April 22, 1998
Mr. Frank Magliato
Chief Executive Officer
Digitec 2000 Inc.
8 West 38th Street, 5th Floor
New York, NY 10018
RE: Letter of Agreement
Dear Frank:
As we discussed in our conference call on December 17, following is
a summary of the terms of the business relationship between CEI and Digitec
2000. This letter of agreement sets forth the items and actions which are the
foundation of this definitive agreement between our two companies.
Parties: Digitec 2000 Inc.
Attn: Frank Magliato, President & CEO
8 West 38th St. 5th Floor
New York, NY 10118
College Enterprise Inc. ("CEI")
Attn: Donald B. Mask, President & CEO
21201 Victory Blvd., Suite 270
Canoga Park, CA 91303
Business Proposition CEI and Digitec 2000 will enter into a business
relationship whereby Digitec 2000 will offer long
distance phone services to customers on college and
university campuses currently served by CEI using two
methods of distribution:
- delivered as an additional "purse" on the
existing Special Teams campus card system and;
- delivered as a rental sale item in CEI's Pulse
destination centers.
2
Term This business relationship will have an initial term of
five years, subject to earlier termination by either
party for breach by the other.
Exclusivity This agreement will be an exclusive arrangement to the
extent that it applies to the current universe of
campuses served by CEI as of 12/31/97. Subject to the
terms contained herein, CEI and Digitec 2000 agree to
provide the other with the first rights of negotiation
and refusal in delivering long distance
telecommunications services to college campuses
extending 60 days after the notice from one party to the
other.
Revenue CEI and Digitec agree that the revenue associated with
the sale of telecommunications products on campus shall
be split in the following proportion: Digitec 80% CEI
20% based on an agreed upon base price per minute which
may be adjusted at CEI's discretion to accommodate the
development of a suitable revenue stream for the host
university. Every effort must be made to ensure that the
final price to the campus is competitive within the
context of available options at each university.
Expenses Incremental expenses that are necessary in order to
complete the preparations for joint sale of
telecommunications products (configuration, training,
research, etc.) shall be borne by Digitec as the
recipient of the majority of the revenue. Division of
other ongoing expenses shall be jointly determined by
the parties recognizing their respective costs and
benefits associated with the business relationship.
Obligations of the
Parties CEI will continue to operate and maintain its Pulse
retail destination centers and campus card systems at
its own expense. Digitec 2000 will maintain and expand
its telecommunications network at its own expense. CEI
and Digitec 2000 will work together to define the
Marketing Plan and jointly agree on the plan for initial
introduction and expansion to individual campuses.
Schedule Initial activation at the campuses in proximity to the
Digitec switches in Boston and New York is to occur as
soon as possible in 1998 and no later than 2/15/98.
Collateral materials for the sales process shall be
jointly coordinated and produced prior to the end of
January 1998.
3
Letter of Agreement The parties understand and agree that these summary
terms are binding.
Financial
Commitment Digitec 2000 agrees to provide $25,000 to CEI prior to
12/31/97 as a good faith commitment for the completion
of the business arrangement.
Donald B. Mask Frank Magliato
College Enterprises, Inc. DIGITEC 2000
/s/ DONALD B. MASK /s/ FRANK MAGLIATO
- ---------------------------- --------------------------------