Document:

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                                                                   EXHIBIT 10.3
                               BILL OF SALE AND
                     ASSIGNMENT AND ASSUMPTION AGREEMENT

     BILL OF SALE AND ASSIGNMENT AND ASSUMPTION AGREEMENT dated as of
September 22, 2000 between T-Com, LLC, a Delaware limited liability company
("Seller") and CXR Telcom Corporation, a Delaware corporation ("Purchaser").

                                  WITNESSTH

     WHEREAS, pursuant to the terms of an Asset Purchase Agreement effective
September 1, 2000 (the "Asset Purchase Agreement") by and among the
Purchaser, the Seller, and MicroTel International, Inc., Seller has agreed to
sell and Purchaser has agreed to purchase the assets, properties and rights
described and referred to in Section 1.2 of the Asset Purchase Agreement,
subject to the exclusion of the assets, properties and rights described in
Section 1.3 of the Asset Purchase Agreement (such assets, properties and
rights, subject to such exclusions, are collectively referred to as the
"Assets"); and

     WHEREAS, pursuant to due authorization, Seller is executing and
deivering this instrument for the purpose of selling and assigning to and
vesting in Purchaser all of Seller's right, title and interest in and to the
Assets;

     WHEREAS, pursuant to the Asset Purchase Agreement, Purchaser has agreed
that, at the closing of the purchase of the Assets, Purchaser would deliver
to Seller its written assumption of obligations whereby it would assume and
agree to perform, to pay or to discharge certain liabilities and obligations
of Seller to the extent and as provided in Section 1.8 of the Asset Purchase
Agreement (the "Assumed Liabilities");

     NOW, THEREFORE, in consideration of the terms and conditions of the
Asset Purchase Agreement and other good and valuable consideration, the
receipt of which is hereby acknowledged, and intending to be legally bound,
the parties hereto agree as follows:

     1. Seller hereby grants, sells, conveys, assigns, transfers, sets over
to, and vests in Purchaser, its successors and assigns, all of Seller's
right, title and interest, legal and equitable, in and to all of the Assets
by which Seller is bound and which are assumed hereby, including without
limitation all of its rights and privileges under or otherwise is respect of
any contracts, commitments, leases and other commitments that are part of the
Assets, to have and to hold the same, including the appurtenances thereof,
unto Purchaser, its successors and assigns, forever, to its and their own
proper use.

     2. Purchaser hereby assumes and agrees to perform or to pay or discharge
the Assumed Liabilities to the extent and as provided in Section 1.8 of the
Asset Purchaser Agreement.

                                      1
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Purchaser shall indemnify and hold Seller harmless from and against any and
all damage, loss, deficiency, cost or liability, including fees of attorneys,
arising from its failure to pay, perform and discharge all such Assumed
Liabilities.

     3. Seller hereby constitutes and appoints Purchaser, its successors and
assigns, as Seller's true and lawful agent and attorney with full power of
substitution, in Seller's name and stead, but on behalf of and for the
benefit of Purchaser, to demand and receive any and all of the Assets which
are not in the possession or under the exclusive control of Seller, and to
give receipts and releases for and in respect of the same, and any part
thereof, and from time to time to institute and in Seller's name or in the
name of Purchaser, its successors and assigns, as the legal attorney of and
for Seller thereunto duly authorized, for the benefit of Purchaser, its
successors and assigns, any and all proceedings at law, in equity or
otherwise, which Purchaser, its successors and assigns, may deem proper for
the collection and enforcement of any claim or right of any kind hereby
granted, sold, conveyed, assigned, transferred or set over to, or intended so
to be, and to do all acts and things in relation to the Assets which
Purchaser, its successors and assigns, shall deem desirable, Seller hereby
declaring that the foregoing powers are coupled with an interest and are and
shall be irrevocable by Seller or by Seller's dissolution or in any manner or
for any reason whatsoever.

     4. Seller for itself, its successors and assigns, hereby covenants that,
at any time and from time to time after the delivery of this instrument, at
Purchaser's request and without further consideration, Seller will do,
execute, acknowledge and deliver, or will cause to be done, executed,
acknowledged and delivered, all and every such further acts, conveyances,
transfers, assignments, powers of attorney and assurances as Purchaser,
reasonably may require more effectively to convey, transfer to or vest in,
and to put Purchaser in possession of, any of the Assets, or to better enable
Purchaser to realize upon or otherwise enjoy any of the Assets or to carry
into effect the intent and purposes of the Asset Purchaser Agreement and of
this instrument.

     5. Neither the making nor the acceptance of this instrument shall
enlarge, restrict or otherwise modify the terms of the Asset Purchase
Agreement or constitute a waiver or release by Seller or Purchaser of any
liabilities, duties or obligations imposed upon either of them by the terms
of the Asset Purchase Agreement, including, without limitation, the
representations and warranties and other provisions which the Asset Purchase
Agreement provides shall survive the date hereof.

     6. This instrument is being executed by Seller and Purchaser and shall
be binding upon Seller and Purchaser, and their respective successors and
assigns, for the uses and purposes above set forth and referred to, and shall
be effective as of the date hereof.

     7. This instrument shall be governed by and enforced in accordance with
the laws of the State of California.

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     IN WITNESS WHEREOF, Seller and Purchase have caused this Bill of Sale
and Assignment and Assumption Agreement to be duly executed on the date first
above written.

                                       T-COM, LLC

                                       By: /s/ Everett Bahre
                                          ---------------------
                                          Everett Bahre
                                          Title:

                                       CXR TELCOM CORPORATION

                                       By: /s/ Carmine T. Oliva
                                          ---------------------
                                          Carmine T. Oliva
                                          Title: Chairman and CEO

                                      3<PAGE>

                                                                 EXHIBIT 10.4

==============================================================================

                        CREDIT AND SECURITY AGREEMENT

                                 BY AND AMONG

                               XIT CORPORATION,

                            CXR TELCOM CORPORATION

                                     AND

                       WELLS FARGO BUSINESS CREDIT, INC.

                          Dated as of: August 16, 2000

==============================================================================

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                               TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                                              PAGE
<S>                        <C>                                                                                <C>
      ARTICLE 1     DEFINITIONS ................................................................................1
           Section 1.1     Definitions .........................................................................1
           Section 1.2     Cross References ...................................................................11
      ARTICLE II    AMOUNT AND TERMS OF THE CREDIT FACILITY ...................................................11
           Section 2.1     Revolving Advances .................................................................11
           Section 2.2     Term Advances ......................................................................12
           Section 2.3     Payment of Term Notes ..............................................................12
           Section 2.4     Interest; Minimum Interest Charge; Default Interest; Participations;
                           Usury ..............................................................................12
           Section 2.5     Fees ...............................................................................13
           Section 2.6     Computation of Interest and Fees; When Interest Due and Payable ....................14
           Section 2.7     Capital Adequacy ...................................................................14
           Section 2.8     Maturity Date ......................................................................15
           Section 2.9     Voluntary Prepayment; Termination of the Credit Facility by the
                           Borrowers ..........................................................................15
           Section 2.10    Termination and Prepayment Fees; Waiver of Termination and
                           Prepayment Fees ....................................................................15
           Section 2.11    Mandatory Prepayment ...............................................................16
           Section 2.12    Payment ............................................................................16
           Section 2.13    Payment on Non-Banking Days ........................................................16
           Section 2.14    Use of Proceeds ....................................................................16
           Section 2.15    Liability Records ..................................................................17
      ARTICLE III   SECURITY INTEREST; OCCUPANCY; SETOFF ......................................................17
           Section 3.1     Grant of Security Interest .........................................................17
           Section 3.2     Notification of Account Debtors and Other Obligors .................................17
           Section 3.3     Assignment of Insurance ............................................................17
           Section 3.4     Occupancy ..........................................................................18
           Section 3.5     License ............................................................................18
           Section 3.6     Financing Statement ................................................................18
           Section 3.7     Setoff .............................................................................18
      ARTICLE IV    CONDITIONS OF LENDING .....................................................................19
</TABLE>

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                               TABLE OF CONTENTS
                                  (continued)
<TABLE>
<CAPTION>
                                                                                                              PAGE
<S>                        <C>                                                                                <C>
           Section 4.1     Conditions Precedent to the Initial Revolving Advances and the
                           Term Advances ......................................................................19

           Section 4.2     Conditions Precedent to All Advances ...............................................22
      ARTICLE V     REPRESENTATIONS AND WARRANTIES ............................................................22
           Section 5.1     Corporate Existence and Power; Name; Chief Executive Office;
                           Inventory and Equipment Locations; Tax Identification Number .......................22
           Section 5.2     Authorization of Borrowing; No Conflict as to Law or Agreements ....................23
           Section 5.3     Legal Agreements ...................................................................23
           Section 5.4     Subsidiaries .......................................................................23
           Section 5.5     Financial Condition; No Adverse Change .............................................23
           Section 5.6     Litigation .........................................................................24
           Section 5.7     Regulation U .......................................................................24
           Section 5.8     Taxes ..............................................................................24
           Section 5.9     Titles and Liens ...................................................................24
           Section 5.10    Plans ..............................................................................24
           Section 5.11    Default ............................................................................25
           Section 5.12    Environmental Matters ..............................................................25
           Section 5.13    Submissions to Lender ..............................................................26
           Section 5.14    Financing Statements ...............................................................26
           Section 5.15    Rights to Payment ..................................................................26
           Section 5.16    Bank Accounts ......................................................................26
           Section 5.17    Financial Solvency .................................................................26
      ARTICLE VI    BORROWER'S AFFIRMATIVE COVENANTS ..........................................................27
           Section 6.1     Reporting Requirements .............................................................27
           Section 6.2     Books and Records; Inspection and Examination ......................................30
           Section 6.3     Account Verification ...............................................................30
           Section 6.4     Compliance with Laws ...............................................................30
           Section 6.5     Payment of Taxes and Other Claims ..................................................31
           Section 6.6     Maintenance of Properties ..........................................................31
           Section 6.7     Insurance ..........................................................................31
           Section 6.8     Preservation of Existence ..........................................................31
</TABLE>
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<PAGE>

                               TABLE OF CONTENTS
                                  (continued)
<TABLE>
<CAPTION>
                                                                                                              PAGE
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           Section 6.9     Delivery of Instruments, etc .......................................................32
           Section 6.10    Collateral Account .................................................................32
           Section 6.11    Performance by the Lender ..........................................................32
           Section 6.12    Minimum Debt Service Coverage Ratio ................................................33
           Section 6.13    Minimum Tangible Net Worth .........................................................33
           Section 6.14    Minimum Net Income .................................................................33
           Section 6.15    Minimum Earnings Before Taxes ......................................................33
           Section 6.16    New Covenants ......................................................................33
           Section 6.17    Government Contracts ...............................................................33
      ARTICLE VII   NEGATIVE COVENANTS ........................................................................33
           Section 7. l    Liens ..............................................................................33
           Section 7.2     Indebtedness .......................................................................34
           Section 7.3     Guaranties .........................................................................34
           Section 7.4     Investments and Subsidiaries .......................................................34
           Section 7.5     Dividends ..........................................................................35
           Section 7.6     Sale or Transfer of Assets; Suspension of Business Operations ......................35
           Section 7.7     Consolidation and Merger; Asset Acquisitions .......................................35
           Section 7.8     Sale and Leaseback .................................................................35
           Section 7.9     Restrictions on Nature of Business .................................................36
           Section 7.10    Capital Expenditures ...............................................................36
           Section 7.11    Accounting .........................................................................36
           Section 7.12    Discounts, etc .....................................................................36
           Section 7.13    Defined Benefit Pension Plans ......................................................36
           Section 7.14    Other Defaults .....................................................................36
           Section 7.15    Place of Business; Name ............................................................36
           Section 7.16    Organizational Documents; S Corporation Status .....................................36
           Section 7.17    Salaries ...........................................................................36
           Section 7.18    Change in Ownership ................................................................36
           Section 7.19    Transaction with Affiliates ........................................................37
           Section 7.20    Additional Bank Accounts ...........................................................37
      ARTICLE VIII  EVENTS OF DEFAULT, RIGHTS AND REMEDIES ....................................................37
</TABLE>

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                               TABLE OF CONTENTS
                                  (continued)
<TABLE>
<CAPTION>
                                                                                                              PAGE
<S>                        <C>                                                                                <C>
           Section 8.1     Events of Default ..................................................................37
           Section 8.2     Rights and Remedies ................................................................39
      ARTICLE IX    MISCELLANEOUS .............................................................................40
           Section 9.1     No Waiver; Cumulative Remedies .....................................................40
           Section 9.2     Amendments, Etc ....................................................................40
           Section 9.3     Addresses for Notices, Etc .........................................................40
           Section 9.4     Further Documents ..................................................................41
           Section 9.5     Collateral .........................................................................41
           Section 9.6     Costs and Expenses .................................................................42
           Section 9.7     Indemnity ..........................................................................42
           Section 9.8     Participants .......................................................................43
           Section 9.9     Execution in Counterparts ..........................................................43
           Section 9.10    Binding Effect; Assignment; Complete Agreement; Exchanging
                           Information ........................................................................43
           Section 9.11    Severability of Provisions .........................................................43
           Section 9.12    Headings ...........................................................................43
           Section 9.13    Governing Law; Jurisdiction, Venue; Waiver of Jury Trial ...........................43
      ARTICLE X     JOINT AND SEVERAL LIABILITY AND SURETYSHIP WAIVERS ........................................44
           Section 10.1    independent Obligations; Subrogation ...............................................44
           Section 10.2    Authority to Modify Obligations and Security .......................................44
           Section 10.3    Waiver of Defenses .................................................................45
           Section 10.4    Exercise of Lender's Rights ........................................................45
           Section 10.5    Additional Waivers .................................................................45
           Section 10.6    Additional Indebtedness ............................................................45
           Section 10.7    Notices, Demands, Etc ..............................................................46
           Section 10.8    Subordination ......................................................................46
           Section 10.9    Revival ............................................................................47
           Section 10.10   Understanding of Waivers ...........................................................47
</TABLE>

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<PAGE>

                        CREDIT AND SECURITY AGREEMENT

                         Dated as of August 16, 2000

                  XIT CORPORATION, a New Jersey corporation ("XIT"), CXR
TELCOM CORPORATION, a Delaware corporation ("CXR" and together with XIT, the
"Borrowers"), and WELLS FARGO BUSINESS CREDIT, INC., a Minnesota corporation
(the "Lender"), hereby agree as follows:

                                  ARTICLE I

                                 DEFINITIONS

                  Section 1.1 Definitions. For all purposes of this
Agreement, except as otherwise expressly provided or unless the context
otherwise requires:

                  (a) the terms defined in this Article have the meanings
         assigned to them in this Article, and include the plural as well as the
         singular; and

                  (b) all accounting terms not otherwise defined herein have the
         meanings assigned to them in accordance with GAAP.

                  "Accounts" means all of the Borrowers' accounts, as such term
         is defined in the UCC, including without limitation the aggregate
         unpaid obligations of customers and other account debtors to the
         Borrowers arising out of the sale or lease of goods or rendition of
         services by the Borrowers on an open account or deferred payment basis.

                  "Advance" means a Revolving Advance or a Term Advance.

                  "Affiliate" or "Affiliates" means MicroTel and any other
         Person controlled by, controlling or under common control with any
         Borrower, including (without limitation) any Subsidiary of any
         Borrower. For purposes of this definition, "control," when used with
         respect to any specified Person, means the power to direct the
         management and policies of such Person, directly or indirectly, whether
         through the ownership of voting securities, by contract or otherwise.

                  "Agreement" means this Credit and Security Agreement, as
         amended, supplemented or restated from time to time.

                  "Availability" means the difference of (i) the sum of the XIT
         Borrowing Base and the CXR Borrowing Base and (ii) the then outstanding
         principal balance of the Revolving Note.

                  "Availability Reserve" means as of any date of determination,
         such amount or amounts as Lender may from time to time establish and
         revise in good faith reducing the amount of Revolving Advances which
         would otherwise be available to any Borrower

<PAGE>

         under the lending formula(s) provided for herein: (a) to reflect
         events, conditions, contingencies or risks which, as determined by
         Lender in good faith, do or may affect either (i) the Collateral or
         its value, (ii) the assets, business or prospects of such Borrower,
         or (iii) the security interests and other rights of Lender in the
         Collateral (including the enforceability, perfection and priority
         thereof), or (b) to reflect Lender's good faith belief that any
         collateral report or financial information furnished by or on behalf
         of Borrowers to Lender is or may have been incomplete, inaccurate or
         misleading in any material respect, or (c) in respect of any state
         of facts which Lender determines in good faith constitutes an Event
         of Default or may, with notice or passage of time or both,
         constitute an Event of Default. Without limiting the Availability
         Reserves that Lender may establish, Lender will establish an
         Availability Reserve for the judgment lien in favor of Bell
         Industries against CXR.

                  "Banking Day" means a day other than a Saturday, Sunday or
         other day on which banks are generally not open for business in
         Pasadena, California.

                  "Base Rate" means the rate of interest publicly announced from
         time to time by Wells Fargo Bank, N.A. as its "base rate" or, if such
         bank ceases to announce a rate so designated, any similar successor
         rate designated by the Lender.

                  "Capital Expenditures" for a period means any expenditure of
         money for the purchase or construction of assets, or for improvements
         or additions thereto, which are capitalized on the Borrowers' balance
         sheets.

                  "Collateral" means all current or hereafter acquired or
         arising Equipment, General Intangibles, Inventory, Receivables,
         Investment Property, deposit accounts, letters of credit, proceeds of
         letters of credit, chattel paper and all sums on deposit in any
         Collateral Account, and any items in any Lockbox; together with (i) all
         substitutions and replacements for and products of any of the
         foregoing; (ii) proceeds of any and all of the foregoing; (iii) in the
         case of all tangible goods, all accessions; (iv) all accessories,
         attachments, parts, equipment and repairs now or hereafter attached or
         affixed to or used in connection with any tangible goods; and (v) all
         warehouse receipts, bills of lading and other documents of title now or
         hereafter covering such goods.

                  "Collateral Accounts" means the "WFBCI Accounts" as defined in
         the Collection Account Agreements and the "Lender Accounts" as defined
         in the Lockbox Agreements.

                  "Collection Account Agreements" means the Collection Account
         Agreements of even date herewith by and among the respective Borrowers,
         Wells Fargo Bank, N.A. and the Lender.

                  "Commitment" means the Lender's commitment to make Advances to
         or for the Borrowers' account pursuant to Article II.

                  "Credit Facility" means the credit facility being made
         available to the Borrowers by the Lender pursuant to Article II.

