March 8, 1996

Mr. Carl Berg
President
Baccarat Silicon, Inc.
10050 Bandley Drive
Cupertino, CA 95014

         Re:      1566 Moffett Street, Salinas, California - IDT FAB 2

Dear Carl:

         The purpose of this letter is to confirm our  agreement to acquire 100%
of the unregistered shares of Baccarat Silicon,  Inc. in a tax-free exchange for
782,445  unregistered  shares  of IDTI  common  stock,  representing  a value of
Baccarat  Silicon,  Inc.  of  $8,509,090  and IDTI stock of  $10.875  per share,
today's closing price.

         The exchange shall be conditioned  upon the approval of the transaction
by a majority of IDT's  disinterested  directors  and the  qualification  of the
transaction as a tax free exchange. Further, the transaction shall be contingent
upon Baccarat Silicon,  Inc. owning in fee simple all of the property subject to
the lease of the  referenced  premises,  free of all  liens,  encumbrances,  and
liabilities,  other than routine easements of record and being free of all other
liabilities.

         Please  signify your  agreement by signing and  returning  the enclosed
copy of this letter at your earliest convenience.

Very truly yours,

/s/ Jack Menache
___________________________
Jack Menache                                   AGREED:
Vice President,                                        Baccarat Silicon, Inc
General Counsel
                                                     /s/ Carl E. Berg
                                                     ___________________________
                                                            Carl Berg
                                                            President