<PAGE>   1
                                                                   EXHIBIT 10.24


                                PROMISSORY NOTE
                                 (this "Note")

U.S. $7,000,000.00                                      August 23, 1996 ("Date")

FOR VALUE RECEIVED, XETEL CORPORATION ("Borrower"), a Delaware corporation,
promises to pay to the order of TEXAS COMMERCE BANK NATIONAL ASSOCIATION
("Bank") on or before August 31, 1998, (the "Termination Date"), at its banking
house at 700 Lavaca, Austin, Travis County, Texas, or at such other location as
Bank may designate, in lawful money of the United States of America, the lesser
of (i) the principal sum of SEVEN MILLION AND NO/100THS UNITED STATES DOLLARS
(U.S. $7,000,000.00) (the "Maximum Loan Total"); or (ii) the aggregate unpaid
principal amount of all loans made by Bank (each such loan being a "Loan"),
which may be outstanding on the Termination Date. Each Loan shall be due and
payable on the maturity date agreed to by Bank and Borrower with respect to
such Loan (the "Maturity Date"). In no event shall any Maturity Date fall on a
date after the Termination Date. Subject to the terms and conditions of this
Note and the Loan Documents, Borrower may borrow, repay and reborrow all or any
part of the credit provided for herein at any time before the Termination Date,
there being no limitation on the number of Loans made so long as the total
unpaid principal amount at any time outstanding does not exceed the Maximum
Loan Total.

       "Board" means the Board of Governors of the Federal Reserve System of
the United States.

       "Borrowing Date" means any Business Day on which Bank shall make or
continue a Loan hereunder.

       "Business Day" means a day: (i) on which Bank and commercial banks in
New York City are generally open for business; and (ii) with respect to LIBOR
Loans, on which dealings in United States Dollar deposits are carried out in
the interbank markets.

       "Highest Lawful Rate" means the maximum nonusurious rate of interest
from time to time permitted by applicable law. If Texas law determines the
Highest Lawful Rate, Bank has elected the "indicated" (weekly) ceiling as
defined in the Texas Credit Code or any successor statute. Bank may from time
to time, as to current and future balances, elect and implement any other
ceiling under such Code and/or revise the index, formula or provisions of law
used to compute the rate on this open-end account by notice to Borrower, if and
to the extent permitted by, and in the manner provided in such Code.

       "Interest Period" means the period commencing on the Borrowing Date and
ending on the Maturity Date, consistent with the following provisions. The
duration of each Interest Period shall be: (a) in the case of a Prime Rate
Loan, a period of up to the Termination Date unless any portion thereof is
converted to a LIBOR Loan hereunder; and (b) in the case of a LIBOR Loan, a
period of up to one, two, three, four or six months; in each case as selected
by Borrower and agreed to by Bank. Borrower's choice of Interest Period is
subject to the following limitations: (i) No Interest Period shall end on a
date after the Termination Date; and (ii) If the last day of an Interest Period
would be a day other than a Business Day, the Interest Period shall end on the
next succeeding Business Day (unless the Interest Period relates to a LIBOR
Loan and the next succeeding Business Day is in a different calendar month than
the day on which the Interest Period would otherwise end, in which case the
Interest Period shall end on the next preceding Business Day).

       "LIBOR Loan" means a Loan which bears interest at a rate determined by
reference to the LIBOR Rate.

       "LIBOR Rate" means a per annum interest rate determined by Bank by
dividing: (i) the average rate per annum (rounded upwards, if necessary, to the
next 1/16 of 1%) of the rates per annum at which United States dollar deposits
in an amount comparable to the principal amount of the LIBOR Loan to which such
LIBOR Rate is applicable for a term equal to or substantially equal to the
Interest Period are offered by Bank to prominent banks in the London interbank
market at approximately 11:00 a.m., London time, two Business Days prior to
the commencement of the applicable Interest Period; by (ii) Statutory Reserves.

       "Loan Documents" means this Note and any document or instrument
evidencing, securing, guaranteeing or given in connection with this Note
including, but not limited to that certain Credit Agreement of even date
herewith executed by and between Borrower and Bank (the "Credit Agreement").

       "Obligations" means all principal, interest and other amounts which are
or become owing under this Note or any other Loan Document.

       "Obligor" means Borrower and any guarantor, surety, co-signer, general
partner or other person who may now or hereafter be obligated to pay all or any
part of the Obligations.

       "Prime Rate" means the rate determined from time to time by The Chase
Manhattan Bank as its prime rate. The Prime Rate shall change automatically
from time to time without notice to Borrower or any other person. THE PRIME
RATE IS A REFERENCE RATE AND MAY NOT BE THE BANK'S LOWEST RATE.

       "Prime Rate Loan" means a Loan which bears interest at a rate determined
by reference to the Prime Rate.

       "Statutory Reserves" means the difference (expressed as a decimal) of
the number one minus the aggregate of the maximum reserve percentages
(including, without limitation, any marginal, special, emergency, or
supplemental reserves) expressed as a decimal established by the Board and any
other banking authority to which Bank is subject to, with respect to the LIBOR
Rate, for Eurocurrency Liabilities (as defined in Regulation D of the Board).
Such reserve percentages shall include, without limitation, those imposed under
such Regulation D. LIBOR Loans shall be deemed to constitute Eurocurrency
Liabilities and as such shall be deemed to be subject to such reserve
requirements without benefit of or credit for proration, exceptions or offsets
which may be available from time to time to any bank under such Regulation D.
Statutory Reserves shall be adjusted automatically on and as of the effective
date of any change in any reserve percentage.




                              Page 1 of 5 Pages
<PAGE>   2
       Loans may be either Prime Rate Loans or LIBOR Loans. Borrower shall pay
interest on the unpaid principal amount of each Prime Rate Loan at a rate per
annum equal to the lesser of: (i) the Prime Rate in effect from time to time
plus zero percent (O%) (the "Effective Prime Rate"); or (ii) the Highest Lawful
Rate. Accrued interest on each Prime Rate Loan is due and payable on the last
day of each month and at the Maturity Date. Borrower shall pay interest on the
unpaid principal amount of each LIBOR Loan for the Interest Period with respect
thereto at the lesser of: (i) the Effective LIBOR Rate (as hereinafter
defined); or (ii) the Highest Lawful Rate. The Effective LIBOR Rate for each
LIBOR Loan shall mean: (i) for the first $3,500,000.00 or less outstanding
hereunder, a rate per annum equal to the LIBOR Rate plus one and one-quarter
percent (1.25%); and (ii) for Loans outstanding equal to or in excess of
$3,500,000.00, a rate per annum equal to the LIBOR Rate plus one and three-
quarters percent per annum (1.75%). The Effective LIBOR Rate for any LIBOR Loan
shall be determined based upon the aggregate amount of all Loans outstanding
hereunder at the time of each request for a LIBOR Loan and such Effective LIBOR
Rate shall continue to be the applicable interest rate for the length of each
such LIBOR Loan until the end of the applicable Interest Period. Accrued
interest on each LIBOR Loan is due on the last day of each Interest Period
applicable thereto, and in the case of an Interest Period in excess of one
month, on each day which occurs every thirty days after the initial date of
such Interest Period, and on any prepayment (on the amount prepaid).

       If at any time the effective rate of interest which would otherwise be
payable on any Loan evidenced by this Note exceeds the Highest Lawful Rate, the
rate of interest to accrue on the unpaid principal balance of such Loan during
all such times shall be limited to the Highest Lawful Rate, but any subsequent
reductions in such interest rate shall not become effective to reduce such
interest rate below the Highest Lawful Rate until the total amount of interest
accrued on the unpaid principal balance of such Loan equals the total amount of
interest which would have accrued if the Effective Prime Rate, or Effective
LIBOR Rate, whichever is applicable, had at all times been in effect.

       Each LIBOR Loan shall be in an amount not less than $200,000.00 and an
integral multiple of $100,000.00. Interest shall be computed on the basis of
the actual number of days elapsed and a year comprised of 360 days, unless such
calculation would result in a usurious interest rate, in which case such
interest shall be calculated on the basis of a 365 or 366 day year, as the case
may be.

       The unpaid principal balance of this Note at any time will be the total
amounts advanced by Bank, less the amount of all payments or prepayments of
principal. Absent manifest error, the records of Bank will be conclusive as to
amounts owed. Loans shall he made on Borrower's irrevocable notice to Bank,
given not later than 10:00 A.M. (Houston time) on, in the case of LIBOR Loans,
the third Business Day prior to the proposed Borrowing Date or, in the case of
Prime Rate Loans, the first Business Day prior to the proposed Borrowing Date.
Each notice of a requested borrowing (a "Notice of Requested Borrowing") under
this paragraph may be oral or written, and shall specify: (i) the requested
amount; (ii) proposed Borrowing Date; (iii) whether the requested Loan is to be
a Prime Rate Loan or LIBOR Loan; and (iv) Interest Period for the LIBOR Loan.
If any Notice of Requested Borrowing shall be oral, Borrower shall deliver to
Bank prior to the Borrowing Date a confirmatory written Notice of Requested
Borrowing.

       Borrower may on any Business Day prepay the outstanding principal amount
of any Prime Rate Loan, in whole or in part. Borrower shall have no right to
prepay any LIBOR Loan.

       Provided that no Event of Default has occurred and is continuing,
Borrower may elect to continue all or any part of any LIBOR Loan beyond the
expiration of the then current Interest Period relating thereto by providing
Bank at least three Business Day's written or telecopy notice of such election,
specifying the Loan or portion thereof to be continued and the Interest Period
therefor and whether it is to be a Prime Rate Loan or LIBOR Loan provided that
any continuation as a LIBOR Loan shall not be less than $200,000.00 and shall
be in an integral multiple of $100,000.00. If an Event of Default shall have
occurred and be continuing, the Borrower shall not have the option to elect to
continue any such LIBOR Loan or to convert Prime Rate Loans into LIBOR Loans.
Provided that no Event of Default has occurred and is continuing, Borrower may
elect to convert any Prime Rate Loan at any time or from time to time to a
LIBOR Loan by providing Bank at least three Business Days' written or telecopy
notice of such election, specifying each Interest Period therefor. Any
conversion of Prime Rate Loans shall not result in a borrowing of LIBOR Loans
in an amount less than $200,000.00 and in integral multiples of $100,000.00.

       If at any time Bank determines in good faith (which determination shall
be conclusive) that any change in any applicable law, rule or regulation or in
the interpretation, application or administration thereof makes it unlawful, or
any central bank or other governmental authority asserts that it is unlawful,
for Bank or its foreign branch or branches to maintain any LIBOR Loan by means
of dollar deposits obtained in the London interbank market (any of the above
being described as a "LIBOR Event"), then, at the option of Bank, the aggregate
principal amount of all LIBOR Loans outstanding shall be prepaid; however the
prepayment may be made at the sole option of the Bank with a Prime Rate Loan.
Upon the occurrence of any LIBOR Event, and at any time thereafter so long as
such LIBOR Event shall continue, the Bank may exercise its aforesaid option by
giving written notice thereof to Borrower.

