8-K

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

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


                                    FORM 8-K

                                 CURRENT REPORT

                     Pursuant to Section 13 or 15(d) of the

                         Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) January 6, 1997
                                                 -------------------------------

                          MICROTEL INTERNATIONAL, INC.
- --------------------------------------------------------------------------------
                Exact name of registrant as specified in charter

         Delaware                       1-10346                 77-0226211
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(State or other jurisdiction          (Commission              (IRS Employer)
     of incorporation)                File Number)           Identification No.)

2040 Fortune Drive, San Jose, California                           95131
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(Address of principal executive offices)                         (Zip Code)

Registrant's telephone number,
including area code           (408) 435-8520
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)




Item 2.  Acquisition or Disposition of Assets.

         On January 6, 1997, MicroTel International, Inc. (the "Company"),
entered into an Agreement and Plan of Merger (the "Merger Agreement"), with XIT
Acquisition, Inc. ("Sub"), and XIT Corporation (formerly XCEL
Corporation)("XIT"). The transaction, which has been approved by the respective
Board of Directors of both companies, will be a tax-free exchange of securities
in which XIT will merge into Sub, a newly formed, wholly-owned subsidiary of the
Company. XIT shareholders, optionholders, and warrantholders will obtain shares
or the right to acquire shares of the common stock of the Company equal to 65%
of the fully-diluted ownership of the Company after the merger. Total common
shares outstanding after the merger will approximate 8.5 million. Upon
consummation of the merger, Carmine T. Oliva, Chairman and Chief Executive
Officer of XIT will become Chairman and Chief Executive Officer of the Company
and Jack Talan, the Company's current Chairman and Chief Executive Officer and
XIT's Board of Directors will comprise the new Board of Directors of the
Company. The merger is subject to and will become effective after the approval
of the shareholders of XIT, which process is expected to be completed within 60
days.

         XIT, a private, closely-held company with vertically integrated
operations in the U.S., England and Japan, designs, manufactures and markets
information display and input products and printed circuit boards for the
international telecommunications, medical, industrial and military/aerospace
markets. For its fiscal year ended September 30, 1996, XIT earned $1,142,000 on
revenues of $31,249,000 (unaudited).

                                    EXHIBITS

Exhibit 1        Agreement and Plan of Merger by and Among MicroTel 
                 International, Inc., XIT Acquisition, Inc. and XIT Corporation,
                 dated as of December 31, 1996

Exhibit 2        Financial Statements (to be filed by amendment)

                                        2




                                   SIGNATURES

         Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.

                                                    MICROTEL INTERNATIONAL, INC.
                                                    ----------------------------
                                                                (registrant)

Dated: January 21, 1997                             By: /s/JACK TALAN
                                                        ------------------------
                                                        Jack Talan,
                                                        Chairman

                                        3

EX-99.1

                          AGREEMENT AND PLAN OF MERGER

         AGREEMENT AND PLAN OF MERGER dated as of December 31, 1996 among
MICROTEL INTERNATIONAL, INC., a Delaware corporation ("MicroTel"), XIT
ACQUISITION INC., a New Jersey corporation and a wholly owned subsidiary of
MicroTel ("Sub"), and XIT CORPORATION, a New Jersey corporation (formerly XCEL
Corporation) ("XIT").

                              W I T N E S S E T H:

         WHEREAS the respective Boards of Directors of MicroTel, Sub and XIT
have approved the merger of XIT and Sub;

         WHEREAS, to effect such transaction, the respective Boards of Directors
of MicroTel, Sub and XIT, and MicroTel acting as the sole shareholder of Sub,
have approved the merger of XIT and Sub (the "Merger"), pursuant and subject to
the terms and conditions of this Agreement, whereby each issued and outstanding
share of Common Stock, no par value, of XIT ("XIT Common Stock") will be
converted into the right to receive shares of Common Stock, par value $.0033 per
share, of MicroTel ("MicroTel Common Stock") as provided herein;

         WHEREAS MicroTel, Sub and XIT desire to make certain representations,
warranties and agreements in connection with the Merger and also to prescribe
various conditions to the Merger;

                  NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements herein contained, the parties agree
as follows:

                                    ARTICLE I

                                   THE MERGER

         1.1 The Merger. Subject to the provisions of this Agreement, a
certificate of merger (the "Certificate of Merger") shall be duly prepared,
executed and acknowledged by the Sub and XIT and thereafter delivered to the
Secretary of State of the State of New Jersey, for filing, as provided in the
New Jersey Business Corporation Act (the "NJBCA"), as soon as practicable on the
Closing Date (as defined in Section 1.2). The Merger shall become effective upon
the filing of the Certificate of Merger with the Secretary of State of the State
of New Jersey or at such later time as is provided in the Certificate of Merger
(the "Effective Time"). As a result of the Merger, the Surviving Corporation
shall become a wholly-owned subsidiary of MicroTel at the Effective Time. For
federal income tax purposes, it is intended that the Merger shall constitute a
reorganization within the meaning of Section 368 of the Internal Revenue Code of
1986, as amended (the "Code").



         1.2 Closing. Subject to the Merger receiving all requisite shareholder
approvals and subject to the provisions of this Agreement, the parties shall
hold a closing (the "Closing") on (i) the later of (A) twenty days following the

tabulation date for the written consents of the shareholders of XIT approving
the Merger and (B) the first business day on which the last of the conditions
set forth in Article VI to be fulfilled prior to the Closing is fulfilled or
waived or (ii) such other date as the parties hereto may agree (the "Closing
Date"), at 10:00 A.M. (local time) at such time and place as the parties hereto
may agree.

         1.3 Effects of the Merger.

         (a) At the Effective Time, the separate existence of Sub shall cease
         and Sub shall be merged with and into XIT (Sub and XIT are sometimes
         referred to herein as the "Constituent Corporations") and XIT shall
         continue as the surviving corporation under the corporate name "XIT
         Corporation" (the "Surviving Corporation").

         (b) At and after the Effective Time, the Surviving Corporation shall
         possess all the rights, privileges, powers and franchises, and be
         subject to all the restrictions, disabilities and duties of each of the
         Constituent Corporations; and all and singular rights, privileges,
         powers and franchises of each of the Constituent Corporations, and all
         property, real, personal and mixed, and all debts due to either of the
         Constituent Corporations on whatever account, and all other things in
         action or belonging to each of the Constituent Corporations, shall be
         vested in the Surviving Corporation; and all property, rights,
         privileges, powers and franchises, and all and every other interest
         shall be thereafter the property of the Surviving Corporation as they
         were of the Constituent Corporations; but all rights of creditors and
         all liens upon any property of either of the Constituent Corporations
         shall be preserved unimpaired, and all debts, liabilities and duties of
         the Constituent Corporations shall thenceforth attach to the Surviving
         Corporation, and may be enforced against it to the same extent as if
         said debts and liabilities had been incurred by it.

         1.4 Certificate of Incorporation, By-Laws and Directors and Officers.
The Certificate of Incorporation of the Surviving Corporation in effect
immediately prior to the Effective Time shall be and remain the Certificate of
Incorporation of the Surviving Corporation, until thereafter amended in
accordance with the provisions therein and as provided by the NJBCA. The By-Laws
of the Surviving Corporation in effect immediately prior to the Effective Time
shall be the By-Laws of the Surviving Corporation until thereafter amended in
accordance with its terms. The initial directors and officers of the Surviving
Corporation shall be the directors and officers of the Surviving Corporation
immediately prior to the Effective Time, in each case until their successors are
duly elected and qualified.

                                       -2-




                                   ARTICLE II

                EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
               CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES

         2.1 Effect on Capital Stock. As of the Effective Time, by virtue of the
Merger and without any action on the part of the holder of any shares of XIT
Common Stock or capital stock of Sub:

         (a) Capital Stock of Sub. Each issued and outstanding share of the
         capital stock of Sub shall be converted into and become one fully paid
         and nonassessable share of Common Stock, no par value, of the Surviving
         Corporation.

         (b) Cancellation of Treasury Stock. All shares of XIT Common Stock that
         are owned by XIT as treasury stock shall be canceled and retired and
         shall cease to exist and no stock of MicroTel or other consideration
         shall be delivered in exchange therefor.

         (c) Conversion of XIT Common Stock. Each issued and outstanding share
         of XIT Common Stock (other than shares to be canceled in accordance
         with Section 2.1(b) and shares held by persons who perfect their
         dissenters' right) shall be converted into the right to receive such
         number of fully paid and nonassessable shares of MicroTel Common Stock
         such that the shareholders, optionholders and warrantholders of XIT own
         or have the right to acquire in the aggregate 65% of the outstanding
         shares of MicroTel Common Stock on a fully diluted basis. All shares of
         XIT Common Stock shall no longer be outstanding and shall automatically
         be canceled and retired and shall cease to exist, and each holder of a
         certificate representing any such shares shall cease to have any rights
         with respect thereto, except the right to receive the shares of
         MicroTel Common Stock to be issued in consideration therefor upon the
         surrender of such certificate in accordance with Section 2.2.

         (d) Dissenting Shares. Notwithstanding anything herein to the contrary,
         shares of XIT Common Stock that are outstanding immediately prior to
         the Effective Time and that are held by shareholders, if any, who are
         entitled to assert a right to dissent from the Merger and who demand
         and validly perfect their rights to receive the "fair value" of their
         shares with respect to the Merger under Chapter 11 of the NJBCA (the
         "Dissenting Shares") shall not be converted into or be exchangeable for
         the right to receive shares of MicroTel Common Stock, but the holders
         of such shares of XIT Common Stock shall be entitled solely to payment
         of the "fair value" of such shares in accordance with the provisions of
         the NJBCA; except that (i) if such demand to receive "fair value" shall
         be withdrawn upon the consent of the Surviving Corporation, (ii) if
         this Merger Agreement shall be terminated, or the Merger shall not be
         consummated, (iii) if no demand or petition for the determination of
         "fair value" by a court shall have been made or filed within the time
         provided in the provisions of the NJBCA or (iv) if a court of competent
         jurisdiction shall determine that such holder of Dissenting Shares is
         not entitled to the


                                       -3-



         relief provided by the provisions of the NJBCA, then the right of such
         holder of Dissenting Shares to be paid the "fair value" of his or her
         shares of XIT Common Stock shall cease and with respect to clauses (i),
         (iii) and (iv) above such Dissenting Shares shall thereupon be deemed
         to have been converted into and to have become exchangeable for, as of
         the Effective Time, the right to receive the number of shares of
         MicroTel Common Stock into which such shares would have been converted
         in the Merger in accordance with Section 2.1(c) hereof, without any
         interest thereon, and with respect to clause (ii) above the status of
         such shareholder shall be restored retroactively without prejudice to
         any corporate proceeding which may have been taken during the interim.

         (e) Assumption of XIT Stock Options and Warrants. At the Effective
         Time, each option to purchase shares of XIT Common Stock and each
         outstanding warrant to purchase shares of XIT Common Stock which is
         then outstanding, whether or not then vested or exercisable, shall be
         assumed by MicroTel on the terms set forth in Sections 5.6 and 5.7 of
         this Agreement. Prior to the Effective Time, the Board of Directors of
         XIT shall take such action as may be required under the governing
         option agreements and warrant agreements or otherwise to effectuate
         such assumption by MicroTel.

         2.2 Exchange of Certificates.

         (a) Exchange Agent. As of the Effective Time, MicroTel shall deposit
         with American Securities Transfer Co., the transfer agent for MicroTel
         (the "Exchange Agent"), for the benefit of the holders of shares of XIT
         Common Stock, for exchange in accordance with this Article II, through
         the Exchange Agent, certificates representing the shares of MicroTel
         Common Stock (the "MicroTel Certificates") issuable pursuant to Section
         2.1 in exchange for outstanding shares of XIT Common Stock.