                                       -2-
<PAGE>

                  "CXR Borrowing Base" means, at any time the lesser of:

                  (a) the Maximum Line, minus the aggregate outstanding sum of
         the Revolving Advances to XIT; or

                  (b) subject to change from time to time in the Lender's sole
         discretion, the sum off

                           (i) eighty-five percent (85%) of the Eligible
                  Accounts of CXR, plus

                           (ii) the lesser of (A) $200,000, minus the aggregate
                  outstanding sum of the Revolving Advances to XIT base upon its
                  Eligible Inventory, or (B) the sum of twenty-five percent
                  (25%) of the Eligible Inventory of CXR consisting of raw
                  materials plus forty percent (40%) of the Eligible Inventory
                  of CXR consisting of finished goods, and minus

                           (iii) any Availability Reserves for CXR.

                  "Current Maturities of Long Term Debt" of a Person as of a
         given date means the amount of such Person's long-term debt and
         capitalized leases which will become due during the twelve (12) month
         period beginning on the designated date.

                  "Debt" of any Person means all items of indebtedness or
         liability which in accordance with GAAP would be included in
         determining total liabilities as shown on the liabilities side of a
         balance sheet of that Person as at the date as of which Debt is to be
         determined. For purposes of determining a Person's aggregate Debt at
         any time, "Debt" shall also include the aggregate payments required to
         be made by such Person at any time under any lease that is considered a
         capitalized lease under GAAP.

                  "Debt Service Coverage Ratio" of a Person as of a given date
         means the ratio of (i) the sum of such Person's (A) Funds from
         Operations and (B) Interest Expense MINUS (C) Capital Expenditures
         during the twelve (12) month period ending on the designated date to
         (ii) the sum of such Person's (A) Current Maturities of Long Term Debt
         as of the designated date and (B) Interest Expense.

                  "Default" means an event that, with giving of notice or
         passage of time or both, would constitute an Event of Default.

                  "Default Period" means any period of time beginning on the
         first day of any month during which a Default or Event of Default has
         occurred and ending on the date the Lender notifies the Borrowers in
         writing that such Default or Event of Default has been cured or waived.

                  "Default Rate" means, with respect to the Revolving Advances,
         an annual rate equal to three percent (3%) over the Revolving Floating
         Rate, which rate shall change when and as the Revolving Floating Rate
         changes and with respect to the Term

                                       -3-
<PAGE>

         Advances, an annual rate equal to three percent (3%) over the Term
         Floating Rate, which rate shall change when and as the Term Floating
         Rate changes.

                  "ERISA" means the Employee Retirement Income Security Act of
         1974, as amended.

                  "Earnings Before Taxes" of a Person for a period means such
         Person's pretax earnings from continuing operations before (i) special
         extraordinary gains, (ii) minority interests, and (iii) miscellaneous
         gains and losses, in each case for such period.

                  "Eligible Accounts" of a Borrower means all of its unpaid
         Accounts, net of any credits, except the following shall not in any
         event be deemed Eligible Accounts:

                           (i) That portion of Accounts unpaid 90 days or more
                  after the invoice date;

                           (ii) That portion of Accounts that is disputed or
                  subject to a claim of offset or a contra account;

                           (iii) That portion of Accounts not yet earned by the
                  final delivery of goods or rendition of services, as
                  applicable, by such Borrower to the customer;

                           (iv) Accounts owed by any unit of government, whether
                  foreign or domestic (provided, however, that there shall be
                  included in Eligible Accounts that portion of Accounts owed by
                  such units of government for which such Borrower has provided
                  evidence satisfactory to the Lender that (A) the Lender has a
                  first priority perfected security interest and (B) such
                  Accounts may be enforced by the Lender directly against such
                  unit of government under all applicable laws, including,
                  without limitation, the Federal Assignment of Claims Act of
                  1940, as amended, or any similar law);

                           (v) Accounts owed by an account debtor located
                  outside the United States or Canada which are not (A) backed
                  by a bank letter of credit naming the Lender as beneficiary or
                  assigned to the Lender, in the Lender's possession and
                  acceptable to the Lender in all respects, in its sole
                  discretion, (B) covered by a foreign receivables insurance
                  policy acceptable to the Lender in its sole discretion;

                           (vi) Accounts owed by an account debtor that is
                  insolvent, the subject' of bankruptcy proceedings or has gone
                  out of business;

                           (vii) Accounts owed by a shareholder, Subsidiary,
                  Affiliate, officer or employee of any Borrower;

                           (viii) Accounts not subject to a duly perfected
                  security interest in the Lender's favor or which are subject
                  to any lien, security interest or claim in favor of any Person
                  other than the Lender including without limitation any payment
                  or performance bond;

                                       -4-
<PAGE>

                           (ix) That portion of Accounts that has been
                  restructured, extended, amended or modified;

                           (x) That portion of Accounts that constitutes
                  advertising, finance charges, service charges or sales or
                  excise taxes;

                           (xi) Accounts of such Borrower owed by an account
                  debtor, regardless of whether otherwise eligible, if 25% or
                  more of the total amount due under such Accounts from such
                  account debtor is ineligible under clauses (i), (ii) or (ix)
                  above;

                           (xii) That portion of Accounts of such Borrower owed
                  by a single account debtor or its affiliates which constitute
                  more than 15% of all of such Borrower's Accounts; and

                           (xiii) Accounts, or portions thereof, otherwise
                  deemed ineligible by the Lender in its sole discretion.

                  "Eligible Inventory" of a Borrower means all Inventory of such
         Borrower, at the lower of cost or market value as determined in
         accordance with GAAP; provided, however, that the following shall not
         in any event be deemed Eligible Inventory:

                           (i) Inventory that is: in-transit; located at any
                  warehouse, job site or other premises not approved by the
                  Lender in writing; located outside of the states, or
                  localities, as applicable, in which the Lender has filed
                  financing statements to perfect a first priority security
                  interest in such Inventory; covered by any negotiable or
                  non-negotiable warehouse receipt, bill of lading or other
                  document of title; on consignment from any Person; on
                  consignment to any Person or subject to any bailment unless
                  such consignee or bailee has executed an agreement with the
                  Lender;

                           (ii) Supplies, packaging, maintenance parts or sample
                  Inventory;

                           (iii) Work-in-process Inventory;

                           (iv) Finished goods Inventory, in the case of XIT
                  only;

                           (v) Inventory that is damaged, obsolete, slow moving
                  or not currently saleable in the normal course of such
                  Borrower's operations;

                           (vi) Inventory that such Borrower has returned, has
                  attempted to return, is in the process of returning or intends
                  to return to the vendor thereof;

                           (vii) Inventory that is perishable or live;

                                       -5-
<PAGE>

                           (viii) Inventory manufactured by such Borrower
                  pursuant to a license unless the applicable licensor has
                  agreed in writing to permit the Lender to exercise its rights
                  and remedies against such Inventory;

                           (ix) Inventory that is subject to a security interest
                  in favor of any Person other than the Lender; and

                           (x) Inventory otherwise deemed ineligible by the
                   Lender in its sole discretion.

                  "Environmental Laws" has the meaning specified in Section
         5.12.

                  "Equipment" means all of the Borrowers' equipment, as such
         term is defined in the UCC, whether now owned or hereafter acquired,
         including but not limited to all present and future machinery,
         vehicles, furniture, fixtures, manufacturing equipment, shop equipment,
         office and recordkeeping equipment, parts, tools, supplies, and
         including specifically (without limitation) the goods described in any
         equipment schedule or list herewith or hereafter furnished to the
         Lender by any Borrower.

                  "Event of Default" has the meaning specified in Section 8.1.

                  "Funding Date" has the meaning specified in Section 2.1.

                  "Funds From Operations" of a Person for a given period means
         the sum of such Person's (i) Net Income, (ii) depreciation and
         amortization, (iii) deferred income taxes, and (iv) other non-cash
         items, each as determined for such period in accordance with GAAP.

                  "GAAP" means generally accepted accounting principles, applied
         on a basis consistent with the accounting practices applied in the
         financial statements described in Section 5.5, except for any change in
         accounting practices to the extent that, due to a promulgation of the
         Financial Accounting Standards Board changing or implementing any new
         accounting standard, any Borrower of any of its Affiliates either (i)
         is required to implement such change, or (ii) for future periods will
         be required to and for the current period may in accordance with
         generally accepted accounting principles implement such change, for its
         financial statements to be in conformity with generally accepted
         accounting principles (any such change is herein referred to as a
         "Required GAAP Change"), provided that (1) the Borrowers shall fully
         disclose in such financial statements any such Required GAAP Change and
         the effects of the Required GAAP Change on the subject Borrower's or
         Affiliate's income, retained earnings or other accounts, as applicable,
         and (2) the Borrowers' financial covenants set forth in Sections 6.12,
         6.13, 6.14, 6.15, and 7.10 shall be adjusted as necessary to reflect
         the effects of such Required GAAP Change.

                  "General Intangibles" means all of the Borrowers' general
         intangibles, as such term is defined in the UCC, whether now owned or
         hereafter acquired, including (without limitation) all present and
         future patents, patent applications, copyrights, trademarks,

                                       -6-

<PAGE>

         trade names, trade secrets, customer or supplier lists and contracts,
         manuals, operating instructions, permits, franchises, the right to use
         any Borrower's name, and the goodwill of the Borrowers' business.

                  "Guarantors" means MicroTel and Carmine T. Oliva.

                  "Hazardous Substance" has the meaning specified in Section
         5.12.

                  "Interest Expense" of a Person for a period means such
         Person's total gross interest expense during such period (excluding
         interest income), and shall in any event include, without limitation,
         (i) interest expensed (whether or not paid) on all Debt, (ii) the
         amortization of debt discounts, (iii) the amortization of all fees
         payable in connection with the incurrence of Debt to the extent
         included in interest expense, and (iv) the portion of any capitalized
         lease obligation allocable to interest expense.

                  "Inventory" means all of the Borrowers' inventory, as such
         term is defined in the UCC, whether now owned or hereafter acquired,
         whether consisting of whole goods, spare parts or components, supplies
         or materials, whether acquired, held or furnished for sale, for lease
         or under service contracts or for manufacture or processing, and
         wherever located.

                  "Investment Property" means all of the Borrowers' investment
         property, as such term is defined in the UCC, whether now owned or
         hereafter acquired, including but not limited to all securities,
         security entitlements, securities accounts, commodity contracts,
         commodity accounts, stocks, bonds, mutual fund shares, money market
         shares and U.S. Government securities.

                  "Loan Documents" means this Agreement, the Notes, the Security
         Documents and all other notes, guaranties and other agreements,
         documents and instruments now or at any time hereafter executed and/or
         delivered by any Borrower or any Guarantor in connection with this
         Agreement, as the same may hereafter be amended, supplemented or
         restated from time to time.

                  "Lockboxes" has the meaning given in the Lockbox Agreements.

                  "Lockbox Agreements" means the Lockbox and Collection Account
         Agreements by and among the respective Borrowers, Wells Fargo Bank,
         N.A., Regulus West, LLC and the Lender, of even date herewith.

                  "Maturity Date" has the meaning specified in Section 2.8.

                  "Maximum Line" means $3,000,000.

                  "MicroTel" means MicroTel International Inc., a Delaware
         corporation, which owns all of the issued and outstanding capital stock
         of the Borrowers.

                  "Minimum Interest Charge" has the meaning specified in
         Section 2.4(c).

                                       -7-
<PAGE>

                  "Net Income" of a Person for a period means such Person's
         after-tax net income for such period DECREASED by the sum of any
         extraordinary, non-operating or non-cash income recorded by such Person
         and INCREASED by any extraordinary, non-cash or non-operating expense
         or loss recorded by such Person, as determined in accordance with GAAP.

                  "Note" means the Revolving Note or any Term Note, and "Notes"
         means the Revolving Note and the Term Notes.

                  "Obligations" means the Notes and each and every other debt,
         liability and obligation of every type and description which any
         Borrower may now or at any time hereafter owe to the Lender, whether
         such debt, liability or obligation now exists or is hereafter created
         or incurred, whether it arises in a transaction involving the Lender
         alone or in a transaction involving other creditors of any Borrower,
         and whether it is direct or indirect, due or to become due, absolute or
         contingent, primary or secondary, liquidated or unliquidated, or sole,
         joint, several or joint and several, and including specifically, but
         not limited to, all indebtedness of any Borrower arising under this
         Agreement, the Notes or any other loan or credit agreement or guaranty
         between any Borrower and the Lender, whether now in effect or hereafter
         entered into.

                  "Patent and Trademark Security Agreements" means the Patent
         and Trademark Security Agreements by the respective Borrowers in favor
         of the Lender of even date herewith.

                  "Permitted Lien" has the meaning specified in Section 7.1.

                  "Person" means any individual, corporation, partnership, joint
         venture, limited liability company, association, joint-stock company,
         trust, unincorporated organization or government or any agency or
         political subdivision thereof.

                  "Plan" means an employee benefit plan or other plan maintained
         for any Borrower's employees and covered by Title IV of ERISA.

                  "Premises" means all premises where any Borrower conducts its
         business and has any rights of possession, including (without
         limitation) the premises legally described in EXHIBIT E attached
         hereto.

                  "Receivables" means each and every right of the Borrowers to
         the payment of money, whether such right to payment now exists or
         hereafter arises, whether such right to payment arises out of a sale,
         lease or other disposition of goods or other property, out of a
         rendering of services, out of a loan, out of the overpayment of taxes
         or other liabilities, or otherwise arises under any contract or
         agreement, whether such right to payment is created, generated or
         earned by any Borrower or by some other person who subsequently
         transfers such person's interest to any Borrower, whether such right to
         payment is or is not already earned by performance, and howsoever such
         right to payment may be evidenced, together with all other rights and
         interests (including all liens and

                                       -8-
<PAGE>

         security interests) which any Borrower may at any time have by law or
         agreement against any account debtor or other obligor obligated to make
         any such payment or against any property of such account debtor or
         other obligor; all including but not limited to all present and future
         accounts, contract rights, loans and obligations receivable, chattel
         papers, bonds, notes and other debt instruments, tax refunds and rights
         to payment in the nature of general intangibles.

                  "Reportable Event" shall have the meaning assigned to that
         term in Title IV of ERISA.

                  "Revolving Advance" has the meaning specified in Section 2.1.

                  "Revolving Floating Rate" means an annual rate equal to the
         sum of the Base Rate plus two percent (2.0%), which annual rate shall
         change when and as the Base Rate changes; PROVIDED, HOWEVER, that so
         long as no Default or Event of Default has occurred and is continuing,
         and effective upon the Lender's receipt and approval of MicroTel's
         audited financial statements for the fiscal year ending December 31,
         2000, complying with all of the requirements set forth in
         Section 6.1(a), such annual rate shall be reduced to the sum of the
         Base Rate plus one and one-half percent (1.5%) if the Net Income of
         Borrowers on a consolidated basis is greater than $250,000 (but not
         greater than $500,000) during such fiscal year, and such annual rate
         shall be reduced to the sum of the Base Rate plus one percent (1.0%)
         if such Net Income is greater than $500,000 during such fiscal year.

                  "Revolving Note" means the Borrowers' revolving promissory
         note, payable to the order of the Lender in substantially the form of
         EXHIBIT A hereto and any note or notes issued in substitution therefor,
         as the same may hereafter be amended, supplemented or restated from
         time to time.

                  "Security Documents" means this Agreement, the Collection
         Account Agreement, the Lockbox Agreement, the Patent and Trademark
         Security Agreements, and any other document delivered to the Lender
         from time to time to secure the Obligations, as the same may hereafter
         be amended, supplemented or restated from time to time.

                  "Security Interest" has the meaning given in Section 3.1.

                  "Subsidiary" means any corporation of which more than 50% of
         the outstanding shares of capital stock having general voting power
         under ordinary circumstances to elect a majority of the board of
         directors of such corporation, irrespective of whether or not at the
         time stock of any other class or classes shall have or might have
         voting power by reason of the happening of any contingency, is at the
         time directly or indirectly owned by the Borrowers, by the Borrowers
         and one or more other Subsidiaries, or by one or more other
         Subsidiaries.

                  "Tangible Net Worth" means the difference between (i) the
         tangible assets of MicroTel and its subsidiaries on a consolidated
         basis, which, in accordance with GAAP

                                       -9-
<PAGE>

         are tangible assets, after deducting adequate reserves in each case
         where, in accordance with GAAP, a reserve is proper and (ii) all Debt
         of MicroTel and its subsidiaries on a consolidated basis; PROVIDED,
         HOWEVER, that notwithstanding the foregoing in no event shall there be
         included as such tangible assets patents, trademarks, trade names,
         copyrights, licenses, goodwill, receivables from Affiliates, directors,
         officers or employees, prepaid expenses, deposits, deferred charges or
         treasury stock or any securities or Debt of MicroTel or its
         subsidiaries, or any other securities unless the same are readily
         marketable in the United States of America or entitled to be used as a
         credit against federal income tax liabilities, and any other assets
         designated from time to time by the Lender, in its sole discretion.

                  "Term Advances" has the meaning specified in Section 2.2.

                  "Term Floating Rate" means an annual rate equal to the sum of
         the Base Rate plus two percent (2.0%), which annual rate shall change
         when and as the Base Rate changes; PROVIDED, HOWEVER, that so long as
         no Default or Event of Default has occurred and is continuing, and
         effective upon the Lender's receipt and approval of MicroTel's audited
         financial statements for the fiscal year ending December 31, 2000,
         complying with all of the requirements set forth in Section 6.1(a),
         such annual rate shall be reduced to the sum of the Base Rate plus one
         and one-half percent (1.5%) if the Net Income of Borrowers on a
         consolidated basis is greater than $250,000 (but not greater than
         $500,000) during such fiscal year, and such annual rate shall be
         reduced to the sum of the Base Rate plus one percent (1.0%) if such Net
         Income is greater than $500,000 during such fiscal year.

                  "Term Notes" means the respective Borrowers' promissory notes,
         payable to the order of the Lender in substantially the forms
         of EXHIBIT B and EXHIBIT C hereto and any note or notes issued in
         substitution therefor, as the same may hereafter be amended,
         supplemented or restated from time to time.

                  "Termination Date" means the earliest of (i) the Maturity
         Date, (ii) the date the Borrowers terminate the Credit Facility, or
         (iii) the date the Lender demands payment of the Obligations after an
         Event of Default pursuant to Section 8.2.

                  "UCC" means the Uniform Commercial Code as in effect from time
         to time in the state designated in Section 9.13 as the state whose laws
         shall govern this Agreement, or in any other state whose laws are held
         to govern this Agreement or any portion hereof.