       If Bank determines after the date of this Note that any change in
applicable laws, rules or regulations regarding capital adequacy, or any change
in the interpretation or administration thereof by any appropriate governmental
agency, or compliance with any request or directive to Bank regarding capital
adequacy (whether or not having the force of law) of any such agency, increases
the capital required to be maintained with respect to any LIBOR Loan and
therefore reduces the rate of return on Bank's capital below the level Bank
could have achieved but for such change or compliance (taking into
consideration





                               Page 2 of 5 Pages
<PAGE>   3
Bank's policies with respect to capital adequacy), then Borrower will pay to
Bank from time to time, within 15 days of Bank's request, any additional amount
required to compensate Bank for such reduction. Bank will request any
additional amount by delivering to Borrower a certificate of Bank setting forth
the amount necessary to compensate Bank. The certificate will be conclusive and
binding, absent manifest error. Bank may make any assumptions, and may use any
allocations of costs and expenses and any averaging and attribution methods,
which Bank in good faith finds reasonable.

       If any domestic or foreign law, treaty, rule or regulation (whether now
in effect or hereinafter enacted or promulgated, including Regulation D of the
Board) or any interpretation or administration thereof by any governmental
authority charged with the interpretation or administration thereof (whether or
not having the force of law): (a) changes, imposes, modifies, applies or deems
applicable any reserve, special deposit or similar requirements in respect of
any Loan or against assets of, deposits with or for the account of, or credit
extended or committed by, Bank; or (b) imposes on Bank or the interbank
eurocurrency deposit and transfer market or the market for domestic bank
certificates or deposit any other condition affecting any such Loan; and the
result of any of the foregoing is to impose a cost to Bank of agreeing to make,
funding or maintaining any such Loan or to reduce the amount of any sum
receivable by Bank in respect of any such Loan, then Bank may notify Borrower
in writing of the happening of such event and Borrower shall upon demand pay to
Bank such additional amounts as will compensate Bank for such costs as
determined by Bank. Without prejudice to the survival of any other agreement of
Borrower under this Note, the obligations of Borrower under this paragraph
shall survive the termination of this Note.

       Borrower will indemnify Bank against, and reimburse Bank on demand for,
any loss, cost or expense incurred or sustained by Bank (including without
limitation any loss, cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by Bank to fund or maintain
LIBOR Loans) as a result of: (a) any payment or prepayment (whether permitted
by Bank or required hereunder or otherwise) of all or a portion of any LIBOR
Loan on a day other than the Maturity Date of such Loan; (b) any payment or
prepayment, whether required hereunder or otherwise, of any LIBOR Loan made
after the delivery of a Notice of Requested Borrowing but before the applicable
Borrowing Date if such payment or prepayment prevents the proposed Loan from
becoming fully effective; or (c) the failure of any LIBOR Loan to be made by
Bank due to any action or inaction of Borrower. Such funding losses and other
costs and expenses shall be calculated and billed by Bank and such bill shall,
as to the costs incurred, be conclusive absent manifest error.

       All past-due principal and interest on this Note, will, at Bank's
option, bear interest at the Highest Lawful Rate, or if applicable law does not
provide for a maximum nonusurious rate of interest, at a rate per annum equal
to the Prime Rate plus three percent (3%).

       In addition to all principal and accrued interest on this Note, Borrower
agrees to pay: (a) all reasonable costs and expenses incurred by Bank and all
owners and holders of this Note in collecting this Note through probate,
reorganization, bankruptcy or any other proceeding; and (b) reasonable
attorney's fees if and when this Note is placed in the hands of an attorney for
collection.

       Borrower and Bank intend to conform strictly to applicable usury laws.
Therefore, the total amount of interest (as defined under applicable law)
contracted for, charged or collected under this Note will never exceed the
Highest Lawful Rate. If Bank contracts for, charges or receives any excess
interest, it will be deemed a mistake. Bank will automatically reform the
contract or charge to conform to applicable law, and if excess interest has
been received, Bank will either refund the excess to Borrower or credit the
excess on the unpaid principal amount of this Note. All amounts constituting
interest will be spread throughout the full term of this Note in determining
whether interest exceeds lawful amounts.

       If any Event of Default (as defined in the Credit Agreement) shall
occur, then Bank may do any or all of the following: (i) cease making Loans
hereunder; (ii) declare the Obligations to be immediately due and payable,
without notice of acceleration or of intention to accelerate, presentment and
demand or protest or notice of any kind, all of which are hereby expressly
waived; (iii) set off, in any order, against the Obligations any debt owing by
Bank to any Obligor, including, but not limited to, any deposit account, which
right is hereby granted by each Obligor to Bank; and (iv) exercise any and all
other rights under the Loan Documents, at law, in equity or otherwise.

       No waiver of any default is a waiver of any other default. Bank's delay
in exercising any right or power under any Loan Document is not a waiver of
such right or power.

       Each Obligor severally waives notice, demand, presentment for payment,
notice of nonpayment, notice of intent to accelerate, notice of acceleration,
protest, notice of protest, and the filing of suit and diligence in collecting
this Note and all other demands and notices, and consents and agrees that its
liabilities and obligations will not be released or discharged by any or all of
the following, whether with or without notice to it or any other Obligor, and
whether before or after the stated maturity hereof: (i) extensions of the time
of payment; (ii) renewals; (iii) acceptances of partial payments; (iv) releases
or substitutions of any collateral or any Obligor; and (v) failure, if any, to
perfect or maintain perfection of any security interest in any collateral. Each
Obligor agrees that acceptance of any partial payment will not constitute a
waiver and that waiver of any default will not constitute waiver of any prior
or subsequent default.

       Where appropriate the neuter gender includes the feminine and the
masculine and the singular number includes the plural number.

       Borrower represents and agrees that: all Loans evidenced by this Note
are and will be for business, commercial, investment or other similar purpose
and not primarily for personal, family, or household use as


                               Page 3 of 5 Pages
<PAGE>   4
such terms are used in Chapter One of the Texas Credit Code. Borrower
represents and agrees that each of the following statements is true: (i) No
advances will be used primarily for agricultural purposes as such term is used
in the Texas Credit Code. (ii) No advances will be used for the purpose of
purchasing or carrying any margin stock as that term is defined in Regulation U
of the Board. Notwithstanding anything contained herein or in any other Loan
Document, if this is a consumer credit obligation (as defined or described in
12 C.F.R. 227, Regulation AA, promulgated by the Board), the security for this
credit obligation will not extend to any non-possessory security interest in
household goods (as defined in Regulation AA) other than a purchase money
security interest, and no waiver of any notice contained herein or therein will
extend to any waiver of notice prohibited by Regulation AA.

       Chapter 15 of the Texas Credit Code shall not apply to this Note or to
any Loan evidenced by this Note.

       (a) THIS NOTE IS GOVERNED BY TEXAS LAWS AND THE APPLICABLE LAWS OF THE
UNITED STATES OF AMERICA. To the maximum extent permitted by law, any
controversy or claim arising out of or relating to this Note, including but not
limited to any claim based on or arising from an alleged tort or an alleged
breach of any agreement contained in this Note, shall, at the request of any
party hereto (either before or after the commencement of judicial proceedings),
be settled by mandatory and binding arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association (the "AAA 
Rules" and pursuant to Title 9 of the United States Code, or if Title 9 does 
not apply, the Texas General Arbitration Act. In any arbitration proceeding: (i)
all statutes of limitations which would otherwise be applicable shall apply; and
(ii) the proceeding shall be conducted in Austin, Texas, by a single arbitrator
if the amount in controversy is $1 million or less, or by a panel of three
arbitrators if the amount in controversy (including but not limited to all
charges, principal, interest fees and expenses) is over $1 million. Arbitrators
are empowered to resolve any controversy by summary rulings substantially
similar to summary judgments and motions to dismiss. Arbitrators may order
discovery conducted in accordance with the Federal Rules of Civil Procedures.
All arbitrators will be selected by the process of appointment from a panel,
pursuant to the AAA Rules. Any award rendered in the arbitration proceeding will
be final and binding, and judgment upon any such award may be entered in any
court having jurisdiction.

       (b) If any party to this Note files a proceeding in any court to resolve
any controversy or claim, such action will not constitute a waiver of the right
of such party or a bar to the right of any other party to seek arbitration
under the provisions hereof or that of any other claim or controversy, and the
court shall, upon motion of any party to the proceeding, direct that the
controversy or claim be arbitrated in accordance herewith.

       (c) No provision of, or the exercise of any rights under, hereunder
shall limit or impair the right of any party hereto before, during or after any
arbitration proceeding to: (i) exercise self-help remedies including but not
limited to setoff or repossession; (ii) foreclose any lien on or security
interest in any collateral; or (iii) obtain relief from a court of competent
jurisdiction to prevent the dissipation, damage, destruction, transfer,
hypothecation, pledging or concealment of assets or collateral including, but
not limited to attachments, garnishments, sequestrations, appointments of
receivers, injunctions or other relief to preserve the status quo.

       (d) To the maximum extent permitted by applicable law and the AAA Rules,
neither Bank nor any Obligor or any Affiliate (as defined in the Credit
Agreement), officer, director, employee, attorney, or agent of either shall
have any liability with respect to, and Bank and each Obligor waives, releases,
and agrees not to sue any of them upon, any claim for any special, indirect,
incidental and consequential damages suffered or incurred by such person in
connection with, arising out of, or in any way related to, this Note or any of
the other Loan Documents. Each of Bank and each Obligor waives, releases, and
agrees not to sue each other or any of their Affiliates, officers, directors,
employees, attorneys, or agents for punitive damages in respect of any claim in
connection with, arising out of, or in any way related to, this Note or any of
the other Loan Documents, or any of the transactions contemplated by this Note
or any of the other Loan Documents. Nothing contained herein, however, shall be
construed as a waiver of any Obligor's or the Bank's right to compel
arbitration of disputes pursuant to subparagraphs (a) and (b), above.

       (e) Nothing herein shall be considered a waiver of the right or
protections afforded Bank by 12 U.S.C. 91, Texas Banking Code Art. 342-609 or
any similar statute.

       (f) Each party agrees that any other party may proceed against any other
liable person, jointly or severally, or against one or more of them, less than
all, without impairing rights against any other liable persons. A party shall
not be required to join the principal Obligor or any other liable persons
(e.g., sureties or guarantors) in any proceeding against any person. A party
may release or settle with one or more liable persons as the party deems fit
without releasing or impairing right to proceed against any persons not so
released.

       This Note is governed by Texas law. If any provision of this Note is
illegal or unenforceable, that illegality or unenforceability will not affect
the remaining provisions of this Note. BORROWER AND BANK AGREE THAT TRAVIS
COUNTY, TEXAS IS PROPER VENUE FOR ANY ACTION OR PROCEEDING BROUGHT BY BORROWER
OR BANK, WHETHER IN CONTRACT, TORT, OR OTHERWISE. ANY ACTION OR PROCEEDING
AGAINST BORROWER MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT IN SUCH COUNTY TO
THE EXTENT NOT PROHIBITED BY APPLICABLE LAW. TO THE EXTENT PERMITTED BY
APPLICABLE LAW BORROWER HEREBY IRREVOCABLY (A) SUBMITS TO THE NONEXCLUSIVE
JURISDICTION OF SUCH COURTS, AND (B) WAIVES ANY OBJECTION IT MAY NOW OR
HEREAFTER HAVE AS TO THE


                               Page 4 of 5 Pages
<PAGE>   5
VENUE OF ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT OR THAT ANY
SUCH COURT IS AN INCONVENIENT FORUM. BORROWER AGREES THAT SERVICE OF PROCESS
UPON IT MAY BE MADE BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED,
AT ITS ADDRESS SPECIFIED BELOW. BANK MAY SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW AND MAY BRING ANY ACTION OR PROCEEDING AGAINST BORROWER OR
WITH RESPECT TO ANY OF ITS PROPERTY IN COURTS IN OTHER PROPER JURISDICTIONS OR
VENUES.