         (b) Exchange Procedures. As soon as reasonably practicable after the
         Effective Time, the Exchange Agent shall mail to each holder of record
         of a certificate or certificates which immediately prior to the
         Effective Time represented outstanding shares of XIT Common Stock (the
         "XIT Certificates") whose shares were converted into the right to
         receive shares of MicroTel Common Stock pursuant to Section 2.1, (i) a
         MicroTel Certificate representing that number of whole shares of
         MicroTel Common Stock to which such holder has the right to receive
         pursuant to the provisions of this Article II, and (ii) a check
         representing the cash consideration to which such holder may be
         entitled on account of a fractional share of MicroTel Common Stock as
         provided in Section 2.2(e). Upon mailing of such MicroTel Certificates
         all outstanding XIT Certificates other than Dissenting Shares shall be
         canceled.

         (c) No Further Ownership Rights in XIT Common Stock. All shares of
         MicroTel Common Stock issued in accordance with the terms hereof shall

         be deemed to have been issued in full satisfaction of all rights
         pertaining to such shares of XIT Common Stock, and there shall be no
         further registration of transfers on the stock transfer books of the
         Surviving Corporation of the shares of XIT Common Stock which were
         outstanding

                                       -4-



         immediately prior to the Effective Time. If, after the Effective Time,
         XIT Certificates are presented to the Surviving Corporation for any
         reason, they shall forthwith be canceled.

         (d) No Fractional Shares. No certificates representing fractional
         shares of MicroTel Common Stock shall be issued for exchange of XIT
         Certificates, and such fractional share interests will not entitle the
         owner thereof to vote or to any rights of a shareholder of MicroTel and
         each holder of XIT Common Stock will receive cash in lieu of any
         fraction of MicroTel Common Stock in an amount equal to such fraction
         multiplied by the average of the closing bid prices of MicroTel Common
         Stock on the Nasdaq SmallCap Market during the five trading days
         preceding the Closing Date. Payment of such amounts shall be made by
         MicroTel.

                                   ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

        3.1      Representations and Warranties of MicroTel and Sub.  MicroTel 
and Sub represent and warrant to XIT as follows:

         (a) Organization, Standing and Power. Each of MicroTel and its
         subsidiaries is a corporation duly organized, validly existing and in
         good standing under the laws of its state or country of incorporation
         or organization, has all requisite power and authority to own, lease
         and operate its properties and to carry on its business as now being
         conducted, and is duly qualified and in good standing to do business in
         each jurisdiction in which the nature of its business or the ownership
         or leasing of its properties makes such qualification necessary other
         than in such jurisdictions where the failure so to qualify would not
         have a material adverse effect on MicroTel and its subsidiaries taken
         as a whole. Schedule 3.1(a) hereto lists each of the direct and
         indirect subsidiaries of MicroTel. All issued and outstanding shares of
         capital stock of each subsidiary have been duly authorized, are fully
         paid and nonassessable, and, except as set forth on Schedule 3.1(a),
         are lawfully owned of record and beneficially by MicroTel or another
         subsidiary free and clear of all pledges, liens, claims, security
         interests and other charges or defects in title of any nature
         whatsoever. Except for the subsidiaries or as set forth in Schedule
         3.1(a) and except for shares representing less than 1% of the
         outstanding shares of any corporation, MicroTel owns no shares of any
         corporation and has no interest, either of record, beneficially or
         equitably, in any association, partnership, joint venture or other

         legal entity.

                                       -5-



         (b) Capital Structure. The authorized capital stock of MicroTel
         consists of 25,000,000 shares of MicroTel Common Stock, par value
         $.0033 per share and 10,000,000 shares of MicroTel Preferred Stock, par
         value $.01 per share. As of the close of business on December 27, 1996,
         2,860,559 shares of MicroTel Common Stock were outstanding; no shares
         of MicroTel Common Stock were held by MicroTel in its treasury, and no
         shares of MicroTel Preferred Stock were issued or outstanding. All
         outstanding shares of MicroTel capital stock are, and the shares of
         MicroTel Common Stock to be issued pursuant to this Agreement will be,
         validly issued, fully paid and nonassessable and not subject to
         preemptive rights. Except for options and warrants described in
         Schedule 3.1(b) hereto, there are no options, warrants, calls,
         agreements or other rights to purchase or otherwise acquire from
         MicroTel at any time, or upon the happening of any stated event, any
         shares of the capital stock of MicroTel or any of its subsidiaries,
         whether or not presently issued or outstanding.

         (c) Certificate of Incorporation, By-Laws, and Minute Books. The copies
         of the Certificate of Incorporation and all amendments thereto and of
         the By-Laws, as amended, of MicroTel and its subsidiaries which have
         been delivered to XIT are true, correct and complete copies thereof.
         The minute books of MicroTel and its subsidiaries which have been made
         available for inspection contain accurate minutes of all meetings and
         accurate consents in lieu of meetings of the Board of Directors (and
         any committee thereof) and of the shareholders of MicroTel and its
         subsidiaries since the respective dates of incorporation and accurately
         reflect all transactions referred to in such minutes and consents in
         lieu of meetings.

         (d) Authority. MicroTel and Sub have all requisite power and authority
         to enter into this Agreement and to consummate the transactions
         contemplated hereby. The execution and delivery of this Agreement and
         the consummation of the transactions contemplated hereby have been duly
         authorized by the Boards of Directors of MicroTel and Sub and MicroTel
         as the sole shareholder of Sub. No other corporate or shareholder
         proceedings on the part of MicroTel or Sub are necessary to authorize
         the Merger and the other transactions contemplated hereby.

         (e) Conflict with Other Agreements; Approvals. This Agreement has been
         duly executed and delivered by MicroTel and Sub and constitutes a valid
         and binding obligation of MicroTel and Sub enforceable in accordance
         with its terms. The execution and delivery of this Agreement does not,
         and the consummation of the transactions contemplated hereby will not
         conflict with, or result in any violation of, or default (with or
         without notice or lapse of time, or both) under, or give rise to a
         right of termination, cancellation or acceleration of any obligation or
         the loss of a material benefit under, or the creation of a lien,
         pledge, security interest or other encumbrance on assets (any such

         conflict, violation, default, right of termination, cancellation or
         acceleration, loss or creation, a "Violation") pursuant to any
         provision of the Certificate of Incorporation or By-laws of MicroTel or
         any of its subsidiaries or, except as set forth on Schedule 3.2(e)
         hereto result in any Violation of any loan or credit agreement, note,
         mortgage, indenture,

                                       -6-



         lease, benefit plan or other agreement, obligation, instrument, permit,
         concession, franchise, license, judgment, order, decree, statute, law,
         ordinance, rule or regulation applicable to MicroTel or any of its
         subsidiaries or their respective properties or assets which Violation
         would have a material adverse effect on MicroTel and its subsidiaries
         taken as a whole. No consent, approval, order or authorization of, or
         registration, declaration or filing with, any court, administrative
         agency or commission or other governmental authority or
         instrumentality, domestic or foreign (a "Governmental Entity") is
         required by or with respect to MicroTel or any of its subsidiaries in
         connection with the execution and delivery of this Agreement by
         MicroTel and Sub or the consummation by MicroTel and Sub of the
         transactions contemplated hereby, the failure to obtain which would
         have a material adverse effect on MicroTel and its subsidiaries, taken
         as a whole, except for (i) the filing of such documents with, and the
         obtaining of such orders from the Securities and Exchange Commission
         (the "SEC") and the various state authorities, including state
         securities authorities, that are required in connection with the
         transactions contemplated by this Agreement and (ii) the filing of the
         Certificate of Merger with the Secretary of State of the State of New
         Jersey.

         (f) SEC Documents; Financial Statements. (i) MicroTel has furnished XIT
         with a true and complete copy of each report, schedule, registration
         statement and definitive proxy statement filed by MicroTel with the
         Securities and Exchange Commission (the "SEC") since January 1, 1993
         (as such documents have since the time of their filing been amended,
         the "MicroTel SEC Documents") which are all the documents (other than
         preliminary material) that MicroTel was required to file with the SEC
         since such date. As of their respective dates, the MicroTel SEC
         Documents complied in all material respects with the requirements of
         the Securities Act of 1933, as amended (the "Securities Act"), or the
         Exchange Act of 1934, as amended (the "Exchange Act"), as the case may
         be, and the rules and regulations of the SEC thereunder applicable to
         such MicroTel SEC Documents, and none of the MicroTel SEC Documents
         contained any untrue statement of a material fact or omitted to state a
         material fact required to be stated therein or necessary to make the
         statements therein, in light of the circumstances under which they were
         made, not misleading.

         (ii) MicroTel has delivered to XIT true and complete copies of (x) the
         consolidated balance sheet of MicroTel at December 31, 1995 and the
         related consolidated statement of income, changes in shareholders'

         equity, changes in financial position and notes thereto for the year
         then ended, certified by BDO Seidman, LLP, independent public
         accountant (the "MicroTel 1995 Financials"); and (y) an unaudited
         consolidated balance sheet of MicroTel at September 30, 1996 and
         related consolidated statement of income, changes in shareholders'
         equity, changes in financial position and notes thereto for the periods
         ended September 30, 1996 (the "MicroTel 1996 Financials"). The MicroTel
         1995 Financials have been prepared in accordance with generally
         accepted accounting principles applied on a consistent basis during the
         periods involved (except as may be indicated in the notes thereto) and
         the MicroTel 1996 Financials have been prepared on a consistent basis
         during the periods involved (except as may be indicated in the notes
         thereto) subject

                                       -7-



         to normal, recurring audit adjustments. The MicroTel 1995 Financials
         and the MicroTel 1996 Financials fairly present the consolidated
         financial position of MicroTel and its consolidated subsidiaries as at
         the dates thereof and the consolidated results of their operations and
         cash flows for the periods then ended. The financial statements of
         MicroTel included in the MicroTel SEC Documents comply as to form in
         all material respects with applicable accounting requirements and with
         the published rules and regulations of the SEC with respect thereto.

         (g) Books and Records. The books and records of MicroTel and each of
         its subsidiaries accurately reflect the transactions to which MicroTel
         or the subsidiary is a party or by which their properties are subject
         or bound, and the assets and liabilities of MicroTel or the subsidiary,
         and such books and records, together with internal accounting
         procedures and controls maintained by MicroTel and the subsidiaries,
         provide reasonable assurance that (i) transactions are executed with
         management's authorization; (ii) transactions are recorded as necessary
         to permit preparation of MicroTel's consolidated financial statements
         and to maintain accountability for the assets of MicroTel and each
         subsidiary; (iii) access to the assets of MicroTel and each subsidiary
         is permitted only in accordance with management's authorization; (iv)
         the reported accountability of the assets of MicroTel and each
         subsidiary is compared with existing assets at reasonable intervals;
         and (v) the assets recorded on the books and records of MicroTel and
         the subsidiaries accurately reflect the assets owned by such
         corporations, except for assets owned by MicroTel and the subsidiaries
         which have been written off.

         (h) Compliance with Laws. MicroTel and its subsidiaries hold all
         permits, licenses, variances, exemptions, orders and approvals of all
         Governmental Entities which are material to the operation of the
         businesses of MicroTel and its subsidiaries, taken as a whole (the
         "MicroTel Permits"). MicroTel and its subsidiaries are in compliance
         with the terms of the MicroTel Permits, except where the failure so to
         comply would not have a material adverse effect on MicroTel and its
         subsidiaries taken as a whole. The businesses of MicroTel and its

         subsidiaries are not being conducted in violation of any law, ordinance
         or regulation of any Governmental Entity, except for possible
         violations which individually or in the aggregate do not, and, insofar
         as reasonably can be foreseen, in the future will not, have a material
         adverse effect on MicroTel and its subsidiaries taken as a whole. None
         of MicroTel, any subsidiary nor any of their officers and directors has
         : (i) made any contributions to any candidate for political office, or
         failed to disclose fully any such contributions, in violation of law;
         (ii) made any payment to any state, federal or foreign governmental
         officer or official, or other person charged with similar public or
         quasi-public duties, except as allowed by applicable law; (iii) used
         any corporate funds for any unlawful contribution, gift, entertainment
         or other unlawful expense relating to political activity; (iv) made any
         direct or indirect unlawful payment to any foreign or domestic
         government official or employee or any purchasing agent or person
         charged with similar duties of any entity with which MicroTel does
         business from corporate funds; (v) made any bribe, rebate, payoff,
         influence payment, kickback or other unlawful payment; or (vi) engaged
         in any transaction, maintained any bank account or used any corporate

                                       -8-



         funds except for transactions, bank accounts and funds which have been
         and are accurately reflected in the normally maintained books and
         records of MicroTel or the subsidiary; and neither MicroTel nor any
         subsidiary has reimbursed or repaid, directly or indirectly, any
         officer or director for any such illegal or improper contribution or
         payment. No investigation or review by any Governmental Entity with
         respect to MicroTel or any of its subsidiaries is pending or, to the
         knowledge of MicroTel, threatened, nor has any Governmental Entity
         indicated an intention to conduct the same, other than, in each case,
         those the outcome of which, as far as reasonably can be foreseen, will
         not have a material adverse effect on MicroTel and its subsidiaries
         taken as a whole.