                  "XIT Borrowing Base" means, at any time the lesser of:

                  (a) the Maximum Line, minus the aggregate outstanding sum of
the Revolving Advances to CXR; or

                  (b) subject to change from time to time in the Lender's sole
discretion, the sum of:

                           (i) eighty-five percent (85%) of the Eligible
Accounts of XIT, plus

                                       -10-
<PAGE>

                           (ii) the lesser of (A) $200,000, minus the
aggregate outstanding sum of the Revolving Advances to CXR base upon its
Eligible Inventory, or (B) twenty-five percent (25%) of the Eligible
Inventory of XIT consisting of raw materials, and minus

                           (iii) any Availability Reserves for XIT.

                  Section 1.2 CROSS REFERENCES. All references in this Agreement
to Articles, Sections and subsections, shall be to Articles, Sections and
subsections of this Agreement unless otherwise explicitly specified.

                                  ARTICLE II

                     AMOUNT AND TERMS OF THE CREDIT FACILITY

                  Section 2.1 REVOLVING ADVANCES. The Lender agrees, on the
terms and subject to the conditions herein set forth, to make advances to the
respective Borrowers from time to time from the date all of the conditions
set forth in Section 4.1 are satisfied (the "FUNDING DATE") to the
Termination Date (the "REVOLVING ADVANCES"). The Lender shall have no
obligation to make a Revolving Advance to XIT if, after giving effect to such
requested Revolving Advance, the sum of the outstanding and unpaid Revolving
Advances to XIT would exceed the XIT Borrowing Base. The Lender shall have no
obligation to make a Revolving Loan to CXR if, after giving effect to such
requested Revolving Advance, the sum of the outstanding and unpaid Revolving
Advances to CXR would exceed the CXR Borrowing Base. The Borrowers'
obligation to pay the Revolving Advances shall be evidenced by the Revolving
Note and shall be secured by the Collateral as provided in Article III.
Within the limits set forth in this Section 2.1, each Borrower may borrow,
prepay pursuant to Section 2.9 and reborrow. The Borrowers agree to comply
with the following procedures in requesting Revolving Advances under this
Section 2.1:

                  (a) Each Borrower shall make each request for a Revolving
         Advance to the Lender before 10:30 a.m. (Los Angeles time) of the day
         of the requested Revolving Advance. Requests may be made in writing or
         by telephone, specifying the date of the requested Revolving Advance
         and the amount thereof. Each request shall be by (i) any officer of the
         applicable Borrower; or (ii) any person designated as the applicable
         Borrower's agent by any officer of the applicable Borrower in a writing
         delivered to the Lender; or (iii) any person whom the Lender
         reasonably believes to be an officer of the applicable Borrower or such
         a designated agent.

                  (b) Upon fulfillment of the applicable conditions set forth in
         Article IV, the Lender shall disburse the proceeds of the requested
         Revolving Advance by crediting the same to the applicable Borrower's
         demand deposit account maintained with Wells Fargo Bank, N.A. unless
         the Lender and the applicable Borrower shall agree in writing to
         another manner of disbursement. Upon the Lender's request, the
         applicable Borrower shall promptly confirm each telephonic request for
         an Advance by executing and delivering an appropriate confirmation
         certificate to the Lender. The Borrowers shall repay all Advances even
         if the Lender does not receive such confirmation and even if the person
         requesting an Advance was not in fact authorized to do so. Any request
         for an

                                       -11-
<PAGE>

         Advance, whether written or telephonic, shall be deemed to be a
         representation by the Borrowers that the conditions set forth in
         Section 4.2 have been satisfied as of the time of the request.

                  Section 2.2 TERM ADVANCES. The Lender agrees, on the terms
and subject to the conditions herein set forth, to make a one-time advance to
XIT on the Funding Date in the original principal amount of Six Hundred
Forty-Six Thousand Seven Hundred Sixty-Five Dollars ($646,765) and to make a
one-time advance to CXR on the Funding Date in the original principal amount
of Forty Thousand Two Hundred Thirty-Five Dollars ($40,235) (collectively,
the "TERM ADVANCES"). The Borrowers' obligation to pay the Term Advances
shall be evidenced by the Term Notes and shall be secured by the Collateral
as provided in Article III.

                  Section 2.3 PAYMENT OF TERM NOTES. The outstanding principal
balance of the Term Notes shall be due and payable as follows:

                  (a) As to the XIT Term Note, beginning on September 1, 2000,
         and on the first day of each month thereafter, in substantially equal
         monthly installments equal to the greater of $10,779.42 or an amount
         sufficient to fully amortize the principal balance of the XIT Term Note
         over an assumed term of sixty (60) months;

                  (b) As to the CXR Term Note, beginning on September 1, 2000,
         and on the first day of each month thereafter, in substantially equal
         monthly installments equal to the greater of $670.58 or an amount
         sufficient to fully amortize the principal balance of the CXR Term Note
         over an assumed term of sixty (60) months; and

                  (c) On the Termination Date, the entire unpaid principal
         balances of the Term Notes, and all unpaid interest accrued thereon,
         shall in any event be due and payable.

                  Section 2.4 INTEREST; MINIMUM INTEREST CHARGE; DEFAULT
INTEREST; PARTICIPATIONS; USURY.

                  (a) REVOLVING NOTE. Except as set forth in Sections 2.4(d),
         and 2.4(f), the outstanding principal balance of the Revolving Note
         shall bear interest at the Revolving Floating Rate.

                  (b) TERM NOTES. Except as set forth in Sections 2.4(d) and
         2.4(f), the outstanding principal balance of the Term Notes shall bear
         interest at the Term Floating Rate.

                  (c) MINIMUM INTEREST CHARGE. Notwithstanding the interest
         payable pursuant to Section 2.4(a), the Borrowers shall pay to the
         Lender interest on the Revolving Advances of not less than 15,000 per
         calendar month or, if the Revolving Floating Rate has been reduced
         based upon the Borrowers' consolidated Net Income during the fiscal
         year ending December 31, 2000, then $13,500 per calendar month (the
         "MINIMUM INTEREST CHARGE") during the term 1 of this Agreement, and the
         Borrowers shall pay any deficiency between the Minimum Interest Charge
         and the amount of interest otherwise

                                       -12-
<PAGE>

         calculated on the Revolving Advances under Sections 2.4(a) and 2.4(d)
         on the date and in the manner provided in Section 2.6.

                  (d) DEFAULT INTEREST RATE. At any time during any Default
         Period, in the Lender's sole discretion and without waiving any of its
         other rights and remedies, the Obligations outstanding from time to
         time shall bear interest at the Default Rate, effective for any periods
         designated by the Lender from time to time during that Default Period.

                  (e) PARTICIPATIONS. If any Person shall acquire a
         participation in the Advances under this Agreement, the Borrowers shall
         be obligated to the Lender to pay the full amount of all interest
         calculated under Sections 2.4(a) and 2.4(b), along with all other fees,
         charges and other amounts due under this Agreement, regardless if such
         Person elects to accept interest with respect to its participation at a
         lower rate than the Revolving Floating Rate or the Term Floating Rate,
         or otherwise elects to accept less than its prorata share of such
         fees, charges and other amounts due under this Agreement.

                  (f) USURY. In any event no rate change shall be put into
         effect which would result in a rate greater than the highest rate
         permitted by law. Notwithstanding anything to the contrary contained in
         any Loan Document, all agreements which either now are or which shall
         become agreements between any Borrower and the Lender are hereby
         limited so that in no contingency or event whatsoever shall the total
         liability for payments in the nature of interest, additional interest
         and other charges exceed the applicable limits imposed by any
         applicable usury laws. If any payments in the nature of interest,
         additional interest and other charges made under any Loan Document are
         held to be in excess of the limits imposed by any applicable usury
         laws, it is agreed that any such amount held to be in excess shall be
         considered payment of principal hereunder, and the indebtedness
         evidenced hereby shall be reduced by such amount so that the total
         liability for payments in the nature of interest, additional interest
         and other charges shall not exceed the applicable limits imposed by any
         applicable usury laws, in compliance with the desires of the Borrowers
         and the Lender. This provision shall never be superseded or waived and
         shall control every other provision of the Loan Documents and all
         agreements between any Borrower and the Lender, or their successors and
         assigns.

                  Section 2.5 FEES.

                  (a) ORIGINATION FEE. The Borrowers hereby agree to pay the
         Lender a fully earned and non-refundable origination fee of $36,870 due
         and payable upon the execution of this Agreement.

                  (b) UNUSED LINE FEE. For the purposes of this Section 2.5(b),
         "UNUSED AMOUNT" means the Maximum Line reduced by outstanding Revolving
         Advances. The Borrowers agree to pay to the Lender an unused line fee
         at the rate of one-quarter of one percent (0.25%) per annum on the
         average daily Unused Amount from the date of this Agreement to and
         including the Termination Date, due and payable quarterly in arrears on
         the first day of each calendar quarter and on the Termination Date.

                                       -13-
<PAGE>

                  (c) AUDIT FEES. The Borrowers hereby agree to pay the Lender,
         on demand, audit fees in connection with any audits or inspections
         conducted by the Lender of any Collateral or any Borrower's operations
         or business at the rates established from time to time by the Lender as
         its audit fees (which fees are currently $81.25 per hour per auditor),
         together with all actual out-of-pocket costs and expenses incurred in
         conducting any such audit or inspection.

                  Section 2.6 COMPUTATION OF INTEREST AND FEES; WHEN INTEREST
DUE AND PAYABLE. Interest accruing on the outstanding principal balance of
the Advances and fees hereunder outstanding from time to time shall be
computed on the basis of actual number of days elapsed in a year of 360 days.
Interest accruing on the Notes shall be due and payable in arrears on the
first day of each month and on the Termination Date.

                  Section 2.7 CAPITAL ADEQUACY. If any Related Lender
determines at any time that its Return has been reduced as a result of any
Rule Change, such Related Lender may require the Borrowers to pay it the
amount necessary to restore its return to what it would have been had there
been no Rule Change. For purposes of this Section 2.7:

                  (a) "Capital Adequacy Rule" means any law, rule, regulation,
         guideline, directive, requirement or request regarding capital
         adequacy, or the interpretation or administration thereof by any
         governmental or regulatory authority, central bank or comparable
         agency, whether or not having the force of law, that applies to any
         Related Lender. Such rules include rules requiring financial
         institutions to maintain total capital in amounts based upon
         percentages of outstanding loans, binding loan commitments and letters
         of credit.

                  (b) "Return", for any period, means the return as determined
         by such Related Lender on the Advances based upon its total capital
         requirements and a reasonable attribution formula that takes account of
         the capital adequacy rules then in effect. Return may be calculated for
         each calendar quarter and for the shorter period between the end of a
         calendar quarter and the date of termination in whole of this
         Agreement.

                  (c) "Rule Change" means any change in any Capital Adequacy
         Rule occurring after the date of this Agreement, but the term does not
         include any changes in applicable requirements that at the closing date
         are scheduled to take place under the existing Capital Adequacy Rules
         or any increases in the capital that any Related Lender is required to
         maintain to the extent that the increases are required due to a
         regulatory authority's assessment of the financial condition of such
         related lender.

                  (d) "Related Lender" includes (but is not limited to) the
         Lender, any parent corporation of the Lender and any assignee of any
         interest of the Lender hereunder and any participant in the loans made
         hereunder.

Certificates of any Related Lender sent to the Borrowers from time to time
claiming compensation under this Section 2.7, stating the reason therefor and
setting forth in reasonable detail the calculation of the additional amount or
amounts to be paid to the Related Lender

                                       -14-
<PAGE>

hereunder to restore its Return shall be conclusive absent manifest error. In
determining such amounts, the Related Lender may use any reasonable averaging
and attribution methods.

                  Section 2.8 MATURITY DATE. This Agreement and the other Loan
Documents shall become effective as of the date set forth on the first page
hereof and shall continue in full force and effect for a term ending on August
16, 2003 (the "MATURITY DATE"), unless earlier terminated by Lender or Borrowers
pursuant to the terms hereof. Upon the Termination Date, Borrowers shall
immediately pay to Lender, in full, all outstanding and unpaid Obligations and
shall furnish cash collateral to Lender in such amounts as Lender determines are
reasonably necessary to secure Lender from loss, cost, damage or expense,
including attorneys' fees and legal expenses, in connection with any contingent
Obligations, including checks and other payments provisionally credited to the
Obligations and/or as to which Lender has not yet received final and
indefeasible payment.

                  Section 2.9 VOLUNTARY PREPAYMENT; TERMINATION OF THE CREDIT
FACILITY BY THE BORROWERS. Except as otherwise provided herein, the Borrowers
may prepay the Revolving Advances in whole at any time or from time to time in
part. The Borrowers may prepay the Term Advances (other than in accordance with
Section 2.3), or terminate the Credit Facility at any time if they (i) give the
Lender at least 30 days' prior written notice and (ii) pay the Lender the
prepayment or termination fees in accordance with Section 2.10. Any prepayment
of the Term Advances (other than in accordance with Section 2.3) must be in an
amount not less than $100,000 or an integral multiple thereof. Any partial
prepayments of the Term Notes (other than in accordance with Section 2.3) shall
be applied to principal payments due and owing in inverse order of their
maturities. Upon termination of the Credit Facility and payment and performance
of all Obligations, the Lender shall release or terminate the Security Interest
and the Security Documents to which the Borrowers are entitled by law.

                  Section 2.10 TERMINATION AND PREPAYMENT FEES; WAIVER OF
TERMINATION AND PREPAYMENT FEES.

                  (a) TERMINATION FEES. If the Credit Facility is terminated for
         any reason as of a date other than the Maturity Date, the Borrowers
         shall pay to the Lender a fee in an amount equal to a percentage of the
         Maximum Line as follows: (i) three percent (3%) if the termination
         occurs on or before the first anniversary of the Funding Date; (ii) two
         percent (2%) if the termination occurs after the first anniversary of
         the Funding Date but on or before the second anniversary of the Funding
         Date; and (iii) one percent (1%) if the termination occurs after the
         second anniversary of the Funding Date.

                  (b) PREPAYMENT FEES. If any Term Note is prepaid for any
         reason except in accordance with Section 2.3, the Borrowers shall pay
         to the Lender a fee in an amount equal to a percentage of the amount
         prepaid as follows: (i) three percent (3%) if prepayment occurs on or
         before the first anniversary of the Funding Date; (ii) two percent (2%)
         if prepayment occurs after the first anniversary of the Funding Date
         but on or before the second anniversary of the Funding Date; and (iii)
         one percent (1%) if prepayment occurs after the second anniversary of
         the Funding Date.

                                       -15-
<PAGE>

                  (c) WAIVER OF TERMINATION AND PREPAYMENT FEES. The Borrowers
         will not be required to pay the termination and prepayment fees
         otherwise due under this Section 2.10 if such termination or prepayment
         is made because of refinancing by an affiliate of the Lender.

                  Section 2.11 MANDATORY PREPAYMENT. Without notice or demand,
if the outstanding principal balance of the Revolving Advances to XIT shall at
any time exceed the XIT Borrowing Base, XIT shall immediately prepay such
Revolving Advances to the extent necessary to eliminate such excess, and if the
outstanding principal balance of the Revolving Advances to CXR shall at any time
exceed the CXR Borrowing Base, CXR shall immediately prepay such Revolving
Advances to the extent necessary to eliminate such excess. Any payment received
by the Lender under this Section 2.11 or under Section 2.9 may be applied to the
Obligations, in such order and in such amounts as the Lender, in its discretion,
may from time to time determine; provided that any prepayment under Section 2.9
which any Borrower designates as a partial prepayment of its Term Note shall be
applied to principal installments of such Term Note in inverse order of
maturity.

                  Section 2.12 PAYMENT. For purposes of calculating the amount
of Revolving Advances available to any Borrower, each payment will be applied
(conditional upon final collection) to the outstanding principal balance of the
Revolving Advances to such Borrower on the Banking Day of receipt by Lender of
advices of deposit in the applicable Collateral Account, if such advices are
received within sufficient time (in accordance with Lender's usual and customary
practices as in effect from time to time) to credit such Borrower's loan account
on such day, and if not, then on the next Banking Day. Such payment shall be
applied in any order or manner of application satisfactory to Lender. For
purposes of calculating interest, Lender shall be entitled to charge Borrowers
for two (2) Banking Day of clearance at the Revolving Floating Rate on all
payments deposited into the Collateral Accounts, whether or not such payments
are applied to reduce the outstanding principal balance of the Revolving Note.
This clearance charge is acknowledged to constitute an integral part of the
pricing of the loans and financial accommodations contemplated herein, and shall
apply whether or not the amount of payments deposited exceeds the obligations
outstanding. Notwithstanding anything in Section 2.1, the Borrowers hereby
authorize the Lender, in its discretion at any time or from time to time without
the Borrowers' request and even if the conditions set forth in Section 4.2 would
not be satisfied, to make a Revolving Advance in an amount equal to the portion
of the Obligations from time to time due and payable. At Lender's option, all
principal, interest, fees, costs, expenses and other charges provided for in
this Agreement or the other Loan Documents may be charged directly to the loan
accounts of Borrowers.

                  Section 2.13 PAYMENT ON NON-BANKING DAYS. Whenever any payment
to be made hereunder shall be stated to be due on a day which is not a Banking
Day, such payment may be made on the next succeeding Banking Day, and such
extension of time shall in such case be included in the computation of interest
on the Advances or the fees hereunder, as the case may be.

                  Section 2.14 USE OF PROCEEDS. The Borrowers shall use the
initial proceeds of Advances only for: (a) payment to each of the Persons listed
in the disbursement direction letter

                                       -16-
<PAGE>

furnished by Borrowers to Lender on or about the date hereof and (b) costs,
expenses and fees in connection with the preparation, negotiation, execution and
delivery of this Agreement and the other Loan Documents. All other Advances made
to any Borrower shall be used by such Borrower only for general operating,
working capital and other proper corporate purposes of such Borrower not
otherwise prohibited by the terms hereof.

                  Section 2.15 LIABILITY RECORDS. The Lender may maintain from
time to time, at its discretion, liability records as to the Obligations. All
entries made on any such record shall be presumed correct until the Borrowers
establish the contrary. Upon the Lender's demand, the Borrowers will admit and
certify in writing the exact principal balance of the Obligations that the
Borrowers then assert to be outstanding. Any billing statement or accounting
rendered by the Lender shall be conclusive and fully binding on the Borrowers
unless the Borrowers give the Lender specific written notice of exception within
30 days after receipt.

                                 ARTICLE III

                     SECURITY INTEREST; OCCUPANCY; SETOFF

                  Section 3.1 GRANT OF SECURITY INTEREST. The Borrowers hereby
pledge, assign and grant to the Lender a security interest (collectively
referred to as the "SECURITY INTEREST") in the Collateral, as security for the
payment and performance of the Obligations.