       For purposes of this Note, any assignee or subsequent holder of this
Note will be considered the "Bank," and each successor to Borrower will be
considered the "Borrower."

       Each Borrower and cosigner represents that if it is not a natural
person, it is duly organized and validly existing and in good standing under
the laws of the state of its incorporation or organization; has full power to
own its properties and to carry on its business as now conducted; is duly
qualified to do business and is in good standing in each jurisdiction in which
the nature of the business conducted by it makes such qualification desirable;
and has not commenced any dissolution proceedings. Each Borrower and cosigner
that is subject to the Texas Revised Partnership Act ("TRPA") agrees that Bank
is not required to comply with Section 3.05(d) of the TRPA and agrees that Bank
may proceed directly against one or more partners or their property without
first seeking satisfaction from partnership property. Each Borrower and
cosigner represents that if it conducts business under an assumed business or
professional name it has properly filed Assumed Name Certificate(s) in the
office(s) required by Chapter 36 of the Texas Business and Commerce Code. Each
of the persons signing below as Borrower or cosigner represents that he/she has
full requisite power and authority to execute and deliver this Note to Bank on
behalf of the party for whom he/she signs and to bind such party to the terms
and conditions of this Note and that this Note is enforceable against such
party.

       NO COURSE OF DEALING BETWEEN BORROWER AND BANK, NO COURSE OF
PERFORMANCE, NO TRADE PRACTICES, AND NO EXTRINSIC EVIDENCE OF ANY NATURE MAY BE
USED TO CONTRADICT OR MODIFY ANY TERM OF THIS NOTE OR ANY OTHER LOAN DOCUMENT.

       THIS NOTE AND THE OTHER WRITTEN LOAN DOCUMENTS REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

       IN WITNESS WHEREOF, Borrower has executed this Note effective the day,
month and year first aforesaid.



                                    BORROWER: XETEL CORPORATION

                                         By:  /s/ RICHARD S. CHILINSKI          
                                             -----------------------------------
                                         Name:  Richard S. Chilinski            
                                               ---------------------------------
                                         Title: Vice President, Chief Financial
                                                Officer and Assistant Secretary 
                                                --------------------------------



(Bank's signature is provided as its acknowledgment of the above as the final
written agreement between the parties and as its agreement with each Borrower
subject to TRPA that Bank is not required to comply with Section 3.05(d) of
TRPA.)

TEXAS COMMERCE BANK NATIONAL ASSOCIATION

By:  /s/ RALPH T. BEASLEY           
    --------------------------------
Name:  Ralph T. Beasley             
      ------------------------------
Title:  Vice President              
       -----------------------------





                               Page 5 of 5 Pages
<PAGE>   6
                                CREDIT AGREEMENT
                                (BORROWING BASE)

THIS CREDIT AGREEMENT (as amended, restated and supplemented from time to time,
this "Agreement") by and between XETEL CORPORATION ("Borrower") and TEXAS
COMMERCE BANK NATIONAL ASSOCIATION ("Bank") is dated as of August 23, 1996 (the
"Effective Date").

1. THE LOAN.

     REVOLVING CREDIT NOTE 1.1 Subject to the terms and conditions hereof, Bank
agrees to make loans ("Loan" or "Loans") to Borrower from time to time before
the Termination Date, not to exceed at any one time outstanding the lesser of
the Borrowing Base or $7,000,000.00 (the "Commitment"). Borrower has the right
to borrow, repay and reborrow. Each Loan and each repayment must be at least the
minimum amount required in the Note. The Loans may only be used for supporting
Borrower's accounts receivable and inventory. Chapter 15 of the Texas Credit
Code will not apply to this Agreement, the Note or any Loan. The Loans will be
evidenced by, and will bear interest and be payable as provided in, the
promissory note of Borrower dated the Effective Date (together with any and all
renewals, extensions, modifications and replacements thereof and substitutions
therefor, the "Note"). "Termination Date" means the earlier of: (a) August 31,
1998; or (b) the date specified by Bank pursuant to Section 6.1 hereof.

     BORROWING BASE 1.2 The Borrowing Base will be the amount shown as the
BORROWING BASE on the most recent Borrowing Base Report, subject to verification
by Bank and calculated using the eligibility criteria, borrowing base factors
and dollar ceilings for various components specified in the attached Exhibit A,
incorporated herein by reference.

     REQUIRED PAYMENT 1.3 If the unpaid amount of the Loan at any time exceeds
the Borrowing Base then in effect, Borrower must make a payment on the Note in
an amount sufficient to reduce the unpaid principal balance of the Note to an
amount no greater than the Borrowing Base. Such payment shall be accompanied by
any prepayment charge required by the Note and shall be due concurrently with
the Borrowing Base Report.

     COMMITMENT FEE 1.4 Borrower will pay a commitment fee (computed on the
basis of the actual number of days elapsed in a year comprised of 360 days) of
one-eighth of one percent (1/8%) per annum on the daily average difference
between the Commitments and the principal balance of the Note, from the date
hereof to the Termination Date. The Commitment fee is due and payable quarterly
in arrears beginning on September 30, 1996.

     PAST DUE AMOUNTS 1.5 Each amount due to Bank in connection with the Loan
Documents will bear interest from its due date until paid at the Highest Lawful
Rate unless the applicable Loan Document provides otherwise.

2. CONDITIONS PRECEDENT.

     ALL LOANS 2.1 Bank is not obligated to make any Loan unless: (a) Bank has
received the following, duly executed and in Proper Form: (1) a Request for
Loan, substantially in the form of Exhibit B, within the time required in the
Note; provided however, Bank may accept and act upon verbal advance requests
received from Borrower's representative reasonably believed by Bank to be
authorized to make such requests; (2) a Borrowing Base Report within the time
required by this Agreement; and (3) such other documents as Bank reasonably may
require; (b) no Event of Default exists; and (c) the making of the Loan is not
prohibited by, or subjects Bank to any penalty or onerous condition under any
Legal Requirement.

     FIRST LOAN 2.2 In addition to the matters described in the preceding
section, Bank will not be obligated to make the first Loan unless: (i) Bank has
received all of the Loan Documents specified on Annex I in Proper Form; and (ii)
Bank has completed a satisfactory field audit of Borrower's inventory.

3. REPRESENTATIONS AND WARRANTIES. To induce Bank to enter into this Agreement
and to make the Loans, Borrower represents and warrants as of the Effective
Date and the date of each request for a Loan that each of the following
statements is and shall remain true and correct throughout the term of this
Agreement:

     ORGANIZATION AND STATUS 3.1 Borrower and each Subsidiary of Borrower is
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization; has all power and authority to conduct its
business as presently conducted, and is duly qualified to do business and in
good standing in each jurisdiction in which the nature of the business conducted
by it makes such qualification desirable. Borrower has no Subsidiary other than
those listed on Annex II and each Subsidiary is owned by Borrower in the
percentage set forth on Annex II. If Borrower is subject to the Texas Revised
Partnership





                               Page 1 of 9 Pages
<PAGE>   7
Act ("TRPA"), Borrower agrees that Bank is not required to comply with Section
3.05(d) of TRPA and agrees that Bank may proceed directly against one or more
partners or their property without first seeking satisfaction from partnership
property.

       FINANCIAL STATEMENTS 3.2 All financial statements delivered to Bank are
complete and correct and fairly present, in accordance with generally accepted
accounting principles, consistently applied ("GAAP"), the financial condition
and the results of operations of Borrower and each Subsidiary of Borrower as at
the dates and for the periods indicated. No material adverse change has
occurred in the financial condition of the Borrower since the dates of such
financial statements. Neither Borrower nor any Subsidiary of Borrower is
subject to any instrument or agreement materially and adversely affecting its
financial condition, business or affairs.

       ENFORCEABILITY 3.3 The Loan Documents are legal, valid and binding
obligations of the Parties enforceable in accordance with their respective
terms, except as may be limited by bankruptcy, insolvency and other similar
laws affecting creditors' rights generally. The execution, delivery and
performance of the Loan Documents have all been duly authorized by all
necessary action; are within the power and authority of the Parties; do not and
will not violate any Legal Requirement, the Organizational Documents of the
Parties or any agreement or instrument binding or affecting the Parties or any
of their respective Property.

       COMPLIANCE 3.4 Borrower and each Subsidiary of Borrower has filed all
applicable tax returns and paid all taxes shown thereon to be due, except those
for which extensions have been obtained and those which are being contested in
good faith and for which adequate reserves have been established. Borrower and
each Subsidiary of Borrower is in compliance with all applicable Legal
Requirements and manages and operates (and will continue to manage and operate)
its business in accordance with good industry practices. Neither Borrower nor
any Subsidiary of Borrower is in default in the payment of any other
indebtedness or under any agreement to which it is a party. The Parties have
obtained all consents of and registered with all Governmental Authorities or
other Persons required to execute, deliver and perform the Loan Documents.

       LITIGATION 3.5 Except as previously disclosed to Bank in writing, there
is no litigation or administrative proceeding pending or, to the knowledge of
Borrower, threatened against, nor any outstanding judgment, order or decree
affecting Borrower or any Subsidiary of Borrower before or by any Governmental
Authority.

       TITLE AND RIGHTS 3.6 Borrower and each Subsidiary of Borrower has good
and marketable title to its Property, free and clear of any Lien except for
Liens permitted by this Agreement and the other Loan Documents. Except as
otherwise expressly stated in the Loan Documents or permitted by this
Agreement, the Liens of the Loan Documents will constitute valid and perfected
first and prior Liens on the Property described therein, subject to no other
Liens whatsoever. Borrower and each Subsidiary of Borrower possesses all
permits, licenses, patents, trademarks and copyrights required to conduct its
business. All easements, rights-of-way and other rights necessary to maintain
and operate Borrower's Property have been obtained and are in full force and
effect.

       REGULATION U; BUSINESS PURPOSE 3.7 None of the proceeds of any Loan will
be used to purchase or carry, directly or indirectly, any margin stock or for
any other purpose which would make this credit a "purpose credit" within the
meaning of Regulation U of the Board of Governors of the Federal Reserve
System. All Loans will be used for business, commercial, investment or other
similar purpose and not primarily for personal, family, or household use or
primarily for agricultural purposes as such terms are used in Chapter One of
the Texas Credit Code.

