTOR )
-----------       --------     ------------         -------------    -----------------
<S>              <C>           <C>                  <C>              <C>

</Table>

                                       13
<PAGE>





Exhibit "B" attached to that certain Intellectual Property Security Agreement
dated 04/09/02

                                   EXHIBIT "B"

                                     PATENTS

<Table>
<Caption>
PATENT
DESCRIPTION       DOCKET NO.        COUNTRY SERIAL NO.     FILING DATE   STATUS
-----------       ----------        ------------------     -----------   ------
<S>               <C>               <C>                    <C>           <C>

</Table>


                                       14
<PAGE>





Exhibit "C" attached to that certain Intellectual Property Security Agreement
dated 04/09/02 EXHIBIT "C"

                                   TRADEMARKS


<Table>
<Caption>
DESCRIPTION       COUNTRY  SERIAL NO.                REG. NO           STATUS
-----------       -------  ----------                -------           ------
<S>               <C>      <C>                       <C>               <C>

</Table>


                                       15
<PAGE>


Exhibit "D" attached to that certain Intellectual Property Security Agreement
dated 04/09/02.

                                   EXHIBIT "D"

                                   MASK WORKS

<Table>
<Caption>
MASK WORK
DESCRIPTION       COUNTRY  SERIAL NO.                REG. NO           STATUS
-----------       -------  ----------                -------           ------
<S>               <C>      <C>                       <C>               <C>

</Table>