                  Section 3.2 NOTIFICATION OF ACCOUNT DEBTORS AND OTHER
OBLIGORS. The Lender may at any time (whether or not a Default Period then
exists) notify any account debtor or other person obligated to pay the amount
due that such right to payment has been assigned or transferred to the Lender
for security and shall be paid directly to the Lender. The Borrowers will
join in giving such notice if the Lender so requests. At any time after the
Borrowers or the Lender give such notice to an account debtor or other
obligor, the Lender may, but need not, in the Lender's name or in any
Borrower's name (a) demand, sue for, collect or receive any money or property
at any time payable or receivable on account of, or securing, any such right
to payment, or grant any extension to, make any compromise or settlement with
or otherwise agree to waive, modify, amend or change the obligations
(including collateral obligations) of any such account debtor or other
obligor; and (b) as the Borrowers' agent and attorney-in-fact, notify the
United States Postal Service to change the address for delivery of any
Borrower's mail to any address designated by the Lender, otherwise intercept
any Borrower's mail, and receive, open and dispose of any Borrower's mail,
applying all Collateral as permitted under this Agreement and holding all
other mail for such Borrower's account or forwarding such mail to such
Borrower's last known address.

                  Section 3.3 ASSIGNMENT OF INSURANCE. As additional security
for the payment and performance of the Obligations, the Borrowers hereby
assign to the Lender any and all monies (including, without limitation,
proceeds of insurance and refunds of unearned premiums) due or to become due
under, and all other rights of the Borrowers with respect to, any and all
policies of insurance now or at any time hereafter covering the Collateral or
any evidence thereof or any business records or valuable papers pertaining
thereto, and the Borrowers hereby direct the issuer of any such policy to pay
all such monies directly to the Lender. At any time, whether or not a

                                       -17-
<PAGE>

Default Period then exists, the Lender may (but need not), in the Lender's name
or in any Borrower's name, execute and deliver proof of claim, receive all such
monies, endorse checks and other instruments representing payment of such
monies, and adjust, litigate, compromise or release any claim against the issuer
of any such policy.

                  Section 3.4 OCCUPANCY.

                  (a) The Borrowers hereby irrevocably grant to the Lender the
         right to take possession of the Premises at any time during a Default
         Period.

                  (b) The Lender may use the Premises only to hold, process,
         manufacture, sell, use, store, liquidate, realize upon or otherwise
         dispose of goods that are Collateral and for other purposes that the
         Lender may in good faith deem to be related or incidental purposes.

                  (c) The Lender's right to hold the Premises shall cease and
         terminate upon the earlier of (i) payment in full and discharge of all
         Obligations and termination of the Commitment, and (ii) final sale or
         disposition of all goods constituting Collateral and delivery of all
         such goods to purchasers.

                  (d) The Lender shall not be obligated to pay or account for
         any rent or other compensation for the possession, occupancy or use of
         any of the Premises; provided, however, that if the Lender does pay or
         account for any rent or other compensation for the possession,
         occupancy or use of any of the Premises, the Borrowers shall reimburse
         the Lender promptly for the full amount thereof. In addition, the
         Borrowers will pay, or reimburse the Lender for, all taxes, fees,
         duties, imposts, charges and expenses at any time incurred by or
         imposed upon the Lender by reason of the execution, delivery,
         existence, recordation, performance or enforcement of this Agreement or
         the provisions of this Section 3.4.

                  Section 3.5 LICENSE. Without limiting the generality of the
Patent and Trademark Security Agreements, the Borrowers hereby grant to the
Lender a non-exclusive, worldwide and royalty-free license to use or otherwise
exploit all trademarks, franchises, trade names, copyrights and patents of the
Borrowers for the purpose of selling, leasing or otherwise disposing of any or
all Collateral during any Default Period.

                  Section 3.6 FINANCING STATEMENT. A carbon, photographic or
other reproduction of this Agreement or of any financing statements signed by
any Borrower is sufficient as a financing statement and may be filed as a
financing statement in any state to perfect the security interests granted
hereby. For this purpose, the following information is set forth:

                  Section 3.7 SETOFF. The Borrowers agree that the Lender may at
any time or from time to time, at its sole discretion and without demand and
without notice to anyone, setoff any liability owed to any Borrower by the
Lender, whether or not due, against any Obligation, whether or not due. In
addition, each other Person holding a participating interest in any Obligations
shall have the right to appropriate or setoff any deposit or other liability
then owed

                                       -18-
<PAGE>

by such Person to any Borrower, whether or not due, and apply the same to the
payment of said participating interest, as fully as if such Person had lent
directly to such Borrower the amount of such participating interest.

                  Name and address of Debtors:

                  XIT Corporation
                  CXR Telcom Corporation
                  9485 Haven Avenue, Suite 100
                  Rancho Cucamonga, California 91730

                  Federal Tax Identification No. 77-0226211

                  Name and address of Secured Party:

                  Wells Fargo Business Credit, Inc.
                  245 South Los Robles Avenue, Suite 600
                  Pasadena, California 91101

                                  ARTICLE IV

                             CONDITIONS OF LENDING

                  Section 4.1 CONDITIONS PRECEDENT TO THE INITIAL REVOLVING
ADVANCES AND THE TERM ADVANCES. The Lender's obligation to make the initial
Revolving Advances and the Term Advances hereunder shall be subject to the
condition precedent that the Lender shall have received all of the following,
each in form and substance satisfactory to the Lender:

                  (a) This Agreement, properly executed by the Borrowers.

                  (b) The Notes, properly executed by the Borrowers.

                  (c) A true and correct copy of any and all leases pursuant to
         which any Borrower is leasing the Premises, together with a landlord's
         disclaimer and consent with respect to each such lease.

                  (d) A true and correct copy of any and all mortgages pursuant
         to which any Borrower has mortgaged the Premises, together with a
         mortgagee's disclaimer and consent with respect to each such mortgage.

                  (e) A true and correct copy of any and all agreements pursuant
         to which any Borrower's property is in the possession of any Person
         other than such Borrower, together with, in the case of any goods held
         by such Person for resale, (i) a consignee's acknowledgment and waiver
         of liens, (ii) UCC financing statements sufficient to protect such
         Borrower's and the Lender's interests in such goods, and (iii) UCC
         searches showing that no other secured party has filed a financing
         statement against such Person

                                       -19-

<PAGE>

         and covering property similar to such Borrower's other than such
         Borrower, or if there exists any such secured party, evidence that each
         such secured party has received notice from such Borrower and the
         Lender sufficient to protect such Borrower's and the Lender's interests
         in such Borrower's goods from any claim by such secured party.

                  (f) An acknowledgment and waiver of liens from each warehouse
         in which any Borrower is storing Inventory.

                  (g) A true and correct copy of any and all agreements pursuant
         to which any Borrower's property is in the possession of any Person
         other than such Borrower, together with, (i) an acknowledgment and
         waiver of liens from each subcontractor who has possession of such
         Borrower's goods from time to time, (ii) UCC financing statements
         sufficient to protect such Borrower's and the Lender's interests in
         such goods, and (iii) UCC searches showing that no other secured party
         has filed a financing statement covering such Person's property other
         than such Borrower, or if there exists any such secured party, evidence
         that each such secured party has received notice from such Borrower and
         the Lender sufficient to protect such Borrower's and the Lender's
         interests in such Borrower's goods from any claim by such secured
         party.

                  (h) The Collection Account Agreements, properly executed by
         the respective Borrowers and Wells Fargo Bank, N.A.

                  (i) The Lockbox Agreements, properly executed by the
         respective Borrowers, Wells Fargo Bank, N.A. and Regulus West, LLC.

                  (j) The Patent and Trademark Security Agreements, properly
         executed by the respective Borrowers.

                  (k) Current searches of appropriate filing offices showing
         that (i) no state or federal tax liens have been filed and remain in
         effect against any Borrower, (ii) no financing statements or
         assignments of patents, trademarks or copyrights have been filed and
         remain in effect against any Borrower except those financing statements
         and assignments of patents, trademarks or copyrights relating to
         Permitted Liens or to liens held by Persons who have agreed in writing
         that upon receipt of proceeds of the Advances, they will deliver UCC
         releases and/or terminations and releases of such assignments of
         patents, trademarks or copyrights satisfactory to the Lender, and (iii)
         the Lender has duly filed all financing statements necessary to perfect
         the Security Interest, to the extent the Security Interest is capable
         of being perfected by filing.

                  (1) A certificate of each Borrower's Secretary or Assistant
         Secretary certifying as to (i) the resolutions of such Borrower's
         directors and, if required, shareholders, authorizing the execution,
         delivery and performance of the Loan Documents, (ii) such Borrower's
         articles of incorporation and bylaws, and (iii) the signatures of such
         Borrower's officers or agents authorized to execute and deliver the
         Loan Documents and other instruments, agreements and certificates,
         including Advance requests, on such Borrower's behalf.

                                       -20-
<PAGE>

                  (m) A current certificate issued by the Secretary of State of
         each Borrower's state of incorporation, certifying that such Borrower
         is in compliance with all applicable organizational requirements of
         such state.

                  (n) Evidence that each Borrower is duly licensed or qualified
         to transact business in all jurisdictions where the character of the
         property owned or leased or the nature of the business transacted by it
         makes such licensing or qualification necessary.

                  (o) A certificate of an officer of each Borrower confirming,
         in his personal capacity, the representations and warranties set forth
         in Article V.

                  (p) A support agreement in favor of the Lender, properly
         executed by Carmine Oliva in his personal capacity.

                  (q) An opinion of counsel to the Borrowers, addressed to the
         Lender.

                  (r) Certificates of the insurance required hereunder, with all
         hazard insurance containing a lender's loss payable endorsement in the
         Lender's favor and with all liability insurance naming the Lender as an
         additional insured.

                  (s) A separate guaranty, properly executed by each Guarantor,
         pursuant to which each Guarantor unconditionally guarantees the full
         and prompt payment of all Obligations to the extent of each such
         guaranty.

                  (t) A security agreement, properly executed by MicroTel.

                  (u) A waiver of interest, properly executed by the spouse of
         Carmine Oliva, waiving any and all interest such spouse may have in
         the assets disclosed to the Lender in the financial statements of such
         Guarantor and in any future earnings or assets acquired by such
         Guarantor.

                  (v) An opinion of counsel to each Guarantor, addressed to the
         Lender.

                  (w) Payment of the fees and commissions due through the date
         of the initial Advance under Section 2.5 and expenses incurred by the
         Lender through such date and required to be paid by the Borrowers under
         Section 9.6, including all legal expenses incurred through the date of
         this Agreement.

                  (x) Evidence that Availability as of the Funding Date is not
         less than Four Hundred Thousand Dollars ($400,000) after giving effect
         to the amount paid or to be paid to Borrowers' prior lender to retire
         Borrowers' line of credit with such prior lender and bringing all other
         obligations to a current status satisfactory to Lender.

                  (y) At Borrowers' cost, an appraisal of all Inventory and
         Equipment, issued by an appraiser acceptable to Lender and in form,
         substance and reflecting values satisfactory to Lender in its sole
         discretion.

                                       -21-
<PAGE>

                  (z) Completion of a field review of the books and records of
         Borrowers and such other information with respect to the Collateral as
         Lender may require and a review of Borrowers' projections, budgets,
         business plans, cash flows and such other financial information as
         Lender may require, the results of all of which shall be satisfactory
         to Lender in its sole discretion.

                  (aa) Evidence that there has been no material adverse change,
         as determined by Lender, in the financial condition or business of any
         Borrower, nor any material decline, as determined by Lender, in the
         market value of any Collateral or a substantial or material portion of
         the assets of any Borrower since the date of the latest financial
         statements of Borrowers delivered to Lender prior to the Funding Date.

                  (bb) Evidence that Borrowers have opened bank accounts of a
         type mutually acceptable to Borrowers and Lender, including, without
         limitation, the Collateral Accounts and any other accounts contemplated
         by the Collection Account Agreements or the Lockbox Agreements.

                  (cc) Such other documents as the Lender in its sole discretion
         may require.

                  Section 4.2 CONDITIONS PRECEDENT TO ALL ADVANCES. The Lender's
obligation to make each Advance shall be subject to the further conditions
precedent that on such date:

                  (a) the representations and warranties contained in Article V
         are correct on and as of the date of such Advance as though made on and
         as of such date, except to the extent that such representations and
         warranties relate solely to an earlier date;

                  (b) no material adverse change, as determined by Lender, shall
         have occurred in the financial condition or business of any Borrower
         nor any material decline, as determined by Lender, in the market value
         of any Collateral or a substantial or material portion of the assets of
         any Borrower since the date of the latest financial statements
         delivered to Lender prior to the Funding Date; and

                  (c) no event has occurred and is continuing, or would result
         from such Advance which constitutes a Default or an Event of Default.

                                  ARTICLE V

                        REPRESENTATIONS AND WARRANTIES

                  The Borrowers represent and warrant to the Lender as follows:

                  Section 5.1 CORPORATE EXISTENCE AND POWER; NAME; CHIEF
EXECUTIVE OFFICE; INVENTORY AND EQUIPMENT LOCATIONS; TAX IDENTIFICATION
NUMBER. Each Borrower is a corporation, duly organized, validly existing and
in good standing under the laws of its state of incorporation and is duly
licensed or qualified to transact business in all jurisdictions where the
character of the property owned or leased or the nature of the business
transacted by it makes such licensing or qualification necessary. Each
Borrower has all requisite power and authority,

                                       -22-
<PAGE>

corporate or otherwise, to conduct its business, to own its properties and to
execute and deliver, and to perform all of its obligations under, the Loan
Documents. During its existence, each Borrower has done business solely under
the names set forth in SCHEDULE 5.1 hereto. Each Borrower's chief executive
office and principal place of business is located at the address set forth in
SCHEDULE 5.1 hereto, and all of such Borrower's records relating to its
business or the Collateral are kept at that location. All Inventory and
Equipment is located at that location or at one of the other locations set
forth in SCHEDULE 5.1 hereto. Each Borrower's tax identification number is
correctly set forth in Section 3.6 hereto.

                  Section 5.2 AUTHORIZATION OF BORROWING; NO CONFLICT AS TO
LAW OR AGREEMENTS. The execution, delivery and performance by each Borrower
of the Loan Documents and the borrowings from time to time hereunder have
been duly authorized by all necessary corporate action and do not and will
not (i) require any consent or approval of such Borrower's stockholders; (ii)
require any authorization, consent or approval by, or registration,
declaration or filing with, or notice to, any governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, or
any third party, except such authorization, consent, approval, registration,
declaration, filing or notice as has been obtained, accomplished or given
prior to the date hereof; (iii) violate any provision of any law, rule or
regulation (including, without limitation, Regulation X of the Board of
Governors of the Federal Reserve System) or of any order, writ, injunction or
decree presently in effect having applicability to such Borrower or of such
Borrower's articles of incorporation or bylaws; (iv) result in a breach of or
constitute a default under any indenture or loan or credit agreement or any
other material agreement, lease or instrument to which such Borrower is a
party or by which it or its properties may be bound or affected; or (v)
result in, or require, the creation or imposition of any mortgage, deed of
trust, pledge, lien, security interest or other charge or encumbrance of any
nature (other than the Security Interest) upon or with respect to any of the
properties now owned or hereafter acquired by such Borrower.

                  Section 5.3 LEGAL AGREEMENTS. This Agreement constitutes
and, upon due execution by the Borrowers, the other Loan Documents will
constitute the legal, valid and binding obligations of the Borrowers,
enforceable against the Borrowers in accordance with their respective terms.

                  Section 5.4 SUBSIDIARIES. Except as set forth in SCHEDULE 5.4
hereto, the Borrowers have no Subsidiaries.

                  Section 5.5 FINANCIAL CONDITION; NO ADVERSE CHANGE. The
Borrowers have heretofore furnished to the Lender the audited financial
statements of MicroTel and its subsidiaries for their fiscal year ended
December 31, 1999 and their unaudited financial statements for the fiscal
year-to-date period ended June 30, 2000 and those statements fairly present
each Borrower's financial condition on the dates thereof and the results of
its operations and cash flows for the periods then ended and were prepared in
accordance with GAAP. Since the date of the most recent financial statements,
there has been no material adverse change in any Borrower's business,
properties or condition (financial or otherwise).

                                       -23-
<PAGE>

                  Section 5.6 LITIGATION. There are no actions, suits or
proceedings pending or, to any Borrower's knowledge, threatened against or
affecting any Borrower or any of its Affiliates or the properties of any
Borrower or any of its Affiliates before any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, which, if determined adversely to any Borrower or any of its
Affiliates, would have a material adverse effect on the financial condition,
properties or operations of any Borrower or any of its Affiliates.

                  Section 5.7 REGULATION U. Each Borrower is not engaged in
the business of extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulation U of the Board of Governors of
the Federal Reserve System, as amended), and no part of the proceeds of any
Advance will be used to purchase or carry any margin stock or to extend
credit to others for the purpose of purchasing or carrying any margin stock
or to retire any indebtedness which was originally incurred to purchase or
carry any margin stock or for any other purpose which might cause any of the
Advances to be considered a "purpose credit" within the meaning of Regulation
U of the Board of Governors of the Federal Reserve System, as amended.

                  Section 5.8 TAXES. Each Borrower and its Affiliates have
paid or caused to be paid to the proper authorities when due all federal,
state and local taxes required to be withheld by each of them. Each Borrower
and its Affiliates have filed all federal, state and local tax returns which
to the knowledge of the officers of the Borrowers or any Affiliate, as the
case may be, are required to be filed, and the Borrowers and their Affiliates
have paid or caused to be paid to the respective taxing authorities all taxes
as shown on said returns or on any assessment received by any of them to the
extent such taxes have become due.

                  Section 5.9 TITLES AND LIENS. Each Borrower has good and
absolute title to all Collateral described in the collateral reports provided
to the Lender and all other Collateral, properties and assets reflected in
the latest financial statements referred to in Section 5.5 and all proceeds
thereof, free and clear of all mortgages, security interests, liens and
encumbrances, except for Permitted Liens. No financing statement naming any
Borrower as debtor is on file in any office except to perfect only Permitted
Liens.

                  Section 5.10 PLANS. Except as disclosed to the Lender in
writing prior to the date hereof, neither the Borrowers nor any of their
Affiliates maintain or have maintained any Plan. Neither the Borrowers nor
any Affiliate have received any notice or has any knowledge to the effect
that they are not in full compliance with any of the requirements of ERISA.
No Reportable Event or other fact or circumstance which may have an adverse
effect on the Plan's tax qualified status exists in connection with any Plan.
Neither the Borrowers nor any of their Affiliates have:

                  (a) Any accumulated funding deficiency within the meaning of
         ERISA; or

                  (b) Any liability or know of any fact or circumstances which
         could result in any liability to the Pension Benefit Guaranty
         Corporation, the Internal Revenue Service, the Department of Labor or
         any participant in connection with any Plan (other than

                                       -24-
<PAGE>

         accrued benefits which or which may become payable to participants or
         beneficiaries of any such Plan).

