Initial 'Letter of Understanding' from ICC, 4/29

The following was submitted to the Board on the morning of Sunday, April
29, at their meeting in Kansas City:

Letter of Understanding
April 29, 2001

The Internet Chess Club (ICC) wishes to enter into negotiations with the
United States Chess Federation regarding online chess play, scholastic
chess, solving certain technical issues, and sponsorship of events, to the
mutual benefit of both organizations.

On Saturday, April 28, 2001, the Internet Chess Club gave a presentation in
open session to the United States Chess Federation Executive Board. Our
proposal was intended to open discussions, and after determining the needs
of the USCF, find a mutually beneficial relationship.

The ICC was subsequently invited to speak with the USCF's Executive
Director, George DeFeis, and CFO, Jeff Loomis. In this discussion, we
sought to find a framework within which to negotiate a relationship with
the USCF.

We believe that we can make a formal written offer to the USCF within 30
days. We would also welcome a formal Request  For Proposal (RFP) from the
USCF, which specifies the USCF's requirements in an open bidding process.

We believe our meeting with Mr. Loomis and Mr. DeFeis was successful, and
subsequently, we would like to offer this co-branding, co-marketing
relationship with the USCF for discussion:

Benefits to the United States Chess Federation

1. A USCF branded Chess Site exclusively for USCF Members. (USCF Live)
The ICC is concerned that a standalone USCF Server may not make economical
sense for the USCF. This will be a subject discussed in negotiations.
However, if the USCF requires a dedicated USCF branded playing site, the
ICC would agree to create a dedicated chess playing server, including a
graphics user interface, which will allow USCF paid members to play online
chess for free. As with the current chess server , USCF Live, the USCF
would provide administration and user support. The graphics interface for
USCF members will be comparable to the major Chess sites available on the
internet. The ICC could get this site fully up and running in less than 60

2. Sponsorship of Events.
The ICC will provide sponsorship to the USCF, most likely in the form of
major event sponsorship. The events, type of sponsorship, and amount of
sponsorship will be determined at a later date.

3. Online tournaments.
The ICC will assist the USCF in running online tournaments. The USCF will
supply all advertising and prize funds, and the ICC will handle
registration, ratings, cheating detection, and otherwise run the tournament
without requiring additional assistance from the USCF staff.

4. Marketing Assistance.
The ICC has expertise in targeted marketing. Over time, the ICC would offer
some of its expertise to the USCF to help the USCF create more effective
membership drives and other targeted marketing programs.

5. Technology Assistance
The ICC will offer to act as the USCF's technology advisor under an
arrangement to be worked out. The USCF has two technical issues that the
ICC is uniquely qualified to offer assistance on, tournament ratings, and
real-time registration for new online members. Dr. Sleator, as recognized
world-wide expert on computer algorithm design, has committed to research
towards a solution, and investigating a cost effective solution to the
issue of tournament ratings. The ICC already has the mechanisms in place to
implement real-time membership offerings, and will work with the USCF to
launch a system  which enables real-time online registration for the USCF.
Irregardless of whether our bid is ultimately accepted, in exchange for
giving us the opportunity to pursue these discussions, the ICC will offer
the USCF assistance in solving the tournament rating issue.

6. Backup for US Chess Live
Because of the fact that the ICC is asking the USCF to negotiate with us
towards a working relationship on short notice, and the possibility of
service interruptions of the current USCF chess site during these
negotiations, ICC commits to provide, at no cost, a USCF branded chess site
until November, 2001, should the USCF find itself in need of this service
on short notice.

What benefits would the ICC expect under such an arrangement?

The ICC and USCF will develop a value-added joint USCF/ICC Membership which
will provide an agreed upon revenue sharing for said joint memberships

The USCF will provide appropriate/agreed upon marketing, advertising
support within its web site, publications and marketing materials.

The USCF will allow the ICC to state that the ICC is an online partner with
its premium service.

The ICC will promote the ICC as the Official Provider of US Chess online
chess play.

The ICC will receive recognition, as typical of any sponsor, when ICC
sponsors specific chess events.

ICC technology advantages overview:

The ICC is a time proven service, and has several advantages over any
alternative Chess Server.

1. The ICC has proven scalability, with the ability to manage many
thousands of online players simultaneously. This is not a simple

2. Every major chess online feature that we know of was either invented by
the ICC, or implemented first on the ICC. There are many features which we
have tested, but not implemented after studying our members reactions to
certain new features. As a result, the ICC has an excellent mix of
features, while maintaining simplicity and ease of use.

3. The ICC has long established anti-cheating technology and policies, with
the infrastructure in place to process a large volume of tournament games
and minimize online cheating.

4. The ICC does not charge Federations and Torunament Directors fees for
tournaments that the ICC hosts. The ICC considers this a Service to its
members, and  to the community-at-large.

5. The ICC has established behavioral oversight, and has successfully
reduced poor user behavior on ICC to a minimum.

6. The ICC has 6 years of development behind it, ensuring a system which is
stable and expandable.

7. The ICC is profitable and well managed, meaning that the USCF can count
on the ICC being around next year, and the next. Profitability is unique to
the ICC over all other chess playing sites.

We thank every individual member of the Executive Board for their time. The
Internet Chess Club is the market leader for online chess, and we welcome
the opportunity to discuss a partnership with the USCF.

Thank you,

Dr. Daniel Sleator, CEO
Internet Chess Club

Signed on behalf of Dr. Sleator,
Mark James
CEO, World Class Games homepage 

Open Letter to USCF re: ICC, by Hal Bogner

ICC-USCF proposal letter of May 8

Questions from USCF to ICC (received by fax 5/2)