       ENVIRONMENT 3.8 To the best knowledge of the Borrower, the Borrower and
each Subsidiary of Borrower have complied with applicable Legal Requirements in
each instance in which any of them have generated, handled, used, stored or
disposed of any hazardous or toxic waste or substance, on or off its premises
(whether or not owned by any of them). Neither Borrower nor any Subsidiary of
Borrower has any material contingent liability for non-compliance with
environmental or hazardous waste laws. Neither Borrower nor any Subsidiary of
Borrower has received any notice that it or any of its Property or operations
does not comply with, or that any Governmental Authority is investigating its
compliance with, any environmental or hazardous waste laws.

       INVESTMENT COMPANY ACT/PUBLIC UTILITY HOLDING COMPANY ACT 3.9 Neither
Borrower nor any Subsidiary of Borrower is an "investment company" within the
meaning of the Investment Company Act of 1940 or a "holding company" or an
"affiliate" of a "holding company" or a "public utility" within the meaning of
the Public Utility Holding Company Act of 1935, as amended.





                               Page 2 of 9 Pages
<PAGE>   8
       STATEMENTS BY OTHERS 3.10 All statements made by or on behalf of
Borrower, any Subsidiary of Borrower or any other of the Parties in connection
with any Loan Document constitute the representation and warranty of Borrower
hereunder.

4. AFFIRMATIVE COVENANTS. Borrower agrees to do, and if necessary cause to be
done, and cause its Subsidiaries to do, each of the following:

       CORPORATE FUNDAMENTALS 4.1 (a) Pay when due all taxes and governmental
charges of every kind upon it or against its income, profits or Property,
unless and only to the extent that the same shall be contested in good faith
and adequate reserves have been established therefor; (b) Renew and keep in
full force and effect all of its licenses, permits and franchises; (c) Do all
things necessary to preserve its corporate existence and its qualifications and
rights in all jurisdictions where such qualification is necessary or desirable;
(d) Comply with all applicable Legal Requirements; and (e) Protect, maintain
and keep in good repair its Property and make all replacements and additions to
its Property as may be reasonably necessary to conduct its business properly
and efficiently.

       INSURANCE 4.2 Maintain insurance with such reputable financially sound
insurers, on such of its Property and personnel, in such amounts and against
such risks as is customary with similar Persons or as may be reasonably
required by Bank, and furnish Bank satisfactory evidence thereof promptly upon
request. These insurance provisions are cumulative of the insurance provisions
of the other Loan Documents. With regard to 25% of Borrower's eligible
inventory as set forth in the Borrowing Base Report: Bank must be named as a
beneficiary, loss payee or additional insured of such insurance and Borrower
must provide Bank with copies of the policies of insurance and a certificate of
the insurer that the insurance required by this section may not be canceled,
reduced or affected in any manner without 30 days' prior written notice to
Bank.

       FINANCIAL INFORMATION/BORROWING BASE REPORT 4.3 Furnish to Bank in
Proper Form (i) the financial statements prepared in conformity with GAAP on
consolidated and consolidating bases and the other information described in,
and within the times required by, Exhibit C, Reporting Requirements, Financial
Covenants and Compliance Certificate attached hereto and incorporated herein by
reference; (ii) the Borrowing Base Report substantially in the form of, and
within the time required by, Exhibit A along with the other information
required by Exhibit A to be submitted; (iii) within the time required by
Exhibit C, Exhibit C signed and certified by the chief financial officer or
president of Borrower; (iv) promptly after such request is submitted to the
appropriate Governmental Authority, any request for waiver of funding standards
or extension of amortization periods with respect to any employee benefit plan;
and (v) such other information relating to the financial condition and affairs
of the Borrower and guarantors and their Subsidiaries as Bank may reasonably
request from time to time in its discretion.

       MATTERS REQUIRING NOTICE 4.4 Notify Bank immediately, upon acquiring
knowledge of (a) the institution or threatened institution of any material
lawsuit or administrative proceeding which, if adversely determined, might
materially adversely affect Borrower; (b) any material adverse change in the
assets, liabilities, financial condition, business or affairs of Borrower; (c)
any Event of Default; or (d) any reportable event or any prohibited transaction
in connection with any employee benefit plan.

       INSPECTION 4.5 Permit Bank and its affiliates to inspect and photograph
its Property, to examine and copy its files, books and records, and to discuss
its affairs with its officers and accountants, at such times and intervals and
to such extent as Bank reasonably desires.

       ASSURANCES 4.6 Promptly execute and deliver any and all further
agreements, documents, instruments, and other writings that Bank may request to
cure any defect in the execution and delivery of any Loan Document or more
fully to describe particular aspects of the agreements set forth or intended to
be set forth in the Loan Documents.

       CERTAIN CHANGES 4.7 Notify Bank at least 30 days prior to the date that
any of the Parties changes its name or the location of its chief executive
office or principal place of business or the place where it keeps its books and
records or the location of any of the Collateral.

       EXHIBIT C 4.8 Comply with each of the other affirmative covenants set
forth in Exhibit C.

5. NEGATIVE COVENANTS. The Borrower will not, and no Subsidiary of Borrower
will:

       INDEBTEDNESS 5.1 Except as approved by the Bank in writing, create,
incur, or permit to exist, or assume or guarantee, directly or indirectly, or
become or remain liable with respect to, any Indebtedness, contingent or
otherwise unless there is a permitted amount set forth in Exhibit C, except: (a)
Indebtedness to Bank, or secured by Liens permitted by this Agreement, (b)
Indebtedness otherwise approved in writing by





                               Page 3 of 9 Pages
<PAGE>   9
Bank, and renewals and extensions (but not increases) thereof; (c) current
accounts payable and unsecured current liabilities, not the result of
borrowing, to vendors, suppliers and Persons providing services, for
expenditures for goods and services normally required by it in the ordinary
course of business and on ordinary trade terms; (d) operating leases incurred
during the ordinary course of business; (e) Indebtedness associated with an
acquired entity or Subsidiary as defined in Section 8, and (f) certain loans
from Rohm U.S.A., Inc. which are approved by the Bank in writing from time to
time.

       LIENS 5.2 Create or permit to exist any Lien upon any of the Collateral,
whether now owned or hereafter acquired; or in any manner directly or
indirectly sell, assign, pledge or otherwise transfer any of its accounts or
other Collateral, except: (a) Liens, not for borrowed money, arising in the
ordinary course of business; (b) Liens for taxes not delinquent or being
contested in good faith by appropriate proceedings; (c) Liens in effect on the
date hereof and disclosed to Bank in writing, so long as neither the
indebtedness secured thereby nor the Property covered thereby increases; (d)
Liens in favor of Bank, or otherwise approved in writing by Bank.
Notwithstanding anything to the contrary herein, Borrower will not, and no
Subsidiary of Borrower will permit any Lien on any accounts receivable and
inventory that secures the Loans unless Bank shall provide Borrower with Bank's
prior written consent; and (e) Liens assumed by Borrower resulting from mergers
and acquisitions.

       FINANCIAL AND OTHER COVENANTS 5.3 Fail to comply with the required
financial covenants and other covenants described, and calculated as set forth,
in Exhibit C. Unless otherwise provided on Exhibit C, all such amounts and
ratios will be calculated: (a) on the basis of GAAP; and (b) on a consolidated
basis. Compliance with the requirements of Exhibit C will be determined as of
the dates of the financial statements to be provided to Bank.

       CORPORATE CHANGES 5.4 Unless approved by the Bank in writing, in any
single transaction, directly or indirectly: (a) liquidate or dissolve; (b) be a
party to any merger or consolidation affecting more than 10% of the Borrower's
total assets; (c) sell or dispose of any interest in any of its Subsidiaries
affecting more than 10% of the Borrower's total assets, or permit any of its
Subsidiaries to issue any additional equity other than to Borrower; (d) sell,
convey or lease all or any substantial part of its assets, except for sale of
inventory or equipment in the ordinary course of business; or (e) materially
change the number of outstanding shares of Borrower.

       RESTRICTED PAYMENTS 5.5 Unless otherwise permitted on Exhibit C, at any
time declare or pay any dividend (except stock dividends and dividends paid to
Borrower).

       NATURE OF BUSINESS 5.6 Change the nature of its business or enter into
any business which is substantially different from the business in which it is
presently engaged.

       AFFILIATE TRANSACTIONS 5.7 Enter into any transaction or agreement with
any Affiliate which might materially affect the Borrower's financial condition
except upon terms substantially similar to those obtainable from wholly
unrelated sources. Note: This provision does not apply for transactions with
management of the Borrower which do not materially affect the Borrower's
financial condition.

       SUBSIDIARIES 5.8 Form, create, acquire or divest of any Subsidiary if
the total purchase price or sales price of any proposed acquisition or sale of
Subsidiary exceeds 10% of the total dollar amount of assets of Borrower or the
cash portion of the purchase price or sales price exceeds $3,000,000.00.

       LOANS AND INVESTMENTS 5.9 Unless otherwise provided on Exhibit C, make
any advance, loan, extension of credit, or capital contribution to or investment
in, or purchase, any stock, bonds, notes, debentures, or other securities of,
any Person, except: (a) readily marketable direct obligations of the United
States of America or any agency thereof with maturities of two years or less
from the date of acquisition; (b) fully insured certificates of deposit with
maturities of one year or less from the date of acquisition issued by any
commercial bank operating in the United States of America having capital and
surplus in excess of $50,000,000.00; (c) commercial paper of a domestic issuer
if at the time of purchase such paper is rated in one of the two highest rating
categories of Standard and Poor's Corporation or Moody's Investors Service; (d)
money market mutual funds that invest in items of the type described in (a), (b)
and (c) above; and (e) financial instruments purchased from the loan
participation programs of either the Bank or Chase Securities, Inc. provided
that the instruments purchased through such program are obligations of
borrower's which have a rating in one of the two highest rating categories of
Standard and Poor's Corporation or Moody's Investors Service.