                  Section 5.11 DEFAULT. Each Borrower is in compliance with all
provisions of all agreements, instruments, decrees and orders to which it is a
party or by which it or its property is bound or affected, the breach or default
of which could have a material adverse effect on such Borrower's financial
condition, properties or operations.

                  Section 5.12 ENVIRONMENTAL MATTERS.

                  (a) DEFINITIONS. As used in this Agreement, the following
         terms shall have the following meanings:

                           (i) "Environmental Law" means any federal, state,
                  local or other governmental statute, regulation, law or
                  ordinance dealing with the protection of human health and the
                  environment.

                           (ii) "Hazardous Substances" means pollutants,
                  contaminants, hazardous substances, hazardous wastes,
                  petroleum and fractions thereof, and all other chemicals,
                  wastes, substances and materials listed in, regulated by or
                  identified in any Environmental Law.

                  (b) To the Borrowers' best knowledge, there are not present
         in, on or under the Premises any Hazardous Substances in such form or
         quantity as to create any liability or obligation for either the
         Borrowers or the Lender under common law of any jurisdiction or under
         any Environmental Law, and no Hazardous Substances have ever been
         stored, buried, spilled, leaked, discharged, emitted or released in, on
         or under the Premises in such a way as to create any such liability.

                  (c) To the Borrowers' best knowledge, the Borrowers have not
         disposed of Hazardous Substances in such a manner as to create any
         liability under any Environmental Law.

                  (d) There are not and there never have been any requests,
         claims, notices, investigations, demands, administrative proceedings,
         hearings or litigation, relating in any way to the Premises or the
         Borrowers, alleging liability under, violation of, or noncompliance
         with any Environmental Law or any license, permit or other
         authorization issued pursuant thereto. To the Borrowers' best
         knowledge, no such matter is threatened or impending.

                  (e) To the Borrowers' best knowledge, the Borrowers'
         businesses are and have in the past always been conducted in accordance
         with all Environmental Laws and all licenses, permits and other
         authorizations required pursuant to any Environmental Law and necessary
         for the lawful and efficient operation of such businesses are in the
         Borrowers' possession and are in full force and effect. No permit
         required under any Environmental Law is scheduled to expire within 12
         months and there is no threat that any such permit will be withdrawn,
         terminated, limited or materially changed.

                                       -25-
<PAGE>

                  (f) To the Borrowers' best knowledge, the Premises are not and
         never have been listed on the National Priorities List, the
         Comprehensive Environmental Response, Compensation and Liability
         Information System or any similar federal, state or local list,
         schedule, log, inventory or database.

                  (g) The Borrowers have delivered to Lender all environmental
         assessments, audits, reports, permits, licenses and other documents
         describing or relating in any way to the Premises or Borrowers'
         businesses.

                  Section 5.13 SUBMISSIONS TO LENDER. All financial and other
information provided to the Lender by or on behalf of the Borrowers in
connection with the Borrowers' request for the credit facilities contemplated
hereby is true and correct in all material respects and, as to projections,
valuations or pro forma financial statements, present a good faith opinion as to
such projections, valuations and pro forma condition and results.

                  Section 5.14 FINANCING STATEMENTS. The Borrowers have provided
to the Lender signed financing statements sufficient when filed to perfect the
Security Interest and the other security interests created by the Security
Documents. When such financing statements are filed in the offices noted
therein, the Lender will have a valid and perfected security interest in all
Collateral and all other collateral described in the Security Documents which is
capable of being perfected by filing financing statements. None of the
Collateral or other collateral covered by the Security Documents is or will
become a fixture on real estate, unless a sufficient fixture filing is in effect
with respect thereto.

                  Section 5.15 RIGHTS TO PAYMENT. Each right to payment and each
instrument, document, chattel paper and other agreement constituting or
evidencing Collateral or other collateral covered by the Security Documents is
(or, in the case of all future Collateral or such other collateral, will be when
arising or issued) the valid, genuine and legally enforceable obligation,
subject to no defense, setoff or counterclaim, of the account debtor or other
obligor named therein or in the Borrowers' records pertaining thereto as being
obligated to pay such obligation.

                  Section 5.16 BANK ACCOUNTS. All of the deposit accounts,
investment accounts or other accounts in the name of or used by Borrowers
maintained at any bank or other financial institution are set forth on SCHEDULE
5.16 hereto.

                  Section 5.17 FINANCIAL SOLVENCY. Both before and after giving
effect to the all of the transactions contemplated in the Loan Documents, none
of the Borrowers or their Affiliates:

                  (a) was or will be insolvent, as that term is used and defined
         in Section 101(32) of the United States Bankruptcy Code and Section 2
         of the Uniform Fraudulent Transfer Act;

                                       -26-
<PAGE>

                  (b) has unreasonably small capital or is engaged or about to
         engage in a business or a transaction for which any remaining assets of
         the Borrower or such Affiliate are unreasonably small;

                  (c) by executing, delivering or performing its obligations
         under the Loan Documents or other documents to which it is a party or
         by taking any action with respect thereto, intends to, nor believes
         that it will, incur debts beyond its ability to pay them as they
         mature;

                  (d) by executing, delivering or performing its obligations
         under the Loan Documents or other documents to which it is a party or
         by taking any action with respect thereto, intends to hinder, delay or
         defraud either its present or future creditors; and

                  (e) at this time contemplates filing a petition in bankruptcy
         or for an arrangement or reorganization or similar proceeding under any
         law any jurisdiction, nor, to the best knowledge of the Borrowers, is
         the subject of any actual, pending or threatened bankruptcy, insolvency
         or similar proceedings under any law of any jurisdiction.

                                  ARTICLE VI

                       BORROWER'S AFFIRMATIVE COVENANTS

                  So long as the Obligations shall remain unpaid, or the Credit
Facility shall remain outstanding, the Borrowers will comply with the following
requirements, unless the Lender shall otherwise consent in writing:

                  Section 6.1 REPORTING REQUIREMENTS. The Borrowers will
deliver, or cause to be delivered, to the Lender each of the following, which
shall be in form and detail acceptable to the Lender:

                  (a) as soon as available, and in any event within 90 days
         after the end of each fiscal year of the Borrowers, the audited
         financial statements of MicroTel and its subsidiaries on a consolidated
         and consolidating basis, with the unqualified opinion of independent
         certified public accountants selected by the Borrowers and acceptable
         to the Lender, which annual financial statements shall include the
         balance sheets as at the end of such fiscal year and the related
         statements of the income, retained earnings and cash flows for the
         fiscal year then ended, all in reasonable detail and prepared in
         accordance with GAAP, together with (i) copies of all management
         letters prepared by such accountants; (ii) a report signed by such
         accountants stating that in making the investigations necessary for
         said opinion they obtained no knowledge, except as specifically stated,
         of any Default or Event of Default hereunder and all relevant facts in
         reasonable detail to evidence, and the computations as to, whether or
         not the Borrowers are in compliance with the requirements set forth in
         Sections 6.12, 6.13, 6.14, 6.15, and 7.10; and (iii) a certificate of
         the Borrowers' chief financial officer stating that such financial
         statements have been prepared in accordance with GAAP and whether or
         not

                                       -27-
<PAGE>

         such officer has knowledge of the occurrence of any Default or Event of
         Default hereunder and, if so, stating in reasonable detail the facts
         with respect thereto;

                  (b) as soon as available and in any event within 25 days after
         the end of each month, unaudited/internal balance sheets and statements
         of income and retained earnings of MicroTel and its subsidiaries, on a
         consolidated and consolidating basis, as at the end of and for such
         month and for the year to date period then ended, in reasonable detail
         and stating in comparative form the figures for the corresponding date
         and periods in the previous year, all prepared in accordance with GAAP,
         subject to year-end audit adjustments; and accompanied by a certificate
         of the Borrowers' chief financial officer, substantially in the form of
         EXHIBIT D hereto stating (i) that such financial statements have been
         prepared in accordance with GAAP, subject to year-end audit
         adjustments, (ii) whether or not such officer has knowledge of the
         occurrence of any Default or Event of Default hereunder not theretofore
         reported and remedied and, if so, stating in reasonable detail the
         facts with respect thereto, and (iii) all relevant facts in reasonable
         detail to evidence, and the computations as to, whether or not the
         Borrowers are in compliance with the requirements set forth in Sections
         6.12, 6.13, 6.14, 6.15,, and 7.10;

                  (c) within 15 days after the end of each month or more
         frequently if the Lender so requires, agings of the Borrowers' accounts
         receivable and their accounts payable, a report of open purchase
         orders, a summary perpetual Inventory report, with a summary breakdown
         of Inventory by classification and location, a detailed report
         regarding sales contracts and approved overages, and a calculation of
         the Borrowers' Accounts, Eligible Accounts, Inventory and Eligible
         Inventory as at the end of such month or shorter time period;

                  (d) at least 30 days before the beginning of each fiscal year
         of the Borrowers, the projected balance sheets and income statements of
         MicroTel and its subsidiaries, on a consolidated and consolidating
         basis, for each month of such year, each in reasonable detail,
         representing the Borrowers' good faith projections and certified by the
         Borrowers' chief financial officer as being the most accurate
         projections available and identical to the projections used by the
         Borrowers for internal planning purposes, together with such supporting
         schedules and information as the Lender may in its discretion require;

                  (e) within 15 days after the end of each month, borrowing base
         certificates of each Borrower as of the end of such month;

                  (f) daily reports of cash collateral, sales assignments,
         credit memos and adjustments and deposits;

                  (g) immediately after the commencement thereof, notice in
         writing of all litigation and of all proceedings before any
         governmental or regulatory agency affecting any Borrower of the type
         described in Section 5.12 or which seek a monetary recovery against any
         Borrower in excess of $5,000;

                                       -28-

<PAGE>

                  (h) as promptly as practicable (but in any event not later
         than five business days) after an officer of any Borrower obtains
         knowledge of the occurrence of any breach, default or event of default
         under any Security Document or any event which constitutes a Default or
         Event of Default hereunder, notice of such occurrence, together with a
         detailed statement by a responsible officer of the Borrowers of the
         steps being taken by the Borrowers to cure the effect of such breach,
         default or event;

                  (i) as soon as possible and in any event within 30 days after
         any Borrower knows or has reason to know that any Reportable Event with
         respect to any Plan has occurred, the statement of the Borrowers' chief
         financial officer setting forth details as to such Reportable Event and
         the action which the Borrowers propose to take with respect thereto,
         together with a copy of the notice of such Reportable Event to the
         Pension Benefit Guaranty Corporation;

                  (j) as soon as possible, and in any event within 10 days after
         any Borrower fails to make any quarterly contribution required with
         respect to any Plan under Section 412(m) of the Internal Revenue Code
         of 1986, as amended, the statement of the Borrowers' chief financial
         officer setting forth details as to such failure and the action which
         the Borrowers propose to take with respect thereto, together with a
         copy of any notice of such failure required to be provided to the
         Pension Benefit Guaranty Corporation;

                  (k) promptly upon knowledge thereof, notice of (i) any
         disputes or claims by any Borrower's customers exceeding $1,000
         individually or $5,000 in the aggregate during any fiscal year; (ii)
         credit memos; (iii) any goods returned to or recovered by any Borrower;
         and (iv) any change in the persons constituting any Borrower's officers
         and directors;

                  (1) promptly upon knowledge thereof, notice of any loss of or
         material damage to any Collateral or other collateral covered by the
         Security Documents or of any substantial adverse change in any
         Collateral or such other collateral or the prospect of payment thereof;

                  (m) promptly upon their distribution, copies of all financial
         statements, reports and proxy statements which MicroTel or its
         subsidiaries shall have sent to its stockholders;

                  (n) promptly after the sending or filing thereof, copies of
         all regular and periodic reports which MicroTel or its subsidiaries
         shall file with the Securities and Exchange Commission or any national
         securities exchange;

                  (o) as soon as possible, and in any event by not later than
         April 30th of each year, copies of the state and federal tax returns of
         MicroTel and its subsidiaries and all schedules thereto and an updated
         personal financial statement of each individual Guarantor;

                                    - 29 -
<PAGE>

                  (p) promptly upon knowledge thereof, notice of any Borrower's
         violation of any law, rule or regulation, the non-compliance with which
         could materially and adversely affect any Borrower's business or its
         financial condition; and

                  (q) from time to time, with reasonable promptness, any and all
         receivables schedules, collection reports, deposit records, equipment
         schedules, copies of invoices to account debtors, shipment documents
         and delivery receipts for goods sold, and such other material, reports,
         records or information as the Lender may request.

                  Section 6.2 BOOKS AND RECORDS; INSPECTION AND EXAMINATION.
Each Borrower will keep accurate books of record and account for itself
pertaining to the Collateral and pertaining to such Borrower's business and
financial condition and such other matters as the Lender may from time to
time request in which true and complete entries will be made in accordance
with GAAP and, upon the Lender's request, will permit any officer, employee,
attorney or accountant for the Lender to audit, review, make extracts from or
copy any and all corporate and financial books and records of such Borrower
at all times during ordinary business hours, to send and discuss with account
debtors and other obligors requests for verification of amounts owed to such
Borrower, and to discuss such Borrower's affairs with any of its directors,
officers, employees or agents. Each Borrower will permit the Lender, or its
employees, accountants, attorneys or agents, to examine and inspect any
Collateral, other collateral covered by the Security Documents or any other
property of such Borrower at any time during ordinary business hours.
Borrowers shall, at their expense, provide Lender with appraisals of the
Equipment, in form, using methodologies and by appraisers satisfactory to
Lender, and with such frequency as Lender may require; PROVIDED, HOWEVER,
that so long as no Default or Event of Default has occurred and is
continuing, Borrowers shall not be responsible for the costs of more than one
(1) such appraisal during any twelve (12) month period.

                  Section 6.3 ACCOUNT VERIFICATION. The Lender may at any
time and from time to time send or require the Borrowers to send requests for
verification of accounts or notices of assignment to account debtors and
other obligors. The Lender may also at any time and from time to time
telephone account debtors and other obligors to verify accounts.

                  Section 6.4 COMPLIANCE WITH LAWS.

                  (a) Each Borrower will (i) comply with the requirements of
         applicable laws and regulations, the non-compliance with which would
         materially and adversely affect its business or its financial condition
         and (ii) use and keep the Collateral, and require that others use and
         keep the Collateral, only for lawful purposes, without violation of any
         federal, state or local law, statute or ordinance.

                  (b) Without limiting the foregoing undertakings, each Borrower
         specifically agrees that it will comply with all applicable
         Environmental Laws and obtain and comply with all permits, licenses and
         similar approvals required by any Environmental Laws, and will not
         generate, use, transport, treat, store or dispose of any Hazardous
         Substances in such a manner as to create any liability or obligation
         under the common law of any jurisdiction or any Environmental Law.

                                     - 30 -
<PAGE>

                  Section 6.5 PAYMENT OF TAXES AND OTHER CLAIMS. Each
Borrower will pay or discharge, when due, (a) all taxes, assessments and
governmental charges levied or imposed upon it or upon its income or profits,
upon any properties belonging to it (including, without limitation, the
Collateral) or upon or against the creation, perfection or continuance of the
Security Interest, prior to the date on which penalties attach thereto, (b)
all federal, state and local taxes required to be withheld by it, and (c) all
lawful claims for labor, materials and supplies which, if unpaid, might by
law become a lien or charge upon any properties of any Borrower; provided,
that the Borrowers shall not be required to pay any such tax, assessment,
charge or claim whose amount, applicability or validity is being contested in
good faith by appropriate proceedings and for which proper reserves have been
made.

                  Section 6.6 MAINTENANCE OF PROPERTIES.

                  (a) The Borrowers will keep and maintain the Collateral, the
         other collateral covered by the Security Documents and all of their
         other properties necessary or useful in their business in good
         condition, repair and working order (normal wear and tear excepted) and
         will from time to time replace or repair any worn, defective or broken
         parts; provided, however, that nothing in this Section 6.6 shall
         prevent the Borrowers from discontinuing the operation and maintenance
         of any of their properties if such discontinuance is, in the Lender's
         judgment, desirable in the conduct of their businesses and not
         disadvantageous in any material respect to the Lender.

                  (b) The Borrowers will defend the Collateral against all
         claims or demands of all persons (other than the Lender) claiming the
         Collateral or any interest therein.

                  (c) The Borrowers will keep all Collateral and other
         collateral covered by the Security Documents free and clear of all
         security interests, liens and encumbrances except Permitted Liens.

                  Section 6.7 INSURANCE. The Borrowers will obtain and at all
times maintain insurance with insurers believed by the Borrowers to be
responsible and reputable, in such amounts and against such risks as may from
time to time be required by the Lender, but in all events in such amounts and
against such risks as is usually carried by companies engaged in similar
business and owning similar properties in the same general areas in which the
Borrowers operate. Without limiting the generality of the foregoing, the
Borrowers will at all times maintain business interruption insurance
including coverage for force majeure and keep all tangible Collateral insured
against risks of fire (including so-called extended coverage), theft,
collision (for Collateral consisting of motor vehicles) and such other risks
and in such amounts as the Lender may reasonably request, with any loss
payable to the Lender to the extent of its interest, and all policies of such
insurance shall contain a lender's loss payable endorsement for the Lender's
benefit acceptable to the Lender. All policies of liability insurance
required hereunder shall name the Lender as an additional insured.

                  Section 6.8 PRESERVATION OF EXISTENCE. Each Borrower will
preserve and maintain its existence and all of its rights, privileges and
franchises necessary or desirable in the normal conduct of its business and
shall conduct its business in an orderly, efficient and regular manner.

                                    - 31 -
<PAGE>

                  Section 6.9 DELIVERY OF INSTRUMENTS, ETC. Upon request by
the Lender, the Borrowers will promptly deliver to the Lender in pledge all
instruments, documents and chattel papers constituting Collateral, duly
endorsed or assigned by the applicable Borrower.

                  Section 6.10 COLLATERAL ACCOUNT.

                  (a) If, notwithstanding the instructions to debtors to make
         payments to its Lockbox, any Borrower receives any payments on
         Receivables, such Borrower shall deposit such payments into its
         Collateral Account. Until so deposited, such Borrower shall hold all
         such payments in trust for and as the property of the Lender and shall
         not commingle such payments with any of its other funds or property.