         (i) Absence of Certain Changes or Events. Except as set forth in the
         1996 MicroTel Financials, or except as contemplated by this Agreement,
         since September 30, 1996, MicroTel and its subsidiaries have conducted
         their respective businesses only in the ordinary and usual course, and,
         as of the date of this Agreement, there has not been (i) any damage,
         destruction or loss, whether covered by insurance or not, which has, or
         insofar as reasonably can be foreseen in the future is reasonably
         likely to have, a material adverse effect on MicroTel and its
         subsidiaries taken as a whole; (ii) any declaration, setting aside or
         payment of any dividend or other distribution (whether in cash, stock
         or property) with respect to any of MicroTel's capital stock; or (iii)
         any transaction, commitment, dispute or other event or condition
         (financial or otherwise) of any character (whether or not in the
         ordinary course of business) individually or in the aggregate having or
         which, insofar as reasonably can be foreseen, in the future is
         reasonably likely to have, a material adverse effect on MicroTel and
         its subsidiaries taken as a whole. There is no fact, development or

         threatened development with respect to the markets, products, services,
         clients, representatives, customers, facilities, personnel, vendors,
         suppliers, operations, assets or prospects of the business of MicroTel
         or its subsidiaries which are known to MicroTel which would materially
         adversely affect the business of MicroTel or its subsidiaries
         considered as a whole, other than such conditions as may affect as a
         whole the economy generally. MicroTel has used its best efforts to keep
         available for XIT the services of the employees, agents and sales
         representatives, customers and suppliers of MicroTel active in the
         conduct of its business. MicroTel does not have any reason to believe
         that any loss of any employee, agent or sales representative, customer,
         distributor or supplier or other advantageous arrangement will result
         because of the consummation of the transactions contemplated hereby.

         (j) Accounts Receivable. The accounts receivable of MicroTel and its
         subsidiaries as set forth in the 1996 MicroTel Financials or arising
         since the date thereof are valid and genuine; arise out of bona fide
         sales and deliveries of goods, performance of services and other
         business transactions in the ordinary course of business; are not
         subject to valid defenses, set-offs or counterclaims; and except as
         reserved for in the 1996 MicroTel Financials, are collectible within 90
         days after billing at the full recorded amounts thereof.

         (k) Inventory. Except as reserved for in the 1996 MicroTel Financials,
         all inventory, including without limitation raw materials, work-in
         process and finished goods, of

                                       -9-



         MicroTel and its subsidiaries reflected in the 1996 MicroTel Financials
         or acquired since the date thereof was acquired and has been maintained
         in the ordinary course of business of MicroTel and its subsidiaries
         consistent with past practice; consists of items of a quality, quantity
         and condition useable, rentable or saleable in the ordinary course of
         business of MicroTel and its subsidiaries consistent with past
         practice; is valued at reasonable amounts based on the ordinary course
         of business of MicroTel and its subsidiaries during the past six
         months; and is not subject to any material write-down or write-off.

         (l) Liabilities and Obligations. Except as described in Schedule
         3.2(l), neither MicroTel nor any subsidiary has any liabilities or
         obligations (direct or indirect, contingent or absolute, matured or
         unmatured) of any nature, whether arising out of contract, tort,
         statute or otherwise, including federal or state income tax
         liabilities, except (i) liabilities and obligations in the amounts and
         categories reflected, reserved against or given effect to in 1996
         MicroTel Financials or the SEC Documents; (ii) liabilities and
         obligations incurred in the ordinary course of business between
         September 30, 1996 and the date hereof which are consistent with past
         practice; or (iii) liabilities and obligations that would not have,
         either individually or in the aggregate, a material adverse effect on
         the business, prospects, results of operations or condition of

         MicroTel, taken as a whole.

         (m) Litigation. Except as disclosed in the MicroTel SEC Documents filed
         prior to the date of this Agreement or on Schedule 3.1(m) hereto, there
         is no suit, action or proceeding pending, or, to the knowledge of
         MicroTel, threatened against or affecting MicroTel or any subsidiary of
         MicroTel which is reasonably likely to have a material adverse effect
         on MicroTel and its subsidiaries taken as a whole, nor is there any
         judgment, decree, injunction, rule or order of any Governmental Entity
         or arbitrator outstanding against MicroTel or any subsidiary of
         MicroTel having, or which, insofar as reasonably can be foreseen, in
         the future could have, any such effect.

         (n) Taxes. Except as described in Schedule 3.2(n), (i) all federal,
         state and local tax returns, reports and statements (including all
         income tax, unemployment compensation, social security, payroll, sales
         and use, excise, privilege, property, ad valorem, franchise, license,
         school and any other tax under laws of the United States or any state
         or municipal or political subdivision thereof) required to be filed by
         MicroTel or any subsidiary (the "Tax Returns"), have been filed with
         the appropriate governmental agencies in all jurisdictions in which
         such returns, reports and statements are required to be filed, and all
         such returns, reports and statements properly reflect the taxes of
         MicroTel and its subsidiaries for the periods, properties or events
         covered thereby; (ii) all federal, state and local taxes, assessments,
         interest, penalties, deficiencies, fees and other governmental charges
         or impositions, including those enumerated above in respect of the Tax
         Returns or other taxes due (all the foregoing, the "Taxes"), have been
         properly accrued or paid; (iii) the accruals for Taxes contained in the
         1996 MicroTel Financials are adequate to cover the tax liabilities of
         MicroTel and its subsidiaries as of September 30, 1996, and

                                      -10-



         nothing has occurred subsequent to that date to make any of such
         accruals inadequate; (iv) amounts reflected as carryforwards of credits
         against United States federal and state income tax and of net operating
         losses on the MicroTel 1995 Financials, or on the books of MicroTel and
         on the books of any subsidiary are accurate in amount, subject to
         subsequent limitations relating to the Merger; (v) neither MicroTel nor
         any subsidiary has knowledge of any basis for any additional assessment
         of Taxes; (vi) MicroTel and each of its subsidiaries have made all
         deposits required by law with respect to employees' withholding taxes;
         (vii) neither MicroTel nor any subsidiary has received any notice of
         assessment or proposed assessment by the Internal Revenue Service or
         any other taxing authority in connection with any Tax Returns and there
         are no pending tax examinations of or tax claims asserted against
         MicroTel or any subsidiary. Neither MicroTel nor any subsidiary has
         waived any law or regulation fixing, or consented to the extension of,
         any period of time for assessment of any Taxes.

         (o) Assets. Except as described in Schedule 3.1(o), MicroTel and its

         subsidiaries have good and marketable title to all their real and
         personal properties and assets, including without limitation those
         assets and properties reflected in the 1996 MicroTel Financials in the
         amounts and categories reflected therein, free and clear of all
         mortgages, liens, pledges, charges or encumbrances or other third party
         interests of any nature whatsoever, except (i) the lien of current
         taxes not yet due and payable, (ii) properties, interests, and assets
         disposed of by MicroTel or any subsidiary since September 30, 1996
         solely in the ordinary course of business consistent with past
         practice, (iii) such secured indebtedness as is disclosed in the 1996
         MicroTel Financials or the SEC Documents covering the properties
         referred to therein, and (iv) such imperfections of title, easements
         and encumbrances, if any, as are not substantial in character, amount
         or extent and do not materially detract from the value, or interfere
         with the present or proposed use, of the properties subject thereto.
         Other than properties disposed of by MicroTel or any subsidiary since
         September 30, 1996 solely in the ordinary course of business consistent
         with past practice, all buildings, structures, facilities, equipment
         and other items of tangible personal property reflected in the 1996
         MicroTel Financials or acquired since the date thereof are in good
         operating condition and repair, subject to normal wear and maintenance,
         are useable in the regular and ordinary course of business of MicroTel
         and its subsidiaries and conform to all applicable laws, ordinances,
         codes, rules and regulations and Authorizations (hereinafter defined)
         relating to their construction, use and operation. The method of
         amortization or depreciation used by MicroTel for financial reporting
         purposes is sufficient to write-off entirely each building, structure,
         facility and item of equipment or other tangible personal property
         during its useful life. The location of all real property owned by
         MicroTel or its subsidiaries is disclosed in Schedule 3.1(o).

         (p) Contracts. All written or oral contracts, agreements, leases,
         mortgages or commitments ("Contracts"), excluding purchase or sales
         orders placed in the ordinary course of business and other Contracts
         involving payments of less than $50,000 over the term thereof, to which
         MicroTel or any subsidiary is a party or may be bound and which cannot
         be terminated by MicroTel without penalty within 30 days after written
         notice are

                                      -11-



         listed on Schedule 3.1(p). Except as described in Schedule 3.1(p)
         hereto, all Contracts are valid and in full force and effect on the
         date hereof, and neither MicroTel nor any subsidiary has violated any
         provision of, or committed or failed to perform any act which with
         notice, lapse of time or both would constitute a default under the
         provisions of, any Contract, the termination or violation of which
         might have a materially adverse effect upon the business, assets,
         liabilities, financial condition, results of operations or prospects of
         MicroTel or any subsidiary. True and complete copies of all Contracts,
         together with all amendments thereto, disclosed in Schedule 3.1(p)
         hereto have been delivered to XIT or made available for inspection.

         Schedule 3.1(p) hereto identifies all Contracts which require the
         consent or approval of third parties to the execution and delivery of
         this Agreement or to the consummation and performance of the
         transactions contemplated hereby.

         (q) Labor Matters. Neither MicroTel nor any subsidiary is a party to or
         bound by any collective bargaining agreements with respect to any
         employees of MicroTel or any subsidiary. Except as described in
         Schedule 3.1(q), since January 1, 1990 there has not been, nor to the
         knowledge of MicroTel was there or is there threatened, any strike,
         slowdown, picketing or work stoppage by any union or other group of
         employees against MicroTel or any subsidiary or any of their premises,
         or any other labor trouble or other occurrence, event or condition of a
         similar character adversely affecting, or which may adversely affect,
         the business, results of operations or prospects of MicroTel or any
         subsidiary.

         (r) Benefit Plans. Schedule 3.1(r) hereto lists all employee benefit
         plans, contracts, agreements or arrangements sponsored, maintained or
         contributed to by MicroTel or any of its United States subsidiaries
         (collectively, the "MicroTel Employee Benefit Plans") including without
         limitation all employment, pension, retirement, deferred compensation,
         incentive, bonus, profit-sharing, stock purchase, stock option,
         performance share, stock appreciation right, phantom stock, life
         insurance, death or survivor's benefit, health insurance, sickness,
         disability, medical, surgical, hospital, severance, layoff or vacation
         plans, contracts, agreements or arrangements. Accurate summaries of the
         material benefits provided under all Employee Benefit Plans have been
         delivered to XIT and Sub. Except as described in Schedule 3.1(r), (i)
         neither MicroTel nor any of its subsidiaries has incurred any
         obligation to contribute any material amount to any multi-employer
         plan, as defined in Section 3(37) of the Employee Retirement Income
         Security Act of 1974, as amended ("ERISA"), (ii) neither MicroTel nor
         any of its subsidiaries has incurred any material liability under Title
         IV of ERISA arising in connection with the termination of, or complete
         or partial withdrawal from, any plan covered or previously covered by
         Title IV of ERISA, and (iii) each MicroTel Employee Benefit Plan is in
         compliance with all applicable laws and regulations in all material
         respects.