6. EVENTS OF DEFAULT AND REMEDIES.

       EVENTS OF DEFAULT 6.1 Each of the following is an "Event of Default":

              (a) Any Obligor fails to pay any principal of or interest on the
       Note or any other obligation under any Loan Document as and when due; or





                               Page 4 of 9 Pages
<PAGE>   10
              (b) Any Obligor or any Subsidiary of Borrower fails to pay at
       maturity, or within any applicable period of grace, any principal of or
       interest on any other borrowed money obligation or fails to observe or
       perform any term, covenant or agreement contained in any agreement or
       obligation by which it is bound; or

              (c) Any material representation or warranty made in connection
       with any Loan Document was incorrect, false or misleading when made; or

              (d) Any Obligor violates any covenant contained in any Loan
       Document; or

              (e) An event of default occurs under any other Loan Document; or

              (f) Final judgment for the payment of money is rendered against
       Obligor or any Subsidiary of Borrower and remains undischarged for a
       period of 30 days during which execution is not effectively stayed; or

              (g) The sale, encumbrance or abandonment (except as otherwise
       expressly permitted by this Agreement) of any of the Collateral or the
       making of any levy, seizure, garnishment, sequestration or attachment
       thereof or thereon; or the loss, theft, substantial damage, or
       destruction of any material portion of such Collateral which is not
       covered by insurance proceeds for which the Bank is shown as loss payee;
       or

              (h) Any order is entered in any proceeding against Borrower or
       any Subsidiary of Borrower decreeing the dissolution, liquidation or
       split-up thereof, and such order shall remain in effect for 30 days; or

              (i) Any Obligor or any subsidiary of Borrower makes a general
       assignment for the benefit of creditors or shall petition or apply to
       any tribunal for the appointment of a trustee, custodian, receiver or
       liquidate of all or any substantial part of its business, estate or
       assets or shall commence any proceeding under any bankruptcy,
       insolvency, dissolution or liquidation law of any jurisdiction, whether
       now or hereafter in effect; or any such petition or application shall be
       filed or any such proceeding shall be commenced against any Obligor or
       any subsidiary of Borrower and the Obligor or such subsidiary by any act
       or omission shall indicate approval thereof, consent thereto or
       acquiescence therein, or an order shall be entered appointing a trustee,
       custodian, receiver or liquidator of all or any substantial part of the
       assets of any Obligor or any subsidiary of Borrower or granting relief
       to any Obligor or any subsidiary of Borrower or approving the petition
       in any such proceeding, and such order shall remain in effect for more
       than 30 days; or any Obligor or any subsidiary of Borrower shall fail
       generally to pay its debts as they become due or suffer any writ of
       attachment or execution or any similar process to be issued or levied
       against it or any substantial part of its property which is not
       released, stayed, bonded or vacated within 30 days after its issue or
       levy; or

              (j) Any Obligor or any Subsidiary of Borrower conceals or
       removes any part of its Property, with intent to hinder, delay or
       defraud any of its creditors, makes or permits a transfer of any of its
       Property which may be fraudulent under any bankruptcy, fraudulent
       conveyance or similar law; or makes any transfer of its Property to or
       for the benefit of a creditor at a time when other creditors similarly
       situated have not been paid; or

              (k) A material adverse change occurs in the financial condition
       of the Borrower or of any Obligor or any Subsidiary of Borrower; or

              (l) Any individual Obligor dies or any Obligor that is not an
       individual dissolves.

       IF ANY EVENT OF DEFAULT OCCURS, then Bank may do any or all of the
following: (1) declare the Obligations to be immediately due and payable
without notice of acceleration or of intention to accelerate, presentment and
demand or protest, all of which are hereby expressly waived; (2) without notice
to any Obligor, terminate the Commitment and accelerate the Termination Date;
(3) set off, in any order, against the indebtedness of Borrower under the Loan
Documents any debt owing by Bank to Borrower (whether such debt is owed
individually or jointly), including, but not limited to, any deposit account,
which right is hereby granted by Borrower to Bank; and (4) exercise any and all
other rights pursuant to the Loan Documents, at law, in equity or otherwise.

       REMEDIES CUMULATIVE 6.2 No remedy, right or power of Bank is exclusive
of any other remedy, right or power now or hereafter existing by contract, at
law, in equity, or otherwise, and all remedies, rights and powers are
cumulative.

7. MISCELLANEOUS.

       NO WAIVER 7.1 No waiver of any default or Event of Default will be a
waiver of any other default or Event of Default. No failure to exercise or
delay in exercising any right or power under any Loan Document will be a waiver
thereof, nor shall any single or partial exercise of any such right or power
preclude any further or other exercise thereof or the exercise of any other
right or power. The making of any Loan during either the existence of any
default or Event of Default, or subsequent to the occurrence of an Event of
Default will not be a waiver of any such default or Event of Default. No
amendment, modification or waiver of any Loan Document will be effective unless
the same is in writing and signed by the Person against whom such amendment,
modification or waiver is sought to be enforced. No notice to or demand on any
Person shall entitle any Person to any other or further notice or demand in
similar or other circumstances.

       NOTICES 7.2 All notices required under the Loan Documents shall be in
writing and either delivered against receipt therefor, or mailed by registered
or certified mail, return receipt requested, in each case addressed to the
address shown on the signature page hereof or to such other address as a party
may designate. Except for the notices required by Section 2.1, which shall be
given only upon actual receipt by Bank, notices shall be deemed to have been
given (whether actually received or not) when delivered (or, if mailed, on the
next Business Day).





                               Page 5 of 9 Pages
<PAGE>   11
       GOVERNING LAW/ARBITRATION 7.3 (a) UNLESS OTHERWISE SPECIFIED THEREIN,
EACH LOAN DOCUMENT IS GOVERNED BY TEXAS LAWS AND THE APPLICABLE LAWS OF THE
UNITED STATES OF AMERICA. To the maximum extent permitted by law, any
controversy or claim arising out of or relating to the Loans or any Loan
Document, including but not limited to any claim based on or arising from an
alleged tort or an alleged breach of any agreement contained in any of the Loan
Documents, shall, at the request of any party to the Loan or Loan Documents
(either before or after the commencement of judicial proceedings), be settled
by mandatory and binding arbitration in accordance with the Commercial
Arbitration Rules of the American Arbitration Association (the "AAA Rules") and
pursuant to Title 9 of the United States Code, or if Title 9 does not apply,
the Texas General Arbitration Act. In any arbitration proceeding: (i) all
statutes of limitations which would otherwise be applicable shall apply; and
(ii) the proceeding shall be conducted in Austin, Texas, by a single arbitrator
if the amount in controversy is $1 million or less, or by a panel of three
arbitrators if the amount in controversy (including but not limited to all
charges, principal, interest fees and expenses) is over $1 million. Arbitrators
are empowered to resolve any controversy by summary rulings substantially
similar to summary judgments and motions to dismiss. Arbitrators may order
discovery conducted in accordance with the Federal Rules of Civil Procedures.
All arbitrators will be selected by the process of appointment from a panel,
pursuant to the AAA Rules. Any award rendered in the arbitration proceeding
will be final and binding, and judgment upon any such award may be entered in
any court having jurisdiction.

       (b) If any party to the Loan or Loan Documents files a proceeding in any
court to resolve any controversy or claim, such action will not constitute a
waiver of the right of such party or a bar to the right of any other party to
seek arbitration under the provisions of this Section or that of any other
claim or controversy, and the court shall, upon motion of any party to the
proceeding, direct that the controversy or claim be arbitrated in accordance
with this Section.

       (c) No provision of, or the exercise of any rights under, this Section
shall limit or impair the right of any party to the Loan Documents before,
during or after any arbitration proceeding to: (i) exercise self-help remedies
including but not limited to setoff or repossession; (ii) foreclose any Lien on
or security interest in any Collateral; or (iii) obtain relief from a court of
competent jurisdiction to prevent the dissipation, damage, destruction,
transfer, hypothecation, pledging or concealment of assets or Collateral
including, but not limited to attachments, garnishments, sequestrations,
appointments of receivers, injunctions or other relief to preserve the status
quo.

       (d) To the maximum extent permitted by applicable law and the AAA Rules,
neither Bank nor any Obligor or any Affiliate, officer, director, employee,
attorney, or agent of either shall have any liability with respect to, and Bank
and each Obligor waives, releases, and agrees not to sue any of them upon, any
claim for any special, indirect, incidental and consequential damages suffered
or incurred by such Person in connection with, arising out of, or in any way
related to, this Agreement or any of the other Loan Documents. Each of Bank and
each Obligor waives, releases, and agrees not to sue each other or any of their
Affiliates, officers, directors, employees, attorneys, or agents for punitive
damages in respect of any claim in connection with, arising out of, or in any
way related to, this Agreement or any of the other Loan Documents, or any of
the transactions contemplated by this Agreement or any of the other Loan
Documents. Nothing contained herein, however, shall be construed as a waiver of
any Obligor's or the Bank's right to compel arbitration of disputes pursuant to
subparagraphs (a) and (b), above.

       (e) Nothing herein shall be considered a waiver of the right or
protections afforded Bank by 12 U.S.C. 91, Texas Banking Code Art. 342-609 or
any similar statute.

       (f) Each party agrees that any other party may proceed against any other
liable Person, jointly or severally, or against one or more of them, less than
all, without impairing rights against any other liable Persons. A party shall
not be required to join the principal Obligor or any other liable Persons (e.g.,
sureties or guarantors) in any proceeding against any Person. A party may
release or settle with one or more liable Persons as the party deems fit without
releasing or impairing right to proceed against any Persons not so released.

       SURVIVAL; PARTIES BOUND; TERM OF AGREEMENT 7.4 All representations,
warranties, covenants and agreements made by or on behalf of Borrower in
connection with the Loan Documents will survive the execution and delivery of
the Loan Documents; will not be affected by any investigation made by any
Person, and will bind Borrower and the successors, trustees, receivers and
assigns of Borrower and will benefit the successors and assigns of the Bank;
provided that Bank's agreement to make Loans to Borrower will not inure to the
benefit of any successor or assign of Borrower except for an approved merger or
business combination. Except as otherwise provided herein, the term of this
Agreement will be until the later of the final maturity of the Note and the
full and final payment of all Obligations and all amounts due under the Loan
Documents.

       DOCUMENTARY MATTERS 7.5 This Agreement may be executed in several
identical counterparts, on separate counterparts; each counterpart will
constitute an original instrument, and all separate counterparts will
constitute but one and the same instrument. The headings and captions in the
Loan Documents have been included solely for convenience and should not be
considered in construing the Loan Documents. If any provision of any Loan
Document is invalid, illegal or unenforceable in any respect under any
applicable





                               Page 6 of 9 Pages
<PAGE>   12
law, the remaining provisions will remain effective. The Loans and all other
obligations and indebtedness of Borrower to Bank are entitled to the benefit of
the Loan Documents.

       EXPENSES 7.6 Any provision to the contrary notwithstanding, and whether
or not the transactions contemplated by this Agreement are consummated,
Borrower agrees to pay on demand all reasonable, direct out-of-pocket expenses
(including, without limitation, the fees and expenses of counsel for Bank) in
connection with the negotiation, preparation, execution, filing, recording,
modification, supplementing and waiver of the Loan Documents and the making,
servicing and collection of the Loans. Notwithstanding anything contained
herein to the contrary, Borrower shall not pay more than $1,500.00 for any
single, annual field analysis of Borrower's assets. Borrower agrees to pay
Bank's standard Documentation Preparation and Processing Fee for preparation,
negotiation and handling of this Agreement not to exceed the amount of
$1,500.00. The obligations of the Borrower under this and the Following section
will survive the termination of this Agreement.

       INDEMNIFICATION 7.7 THE BORROWER AGREES TO INDEMNIFY, DEFEND AND HOLD
BANK HARMLESS FROM AND AGAINST ANY AND ALL LOSS, LIABILITY, OBLIGATION, DAMAGE,
PENALTY, JUDGMENT, CLAIM, DEFICIENCY AND EXPENSE (INCLUDING INTEREST,
PENALTIES, ATTORNEYS' FEES AND AMOUNTS PAID IN SETTLEMENT) TO WHICH THE BANK
MAY BECOME SUBJECT ARISING OUT OF OR BASED UPON THE LOAN DOCUMENTS, OR ANY
LOAN, EXCEPT THAT RESULTING FROM BANK'S OWN NEGLIGENCE.