                  (b) Amounts deposited in the Collateral Accounts shall not
         bear interest and shall not be subject to withdrawal by the Borrowers,
         except after full payment and discharge of all Obligations.

                  (c) All deposits in the Collateral Accounts shall constitute
         proceeds of Collateral and shall not constitute payment of the
         Obligations.

                  (d) All items deposited in the Collateral Accounts shall be
         subject to final payment. If any such item is returned uncollected, the
         applicable Borrower will immediately pay the Lender, or, for items
         deposited in its Collateral Account, the bank maintaining such account,
         the amount of that item, or such bank at its discretion may charge any
         uncollected item to such Borrower's commercial account or other
         account. The Borrowers shall be liable as an endorser on all items
         deposited in the Collateral Accounts, whether or not in fact endorsed
         by the Borrowers.

                  Section 6.11 PERFORMANCE BY THE LENDER. If any Borrower at any
time fails to perform or observe any of the foregoing covenants contained in
this Article VI or elsewhere herein, and if such failure shall continue for a
period of ten (10) calendar days after the Lender gives the Borrowers written
notice thereof (or in the case of the agreements contained in Sections 6.5, 6.7
and 6.10, immediately upon the occurrence of such failure, without notice or
lapse of time), the Lender may, but need not, perform or observe such covenant
on behalf and in the name, place and stead of the Borrowers (or, at the Lender's
option, in the Lender's name) and may, but need not, take any and all other
actions which the Lender may reasonably deem necessary to cure or correct such
failure (including, without limitation, the payment of taxes, the satisfaction
of security interests, liens or encumbrances, the performance of obligations
owed to account debtors or other obligors, the procurement and maintenance of
insurance, the execution of assignments, security agreements and financing
statements, and the endorsement of instruments); and the Borrowers shall
thereupon pay to the Lender on demand the amount of all monies expended and all
costs and expenses (including reasonable attorneys' fees and legal expenses)
incurred by the Lender in connection with or as a result of the performance or
observance of such agreements or the taking of such action by the Lender,
together with interest thereon from the date expended or incurred at the
Revolving Floating Rate. To facilitate the Lender's performance or observance of
such covenants of the Borrowers, the Borrowers hereby irrevocably appoint the
Lender, or the Lender's delegate, acting alone, as the Borrowers' attorney

                                   - 32 -
<PAGE>

in fact (which appointment is coupled with an interest) with the right (but not
the duty) from time to time to create, prepare, complete, execute, deliver,
endorse or file in the name and on behalf of any Borrower any and all
instruments, documents, assignments, security agreements, financing statements,
applications for insurance and other agreements and writings required to be
obtained, executed, delivered or endorsed by the Borrowers under this Section
6.11.

                  Section 6.12 MINIMUM DEBT SERVICE COVERAGE RATIO. The
Borrowers will cause MicroTel and its subsidiaries, on a consolidated basis,
to maintain a Debt Service Coverage Ratio of not less than 1.25 to 1.00 as of
September 30, 2000 and December 31, 2000.

                  Section 6.13 MINIMUM TANGIBLE NET WORTH. The Borrowers will
cause MicroTel and its subsidiaries, on a consolidated basis, to maintain
Tangible Net Worth of not less than $2,500,000 as of December 31, 2000.

                  Section 6.14 MINIMUM NET INCOME. The Borrowers will, on a
consolidated fiscal year to date basis, achieve Net Income of not less than
$1,196,000 as of September 30, 2000, and $1,414,400 as of December 31, 2000.

                  Section 6.15 MINIMUM EARNINGS BEFORE TAXES. The Borrowers
will on a consolidated basis achieve Earnings Before Taxes during each month
of not less than ($75,000).

                  Section 6.16 NEW COVENANTS. On or before December 31, 2000,
Lender shall set new covenant levels for Sections 6.12, 6.13, 6.14, 6.15, and
7.10 for periods after such date. The new covenant levels will be based on the
Borrower's projections for such periods received by Lender pursuant to Section
6.1(d) and shall be no less stringent than the present levels.

                  Section 6.17 GOVERNMENT CONTRACTS. With respect to any
contracts with any unit of government that may give rise to Accounts owing by
such governmental unit in excess of $10,000 in the aggregate (except for any
such contract expiring within 120 days of the Funding Date), Borrowers shall,
within 60 days of the Funding Date and thereafter, comply with the Federal
Assignment of Claims Act of 1940, as amended, or any similar law, for the
assignment of such contracts to Lender.

                                  ARTICLE VII

                              NEGATIVE COVENANTS

                  So long as the Obligations shall remain unpaid, or the Credit
Facility shall remain outstanding, the Borrowers agree that, without the
Lender's prior written consent:

                  Section 7.1 LIENS. Each Borrower will not create, incur or
suffer to exist any mortgage, deed of trust, pledge, lien, security interest,
assignment or transfer upon or of any of its assets, now owned or hereafter
acquired, to secure any indebtedness; EXCLUDING, HOWEVER, from the operation of
the foregoing, the following (collectively, "PERMITTED LIENS"):

                  (a) in the case of any of the Borrowers' property which is not
         Collateral or other collateral described in the Security Documents,
         covenants, restrictions, rights,

                                     - 33 -
<PAGE>

         easements and minor irregularities in title which do not materially
         interfere with any Borrower's business or operations as presently
         conducted;

                  (b) mortgages, deeds of trust, pledges, liens, security
         interests and assignments in existence on the date hereof and listed in
         SCHEDULE 7.1 hereto, securing indebtedness for borrowed money permitted
         under Section 7.2; and

                  (c) the Security Interest and liens and security interests
created by the Security Documents.

                  Section 7.2 INDEBTEDNESS. The Borrowers will not incur,
create, assume or permit to exist any indebtedness or liability on account of
deposits or advances or any indebtedness for borrowed money or letters of
credit issued on any Borrower's behalf, or any other indebtedness or
liability evidenced by notes, bonds, debentures or similar obligations,
except:

                  (a) indebtedness arising hereunder;

                  (b) indebtedness of the Borrowers in existence on the date
         hereof and listed in SCHEDULE 7.2 hereto; and

                  (c) indebtedness relating to liens permitted in accordance
with Section 7.1.

                  Section 7.3 GUARANTIES. The Borrowers will not assume,
guarantee, endorse or otherwise become directly or contingently liable in
connection with any obligations of any other Person, except:

                  (a) the endorsement of negotiable instruments by the Borrowers
         for deposit or collection or similar transactions in the ordinary
         course of business; and

                  (b) guaranties, endorsements and other direct or contingent
         liabilities in connection with the obligations of other Persons, in
         existence on the date hereof and listed in SCHEDULE 7.2 hereto.

                  Section 7.4 INVESTMENTS AND SUBSIDIARIES.

                  (a) The Borrowers will not purchase or hold beneficially any
         stock or other securities or evidences of indebtedness of, make or
         permit to exist any loans or advances to, or make any investment or
         acquire any interest whatsoever in, any other Person, including
         specifically but without limitation any partnership or joint venture,
         except:

                           (i) investments in direct obligations of the United
                  States of America or any agency or instrumentality thereof
                  whose obligations constitute full faith and credit obligations
                  of the United States of America having a maturity of one year
                  or less, commercial paper issued by U.S. corporations rated
                  "A-I" or "A-2" by Standard & Poors Corporation or "P-I" or
                  "P-2" by Moody's Investors Service or certificates of deposit
                  or bankers' acceptances having a maturity of one year or less
                  issued by members of the Federal Reserve System having
                  deposits in excess

                                     - 34 -
<PAGE>

                  of $100,000,000 (which certificates of deposit or bankers'
                  acceptances are fully insured by the Federal Deposit Insurance
                  Corporation);

                           (ii) travel advances or loans to the Borrowers'
                  officers and employees not exceeding at any one time an
                  aggregate of $5,000;

                           (iii) advances in the form of progress payments,
                  prepaid rent not exceeding three (3) months or security
                  deposits; and

                           (iv) so long as no Default or Event of Default has
                  occurred and is continuing, advances to MicroTel in an amount
                  necessary to cover any outstanding accounting, tax and
                  administrative expenses incurred by MicroTel on the Borrowers'
                  behalf.

                  (b) The Borrowers will not create or permit to exist any
         Subsidiary, other than the Subsidiaries in existence on the date hereof
         and listed in SCHEDULE 5.4.

                  Section 7.5 DIVIDENDS. Except as set forth below, the
Borrowers will not declare or pay any dividends (other than dividends payable
solely in stock of the Borrowers) on any class of their stock or make any
payment on account of the purchase, redemption or other retirement of any
shares of such stock or make any distribution in respect thereof, either
directly, or indirectly; PROVIDED, HOWEVER, that so long as no Default or
Event of Default has occurred and is continuing, Borrowers may make such
dividends, payments or other distributions to MicroTel in an amount necessary
to cover any outstanding accounting, tax and administrative expenses incurred
by MicroTel on the Borrowers' behalf.

                  Section 7.6 SALE OR TRANSFER OF ASSETS; SUSPENSION OF
BUSINESS OPERATIONS. Each Borrower will not sell, lease, assign, transfer or
otherwise dispose of(i) the stock of any Subsidiary, (ii) all or a
substantial part of its assets, or (iii) any Collateral or any interest
therein (whether in one transaction or in a series of transactions) to any
other Person other than the sale of Inventory in the ordinary course of
business and will not liquidate, dissolve or suspend business operations. The
Borrowers will not in any manner transfer any property without prior or
present receipt of full and adequate consideration.

                  Section 7.7 CONSOLIDATION AND MERGER; ASSET ACQUISITIONS.
Each Borrower will not consolidate with or merge into any Person, or permit
any other Person to merge into it, or acquire (in a transaction analogous in
purpose or effect to a consolidation or merger) all or substantially all the
assets of any other Person.

                  Section 7.8 SALE AND LEASEBACK. Each Borrower will not
enter into any arrangement, directly or indirectly, with any other Person
whereby such Borrower shall sell or transfer any real or personal property,
whether now owned or hereafter acquired, and then or thereafter rent or lease
as lessee such property or any part thereof or any other property which such
Borrower intends to use for substantially the same purpose or purposes as the
property being sold or transferred.

                                    - 35 -
<PAGE>

                  Section 7.9 RESTRICTIONS ON NATURE OF BUSINESS. The Borrowers
will not engage in any line of business materially different from that presently
engaged in by the Borrowers and will not purchase, lease or otherwise acquire
assets not related to their business.

                  Section 7.10 CAPITAL EXPENDITURES. The Borrowers will not
incur or contract to incur Capital Expenditures of more than $100,000 in the
aggregate during the fiscal year ending December 31,2000.

                  Section 7.11 ACCOUNTING. The Borrowers will not adopt any
material change in accounting principles other than as required by GAAP. The
Borrowers will not adopt, permit or consent to any change in their fiscal year.

                  Section 7.12 DISCOUNTS, ETC. The Borrowers will not, after
notice from the Lender, grant any discount, credit or allowance to any customer
of the Borrowers or accept any return of goods sold, or at any time (whether
before or after notice from the Lender) modify, amend, subordinate, cancel or
terminate the obligation of any account debtor or other obligor of the
Borrowers.

                  Section 7.13 DEFINED BENEFIT PENSION PLANS. The Borrowers will
not adopt, create, assume or become a party to any defined benefit pension plan,
unless disclosed to the Lender pursuant to Section 5.10.

                  Section 7.14 OTHER DEFAULTS. The Borrowers will not permit any
breach, default or event of default to occur under any note, loan agreement,
indenture, lease, mortgage, contract for deed, security agreement or other
contractual obligation binding upon any Borrower.

                  Section 7.15 PLACE OF BUSINESS; NAME. The Borrowers will not
transfer their chief executive office or principal place of business, or move,
relocate, close or sell any business location. The Borrowers will not permit any
tangible Collateral or any records pertaining to the Collateral to be located in
any state or area in which, in the event of such location, a financing statement
covering such Collateral would be required to be, but has not in fact been,
filed in order to perfect the Security Interest. The Borrowers will not change
their names.

                  Section 7.16 ORGANIZATIONAL DOCUMENTS; S CORPORATION STATUS.
Each Borrower will not amend its certificate of incorporation, articles of
incorporation or bylaws. The Borrowers will not become an S Corporation within
the meaning of the Internal Revenue Code of 1986, as amended.

                  Section 7.17 SALARIES. The Borrowers will not pay excessive or
unreasonable salaries, bonuses, commissions, consultant fees or other
compensation; or increase the salary, bonus, commissions, consultant fees or
other compensation of any director, officer or consultant, or any member of
their families, by more than 10% in any one year, either individually or for all
such persons in the aggregate, or pay any such increase from any source other
than profits earned in the year of payment.

                  Section 7.18 CHANGE IN OWNERSHIP. The Borrowers will not
issue or sell any stock of the Borrowers to any Person other than MicroTel,
and the Borrowers will not permit or

                                    - 36 -
<PAGE>

suffer to occur the sale, transfer, assignment, pledge or other disposition of
any or all of the issued and outstanding shares of stock of the Borrowers.

                  Section 7.19 TRANSACTION WITH AFFILIATES. Borrowers shall not
enter into any transaction for the purchase, sale or exchange of property or the
rendering of any service to or by any Affiliate, except in the ordinary course
of and pursuant to the reasonable requirements of their business and upon fair
and reasonable terms no less favorable to Borrowers than Borrowers would obtain
in a comparable arms length transaction with an unaffiliated Person.

                  Section 7.20 ADDITIONAL BANK ACCOUNTS. Borrowers shall not,
directly or indirectly, open, establish or maintain any deposit account,
investment account or any other account with any bank or other financial
institution, other than the Collateral Accounts and the accounts set forth in
SCHEDULE 5.16 hereto.

                                 ARTICLE VIII

                    EVENTS OF DEFAULT, RIGHTS AND REMEDIES

                  Section 8.1 EVENTS OF DEFAULT. "Event of Default", wherever
used herein, means any one of the following events, which Event of Default
shall exist or continue or be continuing until such Event of Default is
waived in accordance with Section 9.2 hereof:

                  (a) Default in the payment of the Obligations when they
         become due and payable;

                  (b) Default in the payment of any fees, commissions, costs or
         expenses required to be paid by any Borrower under this Agreement;

                  (c) Default in the performance, or breach, of any covenant or
         agreement of any Borrower contained in this Agreement;

                  (d) Any Borrower or any Guarantor shall be or become
         insolvent, or admit in writing its or his inability to pay its or his
         debts as they mature, or make an assignment for the benefit of
         creditors; or any Borrower or any Guarantor shall apply for or consent
         to the appointment of any receiver, trustee, or similar officer for it
         or him or for all or any substantial part of its or his property; or
         such receiver, trustee or similar officer shall be appointed without
         the application or consent of such Borrower or such Guarantor, as the
         case may be; or any Borrower or any Guarantor shall institute (by
         petition, application, answer, consent or otherwise) any bankruptcy,
         insolvency, reorganization, arrangement, readjustment of debt,
         dissolution, liquidation or similar proceeding relating to it or him
         under the laws of any jurisdiction; or any such proceeding shall be
         instituted (by petition, application or otherwise) against such
         Borrower or any such Guarantor; or any judgment, writ, warrant of
         attachment or execution or similar process shall be issued or levied
         against a substantial part of the property of any Borrower or any
         Guarantor;

                                    - 37 -
<PAGE>

                  (e) A petition shall be filed by or against any Borrower or
         any Guarantor under the United States Bankruptcy Code naming any
         Borrower or such Guarantor as debtor;

                  (f) Any representation or warranty made by any Borrower in
         this Agreement, by any Guarantor in any guaranty delivered to the
         Lender, or by any Borrower (or any of its officers) or any Guarantor in
         any agreement, certificate, instrument or financial statement or other
         statement contemplated by or made or delivered pursuant to or in
         connection with this Agreement or any such guaranty shall prove to have
         been incorrect in any material respect when deemed to be effective;

                  (g) The rendering against any Borrower of a final judgment,
         decree or order for the payment of money in excess of $10,000 and the
         continuance of such judgment, decree or order unsatisfied and in effect
         for any period of 30 consecutive days without a stay of execution;

                  (h) A default under any bond, debenture, note or other
         evidence of indebtedness of any Borrower owed to any Person other than
         the Lender, or under any indenture or other instrument under which any
         such evidence of indebtedness has been issued or by which it is
         governed, or under any lease of any of the Premises, and the expiration
         of the applicable period of grace, if any, specified in such evidence
         of indebtedness, indenture, other instrument or lease;

                  (i) Any Reportable Event, which the Lender determines in good
         faith might constitute grounds for the termination of any Plan or for
         the appointment by the appropriate United States District Court of a
         trustee to administer any Plan, shall have occurred and be continuing
         30 days after written notice to such effect shall have been given to
         the Borrowers by the Lender; or a trustee shall have been appointed by
         an appropriate United States District Court to administer any Plan; or
         the Pension Benefit Guaranty Corporation shall have instituted
         proceedings to terminate any Plan or to appoint a trustee to administer
         any Plan; or any Borrower shall have filed for a distress termination
         of any Plan under Title IV of ERISA; or any Borrower shall have failed
         to make any quarterly contribution required with respect to any Plan
         under Section 412(m) of the Internal Revenue Code of 1986, as amended,
         which the Lender determines in good faith may by itself, or in
         combination with any such failures that the Lender may determine are
         likely to occur in the future, result in the imposition of a lien on
         any Borrower's assets in favor of the Plan;

                  (j) An event of default shall occur under any Security
         Document or under any other security agreement, mortgage, deed of
         trust, assignment or other instrument or agreement securing any
         obligations of any Borrower hereunder or under any note;

                  (k) Any Borrower shall liquidate, dissolve, terminate or
         suspend its business operations or otherwise fail to operate its
         business in the ordinary course, or sell all or substantially all of
         its assets, without the Lender's prior written consent;

                                    - 38 -
<PAGE>

                  (l) Any Borrower shall fail to pay, withhold, collect or remit
         any tax or tax deficiency when assessed or due (other than any tax
         deficiency which is being contested in good faith and by proper
         proceedings and for which it shall have set aside on its books adequate
         reserves therefor) or notice of any state or federal tax liens shall be
         filed or issued;

                  (m) Default in the payment of any amount owed by any Borrower
         to the Lender other than any indebtedness arising hereunder;

                  (n) Any Guarantor shall repudiate, purport to revoke or fail
         to perform any such Guarantor's obligations under such Guarantor's
         guaranty in favor of the Lender, any individual Guarantor shall die or
         any other Guarantor shall cease to exist;

                  (o) Carmine T. Oliva shall repudiate, purport to revoke or
         fail to perform any of his obligations under his support agreement in
         favor of Lender, or shall fail to be actively involved in the
         management of Borrowers.