         (s) Patents, Trademarks, etc. MicroTel and its subsidiaries have all
         patents, trademarks, trade names, service marks, trade secrets,
         copyrights and other proprietary intellectual property rights as are
         material in connection with the businesses of MicroTel

                                      -12-



         and its subsidiaries, taken as a whole with no material conflict with,
         or infringement of, any patent, trademark, trade name, service mark,
         trade secret, copyright or other proprietary intellectual property
         rights. Schedule 3.1(s) contains a complete and correct listing of all
         patents, trademarks, tradenames, service marks, copyrights and

         applications with respect thereto and license agreements owned or filed
         by any of MicroTel or its subsidiaries or in which they have an
         interest and the nature of such interest.

         (t) Licenses, Permits, Etc. MicroTel and its subsidiaries own or
         possess in the operation of their business all franchises, licenses,
         permits, consents, approvals, rights, waivers and other authorizations,
         governmental or otherwise ("Authorization"), which are necessary for
         them to conduct their business as now conducted except where the
         failure to obtain such Authorization would not have, either
         individually or in the aggregate, a material adverse effect on the
         business, prospects, results of operations or condition of MicroTel,
         taken as a whole. Neither MicroTel nor any subsidiary is in material
         default, or has received any notice of any claim of default, with
         respect to any such Authorization or any notice of any other claim or
         proceeding or threatened proceeding relating to any such Authorization
         or claimed lack of any necessary Authorization. Except as described in
         Schedule 3.1(t), neither the execution or delivery of this Agreement
         nor the consummation of the transactions contemplated hereby will
         require any notice or consent under or have any material adverse effect
         upon any such Authorization.

         (u) Environmental Matters.

                  (i) MicroTel has obtained all permits, licenses and other
         authorizations which are required under Environmental Laws. As used in
         this Agreement, Environmental Laws shall include, without limitation,
         any and all federal, state, local and foreign laws and requirements
         relating to health and safety and pollution or protection of the
         environment, including laws and requirements relating to emissions,
         discharges, releases or threatened releases of pollutants,
         contaminants, chemicals, or industrial, toxic or hazardous substances
         or wastes into the environment (including without limitation ambient
         air, surface water, groundwater or land), or otherwise relating to the
         manufacture, processing, distribution, use, treatment, storage,
         disposal, transport, or handling of pollutants, contaminants,
         chemicals, or industrial, toxic or hazardous substances or wastes.

                  (ii) MicroTel is in full compliance with all terms and
         conditions of the required permits, licenses and authorizations, and is
         also in full compliance with all other limitations, restrictions,
         conditions, standards, prohibitions, requirements, obligations,
         schedules and timetables contained in any and all Environmental Laws or
         contained in any regulation, code, plan, order, decree, judgment,
         injunction, notice or demand letter issued, entered, promulgated or
         approved thereunder by any federal, state or local court or other
         governmental authority, agency or instrumentality except where the
         failure to comply would not have, either individually or in the
         aggregate, a material adverse effect on the business, prospects,
         results of operations or condition of MicroTel, taken as a whole.

                                      -13-




                  (iii) MicroTel is not aware of, nor has MicroTel received
         notice of, any past, present or future events, conditions,
         circumstances, activities, practices, incidents, actions or plans which
         may interfere with or prevent compliance or continued compliance with
         Environmental Laws or any regulation, code, plan, order, decree,
         judgment, injunction, notice or demand letter issued, entered,
         promulgated or approved thereunder by any federal, state or local court
         or other governmental authority, agency or instrumentality which may
         give rise to any common law or legal liability, or otherwise form the
         basis of any claim, action, demand, suit, proceeding, hearing, study or
         investigation, based on or related to the manufacture, processing,
         distribution, use, treatment, storage, disposal, transport, or
         handling, or the emission, discharge, release or threatened release
         into the environment, of any pollutant, contaminant, chemical, or
         industrial, toxic or hazardous substance or waste.

                  (iv) There is no civil, criminal or administrative action,
         suit, demand, claim, hearing, notice or demand letter, notice of
         violation, investigation, or proceeding pending or threatened against
         MicroTel relating in any way to any Environmental Law or any
         regulation, code, plan, order, decree, judgment, injunction, notice or
         demand letter issued, entered, promulgated or approved thereunder.

                  (v) There are no tanks in, on or under any of MicroTel's
         properties or facilities that are used or have been used for the
         storage of petroleum products or any other substance, nor have any such
         tanks ever been located in, on or under any such properties or
         facilities. There are no asbestos-containing materials in, on or at any
         of MicroTel's properties or facilities.

         (v) Interim Operations of Sub. Sub was formed solely for the purpose of
         engaging in the transactions contemplated hereby, has engaged in no
         other business activities, has no assets or liabilities and has
         conducted its operations only as contemplated hereby.

         (w) Transactions and Affiliates. Except as described in Schedule
         3.1(w), no director or officer of MicroTel or any subsidiary or any
         member of his or her immediate family, is a party to any Contract or
         other business arrangement or relationship of any kind with MicroTel or
         any subsidiary or, except for the ownership of not more than 1% of the
         stock of a company having a class of securities registered pursuant to
         the Exchange Act, has an ownership interest in any business, corporate
         or otherwise, which is a party to, or in any property which is the
         subject of, business arrangements or relationships of any kind with
         MicroTel or any subsidiary.

         (x) Brokers. Except for P.K. Hickey and Co., Inc. and Neil Sussman,
         Esq., no broker, finder or investment banker is entitled to any
         brokerage, finder's or other fee or commission in connection with the
         Merger based upon arrangements made by or on behalf of XIT or MicroTel
         and the fee payable to such brokers is (i) $50,000 in cash and five
         year warrants to purchase 125,000 shares of MicroTel Common Stock at
         $3.00 per share payable to P.K. Hickey and Co. and (ii) $50,000 in cash

         and five year warrants to

                                      -14-



         purchase 25,000 shares of MicroTel Common Stock at $3.00 per share
         payable to Neil Sussman. The number of warrants may be reallocated by
         P.K. Hickey and Co., Inc. and Neil Sussman as mutually agreed to by
         such brokers, but in any event the total number of warrants to be
         issued to such brokers shall not exceed 150,000. The fees of Hickey and
         Sussman shall be paid following the closing of the Merger and not later
         than upon the completion of any equity, debt or convertible debt
         financing by MicroTel.

         3.2 Representations and Warranties of XIT. XIT represents and warrants
to MicroTel and Sub as follows:

         (a) Organization, Standing and Power. Each of XIT and its subsidiaries
         is a corporation duly organized, validly existing and in good standing
         under the laws of its state or country of incorporation or
         organization, has all requisite power and authority to own, lease and
         operate its properties and to carry on its business as now being
         conducted, and is duly qualified and in good standing to do business in
         each jurisdiction in which the nature of its business or the ownership
         or leasing of its properties makes such qualification necessary other
         than in such jurisdictions where the failure so to qualify would not
         have a material adverse effect on XIT and its subsidiaries taken as a
         whole. Schedule 3.2(a) hereto lists each of the direct and indirect
         subsidiaries of XIT. All issued and outstanding shares of capital stock
         of each subsidiary have been duly authorized, are fully paid and
         nonassessable, and, except as set forth on Schedule 3.2(a), are
         lawfully owned of record and beneficially by XIT or another subsidiary
         free and clear of all pledges, liens, claims, security interests and
         other charges or defects in title of any nature whatsoever. Except for
         the subsidiaries or as set forth in Schedule 3.2(a) and Capital Source
         Partners, a California Real Estate Partnership, XIT owns no shares of
         any corporation and has no interest, either of record, beneficially or
         equitably, in any association, partnership, joint venture or other
         legal entity.

         (b) Capital Structure. The authorized capital stock of XIT consists of
         10,000,000 shares of XIT Common Stock, no par value, and 1,000 shares
         of XIT Preferred Stock, no par value. As of the close of business on
         December 27, 1996, 4,177,941 shares of XIT Common Stock were
         outstanding; no shares of XIT Common Stock were held by XIT in its
         treasury, and no shares of XIT Preferred Stock were outstanding. All
         outstanding shares of XIT capital stock are validly issued, fully paid
         and nonassessable and not subject to preemptive rights. Except for
         options and warrants described in Schedule 3.2(b) hereto, there are no
         options, warrants, calls, agreements or other rights to purchase or
         otherwise acquire from XIT at any time, or upon the happening of any
         stated event, any shares of the capital stock of XIT or any of its
         subsidiaries, whether or not presently issued or outstanding.


         (c) Certificate of Incorporation, By-Laws, and Minute Books. The copies
         of the Certificate of Incorporation and all amendments thereto and of
         the By-Laws, as amended, of XIT and its subsidiaries which have been
         delivered to XIT are true, correct and complete copies thereof. The
         minute books of XIT and its subsidiaries which have been

                                      -15-



         made available for inspection contain accurate minutes of all meetings
         and accurate consents in lieu of meetings of the Board of Directors
         (and any committee thereof) and of the shareholders of XIT and its
         subsidiaries since the respective dates of incorporation and accurately
         reflect all transactions referred to in such minutes and consents in
         lieu of meetings.

         (d) Authority. XIT has all requisite power and authority to enter into
         this Agreement and, subject to approval of this Agreement by the
         shareholders of XIT, to consummate the transactions contemplated
         hereby. The execution and delivery of this Agreement and the
         consummation of the transactions contemplated hereby have been duly
         authorized by the Board of Directors of XIT, and except for the
         approval and adoption of this Agreement and the Merger by its
         shareholders, no other corporate or shareholder proceedings on the part
         of XIT are necessary to authorize the Merger and the other transactions
         contemplated hereby.

         (e) Conflict with Agreements; Approvals. This Agreement has been duly
         executed and delivered by XIT and, subject to such approval of this
         Agreement by the shareholders of XIT, constitutes a valid and binding
         obligation of XIT enforceable in accordance with its terms. The
         execution and delivery of this Agreement does not, and the consummation
         of the transactions contemplated hereby will not, conflict with, or
         result in any Violation of, or default (with or without notice or lapse
         of time, or both) under, or give rise to a right of termination,
         cancellation or acceleration of any obligation or the loss of a
         material benefit under, or the creation of a lien, pledge, security
         interest or other encumbrance on assets pursuant to any provision of
         the Certificate of Incorporation or By-laws of XIT or any of its
         subsidiaries or, except as set forth on Schedule 3.2(e) hereto or
         result in any Violation of any loan or credit agreement, note,
         mortgage, indenture, lease, benefit plan or other agreement,
         obligation, instrument, permit, concession, franchise, license,
         judgment, order, decree, statute, law, ordinance, rule or regulation
         applicable to XIT or any of its subsidiaries or their respective
         properties or assets which Violation would have a material adverse
         effect on XIT and its subsidiaries taken as a whole. No consent,
         approval, order or authorization of, or registration, declaration or
         filing with, any Governmental Entity is required by or with respect to
         XIT or any of its subsidiaries in connection with the execution and
         delivery of this Agreement by XIT or the consummation by XIT of the
         transactions contemplated hereby, the failure to obtain which would

         have a material adverse effect on XIT and its subsidiaries, taken as a
         whole, except for the filing of the Certificate of Merger with the
         Secretary of State of the State of New Jersey.