       USURY NOT INTENDED 7.8 Borrower and Bank intend to conform strictly to
applicable usury laws. Therefore, the total amount of interest (as defined
under applicable law) contracted for, charged or collected under this Agreement
or any other Loan Document will never exceed the Highest Lawful Rate. If Bank
contracts for, charges or receives any excess interest, it will be deemed a
mistake. Bank will automatically reform the Loan Document or charge to conform
to applicable law, and if excess interest has been received, Bank will either
refund the excess to Borrower or credit the excess on any unpaid principal
amount of the Note or any other Loan Document. All amounts constituting
interest will be spread throughout the full term of the Loan Document or
applicable Note in determining whether interest exceeds lawful amounts.

       NO COURSE OF DEALING 7.9 NO COURSE OF DEALING BY BORROWER WITH BANK, NO
COURSE OF PERFORMANCE AND NO TRADE PRACTICES OR OTHER EXTRINSIC EVIDENCE OF ANY
NATURE MAY BE USED TO CONTRADICT, VARY, SUPPLEMENT OR MODIFY ANY TERM OF THIS
AGREEMENT.

8. DEFINITIONS. Unless the context otherwise requires, capitalized terms used
in Loan Documents and not defined elsewhere shall have the meanings provided by
GAAP, except as follows:

              Affiliate means, as to any Person, any other Person (a) that
       directly or indirectly, through one or more intermediaries, controls or
       is controlled by, or is under common control with, such Person; (b) that
       directly or indirectly beneficially owns or holds five percent (5%) or
       more of any class of voting stock of such Person; or (c) five percent
       (5%) or more of the voting stock of which is directly or indirectly
       beneficially owned or held by the Person in question. The "control"
       means to possess, directly or indirectly, the power to direct the
       management and policies of a Person, whether through the ownership of
       voting securities, by contract, or otherwise. Bank is not under any
       circumstances to be deemed an Affiliate of Borrower or any of its
       Subsidiaries.

              Authority Documents means certificates of authority to transact
       business, certificates of good standing, borrowing resolutions (with
       secretary's certificate), secretary's certificates of incumbency, and
       other documents which empower and enable Borrower or its representatives
       to enter into agreements evidenced by Loan Documents or evidence such
       authority.

              Business Day means a day when the main office of Bank is open for
       the conduct of commercial lending business.

              Collateral means all Property, tangible or intangible, real,
       personal or mixed, now or hereafter subject to Security Documents, or
       intended so to be.

              Corporation means corporations, partnerships, limited liability
       companies, joint ventures, joint stock associations, associations,
       banks, business trusts and other business entities.

              Government Accounts means receivables owed by the U.S. government
       or by the government of any state, county, municipality, or other
       political subdivision as to which Bank's security interest or ability to
       obtain direct payment of the proceeds is governed by any federal or
       state statutory requirements other than those of the Uniform Commercial
       Code, including, without limitation, the Federal Assignment of Claims
       Act of 1940, as amended.

              Governmental Authority means any foreign governmental authority,
       the United States of America, any state of the United States and any
       political subdivision of any of the foregoing, and any agency,
       department, commission, board, bureau, court or other tribunal having
       jurisdiction over Bank or any Obligor, or any Subsidiary of Borrower or
       their respective Property.

              Highest Lawful Rate means the maximum rate of interest permitted
       to be charged by applicable Federal or Texas law (whichever permits the
       higher lawful rate) from time to time in effect. If Chapter One





                               Page 7 of 9 Pages
<PAGE>   13
       of the Texas Credit Code establishes the Highest Lawful Rate, the
       Highest Lawful Rate is the "indicated rate ceiling" as defined in that
       Chapter.

              Indebtedness means and includes (a) all items which in accordance
       with GAAP would be included on the liability side of a balance sheet,
       including but not limited to capital leases, on the date as of which
       Indebtedness is to be determined (excluding capital stock, surplus,
       surplus reserves and deferred credits); (b) all guaranties, endorsements
       and other contingent obligations in respect of, or any obligations to
       purchase or otherwise acquire, Indebtedness of others, and (c) all
       Indebtedness secured by any Lien existing on any interest of the Person
       with respect to which indebtedness is being determined, in Property
       owned subject to such Lien, whether or not the Indebtedness secured
       thereby has been assumed.

              Legal Requirement means any law, ordinance, decree, requirement,
       order, judgment, rule, regulation (or interpretation of any of the
       foregoing) of, and the terms of any license or permit issued by, any
       Governmental Authority.

              Lien shall mean any mortgage, pledge, charge, encumbrance,
       security interest, collateral assignment or other lien or restriction of
       any kind, whether based on common law, constitutional provision, statute
       or contract.

              Loan Documents means this Agreement, the agreements, documents,
       instruments and other writings contemplated by this Agreement or listed
       on Annex I, all other assignments, deeds, guaranties, pledges,
       instruments, certificates and agreements now or hereafter executed or
       delivered to the Bank pursuant to any of the foregoing, and all
       amendments, modifications, renewals, extensions, increases and
       rearrangements of, and substitutions for, any of the foregoing.

              Obligations means all principal, interest and other amounts which
       are or become owing under this Agreement, the Note or any other Loan
       Document.

              Obligor means each Borrower and any guarantor, surety, co-signer,
       general partner or other person who may now or hereafter be obligated to
       pay all or any part of the Obligations.

              Organizational Documents means, with respect to a corporation,
       the certificate of incorporation, articles of incorporation and bylaws
       of such corporation; with respect to a limited liability company, the
       articles of organization, regulations and other documents establishing
       such entity, with respect to a partnership, joint venture, or trust, the
       agreement, certificate or instrument establishing such entity; in each
       case including all modifications and supplements thereof as of the date
       of the Loan Document referring to such Organizational Document and any
       and all future modifications thereof which are consented to by Bank.

              Parties means all Persons other than Bank executing any Loan
       Document.

              Person means any individual, Corporation, trust, unincorporated
       organization, Governmental Authority or any other form of entity.

              Proper means in form and substance satisfactory to the Bank.

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

              Security Documents means those Security Agreements listed on
       Annex I and all supplements, modifications, amendment, extensions
       thereof and all other agreements hereafter executed and delivered to
       Bank to secure the Loans.

              Subordinated Debt means any Indebtedness subordinated to
       Indebtedness due Bank pursuant to a written subordination agreement in
       Proper Form by and among Bank, subordinated creditor and Borrower which
       at a minimum must prohibit: (a) any action by subordinated creditor
       which will result in an occurrence of an Event of Default or default
       under this Agreement, the subordination agreement or the subordinated
       Indebtedness; and (b) upon the happening of any Event of Default or
       default under any Loan Document, the subordination agreement, or any
       instrument evidencing the subordinated Indebtedness (i) any payment of
       principal and interest on the subordinated Indebtedness; (ii) any act to
       compel payment of principal or interest on subordinated Indebtedness;
       and (iii) any action to realize upon any Property securing the
       subordinated Indebtedness.

              Subsidiary means, as to a particular parent Corporation, any
       Corporation of which 50% or more of the indicia of equity rights is at
       the time directly or indirectly owned by such parent Corporation or by
       one or more Persons controlled by, controlling or under common control
       with such parent Corporation.

              Tangible Net worth means as at any date, Net Worth less
       capitalized research and development costs, capitalized interest, debt
       discount and expense, goodwill, patents, trademarks, copyrights,
       franchises, licenses and such other assets as are properly classified as
       "intangible assets."

       THIS WRITTEN LOAN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN BANK
AND THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF BANK AND THE PARTIES.





                               Page 8 of 9 Pages
<PAGE>   14
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN BANK AND THE PARTIES.

       IN WITNESS WHEREOF, the parties have executed this Agreement as of the
Effective Date.



BORROWER:  XETEL CORPORATION

By:  /s/ RICHARD S. CHILINSKI                                                   
    ----------------------------------------------------------------------------
Name:  Richard S. Chilinski                                                     
      --------------------------------------------------------------------------
Title:  Vice President, Chief Financial Officer and Assistant Secretary         
       -------------------------------------------------------------------------
Address:  2525 Brockton Dr. Austin, TX 78758                                    
         -----------------------------------------------------------------------

BANK:  TEXAS COMMERCE BANK NATIONAL ASSOCIATION

By:  /s/ RALPH T. BEASLEY                                                       
    ----------------------------------------------------------------------------
Name:  Ralph T. Beasley                                                         
      --------------------------------------------------------------------------
Title:  Vice President                                                          
       -------------------------------------------------------------------------
Address:  700 Lavaca Austin, TX 78701                                           
         -----------------------------------------------------------------------


EXHIBITS:                                  ANNEXES:
  A Borrowing Base Report                    I Loan Documents
  B Request for Loan                         II Subsidiaries
  C Reporting Requirements, Financial Covenants,
    and Compliance Certificate





                               Page 9 of 9 Pages
<PAGE>   15
                        SECURITY AGREEMENT -- INVENTORY
                               (this "Agreement")

XETEL CORPORATION
2525 Brockton Drive
Austin, Travis County, Texas 78758
("Debtor"), and

TEXAS COMMERCE BANK NATIONAL ASSOCIATION
("Secured Party"), agree as follows:

1. DEFINITIONS. (a) "Collateral" means all Inventory, all Accounts and all
Proceeds, together with all books and records of Debtor, whether in paper or
electronic form, relating to the Collateral. "Inventory" means all inventory,
including without limitation materials, supplies, returned or repossessed
goods, goods in transit and goods held by others under lease, consignment or
other arrangements, and all documents or certificates of title relating to the
foregoing. "Accounts" means all accounts, general intangibles, instruments,
negotiable documents, chattel paper and deposit accounts arising in connection
with the Inventory. (b) "Obligations" means all debts, obligations and
liabilities of every kind and character of Debtor, whether joint or several,
contingent or otherwise, now or hereafter existing in favor of Secured Party,
including without limitation all liabilities arising under or from any note,
open account, overdraft, letter of credit application, endorsement, surety
agreement, guaranty, interest rate swap or other derivative product,
acceptance, foreign exchange contract or depository service contract, whether
payable to Secured Party or to a third party and subsequently acquired by
Secured Party. Debtor and Secured Party specifically contemplate that Debtor 
may hereafter become further indebted to Secured Party. (c) "Past Due Rate" 
means the lesser of the highest nonusurious rate of interest that Secured Party
may contract for, charge or receive under applicable law, or the prime rate plus
3%. (d) "Proceeds" means all products and proceeds, in cash or otherwise, of all
other Collateral. (e) "Security Interest" means the security interests created
by this Agreement. (f) "UCC" means the Texas Uniform Commercial Code, as amended
from time to time. All terms defined in the UCC are used in this Agreement as
defined in the UCC unless otherwise defined in this Agreement.

2. CREATION OF SECURITY INTEREST. To secure the payment and performance of the
Obligations, Debtor grants to Secured Party a security interest in and assigns
to Secured Party all Collateral which Debtor owns or later acquires.