                  (p) Any event or circumstance with respect to any Borrower
         shall occur such that the Lender shall believe in good faith that the
         prospect of payment of all or any part of the Obligations or the
         performance by such Borrower under the Loan Documents is impaired or
         any material adverse change in the business or financial condition of
         any Borrower shall occur; or

                  (q) Any breach, default or event of default by or attributable
         to any Affiliate under any agreement between such Affiliate and the
         Lender.

                  Section 8.2 RIGHTS AND REMEDIES. During any Default Period,
the Lender may exercise any or all of the following rights and remedies:

                  (a) the Lender may, by notice to the Borrowers, declare the
         Commitment to be terminated, whereupon the same shall forthwith
         terminate;

                  (b) the Lender may, by notice to the Borrowers, declare the
         Obligations to be forthwith due and payable, whereupon all Obligations
         shall become and be forthwith due and payable, without presentment,
         notice of dishonor, protest or further notice of any kind, all of which
         the Borrowers hereby expressly waive;

                  (c) the Lender may, without notice to the Borrowers and
         without further action, apply any and all money owing by the Lender to
         any Borrower to the payment of the Obligations;

                  (d) the Lender may exercise and enforce any and all rights and
         remedies available upon default to a secured party under the UCC,
         including, without limitation, the right to take possession of
         Collateral, or any evidence thereof, proceeding without judicial
         process or by judicial process (without a prior hearing or notice
         thereof, which the Borrowers hereby expressly waive) and the right to
         sell, lease or otherwise dispose of any or all of the Collateral, and,
         in connection therewith, the Borrowers will on demand

                                    - 39 -
<PAGE>

         assemble the Collateral and make it available to the Lender at a place
         to be designated by the Lender which is reasonably convenient to both
         parties;

                  (e) the Lender may exercise and enforce its rights and
         remedies under the Loan Documents; and

                  (f) the Lender may exercise any other fights and remedies
         available to it by law or agreement.

Notwithstanding the foregoing, upon the occurrence of an Event of Default
described in subsections (d) or (e) of Section 8.1, the Obligations shall be
immediately due and payable automatically without presentment, demand, protest
or notice of any kind.

                  Section 8.3 CERTAIN NOTICES. If notice to the Borrowers of
any intended disposition of Collateral or any other intended action is
required by law in a particular instance, such notice shall be deemed
commercially reasonable if given (in the manner specified in Section 9.3) at
least ten (10) calendar days before the date of intended disposition or other
action.

                                   ARTICLE IX

                                 MISCELLANEOUS

                  Section 9.1 NO WAIVER; CUMULATIVE REMEDIES. No failure or
delay by the Lender in exercising any fight, power or remedy under the Loan
Documents shall operate as a waiver thereof; nor shall any single or partial
exercise of any such fight, power or remedy preclude any other or further
exercise thereof or the exercise of any other fight, power or remedy under the
Loan Documents. The remedies provided in the Loan Documents are cumulative and
not exclusive of any remedies provided by law.

                  Section 9.2 AMENDMENTS, ETC. No amendment, modification,
termination or waiver of any provision of any Loan Document or consent to any
departure by any Borrower therefrom or any release of a Security Interest
shall be effective unless the same shall be in writing and signed by the
Lender, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given. No notice to
or demand on the Borrowers in any case shall entitle the Borrowers to any
other or further notice or demand in similar or other circumstances.

                  Section 9.3 ADDRESSES FOR NOTICES, ETC. Except as otherwise
expressly provided herein, all notices, requests, demands and other
communications provided for under the Loan Documents shall be in writing and
shall be (a) personally delivered, (b) sent by first class United States
mail, (c) sent by overnight courier of national reputation, or (d)
transmitted by telecopy, in each case addressed or telecopied to the party to
whom notice is being given at its address or telecopier number as set forth
below:

                                    - 40 -
<PAGE>

                  If to the Borrowers:

                  XIT Corporation/CXR Telcom Corporation
                  9485 Haven Avenue, Suite 100
                  Rancho Cucamonga, California 91730
                  Telecopier:        (909) 297-2644
                  Attention:         Carmine Oliva

                  If to the Lender:

                  Wells Fargo Business Credit, Inc.
                  245 South Los Robles Avenue, Suite 600
                  Pasadena, California 91101
                  Telecopier:       (626) 844-9063
                  Attention:        Vincent Maddela

or, as to each party, at such other address or telecopier number as may
hereafter be designated by such party in a written notice to the other party
complying as to delivery with the terms of this Section. All such notices,
requests, demands and other communications shall be deemed to have been given on
(a) the date received if personally delivered, (b) when deposited in the mail if
delivered by mail, (c) the date sent if sent by overnight courier, or (d) the
date of transmission if delivered by telecopy, except that notices or requests
to the Lender pursuant to any of the provisions of Article II shall not be
effective until received by the Lender.

                  Section 9.4 FURTHER DOCUMENTS. The Borrowers will from time
to time execute and deliver or endorse any and all instruments, documents,
conveyances, assignments, security agreements, financing statements and other
agreements and writings that the Lender may reasonably request in order to
secure, protect, perfect or enforce the Security Interest or the Lender's
rights under the Loan Documents (but any failure to request or assure that
the Borrowers execute, deliver or endorse any such item shall not affect or
impair the validity, sufficiency or enforceability of the Loan Documents and
the Security Interest, regardless of whether any such item was or was not
executed, delivered or endorsed in a similar context or on a prior occasion).

                  Section 9.5 COLLATERAL. This Agreement does not contemplate
a sale of accounts, contract rights or chattel paper, and, as provided by
law, the Borrowers are entitled to any surplus and shall remain liable for
any deficiency. The Lender's duty of care with respect to Collateral in its
possession (as imposed by law) shall be deemed fulfilled if it exercises
reasonable care in physically keeping such Collateral, or in the case of
Collateral in the custody or possession of a bailee or other third person,
exercises reasonable care in the selection of the bailee or other third
person, and the Lender need not otherwise preserve, protect, insure or care
for any Collateral. The Lender shall not be obligated to preserve any rights
the Borrowers may have against prior parties, to realize on the Collateral at
all or in any particular manner or order or to apply any cash proceeds of the
Collateral in any particular order of application.

                                    - 41 -
<PAGE>

                  Section 9.6 COSTS AND EXPENSES. The Borrowers agree to pay
on demand all costs and expenses, including (without limitation) attorneys'
fees, incurred by the Lender in connection with the Obligations, this
Agreement, the Loan Documents, and any other document or agreement related
hereto or thereto, and the transactions contemplated hereby, including
without limitation all such costs, expenses and fees incurred in connection
with the negotiation, preparation, execution, amendment, administration,
performance, collection and enforcement of the Obligations and all such
documents and agreements and the creation, perfection, protection,
satisfaction, foreclosure or enforcement of the Security Interest.

                  Section 9.7 INDEMNITY. In addition to the payment of
expenses pursuant to Section 9.6, the Borrowers agree to indemnify, defend
and hold harmless the Lender, and any of its participants, parent
corporations, subsidiary corporations, affiliated corporations, successor
corporations, and all present and future officers, directors, employees,
attorneys and agents of the foregoing (the "INDEMNITEES") from and against
any of the following (collectively, "INDEMNIFIED LIABILITIES"):

                           (i) any and all transfer taxes, documentary taxes,
                  assessments or charges made by any governmental authority by
                  reason of the execution and delivery of the Loan Documents or
                  the making of the Advances;

                           (ii) any claims, loss or damage to which any
                  Indemnitee may be subjected if any representation or warranty
                  contained in Section 5.12 proves to be incorrect in any
                  respect or as a result of any violation of the covenant
                  contained in Section 6.4(b); and

                           (iii) any and all other liabilities, losses, damages,
                  penalties, judgments, suits, claims, costs and expenses of any
                  kind or nature whatsoever (including, without limitation, the
                  reasonable fees and disbursements of counsel) in connection
                  with the foregoing and any other investigative, administrative
                  or judicial proceedings, whether or not such Indemnitee shall
                  be designated a party thereto, which may be imposed on,
                  incurred by or asserted against any such Indemnitee, in any
                  manner related to or arising out of or in connection with the
                  making of the Advances and the Loan Documents or the use or
                  intended use of the proceeds of the Advances.

If any investigative, judicial or administrative proceeding arising from any of
the foregoing is brought against any Indemnitee, upon such Indemnitee's request,
the Borrowers, or counsel designated by the Borrowers and satisfactory to the
Indemnitee, will resist and defend such action, suit or proceeding to the extent
and in the manner directed by the Indemnitee, at the Borrowers' sole costs and
expense. Each Indemnitee will use its best efforts to cooperate in the defense
of any such action, suit or proceeding. If the foregoing undertaking to
indemnify, defend and hold harmless may be held to be unenforceable because it
violates any law or public policy, the Borrowers shall nevertheless make the
maximum contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law. The Borrowers' obligation
under this Section 9.7 shall survive the termination of this Agreement and the
discharge of the Borrowers' other obligations hereunder.

                                    - 42 -
<PAGE>

                  Section 9.8 PARTICIPANTS. The Lender and its participants,
if any, are not partners or joint venturers, and the Lender shall not have
any liability or responsibility for any obligation, act or omission of any of
its participants. All rights and powers specifically conferred upon the
Lender may be transferred or delegated to any of the Lender's participants,
successors or assigns.

                  Section 9.9 EXECUTION IN COUNTERPARTS. This Agreement and
other Loan Documents may be executed in any number of counterparts, each of
which when so executed and delivered shall be deemed to be an original and
all of which counterparts, taken together, shall constitute but one and the
same instrument.

                  Section 9.10 BINDING EFFECT; ASSIGNMENT; COMPLETE AGREEMENT;
EXCHANGING INFORMATION. The Loan Documents shall be binding upon and inure to
the benefit of the Borrowers and the Lender and their respective successors and
assigns, except that the Borrowers shall not have the right to assign their
rights thereunder or any interest therein without the Lender's prior written
consent. This Agreement, together with the Loan Documents, comprises the
complete and integrated agreement of the parties on the subject matter hereof
and supersedes all prior agreements, written or oral, on the subject matter
hereof. Without limiting the Lender's right to share information regarding the
Borrowers and their Affiliates with the Lender's participants, accountants,
lawyers and other advisors, the Lender, Wells Fargo Corporation, and all direct
and indirect subsidiaries of Wells Fargo Corporation, may exchange any and all
information they may have in their possession regarding the Borrowers and their
Affiliates, and the Borrowers waive any right of confidentiality they may have
with respect to such exchange of such information.

                  Section 9.11 SEVERABILITY OF PROVISIONS. Any provision of this
Agreement which is prohibited or unenforceable shall be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof.

                  Section 9.12 HEADINGS. Article and Section headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.

                  Section 9.13 GOVERNING LAW; JURISDICTION, VENUE; WAIVER OF
JURY TRIAL. This Agreement and the other Loan Documents shall be governed by and
construed in accordance with the substantive laws (other than conflict laws) of
the State of California. The Guaranties shall be governed by and construed in
accordance with the substantive laws (other than conflict laws) of the State of
California. Each of the parties hereto hereby (i) consents to the personal
jurisdiction of the state and federal courts located in the State of California
in connection with any controversy related to this Agreement or the other Loan
Documents; (ii) waives any argument that venue in any such forum is not
convenient, (iii) agrees that any litigation initiated by the Lender or any
Borrower in connection with this Agreement or the other Loan Documents shall be
venued in either the State Courts of the County of Los Angeles, State of
California, or the United States District Court for the Central District of
California; and (iv) agrees that a final judgment in any such suit, action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. THE PARTIES

                                    - 43 -
<PAGE>

WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED ON OR
PERTAINING TO THIS AGREEMENT.

                                   ARTICLE X

              JOINT AND SEVERAL LIABILITY AND SURETYSHIP WAIVERS

                  Section 10.1 INDEPENDENT OBLIGATIONS; SUBROGATION. The
Obligations of each Borrower hereunder are joint and several, and each
Borrower guarantees the payment and performance of the other Borrower's
Obligations to Lender. To the maximum extent permitted by law, each Borrower
hereby waives any claim, right or remedy which either may now have or
hereafter acquire against the other Borrower that arises hereunder including,
without limitation, any claim, remedy or right of subrogation, reimbursement,
exoneration, contribution, indemnification, or participation in any claim,
right or remedy of Lender against the other Borrower or any Collateral which
Lender now has or hereafter acquires, whether or not such claim, right or
remedy arises in equity, under contract, by statute, under common law or
otherwise until the Obligations are fully paid and finally discharged. In
addition, each Borrower hereby waives any right to proceed against the other
Borrower, now or hereafter, for contribution, indemnity, reimbursement, and
any other suretyship rights and claims, whether direct or indirect,
liquidated or contingent, whether arising under express or implied contract
or by operation of law, which any Borrower may now have or hereafter have as
against the other Borrower with respect to the Obligations until the
Obligations are fully paid and finally discharged. Each Borrower also hereby
waives any rights of recourse to or with respect to any asset of the other
Borrower until the Obligations are fully paid and finally discharged.

                  Section 10.2 AUTHORITY TO MODIFY OBLIGATIONS AND SECURITY.
Each Borrower authorizes Lender, without notice or demand and without
affecting any Borrower's liability hereunder, from time to time, whether
before or after any notice of termination hereof or before or after any
default in respect of the Obligations, to: (i) renew, extend, accelerate, or
otherwise change the time for payment of, or otherwise change any other term
or condition of, any document or agreement evidencing or relating to any
Obligations as such Obligations relate to the other Borrower, including,
without limitation, to increase or decrease the rate of interest thereon;
(ii) accept, substitute, waive, defease, increase, release, exchange or
otherwise alter any Collateral, in whole or in part, securing the other
Borrower's Obligations; (iii) apply any and all such Collateral and direct
the order or manner of sale thereof as Lender, in its sole discretion, may
determine; (iv) deal with the other Borrower as Lender may elect; (v) in
Lender's sole discretion, settle, release on terms satisfactory to Lender, or
by operation of law or otherwise, compound, compromise, collect or otherwise
liquidate any of the other Borrower's Obligations and/or any of the
Collateral in any manner, and bid and purchase any of the collateral at any
sale thereof; (vi) apply any and all payments or recoveries from the other
Borrower as Lender, in its sole discretion, may determine, whether or not
such indebtedness relates to the Obligations; all whether such Obligations
are secured or unsecured or guaranteed or not guaranteed by others; and (vii)
apply any sums realized from Collateral furnished by the other Borrower upon
any of its indebtedness or obligations to Lender as it in its sole
discretion, may determine, whether or not

                                    - 44 -
<PAGE>

such indebtedness relates to the Obligations; all without in any way
diminishing, releasing or discharging the liability of any Borrower hereunder.

                  Section 10.3 WAIVER OF DEFENSES. Upon an Event of Default
by any Borrower in respect of any Obligations, Lender may, at its option and
without additional notice to any Borrower, proceed directly against any
Borrower to collect and recover the full amount of the liability hereunder,
or any portion thereof, and each Borrower waives any right to require Lender
to: (i) proceed against the other Borrower or any other person whomsoever;
(ii) proceed against or exhaust any Collateral given to or held by Lender in
connection with the Obligations; (iii) give notice of the terms, time and
place of any public or private sale of any of the Collateral except as
otherwise provided herein; or (iv) pursue any other remedy in Lender's power
whatsoever. A separate action or actions may be brought and prosecuted
against any Borrower whether or not action is brought against the other
Borrower and whether the other Borrower be joined in any such action or
actions; and each Borrower waives the benefit of any statute of limitations
affecting the liability hereunder or the enforcement hereof, and agrees that
any payment of any Obligations or other act which shall toll any statute of
limitations applicable thereto shall similarly operate to toll such statute
of limitations applicable to the liability hereunder.

                  Section 10.4 EXERCISE OF LENDER'S RIGHTS. Each Borrower
hereby authorizes and empowers Lender in its sole discretion, without any
notice or demand to such Borrower whatsoever and without affecting the
liability of such Borrower hereunder, to exercise any right or remedy which
Lender may have available to them against the other Borrower.

                  Section 10.5 ADDITIONAL WAIVERS. Each Borrower waives any
defense arising by reason of any disability or other defense of the other
Borrower or by reason of the cessation from any cause whatsoever of the
liability of the other Borrower or by reason of any act or omission of Lender
or others which directly or indirectly results in or aids the discharge or
release of the other Borrower or any Obligations or any Collateral by
operation of law or otherwise. The Obligations shall be enforceable against
each Borrower without regard to the validity, regularity or enforceability of
any of the Obligations with respect to the other Borrower or any of the
documents related thereto or any collateral security documents securing any
of the Obligations. No exercise by Lender of, and no omission of Lender to
exercise, any power or authority recognized herein and no impairment or
suspension of any right or remedy of Lender against any Borrower or any
Collateral shall in any way suspend, discharge, release, exonerate or
otherwise affect any of the Obligations or any Collateral furnished by the
Borrowers or give to the Borrowers any right of recourse against Lender. Each
Borrower specifically agrees that the failure of Lender: (i) to perfect any
lien on or security interest in any property heretofore or hereafter given
any Borrower to secure payment of the Obligations, or to record or file any
document relating thereto or (ii) to file or enforce a claim against the
estate (either in administration, bankruptcy or other proceeding) of any
Borrower shall not in any manner whatsoever terminate, diminish, exonerate or
otherwise affect the liability of any Borrower hereunder.

                  Section 10.6 ADDITIONAL INDEBTEDNESS. Additional
Obligations may be created from time to time at the request of any Borrower
and without further authorization from or notice to the other Borrower even
though the borrowing Borrower's financial condition may deteriorate

                                    - 45 -
<PAGE>

since the date hereof. Each Borrower waives the right, if any, to require
Lender to disclose to such Borrower any information it may now have or
hereafter acquire concerning the other Borrower's character, credit,
Collateral, financial condition or other matters. Each Borrower has
established adequate means to obtain from the other Borrower on a continuing
basis financial and other information pertaining to such Borrower's business
and affairs, and assumes the responsibility for being and keeping informed of
the financial and other conditions of the other Borrower and of all
circumstances bearing upon the risk of nonpayment of the Obligations which
diligent inquiry would reveal. Lender need not inquire into the powers of any
Borrower or the authority of any of its officers, directors, partners or
agents acting or purporting to act in their behalf, and any obligations
created in reliance upon the purported exercise of such power or authority is
hereby guaranteed. All obligations of each Borrower to Lender heretofore, now
or hereafter created shall be deemed to have been granted at each Borrower's
special insistence and request and in consideration of and in reliance upon
this Agreement.