         (f) Financial Statements. XIT has delivered to MicroTel true and
         complete copies of (i) the consolidated balance sheet of XIT at
         September 30, 1995 and the related consolidated statement of income,
         changes in shareholders' equity, changes in financial position and
         notes thereto for the year then ended, certified by KPMG Peat Marwick,
         independent public accountant (the "XIT 1995 Financials"); and (ii) an
         unaudited consolidated balance sheet of XIT at September 30, 1996 and
         related consolidated

                                      -16-



         statement of income, changes in shareholders' equity, changes in
         financial position and notes thereto for the periods ended September
         30, 1996 (the "XIT 1996 Financials"), all of which have been prepared
         in accordance with generally accepted accounting principles applied on
         a consistent basis during the periods involved (except as may be
         indicated in the notes thereto) and fairly present (subject, in the
         case of the unaudited XIT 1996 Financials, to normal, recurring audit
         adjustments) the consolidated financial position of XIT and its
         consolidated subsidiaries as at the dates thereof and the consolidated
         results of their operations and cash flows for the period then ended.

         (g) Books and Records. The books and records of XIT and each of its
         subsidiaries accurately reflect the transactions to which XIT or the
         subsidiary is a party or by which their properties are subject or
         bound, and the assets and liabilities of XIT or the subsidiary, and
         such books and records, together with internal accounting procedures
         and controls maintained by XIT and the subsidiaries, provide reasonable
         assurance that (i) transactions are executed with management's
         authorization; (ii) transactions are recorded as necessary to permit
         preparation of XIT's consolidated financial statements and to maintain
         accountability for the assets of XIT and each subsidiary; (iii) access
         to the assets of XIT and each subsidiary is permitted only in
         accordance with management's authorization; (iv) the reported
         accountability of the assets of XIT and each subsidiary is compared
         with existing assets at reasonable intervals; and (v) the assets
         recorded on the books and records of XIT and the subsidiaries
         accurately reflect the assets owned by such corporations, except for
         assets owned by XIT and the subsidiaries which have been written off.

         (h) Compliance with Laws. XIT and its subsidiaries hold all permits,
         licenses, variances, exemptions, orders and approvals of all
         Governmental Entities which are material to the operation of the
         businesses of XIT and its subsidiaries, taken as a whole (the "XIT
         Permits"). XIT and its subsidiaries are in compliance with the terms of
         the XIT Permits, except where the failure so to comply would not have a
         material adverse effect on XIT and its subsidiaries taken as a whole.
         The businesses of XIT and its subsidiaries are not being conducted in

         violation of any law, ordinance or regulation of any Governmental
         Entity, except for possible violations which individually or in the
         aggregate do not, and, insofar as reasonably can be foreseen, in the
         future will not, have a material adverse effect on XIT and its
         subsidiaries taken as a whole. None of XIT, any subsidiary nor any of
         their officers and directors has: (i) made any contributions to any
         candidate for political office, or failed to disclose fully any such
         contributions, in violation of law; (ii) made any payment to any state,
         federal or foreign governmental officer or official, or other person
         charged with similar public or quasi-public duties, except as allowed
         by applicable law; (iii) used any corporate funds for any unlawful
         contribution, gift, entertainment or other unlawful expense relating to
         political activity; (iv) made any direct or indirect unlawful payment
         to any foreign or domestic government official or employee or any
         purchasing agent or person charged with similar duties of any entity
         with which XIT does business from corporate funds; (v) made any bribe,
         rebate, payoff, influence payment, kickback or other unlawful payment;
         or (vi) engaged in any transaction,

                                      -17-



         maintained any bank account or used any corporate funds except for
         transactions, bank accounts and funds which have been and are
         accurately reflected in the normally maintained books and records of
         XIT or the subsidiary; and neither XIT nor any subsidiary has
         reimbursed or repaid, directly or indirectly, any officer or director
         for any such illegal or improper contribution or payment. No
         investigation or review by any Governmental Entity with respect to XIT
         or any of its subsidiaries is pending or, to the knowledge of XIT,
         threatened, nor has any Governmental Entity indicated an intention to
         conduct the same, other than, in each case, those the outcome of which,
         as far as reasonably can be foreseen, will not have a material adverse
         effect on XIT and its subsidiaries taken as a whole.

         (i) Absence of Certain Changes or Events. Except as set forth in the
         XIT 1996 Financials, or except as contemplated by this Agreement, since
         September 30, 1996, XIT and its subsidiaries have conducted their
         respective businesses only in the ordinary and usual course, and, as of
         the date of this Agreement, there has not been (i) any damage,
         destruction or loss, whether covered by insurance or not, which has, or
         insofar as reasonably can be foreseen in the future is reasonably
         likely to have, a material adverse effect on XIT and its subsidiaries
         taken as a whole; (ii) any declaration, setting aside or payment of any
         dividend or other distribution (whether in cash, stock or property)
         with respect to any of XIT's capital stock; or (iii) any transaction,
         commitment, dispute or other event or condition (financial or
         otherwise) of any character (whether or not in the ordinary course of
         business) individually or in the aggregate having or which, insofar as
         reasonably can be foreseen, in the future is reasonably likely to have,
         a material adverse effect on XIT and its subsidiaries taken as a whole.
         There is no fact, development or threatened development with respect to
         the markets, products, services, clients, representatives, customers,

         facilities, personnel, vendors, suppliers, operations, assets or
         prospects of the business of XIT or its subsidiaries which are known to
         XIT which would materially adversely affect the business of XIT or its
         subsidiaries considered as a whole, other than such conditions as may
         affect as a whole the economy generally. XIT has used its best efforts
         to keep available for MicroTel the services of the employees, agents
         and sales representatives, customers and suppliers of XIT active in the
         conduct of its business. XIT does not have any reason to believe that
         any loss of any employee, agent or sales representative, customer,
         distributor or supplier or other advantageous arrangement will result
         because of the consummation of the transactions contemplated hereby.

         (j) Accounts Receivable. The accounts receivable of XIT and the
         subsidiaries as set forth in the XIT 1996 Financials or arising since
         the date thereof are valid and genuine; arise out of bona fide sales
         and deliveries of goods, performance of services and other business
         transactions in the ordinary course of business; are not subject to
         valid defenses, set-offs or counterclaims; and except as reserved for
         in the XIT 1996 Financials are collectible within 90 days after billing
         at the full recorded amounts thereof.

         (k) Inventory. Except as reserved for in the XIT 1996 Financials, all
         inventory, including without limitation raw materials, work-in process
         and finished goods, of XIT

                                      -18-



         and its subsidiaries reflected in the XIT 1996 Financials or acquired
         since the date thereof was acquired and has been maintained in the
         ordinary course of business of XIT and its subsidiaries consistent with
         past practice; consists of items of a quality, quantity and condition
         useable, rentable or saleable in the ordinary course of business of XIT
         and its subsidiaries consistent with past practice; is valued at
         reasonable amounts based on the ordinary course of business of XIT and
         its subsidiaries during the past six months; and is not subject to any
         material write-down or write-off.

         (l) Liabilities and Obligations. Except as described in Schedule
         3.2(l), neither XIT nor any subsidiary has any liabilities or
         obligations (direct or indirect, contingent or absolute, matured or
         unmatured) of any nature, whether arising out of contract, tort,
         statute or otherwise, including federal or state income tax
         liabilities, except (i) liabilities and obligations in the amounts and
         categories reflected, reserved against or given effect to in the XIT
         1996 Financials; (ii) liabilities and obligations incurred in the
         ordinary course of business between September 30, 1996 and the date
         hereof which are consistent with past practice; or (iii) liabilities
         and obligations that would not have, either individually or in the
         aggregate, a material adverse effect on the business, prospects,
         results of operations or condition of XIT, taken as a whole.

         (m) Litigation. There is no suit, action or proceeding pending, or, to

         the knowledge of XIT, threatened against or affecting XIT or any
         subsidiary of XIT which is reasonably likely to have a material adverse
         effect on XIT and its subsidiaries taken as a whole, nor is there any
         judgment, decree, injunction, rule or order of any Governmental Entity
         or arbitrator outstanding against XIT or any subsidiary of XIT having,
         or which, insofar as reasonably can be foreseen, in the future could
         have, any such effect.

         (n) Taxes. Except as described in Schedule 3.2(n), (i) all Tax Returns
         have been filed with the appropriate governmental agencies in all
         jurisdictions in which such returns, reports and statements are
         required to be filed, and all such returns, reports and statements
         properly reflect the taxes of XIT and its subsidiaries for the periods,
         properties or events covered thereby; (ii) all Taxes have been properly
         accrued or paid; (iii) the accruals for Taxes contained in the XIT 1996
         Financials are adequate to cover the tax liabilities of XIT and its
         subsidiaries as of September 30, 1996, and nothing has occurred
         subsequent to that date to make any of such accruals inadequate; (iv)
         amounts reflected as carryforwards of credits against United States
         federal income tax and of net operating losses on the XIT 1996
         Financials or on the books of XIT and on the books of any subsidiary
         are accurate in amount, subject to subsequent limitations relating to
         the Merger, if any; (v) neither XIT nor any subsidiary has knowledge of
         any basis for any additional assessment of Taxes; (vi) XIT and each of
         its subsidiaries have made all deposits required by law with respect to
         employees' withholding taxes; (vii) neither XIT nor any subsidiary has
         received any notice of assessment or proposed assessment by the
         Internal Revenue Service or any other taxing authority in connection
         with any Tax Returns and there are no pending tax examinations of or
         tax claims asserted against XIT or any subsidiary.

                                      -19-



         Neither XIT nor any subsidiary has waived any law or regulation fixing,
         or consented to the extension of, any period of time for assessment of
         any Taxes.

         (o) Assets. Except as described in Schedule 3.2(o), XIT and its
         subsidiaries have good and marketable title to all their real and
         personal properties and assets, including without limitation those
         assets and properties reflected in the XIT 1996 Financials in the
         amounts and categories reflected therein, free and clear of all
         mortgages, liens, pledges, charges or encumbrances or other third party
         interests of any nature whatsoever, except (i) the lien of current
         taxes not yet due and payable, (ii) properties, interests, and assets
         disposed of by XIT or any subsidiary since September 30, 1996 solely in
         the ordinary course of business consistent with past practice, (iii)
         such secured indebtedness as is disclosed in the XIT 1996 Financials
         covering the properties referred to therein, and (iv) such
         imperfections of title, easements and encumbrances, if any, as are not
         substantial in character, amount or extent and do not materially
         detract from the value, or interfere with the present or proposed use,

         of the properties subject thereto. All buildings, structures,
         facilities, equipment and other items of tangible personal property
         reflected on the XIT 1996 Financials or acquired since the date thereof
         are in good operating condition and repair, subject to normal wear and
         maintenance, are useable in the regular and ordinary course of business
         of XIT and its subsidiaries and conform to all applicable laws,
         ordinances, codes, rules and regulations and Authorizations
         (hereinafter defined) relating to their construction, use and
         operation. The method of amortization or depreciation used by XIT for
         financial reporting purposes is sufficient to write-off entirely each
         building, structure, facility and item of equipment or other tangible
         personal property during its useful life. The location of all real
         property owned by XIT or its subsidiaries is disclosed in Schedule
         3.2(o).

         (p) Contracts. All Contracts, excluding purchase or sales orders placed
         in the ordinary course of business and other Contracts involving
         payments of less than $50,000 over the term thereof, to which XIT or
         any subsidiary is a party or may be bound and which cannot be
         terminated by XIT without penalty within 30 days after written notice
         are listed on Schedule 3.2(p). Except as described in Schedule 3.2(p),
         all Contracts are valid and in full force and effect on the date
         hereof, and neither XIT nor any subsidiary has violated any provision
         of, or committed or failed to perform any act which with notice, lapse
         of time or both would constitute a default under the provisions of, any
         Contract, the termination or violation of which might have a materially
         adverse effect upon the business, assets, liabilities, financial
         condition, results of operations or prospects of XIT or any subsidiary.
         True and complete copies of all Contracts, together with all amendments
         thereto, disclosed in Schedule 3.2(p) have been delivered to MicroTel
         or made available for inspection. Schedule 3.2(p) identifies all
         Contracts which require the consent or approval of third parties to the
         execution and delivery of this Agreement or to the consummation and
         performance of the transactions contemplated hereby.

         (q) Labor Matters. Neither XIT nor any subsidiary is a party to or
         bound by any collective bargaining agreements with respect to any
         employees of XIT or any subsidiary.