3. DEBTOR'S REPRESENTATIONS. (a) Debtor is the sole lawful owner of the
Collateral, free and clear of all encumbrances, and has the right and power to
transfer the Collateral to Secured Party. No financing statement covering the
Collateral, other than in favor of Secured Party, is on file in any public
office. (b) This Agreement constitutes the legal, valid and binding obligation
of Debtor, enforceable in accordance with its terms. (c) The Collateral and the
Debtor's production, sale and use thereof comply with all applicable laws,
rules and regulations (including without limitation the Fair Labor Standards
Act), and Debtor has obtained any consents necessary to execute, deliver and
perform its obligations under this Agreement. (d) The address set forth above
is Debtor's place of business, if Debtor has only one place of business,
Debtor's chief executive office, if Debtor has more than one place of business,
or Debtor's residence, if Debtor has no place of business. (e) The Collateral
is free from damage caused by fire or other casualty. (f) Except as disclosed
on attached schedules, no Collateral is covered by a certificate of title or
subject to a certificate of title law.

4. DEBTORS AGREEMENTS. (a) Debtor will warrant and defend its title to and
Secured Party's interest in the Collateral against any adverse claimant. Debtor
will promptly take all reasonable and appropriate steps to collect the
Accounts. Debtor will not agree to a material modification of the terms of any
Account without the written consent of Secured Party. (b) Notwithstanding the
security interest in Proceeds granted herein, Debtor will not sell, transfer,
assign or otherwise dispose of any interest in the Collateral, except as
authorized in this Agreement or in writing by Secured Party, and Debtor will
keep the Collateral (including Proceeds) free from unpaid charges, including
taxes and assessments, and from all encumbrances other than those in favor of
Secured Party. Debtor may sell or lease Inventory in the ordinary course of
business. Sale in the ordinary course of business does not include a transfer
in total or partial satisfaction of a debt. (c) Secured Party may require that
Debtor (i) deposit all payments on the Accounts in a special bank account over
which Secured Party alone has power of withdrawal, and (ii) direct each account
debtor to send remittances to an address designated by Secured Party. Secured
Party may hold the funds in the account as security, or apply the funds to pay
the Obligations. (d) Debtor will furnish Secured Party all information Secured
Party may request with respect to the Collateral. Debtor will notify Secured
Party promptly of any event that could have a material adverse effect on the
aggregate value of the Collateral or on the Security Interest, or any change in
Debtor's location, name, identity or organizational structure. (e) Debtor will
keep accurate books and records regarding the Collateral and will allow Secured
Party to inspect the Collateral and
<PAGE>   16
to inspect and make copies (including electronic copies) of its books and
records during regular business hours. Secured Party may make test
verifications of the Collateral.

5. FURTHER ASSURANCES. Secured Party may file this Agreement or any financing
statements wherever Secured Party believes necessary to perfect the Security
Interest. A photographic or other reproduction of this Agreement or any
financing statement relating to this Agreement will be sufficient as a
financing statement. Debtor authorizes Secured Party and irrevocably appoints
Secured Party as Debtor's attorney-in-fact to file any financing statement
(including any amendments) relating to this Agreement electronically, and
Secured Party's transmission of Debtor's name as part of any filing relating to
this Agreement will constitute Debtor's signature on the financing statement.
Debtor will take such action as Secured Party may at any time require to
protect, assure or enforce the Security Interest. If any Collateral is located
on or in leased property, Debtor will furnish Secured Party an executed
landlord's waiver satisfactory to Secured Party. Debtor will promptly deliver
to Secured Party any part of the Collateral that constitutes instruments, and
will make a designation on all of its chattel paper, instruments and negotiable
documents to reflect the Security Interest.

6. DEBTOR'S USE OF COLLATERAL; INSURANCE. (a) Debtor will keep the Inventory at
       (i) 2525 Brockton Drive, Austin, Travis County, TX; and/or
       (ii) 310 Regal Row, Dallas, Dallas County, TX

(a) Debtor will properly maintain the Inventory and will comply with all
applicable laws, rules and regulations in the use, sale and production of the
Inventory (including without limitation the Fair Labor Standards Act). (c)
DEBTOR WILL MAINTAIN INSURANCE ON THE COLLATERAL against all customary risks for
goods of the same type and use, including without limitation fire and theft, and
any other risks designated by Secured Party. DEBTOR MAY FURNISH INSURANCE
THROUGH EXISTING POLICIES DEBTOR OWNS OR CONTROLS OR THROUGH NEW POLICIES ISSUED
BY ANY COMPANY AUTHORIZED TO TRANSACT BUSINESS IN TEXAS. With regard to 25% of
Borrower's eligible inventory: Secured Party will be named on a customary loss
payee endorsement to all such insurance, providing for payment to Secured Party
and Debtor (and no other person) as their interests appear, and providing for at
least 30 days written notice to Secured Party before cancellation. Secured Party
is irrevocably appointed attorney in fact for Debtor to obtain, adjust, settle
and cancel such insurance. Secured Party may apply all proceeds of insurance to
repayment of the Obligations, whether Debtor is in default or not.

7. COSTS AND EXPENSES. Debtor will pay, or reimburse Secured Party for, all
costs and expenses of every character incurred from time to time in connection
with this Agreement (including all modifications and renewals) and the
Obligations, including costs and expenses incurred (a) for mortgage or
recording taxes, (b) to satisfy any obligation of Debtor under this Agreement
or to protect the Collateral, (c) in connection with the evaluation, monitoring
or administration of the Obligations or the Collateral (whether or not an Event
of Default has occurred), and (d) in connection with the exercise of Secured
Party's rights and remedies. Costs and expenses include reasonable fees and
expenses of outside counsel and other outside professionals and charges imposed
for the services of attorneys and other professionals employed by Secured Party
or its affiliates. Any amount owing under this Section will be due and payable
on demand and will bear interest from the date of expenditure by Secured Party
until paid at the Past Due Rate. If any part of the Obligations is governed by
Chapter 3, 4, 5 or 15 of the Texas Credit Code, this Section is limited to the
extent required by such provisions.

8. SECURED PARTY'S RIGHTS AND REMEDIES. After an Event of Default (as defined in
the Credit Agreement of even date herewith entered into by and between Debtor
as Borrower and Secured Party as Bank) occurs, Secured Party will have all
rights and remedies of a secured party after default under the UCC and other
applicable law. Secured Party may, without waiving any default, do anything
Debtor is required to do by this Agreement but fails to do. Secured Party may
require Debtor to assemble the Collateral and make it available at a reasonably
convenient place Secured Party designates. Except for the safe custody of any
Collateral in its possession and accounting for moneys actually received by it,
Secured Party will have no duty as to any Collateral, including any duty to
preserve rights against prior parties. Debtor irrevocably appoints Secured
Party Debtor's attorney-in-fact to endorse any checks or other instruments
included in the Collateral, or to take other action to enforce, collect or
compromise the Collateral. Secured Party is not required to take possession of
any Collateral prior to any sale, nor to have any Collateral present at any
sale. Secured Party may sell part of the Collateral without waiving its right
to proceed against the remaining Collateral. If any sale is not completed or is
defective in the opinion of Secured Party, Secured Party may make a subsequent
sale of the same Collateral. Any bill of sale or other instrument evidencing
any foreclosure sale will be prima facie evidence of factual matters stated or
recited therein. If a sale of Collateral is conducted in conformity with
customary practices of banks disposing of similar property, the sale will be
deemed commercially reasonable, but Secured Party will have no obligation to
advertise or to sell Collateral on credit. Written notice to Debtor mailed 10
days prior to public or private sale is reasonable notice. By exercising its
rights, Secured Party will not become liable for, and Debtor will not be
released from, any of Debtor's duties or obligations under the contracts and
agreements included in the Collateral. Secured Party





                                       2
<PAGE>   17
may purchase Collateral at any public sale, and may credit the purchase price
against the Obligations. All remedies in this Agreement are cumulative of any
and all other legal, equitable or contractual remedies available to Secured
Party. Debtor WAIVES any rights to a marshalling of assets or sale in inverse
order of alienation, and any rights to notice except as provided in the UCC.

9. ADDITIONAL AGREEMENTS. (a) This Agreement will remain in effect until the
Secured Party executes and delivers to Debtor a written termination statement.
(b) No modification or waiver of the terms of this Agreement will be effective
unless in writing and signed by Secured Party. Secured Party may waive any
default without waiving any other prior or subsequent default. Secured Party's
failure to exercise or delay in exercising any right under this Agreement will
not operate as a waiver of such right. No single or partial exercise of any
right under this Agreement will preclude any other or further exercise of that
right or any other right. (c) Any notice required or permitted under this
Agreement will be given in writing by United States mail, by hand delivery or
delivery service, or by telegraphic, telex, telecopy or cable communication,
sent to the intended addressee at the address shown in this Agreement, or to
such different address as the addressee designates by 10 days notice. Notice by
United States mail will be effective when mailed. All other notices will be
effective when received. Written confirmation of receipt will be conclusive.
(d) If any provision of this Agreement is unenforceable or invalid, that
provision will not affect the enforceability or validity of any other
provision. If the application of any provision of this Agreement to any person
or circumstance is illegal or unenforceable, that application will not affect
the legality or enforceability of the provision as to any other person or
circumstance. (e) If more than one person executes this Agreement as Debtor,
their obligations under this Agreement are joint and several, and the term
Collateral includes any property described in Section 1 that is owned by any
Debtor individually or jointly with any other Debtor and the term "Obligations"
includes both several and joint obligations of each debtor. (f) The section
headings in this Agreement are for convenience only and shall not be considered
in construing this Agreement. (g) This Agreement may be executed in any number
of counterparts and by different parties in separate counterparts, each of
which will constitute one and the same agreement. (h) This Agreement benefits
the Secured Party and its successors and assigns and is binding on Debtor and
its heirs, legal representatives, successors and assigns. (i) If any of the
Obligations are subject to Chapter 3, 4, 5 or 15 of the Texas Credit Code or
Regulation AA of the Board of Governors of the Federal Reserve System
(collectively, the "Consumer Restrictions"), (1) nothing in this Agreement
waives any rights which cannot be legally waived under the Consumer
Restrictions, and (2) the Collateral does not include any assignment of wages
or any non-possessory, non-purchase money security interest in household goods.
(j) THIS AGREEMENT IS GOVERNED BY THE LAWS OF THE STATE OF TEXAS. (k) Secured
Party is executing this Agreement for the purpose of acknowledging the
following notice, and Secured Party's failure to execute this Agreement will
not invalidate this Agreement.

THIS WRITTEN LOAN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES. Executed to be effective as of August 23, 1996.