                  Section 10.7 NOTICES, DEMANDS, ETC. Except as expressly
provided by this Agreement, Lender shall be under no obligation whatsoever to
make or give to any Borrower, and each Borrower hereby waives diligence, all
rights of setoff and counterclaim against Lender, all demands, presentments,
protests, notices of protests, notices of protests, notices of
nonperformance, notices of dishonor, and all other notices of every kind or
nature, including notice of the existence, creation or incurring of any new
or additional Obligations.

                  Section 10.8 SUBORDINATION. Any indebtedness of any
Borrower now or hereafter owing to the other Borrower is hereby subordinated
to the Obligations, whether heretofore, now or hereafter created, and whether
before or after notice of termination hereof, and, following the occurrence
and during the continuation of an Event of Default, no Borrower shall,
without the prior consent of Lender, pay in whole or in part any of such
indebtedness nor will any such Borrower accept any payment of or on account
of any such indebtedness at any time while such Borrower remains liable
hereunder. At the request of Lender, after the occurrence and during the
continuance of an Event of Default, each Borrower shall pay to Lender all or
any part of such subordinated indebtedness and any amount so paid to Lender
at its request shall be applied to payment of the Obligations. Each payment
on the indebtedness of any Borrower to the other Borrower received in
violation of any of the provisions hereof shall be deemed to have been
received by the other Borrower as trustee for Lender and shall be paid over
to Lender immediately on account of the Obligations, but without otherwise
affecting in any manner any such Borrower's liability under any of the
provisions of this Agreement. Each Borrower agrees to file all claims against
the other Borrower in any bankruptcy or other proceeding in which the filing
of claims is required by law in respect of any indebtedness of the other
Borrower to such Borrower, and Lender shall be entitled to all of any such
Borrower's rights thereunder. If for any reason any such Borrower fails to
file such claim at least thirty (30) days prior to the last date on which
such claim should be filed, Lender, as such Borrower's attorney-in-fact, is
hereby authorized to do so in Borrowers' name or, in Lender's discretion, to
assign such claim to, and cause a proof of claim to be filed in the name of,
Lender's nominee. In all such cases, whether in administration, bankruptcy or
otherwise, the person or persons authorized to pay such claim shall pay to
Lender the full amount payable on the claim in the proceeding, and to the
full extent necessary for that purpose any such Borrower hereby assigns to
Lender all such Borrower's rights to any payments or distributions to which
such Borrower

                                    - 46 -
<PAGE>

otherwise would be entitled. If the amount so paid is greater than any such
Borrower's liability hereunder, Lender will pay the excess amount to the party
entitled thereto.

                  Section 10.9 REVIVAL. If any payments of money or transfers
of property made to Lender by any Borrower should for any reason subsequently
be declared to be, or in Lender's counsel's good faith opinion be determined
to be, fraudulent (within the meaning of any state or federal law relating to
fraudulent conveyances), preferential or otherwise voidable or recoverable in
whole or in part for any reason (hereinafter collectively called "voidable
transfers") under the Bankruptcy Code or any other federal or state law and
Lender is required to repay or restore, or in Lender's counsel's opinion may
be so liable to repay or restore, any such voidable transfer, or the amount
or any portion thereof, then as to any such voidable transfer or the amount
repaid or restored and all reasonable costs and expenses (including
reasonable attorneys' fees) of Lender related thereto, such Borrower's
liability hereunder shall automatically be revived, reinstated and restored
and shall exist as though such voidable transfer had never been made to
Lender.

                  Section 10.10 UNDERSTANDING OF WAIVERS. Each Borrower
warrants and agrees that the waivers set forth in this Article X are made
with full knowledge of their significance and consequences. If any of such
waivers are determined to be contrary to any applicable law or public policy,
such waivers shall be effective only to the maximum extent permitted by law.

                                    - 47 -
<PAGE>

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

WELLS FARGO BUSINESS CREDIT, INC.      XIT CORPORATION
a Minnesota corporation                a New Jersey corporation

By: /s/ Vincent L. Maddela             By: /s/ Randolph Foote
    --------------------------             --------------------------

Name: Vincent L. Maddela               Name: Randolph Foote
      ------------------------               ------------------------

      Its Asst. Vice President               Its Vice President
          --------------------                   --------------------

                                       CXR TELECOM CORPORATION
                                       a Delaware corporation

                                       By: /s/ Randolph Foote
                                           --------------------------

                                       Name: Randolph Foote
                                             ------------------------

                                             Its Vice President
                                                 --------------------

                                    - 48 -
<PAGE>

                       TABLE OF EXHIBITS AND SCHEDULES

<TABLE>
<S>                                             <C>
              Exhibit A                         Form of Revolving Note

              Exhibit B                         Form of XIT Term Note

              Exhibit C                         Form of CXR Term Note

              Exhibit D                         Compliance Certificate

              Exhibit E                         Premises

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

              Schedule 5.1                      Trade Names, Chief Executive Office, Principal
                                                Place of Business, and Locations of Collateral

              Schedule 5.4                      Subsidiaries

              Schedule 5.16                     Bank Accounts

              Schedule 7.1                      Permitted Liens

              Schedule 7.2                      Permitted Indebtedness and Guaranties
</TABLE>

<PAGE>

                                      Exhibit A to Credit and Security Agreement

                                REVOLVING NOTE

$3,000,000                                                  Pasadena, California
                                                                 August 16, 2000

                  For value received, the undersigned, XIT CORPORATION, a New
Jersey corporation and CXR TELCOM CORPORATION, a Delaware corporation
(collectively the "BORROWERS"), jointly and severally, hereby promise to pay
on the Termination Date under the Credit Agreement (defined below), to the
order of WELLS FARGO BUSINESS CREDIT, INC., a Minnesota corporation (the
"LENDER"), at its main office in Pasadena, California, or at any other place
designated at any time by the holder hereof, in lawful money of the United
States of America and in immediately available funds, the principal sum of
THREE MILLION DOLLARS ($3,000,000) or, if less, the aggregate unpaid
principal amount of all Revolving Advances made by the Lender to the
Borrowers under the Credit Agreement (defined below) together with interest
on the principal amount hereunder remaining unpaid from time to time,
computed on the basis of the actual number of days elapsed and a 360-day
year, from the date hereof until this Note is fully paid at the rate from
time to time in effect under the Credit and Security Agreement of even date
herewith (as the same may hereafter be amended, supplemented or restated from
time to time, the "CREDIT AGREEMENT") by and between the Lender and the
Borrowers. The principal hereof and interest accruing thereon shall be due
and payable as provided in the Credit Agreement. This Note may be prepaid
only in accordance with the Credit Agreement.

                  This Note is issued pursuant, and is subject, to the Credit
Agreement, which provides, among other things, for acceleration hereof. This
Note is the Revolving Note referred to in the Credit Agreement. This Note is
secured, among other things, pursuant to the Credit Agreement and the
Security Documents as therein defined, and may now or hereafter be secured by
one or more other security agreements, mortgages, deeds of trust, assignments
or other instruments or agreements.

                  The Borrowers hereby agree to pay all costs of collection,
including attorneys' fees and legal expenses in the event this Note is not
paid when due, whether or not legal proceedings are commenced.

                  Presentment or other demand for payment, notice of dishonor
and protest are expressly waived.

CXR TELCOM CORPORATION                     XIT CORPORATION
a Delaware corporation                      a New Jersey corporation

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

Name:                                       Name:
      ----------------------                      ----------------------
      Its President                               Its President

                                  A - 1
<PAGE>

                                      Exhibit B to Credit and Security Agreement

                                  TERM NOTE

$646,765                                                    Pasadena, California
                                                                 August 16, 2000

                  For value received, the undersigned, XIT CORPORATION, a New
Jersey corporation (the "BORROWER"), hereby promises to pay on the
Termination Date under the Credit Agreement (defined below), to the order of
WELLS FARGO BUSINESS CREDIT, INC., a Minnesota corporation (the "LENDER"), at
its main office in Pasadena, California, or at any other place designated at
any time by the holder hereof, in lawful money of the United States of
America and in immediately available funds, the principal sum of SIX HUNDRED
FORTY-SIX THOUSAND SEVEN HUNDRED SIXTY-FIVE DOLLARS ($646,765) or, if less,
the aggregate unpaid principal amount of the Term Advance made by the Lender
to the Borrower under the Credit Agreement (defined below) together with
interest on the principal amount hereunder remaining unpaid from time to
time, computed on the basis of the actual number of days elapsed and a
360-day year, from the date hereof until this Note is fully paid at the rate
from time to time in effect under the Credit and Security Agreement of even
date herewith (as the same may hereafter be amended, supplemented or restated
from time to time, the "CREDIT AGREEMENT") by and among the Lender, the
Borrower and CXR TELCOM CORPORATION. The principal hereof and interest
accruing thereon shall be due and payable as provided in the Credit
Agreement. This Note may be prepaid only in accordance with the Credit
Agreement.

                  This Note is issued pursuant, and is subject, to the Credit
Agreement, which provides, among other things, for acceleration hereof. This
Note is the Term Note referred to in the Credit Agreement. This Note is secured,
among other things, pursuant to the Credit Agreement and the Security Documents
as therein defined, and may now or hereafter be secured by one or more other
security agreements, mortgages, deeds of trust, assignments or other instruments
or agreements.

                  The Borrower hereby agrees to pay all costs of collection,
including attorneys' fees and legal expenses in the event this Note is not paid
when due, whether or not legal proceedings are commenced.

                  Presentment or other demand for payment, notice of dishonor
and protest are expressly waived.

                                       XIT CORPORATION,
                                       a New Jersey corporation

                                       By
                                          ------------------------------

                                       Name:
                                            ----------------------------
                                            Its President

                                     B - 1
<PAGE>

                                      Exhibit C to Credit and Security Agreement

                                   TERM NOTE
$40,235                                                     Pasadena, California
                                                                 August 16, 2000

                  For value received, the undersigned, CXR TELCOM
CORPORATION, a Delaware corporation (the "BORROWER"), hereby promises to pay
on the Termination Date under the Credit Agreement (defined below), to the
order of WELLS FARGO BUSINESS CREDIT, INC., a Minnesota corporation (the
"LENDER"), at its main office in Pasadena, California, or at any other place
designated at any time by the holder hereof, in lawful money of the United
States of America and in immediately available funds, the principal sum of
FORTY THOUSAND TWO HUNDRED THIRTY-FIVE DOLLARS ($40,235) or, if less, the
aggregate unpaid principal amount of the Term Advance made by the Lender to
the Borrower under the Credit Agreement (defined below) together with
interest on the principal amount hereunder remaining unpaid from time to
time, computed on the basis of the actual number of days elapsed and a
360-day year, from the date hereof until this Note is fully paid at the rate
from time to time in effect under the Credit and Security Agreement of even
date herewith (as the same may hereafter be amended, supplemented or restated
from time to time, the "CREDIT AGREEMENT") by and among the Lender, the
Borrower and XIT CORPORATION. The principal hereof and interest accruing
thereon shall be due and payable as provided in the Credit Agreement. This
Note may be prepaid only in accordance with the Credit Agreement.

                  This Note is issued pursuant, and is subject, to the Credit
Agreement, which provides, among other things, for acceleration hereof. This
Note is the Term Note referred to in the Credit Agreement. This Note is
secured, among other things, pursuant to the Credit Agreement and the
Security Documents as therein defined, and may now or hereafter be secured by
one or more other security agreements, mortgages, deeds of trust, assignments
or other instruments or agreements.

                  The Borrower hereby agrees to pay all costs of collection,
including attorneys' fees and legal expenses in the event this Note is not
paid when due, whether or not legal proceedings are commenced.

                  Presentment or other demand for payment, notice of dishonor
and protest are expressly waived.

                                       CXR TELCOM CORPORATION,
                                       a Delaware corporation

                                       By
                                          ------------------------------

                                       Name:
                                             ----------------------------
                                             Its President

                                    C - 1
<PAGE>

                                      Exhibit D to Credit and Security Agreement

                            COMPLIANCE CERTIFICATE

To:
                  ---------------------------------
                  Wells Fargo Business Credit, Inc.

Date:                                       ,2000
                  --------------------------

Subject:          XIT Corporation/CXR Telcom Corporation
                  FINANCIAL STATEMENTS

                  In accordance with our Credit and Security Agreement dated
as of August __, 2000 (the "CREDIT AGREEMENT"), attached are the financial
statements of XIT Corporation and CXR Telcom Corporation (collectively the
"BORROWERS") as of and for _________________,20__ (the "REPORTING DATE") and
the year-to-date period then ended (the "CURRENT FINANCIALS"). All terms used
in this certificate have the meanings given in the Credit Agreement.

                  I certify that the Current Financials have been prepared in
accordance with GAAP, subject to year-end audit adjustments, and fairly present
the Borrowers' financial condition and the results of its operations as of the
date thereof.

                  EVENTS OF DEFAULT. (Check one):

                  [ ]      The undersigned does not have knowledge of the
                           occurrence of a Default or Event of Default under the
                           Credit Agreement.

                  [ ]      The undersigned has knowledge of the occurrence of a
                           Default or Event of Default under the Credit
                           Agreement and attached hereto is a statement of the
                           facts with respect to thereto.

                  I hereby certify to the Lender as follows:

                  [ ]      The Reporting Date does not mark the end of one of
                           the Borrowers' fiscal quarters, hence I am completing
                           only paragraph____below.

                  [ ]      The Reporting Date marks the end of one of the
                           Borrowers' fiscal quarters, hence I am completing all
                           paragraphs below except paragraph__.

                  [ ]      The Reporting Date marks the end of the Borrowers'
                           fiscal year, hence I am completing all paragraphs
                           below.

                  FINANCIAL COVENANTS. I further hereby certify as follows:

                  1. MINIMUM DEBT SERVICE COVERAGE RATIO. Pursuant to Section
         6.12 of the Credit Agreement, as of the Reporting Date, the Debt
         Service Coverage Ratio of MicroTel and its subsidiaries, on a
         consolidated basis, was___to 1.00 which

                                     D - 1
<PAGE>

         [ ] satisfies [ ] does not satisfy the requirement that such ratio be
         no less than 1.25 to 1.00 on the Reporting Date.

                  2. MINIMUM TANGIBLE NET WORTH. Pursuant to Section 6.13 of the
         Credit Agreement, as of the Reporting Date the Tangible Net Worth of
         MicroTel and its subsidiaries, on a consolidated basis, was $ _________
         which [ ] satisfies [ ] does not satisfy the requirement that such
         amount be not less than $2,500,000 on the Reporting Date.

                  3. MINIMUM NET INCOME. Pursuant to Section 6.14 of the Credit
         Agreement, the Borrowers' Net Income for the____month period ending on
         the Reporting Date, was $______ , which [ ] satisfies [ ] does not
         satisfy the requirement that such amount be not less than $1,196,000
         during the 9 months ending September 30, 2000, and $1,414,400 during
         the 12 months ending December 31, 2000.

                  4. MINIMUM EARNINGS BEFORE TAXES. Pursuant to Section 6.15 of
         the Credit Agreement, the Borrowers' Earnings Before Taxes for the
         monthly period ending on the Reporting Date, was $________ , which [ ]
         satisfies [ ] does not satisfy the requirement that such amount be not
         less than ($75,000) during such period.

                  5. CAPITAL EXPENDITURES. Pursuant to Section 7.10 of the
         Credit Agreement, for the year-to-date period ending on the Reporting
         Date, the Borrowers have expended or contracted to expend during the
         fiscal year ended ________, 200_, for Capital Expenditures, $________
         in the aggregate and at most $ _____ in any one transaction, which [ ]
         satisfies [ ] does not satisfy the requirement that such expenditures
         not exceed $100,000 in the aggregate and $________ for any one
         transaction during such year.

                  6. Salaries. As of the Reporting Date, the Borrower [ ] is [ ]
         is not in compliance with Section 7.17 of the Credit Agreement
         concerning salaries.

                  Attached hereto are all relevant facts in reasonable detail to
evidence, and the computations of the financial covenants referred to above.
These computations were made in accordance with GAAP.

                                       XIT CORPORATION
                                       CXR TELCOM CORPORATION

                                       By
                                          ----------------------------

                                          ----------------------------
                                          Their Chief Financial Officer

                                     D - 2
<PAGE>

                                      Exhibit E to Credit and Security Agreement

                                   PREMISES

                  The Premises referred to in the Credit and Security Agreement
are legally described as follows:

                         [To be completed by Borrower]

                                     E - 1
<PAGE>

                                   Schedule 5.1 to Credit and Security Agreement

            TRADE NAMES, CHIEF EXECUTIVE OFFICE, PRINCIPAL PLACE OF
                     BUSINESS, AND LOCATIONS OF COLLATERAL

                                  TRADE NAMES

                XIT Corporation: XCEL Etch-Tek; XCEL Information
                Technologies; XCEL Info Tech; XCEL Circuits; Digitran

                CHIEF EXECUTIVE OFFICE/PRINCIPAL PLACE OF BUSINESS

                        9485 Haven Avenue
                        Suite 100
                        Rancho Cucamonga, California 91730

                  OTHER INVENTORY AND EQUIPMENT LOCATIONS

XIT Corporation:

                  720 E. Huntington Drive, Monrovia, California

                  9654 N. Hermosa Avenue, Rancho Cucamonga, California

                  2455 Bates Avenue, Concord, California

                  5012-D Forni Drive, Concord, California

                  7634 N. Hermosa Avenue, Rancho Cucamonga, California

CXR Telcom Corporation:

                  47233 Fremont Boulevard, Fremont, California

                  218 Riverside Avenue, St. Charles, Illinois

                          Schedule 5.1 - page 1
<PAGE>

                                   Schedule 5.4 to Credit and Security Agreement

                                SUBSIDIARIES

XIT CORPORATION

                      XCEL Japan, Ltd.

                             SCHEDULE 5.4 -page 1
<PAGE>

                                  Schedule 5.16 to Credit and Security Agreement

                                 BANK ACCOUNTS

                          Union Bank of California, N.A.

                              10681 Foothill Boulevard
                          Rancho Cucamonga, California 91730

                           Deposit Account No.: 3340007742
                 (Account in the name of MicroTel International Inc.)

                              Schedule 7.1 - page 1
<PAGE>

                                   Schedule 7.1 to Credit and Security Agreement

                               PERMITTED LIENS

                      Various purchase money liens against
                              specific equipment

                           Judgment lien in favor of
                                 Bell Industries

                             Schedule 7.1 - page 1
<PAGE>

                                   Schedule 7.2 to Credit and Security Agreement

                       PERMITTED INDEBTEDNESS AND GUARANTIES

                                 INDEBTEDNESS

                                     None

                                  GUARANTIES

                                     None

                             Schedule 7.2 - page 1

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