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EXHIBIT 2.17
October 19, 1998
Mr. Andy Salazar
President and Chief Executive Officer
Digital Transmission Systems, Inc.
3000 Northwood Parkway, Building 300
Norcross, GA 30071
Re: ACQUISITION OF DIGITAL TRANSMISSION SYSTEMS, INC.
Dear Andy:
MicroTel International, Inc. ("MCTL") hereby offers to purchase all the issued
and outstanding common stock of Digital Transmission Systems, Inc. ("DTSX") on
the terms and conditions set forth in the Proposed Terms and Conditions of
Acquisition dated October 19, 1998 attached hereto, subject to completion of due
diligence review by both MCTL and DTSX; the approval by their respective boards
of directors and shareholders, as applicable: and, the negotiation and execution
of a definitive purchase and sale agreement. Time is of the essence with respect
to this offer which shall expire at 5 p.m. pacific time on October 30, 1998.
For and on behalf of Accepted on behalf of
MICROTEL INTERNATIONAL, INC. DIGITAL TRANSMISSION SYSTEMS, INC.
By:/S/ Carmine T. Oliva By:/S/Andy Salazar
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Carmine T. Oliva Andy Salazar
Chairman of the Board and President and Chief Executive Officer
Chief Executive Officer
CTO/jb
enclosure
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CONFIDENTIAL
PROPOSED TERMS AND CONDITIONS OF ACQUISITION
OF
DIGITAL TRANSMISSION SYSTEMS, INC.
BY
MICROTEL INTERNATIONAL, INC.
October 19, 1998
The following are the proposed terms and conditions under which MicroTel
International, Inc. ("MCTL") would acquire (the "Acquisition") all the
outstanding common stock of Digital Transmission Systems, Inc. ("DTSX"). These
terms and conditions are based in part on the information contained in the
Revised Valuation Factors document dated October 19, 1998 attached hereto. Time
is of the essence with regard to all dates contained herein.
Securities to be issued At the closing of the Acquisition, MCTL
shall issue approximately 5,876,640 shares
of MCTL common stock in exchange for all
outstanding shares of common stock of DTSX.
The aforementioned number of shares of MCTL
common stock to be issued is based upon the
outstanding common shares of DTSX of
4,187,273 as of March 31, 1998 and
11,931,363 shares of MCTL as of September
30, 1998 and shall be adjusted to reflect
the actual number of common shares of DTSX
outstanding as of September 30, 1998 so as
to cause the ownership percentage of the
combined company by the shareholders of MCTL
and DTSX as of September 30, 1998 to be 67%
and 33%, respectively.
The shares of MCTL issued shall be
registered with the Securities and Exchange
Commission on Form S-4 but shall contain a
lock-up provision to be mutually agreed upon
by the parties.
Outstanding options and warrants Unless otherwise required by the terms and
conditions of existing option and warrant
purchase agreements, all outstanding options
and warrants to purchase the common stock of
MCTL shall not be adjusted in any manner and
all outstanding options and warrants to
purchase the common stock of DTSX shall be
converted to options or warrants to purchase
the common stock of MCTL as applicable on a
ratio of 1.13:1 (subject to the adjustment
noted above) with a corresponding adjustment
in exercise price.
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CONFIDENTIAL
Conditions precedent-MCTL MCTL shall commit to the sale of its
HyComp, Inc. subsidiary ("HyComp") as
soon as practical and shall continue to
utilize all reasonable efforts to effect
such sale.
MCTL will obtain an agreement with the
holders of its Series A Convertible
Preferred Stock to convert such preferred
stock at not less than $0.50 per common
share.
Conditions precedent-DTSX DTSX shall have completed the sale of the
South Tech business operations not later
than November 30, 1998.
DTSX shall have a minimum of $500,000 in
unencumbered cash in its possession as of
the date of the closing of the Acquisition.
DTSX shall have net intangible shareholders'
equity of not less than $1 million as of the
closing of the Acquisition.
DTSX shall have not more that $600,000 in
accounts payable over 60 days past due as of
the closing of the Acquisition.
In conjunction with the sale of South Tech,
DTSX shall arrange the assumption by South
Tech, or its successor, of $1 million of the
existing $4 million in convertible
debentures.
DTSX shall arrange for the holders of the
existing $4 million in convertible
debentures to convert $3 million thereof at
$2.00 per share not later than October 31,
1998.
DTSX shall obtain the agreement of Peregrine
Ventures to the terms and conditions
referenced herein not later than October 31,
1998.
Between the date of the execution of a
letter of intent between the parties and the
closing of the Acquisition, DTSX shall not
solicit nor accept any other offer for the
acquisition of its business operations in
any form.
DTSX shall finalize agreements concerning
all fees to be paid in connection with the
Acquisition to Colebrook Capital, P.K.
Hickey & Associates, Neil Sussman and
Broadview in a form acceptable to MCTL not
later than October 31, 1998. All such fees
shall be paid in the common stock and
warrants to purchase the common stock of
MCTL except for a small percentage to be
paid in cash as mutually agreed by the
parties if residual cash is
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CONFIDENTIAL
available following the payment of all other
transaction expenses and the common stock
issued and underlying the warrants issued as
fees shall be registered concurrently with
the common shares issued to the DTSX
shareholders and shall be subject to the
same lock-up provisions. The total value of
all fees for all parties shall not exceed
$275,000.
DTSX shall arrange for Barrington Capital to
become a market maker in MCTL common share
with analyst coverage provided by
Barrington.
DTSX shall arrange for Colebrook Capital
("Colebrook") to use its best efforts to
support the proposed sale by MCTL of HyComp
by referring MCTL to other agents who would
be capable of facilitating such sale and by
referring to MCTL any potential purchasers
of HyComp but Colebrook shall not be
required to actively market HyComp on behalf
of MCTL.
DTSX shall obtain a fairness opinion but in
no event shall the cost exceed $50,000.
General A definitive purchase and sale agreement to
effect the Acquisition shall be executed not
later than December 31, 1998.
Both MCTL and DTSX shall have timely filed
all reports or any other documents required
pursuant to the Securities and Exchange Act
of 1934, as amended, or any rules and
regulations promulgated thereunder.
These terms and conditions shall be held as
confidential by both MCTL and DTSX and no
press release or other dissemination of the
occurrence of ongoing discussions by the
parties regarding the Acquisition or the
contents of such discussions shall be
disclosed other than to necessary internal
employees or directors of the parties.
Further, the content and timing of any press
release(s) issued relating to the
Acquisition shall be approved in writing in
advance by the parties.
No press release relating to the Acquisition
shall be issued prior to the completion by
DTSX of the sale of the South Tech business
operations, except that MCTL may, at its
sole option, issued such a press release if
it believes such action will assist its
efforts to support the market price of its
common shares.
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