                                      -20-



         Since January 1, 1990 there has not been, nor to the knowledge of XIT
         was there or is there threatened, any strike, slowdown, picketing or
         work stoppage by any union or other group of employees against XIT or
         any subsidiary or any of their premises, or any other labor trouble or
         other occurrence, event or condition of a similar character adversely
         affecting, or which may adversely affect, the business, results of
         operations or prospects of XIT or any subsidiary.

         (r) Benefit Plans. Schedule 3.2(r) hereto lists all employee benefit
         plans, contracts, agreements or arrangements sponsored, maintained or
         contributed to by XIT or any of its United States subsidiaries

         (collectively, the "XIT Employee Benefit Plans") including without
         limitation all employment, pension, retirement, deferred compensation,
         incentive, bonus, profit-sharing, stock purchase, stock option,
         performance share, stock appreciation right, phantom stock, life
         insurance, death or survivor's benefit, health insurance, sickness,
         disability, medical, surgical, hospital, severance, layoff or vacation
         plans, contracts, agreements or arrangements. Accurate summaries of the
         material benefits provided under all XIT Employee Benefit Plans have
         been delivered to MicroTel and Sub. Except as described in 3.2(r), (i)
         neither XIT nor any of its subsidiaries has incurred any obligation to
         contribute any material amount to any multi-employer plan, as defined
         in Section 3(37) of ERISA, (ii) neither XIT nor any of its subsidiaries
         has incurred any material liability under Title IV of ERISA arising in
         connection with the termination of, or complete or partial withdrawal
         from, any plan covered or previously covered by Title IV of ERISA, and
         (iii) each XIT Employee Benefit Plan is in compliance with all
         applicable laws and regulations in all material respects.

         (s) Patents, Trademarks, etc. XIT and its subsidiaries have all
         patents, trademarks, trade names, service marks, trade secrets,
         copyrights and other proprietary intellectual property rights as are
         material in connection with the businesses of XIT and its subsidiaries,
         taken as a whole with no material conflict with, or infringement of,
         any patent, trademark, trade name, service mark, trade secret,
         copyright or other proprietary intellectual property rights. Schedule
         3.2(s) contains a complete and correct listing of all patents,
         trademarks, tradenames, service marks, copyrights and applications with
         respect thereto and license agreements owned or filed by any of the XIT
         or its subsidiaries or in which they have an interest and the nature of
         such interest.

         (t) Licenses, Permits, etc. XIT and its subsidiaries own or possess in
         the operation of their business all franchises, licenses, permits,
         consents, approvals, rights, waivers and other authorizations,
         governmental or otherwise ("Authorization"), which are necessary for
         them to conduct their business as now conducted except where the
         failure to obtain such Authorization would not have, either
         individually or in the aggregate, a material adverse effect on the
         business, prospects, results of operations or condition of XIT, taken
         as a whole. Neither XIT nor any subsidiary is in material default, or
         has received any notice of any claim of default, with respect to any
         such Authorization or any notice of any other claim or proceeding or
         threatened proceeding relating to any such Authorization or claimed
         lack of any necessary Authorization. Neither the execution or delivery
         of this

                                      -21-



         Agreement nor the consummation of the transactions contemplated hereby
         will require any notice or consent under or have any material adverse
         effect upon any such Authorization.


         (u) Environmental Matters.

                  (i) XIT has obtained all permits, licenses and other
         authorizations which are required under Environmental Laws.

                  (ii) XIT is in full compliance with all terms and conditions
         of the required permits, licenses and authorizations, and is also in
         full compliance with all other limitations, restrictions, conditions,
         standards, prohibitions, requirements, obligations, schedules and
         timetables contained in any and all Environmental Laws or contained in
         any regulation, code, plan, order, decree, judgment, injunction, notice
         or demand letter issued, entered, promulgated or approved thereunder by
         any federal, state or local court or other governmental authority,
         agency or instrumentality except where the failure to comply would not
         have, either individually or in the aggregate, a material adverse
         effect on the business, prospects, results of operations or condition
         of XIT, taken as a whole.

                  (iii) XIT is not aware of, nor has XIT received notice of, any
         past, present or future events, conditions, circumstances, activities,
         practices, incidents, actions or plans which may interfere with or
         prevent compliance or continued compliance with Environmental Laws or
         any regulation, code, plan, order, decree, judgment, injunction, notice
         or demand letter issued, entered, promulgated or approved thereunder by
         any federal, state or local court or other governmental authority,
         agency or instrumentality which may give rise to any common law or
         legal liability, or otherwise form the basis of any claim, action,
         demand, suit, proceeding, hearing, study or investigation, based on or
         related to the manufacture, processing, distribution, use, treatment,
         storage, disposal, transport, or handling, or the emission, discharge,
         release or threatened release into the environment, of any pollutant,
         contaminant, chemical, or industrial, toxic or hazardous substance or
         waste.

                  (iv) There is no civil, criminal or administrative action,
         suit, demand, claim, hearing, notice or demand letter, notice of
         violation, investigation, or proceeding pending or threatened against
         XIT relating in any way to any Environmental Law or any regulation,
         code, plan, order, decree, judgment, injunction, notice or demand
         letter issued, entered, promulgated or approved thereunder.

                  (v) Except as disclosed on Schedule 3.2(u), there are no tanks
         in, on or under any of XIT's properties or facilities that are used or
         have been used for the storage of petroleum products or any other
         substance, nor have any other tanks ever been located in, on or under
         any such properties or facilities. There are no asbestos-containing
         materials in, on or at any of XIT properties or facilities.

                                      -22-



         (v) Vote Required. The affirmative vote of a majority of the
         outstanding shares of XIT Common Stock is the only vote of the holders

         of any class or series of XIT capital stock necessary to approve this
         Agreement and the transactions contemplated hereby.

         (w) Transactions and Affiliates. Except as described in Schedule
         3.2(w), no director or officer of XIT or any subsidiary or any member
         of his or her immediate family, is a party to any Contract or other
         business arrangement or relationship of any kind with XIT or any
         subsidiary or, except for the ownership of not more than 1% of the
         stock of a company having a class of securities registered pursuant to
         the Exchange Act, has an ownership interest in any business, corporate
         or otherwise, which is a party to, or in any property which is the
         subject of, business arrangements or relationships of any kind with XIT
         or any subsidiary.

         (x) Brokers. Except for P.K. Hickey and Co., Inc. and Neil Sussman,
         Esq., no broker, finder or investment banker is entitled to any
         brokerage, finder's or other fee or commission in connection with the
         Merger based upon arrangements made by or on behalf of XIT or MicroTel
         and the fee payable to such brokers is (i) $50,000 in cash and five
         year warrants to purchase 125,000 shares of MicroTel Common Stock at
         $3.00 per share payable to P.K. Hickey and Co. and (ii) $50,000 in cash
         and five year warrants to purchase 25,000 shares of MicroTel Common
         Stock at $3.00 per share payable to Neil Sussman. The number of
         warrants may be reallocated by P.K. Hickey and Co., Inc. and Neil
         Sussman as mutually agreed to by such brokers, but in any event the
         total number of warrants to be issued to such brokers shall not exceed
         150,000.The fees of Hickey and Sussman shall be paid following the
         closing of the Merger and not later than upon the completion of any
         equity, debt or convertible debt financing by MicroTel.

                                   ARTICLE IV

                    COVENANTS RELATING TO CONDUCT OF BUSINESS

         4.1 Covenants of XIT and MicroTel. During the period from the date of
this Agreement and continuing until the Effective Time, XIT and MicroTel each
agree as to itself and its subsidiaries that (except as expressly contemplated
or permitted by this Agreement, or to the extent that the other party shall
otherwise consent in writing):

         (a) Ordinary Course. Each party and their respective subsidiaries shall
         carry on their respective businesses in the usual, regular and ordinary
         course in substantially the same manner as heretofore conducted and use
         all reasonable efforts to preserve intact their present business
         organizations, keep available the services of their present officers
         and employees and preserve their relationships with customers,
         suppliers and others having business dealings with them to the end that
         their goodwill and ongoing businesses shall not be impaired in any
         material respect at the Effective Time.

                                      -23-




         (b) Dividends; Changes in Stock. No party shall, nor shall any party
         permit any of its subsidiaries to, nor shall any party propose to, (i)
         declare or pay any dividends on or make other distributions in respect
         of any of its capital stock, (ii) split, combine or reclassify any of
         its capital stock or issue or authorize or propose the issuance of any
         other securities in respect of, in lieu of or in substitution for
         shares of its capital stock or (iii) repurchase or otherwise acquire,
         or permit any subsidiary to purchase or otherwise acquire, any shares
         of its capital stock.

         (c) Issuance of Securities. No party shall, nor shall any party permit
         any of its subsidiaries to, issue, deliver or sell, or authorize or
         propose the issuance, delivery or sale of, any shares of its capital
         stock of any class, any voting debt or any securities convertible into,
         or any rights, warrants or options to acquire, any such shares, voting
         debt or convertible securities, other than (i) the issuance of XIT
         Common Stock or MicroTel Common Stock, as the case may be, upon the
         exercise of stock options or warrants as disclosed in this Agreement in
         each case outstanding on the date of this Agreement in each case in
         accordance with their present terms; (ii) the issuance of shares of XIT
         Common Stock to directors of XIT in satisfaction of unpaid and accrued
         fees for attendance at meetings of the Board of Directors of XIT and in
         satisfaction of loans in the aggregate not to exceed $250,000 (with
         such shares valued at a price per share not less than the average of
         the closing bid prices of MicroTel Common Stock on the Nasdaq SmallCap
         Market during the five trading days preceding such issuance), (iii) the
         issuance of XIT Common Stock in connection with the acquisition of
         Microwave Printed Circuits, Inc. not to exceed $250,000 in value; (iv)
         the issuance of up to 2% of the outstanding shares of XIT Common Stock
         or MicroTel Common Stock, as the case may be; or (v) the issuance of
         such number of shares of XIT Common Stock or MicroTel Common Stock, as
         the case may be, as approved by the other party.

         (d) Governing Documents. No party shall amend or propose to amend its
         Certificate of Incorporation or By-laws.

         (e) No Solicitations. No party shall, nor shall any party permit any of
         its subsidiaries to, nor shall it authorize or permit any of its
         officers, directors or employees or any investment banker, financial
         advisor, attorney, accountant or other representative retained by it or
         any of its subsidiaries to, solicit or encourage (including by way of
         furnishing information), or take any other action to facilitate, any
         inquiries or the making of any proposal which constitutes, or may
         reasonably be expected to lead to, any takeover proposal, or agree to
         or endorse any takeover proposal. Each party shall promptly advise the
         other orally and in writing of any such inquiries or proposals. As used
         in this Agreement, "takeover proposal" shall mean any tender or
         exchange offer, proposal for a merger, consolidation or other business
         combination involving a party hereto or any subsidiary of such party or
         any proposal or offer to acquire in any manner a substantial equity
         interest in, or a substantial portion of the assets of, such party or
         any of its subsidiaries other than the transactions contemplated by
         this Agreement.


                                      -24-



         (f) No Acquisitions. No party shall, nor shall any party permit any of
         its subsidiaries to, acquire or agree to acquire by merging or
         consolidating with, or by purchasing a substantial equity interest in
         or a substantial portion of the assets of, or by any other manner, any
         business or any corporation, partnership, association or other business
         organization or division thereof or otherwise acquire or agree to
         acquire any assets in each case which are material, individually or in
         the aggregate, to such party and its subsidiaries taken as a whole.
         Notwithstanding the foregoing, XIT may enter into an Asset or Stock
         Purchase Agreement with Microwave Printed Circuits, Inc. for the
         purpose of acquiring such entity.

         (g) No Dispositions. Other than in the ordinary course of business
         consistent with prior practice, no party shall, nor shall any party
         permit any of its subsidiaries to, sell, lease, encumber or otherwise
         dispose of, or agree to sell, lease, encumber or otherwise dispose of,
         any of its assets, which are material, individually or in the
         aggregate, to such party and its subsidiaries taken as a whole.