DEBTOR: XETEL CORPORATION

By:  /s/ RICHARD S. CHILINSKI              
    ---------------------------------------
Name:  Richard S. Chilinski                
      -------------------------------------
Title: Vice President, Chief Financial
       Officer and Assistant Secretary     
       ------------------------------------
Date:  8/26/96                             
      -------------------------------------


SECURED PARTY: TEXAS COMMERCE BANK NATIONAL ASSOCIATION

By:  /s/ RALPH T. BEASLEY                  
    ---------------------------------------
Name:  Ralph T. Beasley                    
      -------------------------------------
Title:  Vice President                     
       ------------------------------------





                                       3
<PAGE>   18
                         SECURITY AGREEMENT -- ACCOUNTS
                               (this "Agreement")

XETEL CORPORATION
2525 Brockton Drive
Austin, Travis County, Texas 78758
("Debtor"), and

TEXAS COMMERCE BANK NATIONAL ASSOCIATION
("Secured Party"), agree as follows:

1. DEFINITIONS. (a) "Collateral" means all Accounts and all Proceeds, together
with all books and records of Debtor, whether in paper or electronic form,
relating to the Collateral. "Accounts" means all accounts, instruments,
negotiable documents and chattel paper. (b) "Obligations" means all debts,
obligations and liabilities of every kind and character, whether joint or
several, contingent or otherwise, of Debtor now or hereafter existing in favor
of Secured Party, including without limitation all liabilities arising under or
from any note, open account, overdraft, letter of credit, endorsement, surety
agreement, guaranty, interest rate swap, or other derivative produce,
acceptance, foreign exchange contract or depository service contract, whether
payable to Secured Party or to a third party and subsequently acquired by
Secured Party. Debtor and Secured Party specifically contemplate that Debtor
may hereafter become further indebted to Secured Party. (c) "Past Due Rate"
means the lesser of the highest nonusurious rate of interest that Secured Party
may contract for, charge or receive under applicable law, or the Prime Rate
plus 3%. (d) "Prime Rate" means the rate of interest per annum publicly
announced from time to time by the Secured Party as its prime rate in effect at
its principal office in Houston, Texas. The Prime Rate is not intended to be
the lowest rate of interest charged by the Secured Party in connection with
extensions of credit to debtors. (e) "Proceeds" means the rights and interests
of Debtor in goods, the sale and delivery of which give rise to any Account,
including all returned or repossessed goods, and all products and proceeds, in
cash or otherwise, of all Collateral. (f) "Security Interest" means the
security interests created by this Agreement. (g) "UCC" means the Texas Uniform
Commercial Code, as amended from time to time. All terms defined in the UCC are
used in this Agreement as defined in the UCC unless otherwise defined in this
Agreement.

2. CREATION OF SECURITY INTEREST. To secure the payment and performance of the
Obligations, Debtor grants to Secured Party a security interest in and assigns
to Secured Party all Collateral which Debtor owns or later acquires.

3. DEBTOR'S REPRESENTATIONS AND WARRANTIES. (a) Debtor is the sole lawful owner
of the Collateral, free and clear of all encumbrances, and has the right and
power to transfer the Collateral to Secured Party. No financing statement
covering the Collateral, other than in favor of Secured Party, is on file in
any public office. (b) This Agreement constitutes the legal, valid and binding
obligation of Debtor, enforceable in accordance with its terms. (c) The
Collateral and the Debtor's use thereof comply with all applicable laws, rules
and regulations, and Debtor has obtained any consents necessary to execute,
deliver and perform its obligations under this Agreement. (d) The address set
forth above is Debtor's place of business, if Debtor has only one place of
business, Debtor's chief executive office, if Debtor has more than one place of
business, or Debtor's residence, if Debtor has no place of business.

4. DEBTOR'S AGREEMENTS. (a) Debtor will warrant and defend its title to and
Secured Party's interest in the Collateral against any adverse claimant. Debtor
will promptly take all reasonable and appropriate steps to collect the
Collateral. Debtor will not agree to a material modification of the terms of
any Account without the written consent of Secured Party. (b) Notwithstanding
the security interest in Proceeds granted herein, Debtor will not sell,
transfer, assign or otherwise dispose of any interest in the Collateral, except
as authorized in this Agreement or in writing by Secured Party, and Debtor will
keep the Collateral (including Proceeds) free from unpaid charges, including
taxes and assessments, and from all encumbrances other than those in favor of
Secured Party. (c) Secured Party may require that Debtor (i) deposit all
payments on the Accounts in a special bank account over which Secured Party
alone has power of withdrawal, and (ii) direct each account debtor to send
remittances to an address designated by Secured Party. Secured Party may hold
the funds in the account as security, or apply the funds to pay the
Obligations. (d) Debtor will furnish Secured Party all information Secured
Party may request with respect to the Collateral. Debtor will notify Secured
Party promptly of any event that could have a material adverse effect on the
aggregate value of the Collateral or on the Security Interest, or any change in
Debtor's location, name, identity or organizational structure. (e) Debtor will
keep accurate books and records regarding the Collateral and will allow Secured
Party to inspect and make copies (including electronic copies) of its books and
records during regular business hours. Secured Party may make test
verifications of the Collateral.

5. FURTHER ASSURANCES. Secured Party may file this Agreement or any financing
statements wherever Secured Party believes necessary to perfect the Security
Interest. A photographic or other reproduction of this


XETEL CORPORATION, August 23, 1996





<PAGE>   19
Agreement or any financing statement relating to this Agreement will be
sufficient as a financing Statement Debtor authorizes Secured Party and
irrevocably appoints Secured Party as Debtor's attorney-in-fact to file any
financing statement (including any amendments) relating to this Agreement
electronically, and Secured Party's transmission of Debtor's name as part of any
filing relating to this Agreement will constitute Debtor's signature on the
financing statement. Debtor will take such action as Secured Party may at any
time require to protect, assure or enforce the Security Interest. Debtor will
promptly deliver to Secured Party any part of the Collateral that constitutes
instruments, and will make a designation on all of its chattel paper,
instruments and negotiable documents to reflect the Security Interest.

6. COSTS AND EXPENSES. Debtor will pay, or reimburse Secured Party for, all
costs and expenses of every character incurred from time to time in connection
with this Agreement (including all modifications and renewals) and the
Obligations, including costs and expenses incurred (a) for mortgage or
recording taxes, (b) to satisfy any obligation of Debtor under this Agreement
or to protect the Collateral, (c) in connection with the evaluation, monitoring
or administration of the Obligations or the Collateral (whether or not an Event
of Default has occurred), and (d) in connection with the exercise of Secured
Party's rights and remedies. Costs and expenses include reasonable fees and
expenses of outside counsel and other outside professionals and charges imposed
for the services of attorneys and other professionals employed by Secured Party
or its affiliates. Any amount owing under this Section will be due and payable
on demand and will bear interest from the date of expenditure by Secured Party
until paid at the Past Due Rate. If any part of the Obligations is governed by
Chapter 3, 4, 5 or 15 of the Texas Credit Code, this Section is limited to the
extent required by those chapters.

7. SECURED PARTY'S RIGHTS AND REMEDIES. After an Event of Default (as defined
in the Credit Agreement of even date herewith entered into by and between
Debtor as Borrower and Secured Party as Bank) occurs, Secured Party will have
all rights and remedies of a secured party after default under the UCC and
other applicable law. Secured Party may, without waiving any default, do
anything Debtor is required to do by this Agreement and fails to do. Secured
Party may require Debtor to assemble the Collateral and make it available at a
reasonably convenient place Secured Party designates. Except for the safe
custody of any Collateral in its possession and accounting for moneys actually
received by it, Secured Party will have no duty as to any Collateral, including
any duty to preserve rights against prior parties. Debtor irrevocably appoints
Secured Party Debtor's attorney-in-fact to endorse any checks or other
instruments included in the Collateral, or to take any other action to enforce,
collect or compromise the Collateral. Secured Party is not required to take
possession of any Collateral prior to any sale, nor to have any Collateral
present at any sale. Secured Party may sell part of the Collateral without
waiving its right to proceed against the remaining Collateral. If any sale is
not completed or is defective in the opinion of Secured Party, Secured Party
may make a subsequent sale of the same Collateral. Any bill of sale or other
instrument evidencing any foreclosure sale will be prima facie evidence of
factual matters stated or recited therein. If a sale of Collateral is conducted
in conformity with customary practices of banks disposing of similar property,
the sale will be deemed commercially reasonable, but Secured Party will have no
obligation to advertise or to sell Collateral on credit. Written notice to
Debtor mailed 10 days prior to public or private sale is reasonable notice. By
exercising its rights, Secured Party will not become liable for, and Debtor
will not be released from, any of Debtor's duties or obligations under the
contracts and agreements included in the Collateral. Secured Party may purchase
Collateral at any public sale, and may credit the purchase price against the
Obligations. All remedies in this Agreement are cumulative of any and all other
legal, equitable or contractual remedies available to Secured Party. Debtor
WAIVES any rights to a marshalling of assets or sale in inverse order of
alienation, and any rights to notice except as provided in the UCC.

8. ADDITIONAL AGREEMENTS. (a) This Agreement will remain in effect until the
Secured Party executes and delivers to Debtor a written termination statement.
(b) No modification or waiver of the terms of this Agreement will be effective
unless in writing and signed by Secured Party. Secured Party may waive any
default without waiving any other prior or subsequent default. Secured Party's
failure to exercise or delay in exercising any right under this Agreement will
not operate as a waiver of such right. No single or partial exercise of any
right under this Agreement will preclude any other or further exercise of that
right or any other right. (c) Any notice required or permitted under this
Agreement will be given in writing by United States mail, by hand delivery or
delivery service, or by telegraphic, telex, telecopy or cable communication,
sent to the intended addressee at the address shown in this Agreement, or to
such different address as the addressee designates by 10 days notice. Notice by
United States mail will be effective when mailed. All other notices will be
effective when received. Written confirmation of receipt will be conclusive.
(d) If any provision of this Agreement is unenforceable or invalid, that
provision will not affect the enforceability or validity of any other
provision. If the application of any provision of this Agreement to any person
or circumstance is illegal or unenforceable, that application will not affect
the legality or enforceability of the provision as to any other person or
circumstance. (e) If more than one person executes this Agreement as Debtor,
their obligations under this Agreement are joint and several, and the term
Collateral includes any property described in Section I that is owned by any
Debtor individually or jointly with any other Debtor and the term "Obligations"
includes both several and joint obligations of each Debtor. (f) The section
headings in this Agreement are for convenience only and shall not be considered
in construing this Agreement. (g) This Agreement may be executed in any number
of counterparts and by different parties in separate counterparts, each of
which will constitute one and the same agreement. (h) This Agreement benefits
the





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Secured Party and its successors and assigns and is binding on Debtor and its
heirs, legal representatives, successors and assigns. (i) If any of the
Obligations are subject to Chapter 3, 4, 5 or 15 of the Texas Credit Code or
Regulation AA of the Board of Governors of the Federal Reserve System
(collectively, the "Consumer Restrictions"), (1) nothing in this Agreement
waives any rights which cannot be legally waived under the Consumer
Restrictions, and (2) the Collateral does not include any assignment of wages
or any non-possessory, non-purchase money security interest in household goods.
(j) THIS AGREEMENT IS GOVERNED BY THE LAWS OF THE STATE OF TEXAS. (k) Secured
Party is executing this Agreement for the purpose of acknowledging the
following notice, and Secured Party's failure to execute this Agreement will
not invalidate this Agreement.

THIS WRITTEN LOAN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES.


DEBTOR: XETEL CORPORATION

By:  /s/ RICHARD S. CHILINSKI              
    ---------------------------------------
Name:  Richard S. Chilinski                
      -------------------------------------
Title: Vice President, Chief Financial
       Officer and Assistant Secretary     
       ------------------------------------
Date:  8/26/96                             
      -------------------------------------


SECURED PARTY: TEXAS COMMERCE BANK NATIONAL ASSOCIATION

By:  /s/ RALPH T. BEASLEY                  
    ---------------------------------------
Name:  Ralph T. Beasley                    
      -------------------------------------
Title:  Vice President                     
       ------------------------------------





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