         (h) Indebtedness. No party shall, nor shall any party permit any of its
         subsidiaries to, incur any indebtedness for borrowed money or guarantee
         any such indebtedness or issue or sell any debt securities or warrants
         or rights to acquire any debt securities of such party or any of its
         subsidiaries or guarantee any debt securities of others other than in
         each case in the ordinary course of business consistent with prior
         practice or as mutually agreed to by the parties hereto.

         (i) Compensation. Except as set forth in Section 5.8(c), no party shall
         grant any increase in the salary or other compensation of its officers
         or other employees or grant any bonus to any officer or other employee
         or enter into any employment agreement or make any loan to or enter
         into any material transaction of any other nature with any officer or
         other employee of such party other than salary increases or bonuses
         consistent with the normal compensation policies of such party.

         (j) No New Severance. No party shall take any action to institute any
         new severance or termination pay practices with respect to any
         directors or officers or other employees of such party or to increase
         the benefits payable under its severance or termination pay practices.

         (k) Benefit Plans. No party shall adopt or amend, in any respect,
         except as may be required by applicable law or regulation, any bonus,
         profit sharing, compensation, stock option, restricted stock, pension,
         retirement, deferred compensation, employment or other employee benefit
         plan, agreement, trust, fund, plan or arrangement for the benefit or
         welfare of any directors or officers or other employees except as
         otherwise contemplated by this Agreement.

         4.2 Other Actions. No party shall, nor shall any party permit any of
its subsidiaries to, take any action that would or is reasonably likely to

result in any of its representations and

                                      -25-



warranties set forth in this Agreement being untrue as of the date made (to the
extent so limited), or in any of the conditions to the Merger set forth in
Article VI not being satisfied.

         4.3 Advice of Changes; Filings. Each party shall confer on a regular
and frequent basis with the other, report on operational matters and promptly
advise the other orally and in writing of any change or event having, or which,
insofar as can reasonably be foreseen, could have, a material adverse effect on
such party and its subsidiaries taken as a whole. Each party shall promptly
provide the other (or its counsel) copies of all filings made by such party with
any State or Federal Governmental Entity in connection with this Agreement and
the transactions contemplated hereby and thereby.

                                    ARTICLE V

                              ADDITIONAL AGREEMENTS

         5.1 Preparation and Delivery of Private Placement Memorandum and
Information Statement; Shareholder Approval.

         (a) MicroTel and XIT shall promptly prepare a joint Private Placement
         Memorandum and Information Statement (the "PPM") and deliver such PPM
         to the XIT shareholders along with such private placement
         questionnaires, investor representation agreements and other documents
         necessary to effectuate the issuance of shares of MicroTel Common Stock
         in the Merger in compliance with Regulation D of the Securities Act
         (the "Private Placement Documents").

         (b) MicroTel shall use its best efforts to take any action (other than
         qualifying to do business in any jurisdiction in which it is now not so
         qualified) required to be taken under any applicable state securities
         laws in connection with the issuance of MicroTel Common Stock in the
         Merger and XIT shall furnish all information concerning XIT and the
         holders of XIT Common Stock as may be reasonably requested in
         connection with any such action.

         (c) XIT shall, as soon as practical after the date hereof and the
         delivery of the Private Placement Documents to the XIT shareholders,
         seek the written consent of the shareholders of XIT in accordance with
         the NJBCA and XIT's Bylaws in lieu of a meeting. XIT shall use its best
         efforts to obtain the consents of shareholders necessary to approve
         this Agreement.

         (d) When seeking shareholder approval of this Agreement, XIT shall
         provide its shareholders with the PPM and the other Private Placement
         Documents which shall contain all information reasonably necessary for
         such shareholders to make an informed decision regarding approval of
         this Agreement.


                                      -26-



         5.2 Restricted MicroTel Shares; Registration Rights; Lock-Up Agreements

         (a) The shares of MicroTel Common Stock to be issued in the Merger will
         not be registered under the Securities Act, and accordingly, will
         constitute "restricted securities" for purposes of the Securities Act
         and, the XIT shareholders will not be able to transfer such shares
         except upon compliance with the registration requirements of the
         Securities Act and applicable state securities laws or an exemption
         therefrom. The certificates evidencing the shares of MicroTel Common
         Stock to be issued in the Merger shall contain a legend to the
         foregoing effect.

         (b) MicroTel shall within six months of the Effective Date file a
         registration statement with the SEC to permit the sale of shares of
         MicroTel Common Stock by the XIT shareholders from time to time and the
         shares of MicroTel Common Stock underlying the XIT Warrants to be
         assumed by MicroTel pursuant to Section 5.7 of this Agreement. Such
         registration statement shall remain in effect for two years after the
         Effective Date. The XIT shareholders and warrantholders shall also have
         "piggyback" registration rights.

         (c) Notwithstanding the registration rights granted pursuant to this
         Agreement, the MicroTel shares issued in the Merger to the XIT
         shareholders and the MicroTel Shares to be issued pursuant to the XIT
         Warrants and XIT Options assumed by MicroTel pursuant to this Agreement
         shall be subject to "lock-up" agreements preventing the transfer of
         such shares until the termination of such lock-up agreements. The
         lock-up agreements will terminate with respect to 25% of such shares on
         each of the following dates: 6 months after the Closing Date, 12 months
         after the Closing Date, 15 months after the Closing Date and 18 months
         after the Closing Date.

         5.3 Access to Information. Upon reasonable notice, MicroTel and XIT
shall each (and shall cause each of their respective subsidiaries to) afford to
the officers, employees, accountants, counsel and other representatives of the
other, access, during normal business hours during the period prior to the
Effective Time, to all its properties, books, contracts, commitments and records
and, during such period, each of MicroTel and XIT shall (and shall cause each of
their respective subsidiaries to) furnish promptly to the other (a) a copy of
each report, schedule, registration statement and other document filed or
received by it during such period pursuant to the requirements of Federal or
state securities laws and (b) all other information concerning its business,
properties and personnel as such other party may reasonably request. Unless
otherwise required by law, the parties will hold any such information which is
nonpublic in confidence until such time as such information otherwise becomes
publicly available through no wrongful act of either party, and in the event of
termination of this Agreement for any reason each party shall promptly return
all nonpublic documents obtained from any other party, and any copies made of
such documents, to such other party.


         5.4 Legal Conditions to Merger. Each of MicroTel, Sub and XIT will take
all reasonable actions necessary to comply promptly with all legal requirements
which may be imposed on itself with respect to the Merger and will promptly
cooperate with and furnish

                                      -27-



information to each other in connection with any such requirements imposed upon
any of them or any of their subsidiaries in connection with the Merger. Each of
MicroTel, Sub and XIT will, and will cause its subsidiaries to, take all
reasonable actions necessary to obtain (and will cooperate with each other in
obtaining) any consent, authorization, order or approval of, or any exemption
by, any Governmental Entity or other public or private third party, required to
be obtained or made by MicroTel, XIT or any of their subsidiaries in connection
with the Merger or the taking of any action contemplated thereby or by this
Agreement.

         5.5 Employee Benefit Plans. MicroTel and XIT agree that the XIT Benefit
Plans and its subsidiaries in effect at the date of this Agreement shall, to the
extent practicable, remain in effect until otherwise determined after the
Effective Time. XIT and MicroTel agree that where consolidation of XIT Benefit
Plans into MicroTel Benefit Plans is required by regulation or is otherwise
deemed by XIT and MicroTel to be in the best interests of XIT and MicroTel, that
the consolidated Plans will be conformed to the extent practicable such that the
benefits accruing to XIT employees will be no less favorable to XIT employees as
a result of such consolidation.

         5.6 Stock Options.

         (a) At the Effective Time, each outstanding option to purchase shares
         of XIT Common Stock (a "XIT Stock Option") issued pursuant to any stock
         option plan of XIT (collectively, the "XIT Plans"), whether vested or
         unvested, shall be assumed by MicroTel. Each XIT Stock Option shall be
         deemed to constitute an option to acquire, on the same terms and
         conditions as were applicable under such XIT Stock Option, the same
         number of shares of MicroTel Common Stock as the holder of such XIT
         Stock Option would have been entitled to receive pursuant to the Merger
         had such holder exercised such option in full immediately prior to the
         Effective Time.

         (b) As soon as practicable after the Effective Time, MicroTel shall
         deliver to the holders of XIT Stock Options appropriate notices setting
         forth such holders' rights pursuant to the respective XIT Plans and the
         agreements evidencing the grants of such options.

         (c) MicroTel shall take all corporate action necessary to reserve for
         issuance a sufficient number of shares of MicroTel Common Stock for
         delivery upon exercise of the XIT Stock Options assumed in accordance
         with this Section 5.6. As soon as practicable after the Effective Time,
         MicroTel shall file a registration statement on Form S-8 (or any
         successor or other appropriate forms), or another appropriate form with

         respect to the shares of MicroTel Common Stock subject to such options
         and shall use its best efforts to maintain the effectiveness of such
         registration statement or registration statements (and maintain the
         current status of the prospectus or prospectuses contained therein) for
         so long as such options remain outstanding.

                                      -28-



         5.7 Warrants.

         (a) At the Effective Time, each outstanding warrant to purchase shares
         of XIT Common Stock ("XIT Warrants") whether vested or unvested, shall
         be assumed by MicroTel. Each XIT Warrant shall be deemed to constitute
         a warrant to acquire, on the same terms and conditions as were
         applicable under the XIT Warrant Agreements, the same number of shares
         of MicroTel Common Stock as the holder of such XIT Warrant would have
         been entitled to receive pursuant to the Merger had such holder
         exercised such warrant in full immediately prior to the Effective Time.

         (b) As soon as practicable after the Effective Time, MicroTel shall
         deliver to the holders of XIT Warrants appropriate notices setting
         forth such holders' rights pursuant to the respective agreements
         evidencing the grants of such Warrants.

         (c) MicroTel shall take all corporate action necessary to reserve for
         issuance a sufficient number of shares of MicroTel Common Stock for
         delivery upon exercise of the XIT Warrants assumed in accordance with
         this Section 5.7.

         5.8 MicroTel Board of Directors and Officers.

         (a) At the Effective Time of the Merger all of the officers and
         directors of MicroTel, other than Jack Talan, shall resign as officers
         and directors and the current officers and directors of XIT shall be
         appointed as officers and directors of MicroTel in addition to Jack
         Talan who shall be appointed as a director of MicroTel for a term of
         not less than two years after the Effective Date. Jack Talan shall also
         be appointed as a member of the audit committee during such two year
         period.

         (b) At least 10 days prior to the Closing Date, MicroTel shall file
         with the SEC and transmit to all holders of record of MicroTel Common
         Stock the information required by Section 14(f) of the Exchange Act
         regarding the election of a majority of directors of MicroTel without a
         meeting of security holders.

         (c) At the Effective Time of the Merger, MicroTel shall have entered
         into employment agreements with Messrs. Barry Reifler and Henry Mourad
         on terms mutually agreeable to both Messrs. Reifler and Mourad as well
         as MicroTel and XIT and the employment contract between Jacques Moisset
         and MicroTel shall remain in full force and effect as of the Closing
         Date.


         5.9 Expenses. All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby and thereby shall be paid by
the party incurring such expense.

                                      -29-




                                   ARTICLE VI

                              CONDITIONS PRECEDENT

         6.1 Conditions to Each Party's Obligation To Effect the Merger. The
respective obligation of each party to effect the Merger shall be subject to the
satisfaction prior to the Closing Date of the following conditions:

         (a) Shareholder Approval. This Agreement shall have been approved and
         adopted by the affirmative vote of a majority of the outstanding shares
         of XIT Common Stock.

         (b) Other Approvals. All authorizations, consents, orders or approvals
         of, or declarations or filings with, or expirations of waiting periods
         imposed by, any Governmental Entity the failure to obtain which would
         have a material adverse effect on MicroTel or the Surviving
         Corporation, taken as a whole, shall have been filed, occurred or been
         obtained including the filings required by Section 5.8(b) of this
         Agreement. MicroTel shall have received all state securities or "Blue
         Sky" permits and other authorizations necessary to issue the MicroTel
         Common Stock in exchange for the XIT Common Stock and to consummate the
         Merger.

         (c) Regulation D. The number of shareholders of XIT exchanging XIT
         shares for shares of MicroTel Common Stock in the Merger who do not
         qualify as "accredited investors" as defined in Rule 501 of Regulation
         D of the Securities Act total no more than 35 shareholders.

         (d) No Injunctions or Restraints. No temporary restraining order,
         preliminary or permanent injunction or other order issued by any court
         of competent jurisdiction or other legal restraint or prohibition (an
         "Injunction") preventing the consummation of the Merger shall be in
         effect.

         (e) Business Review. MicroTel shall have completed to its reasonable
         satisfaction a review of the business, operations, finances, assets and
         liabilities of XIT and its subsidiaries and shall not have determined
         that any of the representations or warranties of XIT contained herein
         are, as of the date hereof or the Closing Date, inaccurate in any
         material respect or that XIT is otherwise in violation of any of the
         provisions of this Agreement.

         (f) Dissenting Shares. Holders of no more than five percent (5%) of the
         outstanding XIT Common Stock shall have elected and perfected appraisal
         rights under the NJBCA, the holders of which have not, as of the
         Effective Date, effectively withdrawn or become ineligible for
         dissenters' rights.

                                      -30-




         6.2 Conditions of Obligations of MicroTel and Sub. The obligations of
MicroTel and Sub to effect the Merger are subject to the satisfaction of the
following conditions unless waived by MicroTel and Sub:

         (a) Representations and Warranties. The representations and warranties
         of XIT set forth in this Agreement shall be true and correct in all
         material respects as of the date of this Agreement and (except to the
         extent such representations and warranties speak as of an earlier date)
         as of the Closing Date as though made on and as of the Closing Date,
         except as otherwise contemplated by this Agreement, and MicroTel shall
         have received a certificate signed on behalf of XIT by the Chief
         Executive Officer and by the Chief Financial Officer of XIT to such
         effect.

         (b) Performance of Obligations of XIT. XIT shall have performed in all
         material respects all obligations required to be performed by it under
         this Agreement at or prior the Closing Date, and MicroTel shall have
         received a certificate signed on behalf of XIT by the Chief Executive
         Officer and by the Chief Financial Officer of XIT to such effect.

         (c) Opinion of Counsel for XIT. MicroTel shall have received an opinion
         dated the Closing Date of Gallagher, Briody & Butler, counsel for XIT,
         in form and substance reasonably satisfactory to MicroTel and its
         counsel relating to such matters as are customarily delivered in
         connection with a merger transaction.

         (d) Tax Opinion. MicroTel shall have received an opinion of Schneck
         Weltman Hashmall & Mischel LLP, counsel to MicroTel, to the effect that
         the Merger will be treated for Federal income tax purposes as a
         reorganization within the meaning of Section 368(a) of the Code.

         (e) Consents. XIT shall have obtained the consent or approval of each
         person whose consent or approval shall be required in connection with
         the transactions contemplated hereby under any loan or credit
         agreement, note, mortgage, indenture, lease or other agreement or
         instrument, except those for which failure to obtain such consents and
         approvals would not, in the reasonable opinion of MicroTel,
         individually or in the aggregate, have a material adverse effect on XIT
         and its subsidiaries taken as a whole upon the consummation of the
         transactions contemplated hereby.

         6.3 Conditions of Obligations of XIT. The obligation of XIT to effect
the Merger is subject to the satisfaction of the following conditions unless
waived by XIT:

               (a) Representations and Warranties. The representations and
               warranties of MicroTel and Sub set forth in this Agreement shall
               be true and correct in all material respects as of the date of
               this Agreement and (except to the extent such representations
               speak as of an earlier date) as of the Closing Date as though
               made on and as of the Closing Date, except as otherwise
               contemplated by this Agreement, and XIT shall have received a
               certificate signed on behalf


                                      -31-



               of MicroTel by the Chief Executive Officer and by the Chief
               Financial Officer of MicroTel to such effect.

         (b) Performance of Obligations of MicroTel and Sub. MicroTel and Sub
         shall have performed in all material respects all obligations required
         to be performed by them under this Agreement at or prior to the Closing
         Date, and XIT shall have received a certificate signed on behalf of
         MicroTel by the Chief Executive Officer and by the Chief Financial
         Officer of MicroTel to such effect.

         (c) Opinion of Counsel for MicroTel. XIT shall have received an opinion
         dated the Closing Date of Schneck Weltman Hashmall & Mischel LLP,
         counsel for MicroTel, in form and substance reasonably satisfactory to
         XIT and its counsel relating to such matters as are customarily
         delivered in connection with a merger transaction.

         (d) Tax Opinion. XIT shall have received an opinion of Gallagher,
         Briody & Butler, counsel to XIT, to the effect that the Merger will be
         treated for Federal income tax purposes as a reorganization with the
         meaning of Section 368(a) of the Code.

         (e) Consents. MicroTel shall have obtained the consent or approval of
         each person whose consent or approval shall be required in connection
         with the transactions contemplated hereby under any loan or credit
         agreement, note, mortgage, indenture, lease or other agreement or
         instrument, except those for which failure to obtain such consents and
         approvals would not, in the reasonable opinion of XIT, individually or
         in the aggregate, have a material adverse effect on MicroTel and its
         subsidiaries, taken as a whole, or upon the consummation of the
         transactions contemplated hereby.

         (f) Business Review. XIT shall have completed to its reasonable
         satisfaction a review of the business, operations, finances, assets and
         liabilities of MicroTel and its subsidiaries and shall not have
         determined that any of the representations or warranties of MicroTel
         contained herein are, as of the date hereof or the Closing Date,
         inaccurate in any material respect or that MicroTel is otherwise in
         violation of any of the provisions of this Agreement.

         (g) Resignation of Officers and Directors. Each officer and director of
         MicroTel, other than Jack Talan, shall have delivered his resignation
         as an officer and/or director of MicroTel.

                                      -32-




                                   ARTICLE VI

                            TERMINATION AND AMENDMENT

         7.1 Termination. This Agreement may be terminated at any time prior to
the Effective Time, whether before or after approval of the matters presented in
connection with the Merger by the shareholders of XIT:

         (a) by mutual consent of MicroTel and XIT;

         (b) by either MicroTel or XIT if there has been a material breach of
         any representation, warranty, covenant or agreement on the part of the
         other set forth in this Agreement which breach has not been cured
         within 5 business days following receipt by the breaching party of
         notice of such breach, or if any permanent injunction or other order of
         a court or other competent authority preventing the consummation of the
         Merger shall have become final and non-appealable;

         (c) by either MicroTel or XIT if the Merger shall not have been
         consummated before March 31, 1997; or

         (d) by either party if any required approval of the shareholders of XIT
         shall not have been obtained of.

         7.2 Effect of Termination. In the event of termination of this
Agreement by either XIT or MicroTel as provided in Section 7.1, this Agreement
shall forthwith become void and there shall be no liability or obligation on the
part of MicroTel, Sub or XIT or their respective officers or directors. All
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby and thereby shall be paid by the party
incurring such expenses.

         7.3 Amendment. This Agreement may be amended by the parties hereto, by
action taken or authorized by their respective Boards of Directors, at any time
before or after approval of the matters presented in connection with the Merger
by the shareholders of XIT, but, after any such approval, no amendment shall be
made which by law requires further approval by such shareholders without such
further approval. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.

         7.4 Extension; Waiver. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective Board of
Directors, may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(b) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party.

                                      -33-




                                  ARTICLE VIII

                               GENERAL PROVISIONS

         8.1 Nonsurvival of Representations, Warranties and Agreements. None of
the representations, warranties and agreements in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective
Time, except for the agreements contained in Sections 5.2, 5.3, 5.5, 5.6, 5.7,
5.8, 5.9, 7.2 and 8.1.

         8.2 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (which is
confirmed) or mailed by registered or certified mail (return receipt requested)
to the parties at the following addresses (or at such other address for a party
as shall be specified by like notice):

         (a) If to MicroTel or Sub, to

                              MicroTel International, Inc.
                              2040 Fortune Drive, Suite 102
                              San Jose, CA 95131
                              Attention: Mr. Jack Talan, Chairman

                              Facsimile No.: 408-435-1276

                      with a copy to

                              Schneck Weltman Hashmall & Mischel LLP
                              1285 Avenue of the Americas
                              New York, NY 10019
                              Attention: Felice F. Mischel, Esq.

                              Facsimile No.: 212-956-3252

                      and

         (b)  if to XIT, to

                              XIT Corporation
                              4290 East Brickell Street
                              Ontario, CA 91761-1511
                              Attention: Carmine T. Oliva,
                              Chairman, President and Chief Executive Officer

                              Facsimile No.: 909-391-6681

                                      -34-




         with a copy to

                              Gallagher, Briody & Butler
                              212 Carnegie Center, Suite 402
                              Princeton, NJ 08540
                              Attn: Thomas P. Gallagher, Esq.

                              Facsimile No.: 609-452-0090

         8.3 Interpretation. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the words "include", "includes" or "including" are used
in this Agreement, they shall be deemed to be followed by the words "without
limitation". The phrase "made available" in this Agreement shall mean that the
information referred to has been made available if requested by the party to
whom such information is to be made available.

         8.4 Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.

         8.5 Entire Agreement; No Third Party Beneficiaries; Rights of
Ownership. This Agreement (including the documents and the instruments referred
to herein) (a) constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof, (b) except as provided in Section 5.2, 5.6
and 5.7, is not intended to confer upon any person other than the parties hereto
any rights or remedies hereunder.

         8.6 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware.

         8.7 No Remedy in Certain Circumstances. Each party agrees that, should
any court or other competent authority hold any provision of this Agreement or
part hereof or thereof to be null, void or unenforceable, or order any party to
take any action inconsistent herewith or not to take any action required herein,
the other party shall not be entitled to specific performance of such provision
or part hereof or thereof or to any other remedy, including but not limited to
money damages, for breach hereof or thereof or of any other provision of this
Agreement or part hereof or thereof as a result of such holding or order.

                                      -35-



         8.8 Publicity. Except as otherwise required by law or the rules of the
SEC, so long as this Agreement is in effect, neither MicroTel nor XIT shall, or
shall permit any of its subsidiaries to, issue or cause the publication of any
press release or other public announcement with respect to the transactions
contemplated by this Agreement without the written consent of the other party,

which consent shall not be unreasonably withheld.

         8.9 Assignment. Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by any of the parties hereto (whether
by operation of law or otherwise) without the prior written consent of the other
parties, except that Sub may assign, in its sole discretion, any or all of its
rights, interests and obligations hereunder to MicroTel or to any direct or
indirect wholly owned subsidiary of MicroTel. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of and be enforceable
by the parties and their respective successors and assigns.

                                      -36-




         IN WITNESS WHEREOF, MicroTel, Sub and XIT have caused this Agreement to
be signed by their respective officers thereunto duly authorized, as of the date
set forth above.

Attest:                                           MICROTEL INTERNATIONAL, INC.

/s/BARRY REIFLER                                  By: /s/JACK TALAN
- -------------------------------                      ---------------------------
Name: Barry Reifler                               Name:  Jack Talan
Title: Secretary                                  Title:  Chairman

Attest:                                           XIT ACQUISITION CORP.

/s/BARRY REIFLER                                  By: /s/JACK TALAN
- -------------------------------                      ---------------------------
Name: Barry Reifler                               Name:  Jack Talan
Title: Secretary                                  Title: Chairman

Attest:                                           XIT CORPORATION

 /s/THOMAS P. GALLAGHER                           By: /s/CARMINE T. OLIVA
- -------------------------------                      ---------------------------
Name: Thomas P. Gallagher                             Carmine T. Oliva
Title: Assistant Secretary                            Chairman, President and
                                                      Chief Executive Officer

                                      -37-