I've never tried being a hostage negotiator before, but after looking at the contract between Digigold and Systemics, I can immediately see why both sides are acting the way they are. Before reading this, I just want to say that I highly respect both Doug Jackson and Ian Grigg as entrepreneurs and businessmen who have taken great risks and staked their reputations in order to make digital money possible. In my opinion, the problem is with their lawyers, and specifically, the contract that they signed that puts both DigiGold and Systemics in a very bad position. Their lawyers should have their heads removed. This would make a fascinating article, but I don't think it is healthy for the gold economy at large to go about airing our dirty laundry to the world. But since it has already been aired on this list, here is a look at the dispute from a different angle from someone who doesn't have a stake in either camp. The following text is taken from the "AN APPROXIMATION OF THE CONTENTS OF BD1, ATTACHMENT TO DEPOSITION OF BARRY DOWNEY." located at http://www.systemics.com/legal/affidavit_BD1.txt . Three phrases of particular interest (clause names and numbers added by me, full text quoted at end of post): 1. THE DEADLINE CLAUSE "In consideration, DigiGold agrees to pay Systemics the price of $500,000 US worth of e-gold. DigiGold may make payments in installments and will not be charged interest. Payment in full must be completed BEFORE 1 June 2000." (Emphasis added.) 2. THE ALL OR NOTHING CLAUSE "In consideration, DigiGold agrees to pay Systemics the price of $500,000 US. Systemics acknowledges that significant advance payments have been made. The completion of the sale is contingent on DigiGold receiving financing to the extent of $2,000,000. However, any advance payments duly received by Systemics from DigiGold or any of its agents are NON-RECOVERABLE." (emphasis added) TRANSLATION OF 1+2 = If Digigold didn't pay the full $500K before 1 June 2000, they LOST the money they already invested (over $300K ). By their own admission, DigiGold did not meet the payment terms of the contract by 1 June 2000, so unless they signed some kind of amendment that isn't in the contract, it looks like Systemics walks away with the money no strings attached. If I were Dr. Jackson, I would sue the lawyer who approved the contract. (Sorry Barry.) 3. THE REBATE CLAUSE "...it is agreed that if Systemics subsequently sells equivalent rights or products... for less money, that the difference between the price which DigiGold.net paid and later, lower price would be credited to DigiGold.net for purposes of additional technical support or hardware/software upgrades." TRANSLATION of 3: If Systemics sells licenses for less than $500,000 they owe Digigold the difference by crediting them for service or hardware. In other words, money out of Ian's pocket. Half a million is very steep for a software license if its success depends on lots of companies using it in an open market. Especially when competitor e-cash offers a similar product that was already completed years ago and will license it in the $100,000 range. This gives Systemics a $400,000 incentive to try to find a way to squirm out of the contract, because if they don't they haven't a chance of surviving financially without another huge infusion of money from investors. 4. THE EXCLUSIVE CLAUSE "DigiGold acquires a 2 year exclusive on metal-based issues such as their product called DigiGold....No other exclusivity is implied or given." TRANSLATION: If Systemics wants to sell enough licenses to make a profit, they have just locked themselves out of the biggest potential market for their product. (This is hindsight, since three years ago, everyone would have thought fiat currencies would be the biggest market for digital cash. But based on the trends so far, there are far more metal-based currencies on the net than fiat currencies.) Systemics should shoot their lawyer, too. Having signed a couple of bad contracts myself and gotten ripped off to the tune of $100K, I can really feel for Doug. Looking at the prospects of trying to market a product for five times its market value, or paying the difference, I can really feel for Ian. The contract basically puts Ian in a position of either being forced to pay about $200,000 worth of services back to Digigold (by marketing his software for $100K or less), or finding an excuse to squirm out of the contract, since technically, Digigold did not meet the terms of payment. If G&SR wins, then Systemics is screwed by a contract they never should have signed. They will go bankrupt. If Systemics wins, G&SR is screwed by a contract they never should have signed. You would think maybe they could get together and say, "You know, whichever way this lawsuit goes is a lose-lose situation. Let's make a win-win situation by giving Digigold credit in stock for the $300K and release Systemics from the "exclusive" & "rebate" clauses, so they can sell their product and have a chance of making a profit in a world of dead and dying dotcoms." Let's hope that the parties involved can get together and work this out before it goes to trial. That would be far better for the gold economy at large. The last thing we need is the mainline media gloating over a big fight between two dotcoms and yet another excuse to say that digital cash has failed on the net! If it does go to trial the outcome will depend on whether they get a judge who is a stickler for technicality, or one that is more concerned about fairness. Personally, I suspect Digigold will lose if it comes to that. But so will Systemics, because any other business would be very wary about investing any money with them or licensing their product after seeing Doug Jackson lose his shirt to them because of a contract technicality. Reality is stranger than LA Law. Ken Griffith www.goldeconomy.com <!--StartFragment-->ARTICLE 16. PAYMENT AND CONSIDERATION In consideration, DigiGold agrees to pay Systemics the price of $500,000 US worth of e-gold. DigiGold may make payments in installments and will not be charged interest. Payment in full must be completed before 1 June 2000. The parties acknowledge that as of February 1, 1999 e-gold in the amount of $40,000 (US$- equivalent) has been received by LICENSOR as an advance against license fees. <!--StartFragment--><h2>Consideration</h2> <u> In consideration, DigiGold agrees to pay Systemics the price of $500,000 US. <P> Systemics acknowledges that significant advance payments have been made. <P> The completion of the sale is contingent on DigiGold receiving financing to the extent of $2,000,000. However, any advance payments duly received by Systemics from DigiGold or any of its agents are non-recoverable. </u> <h2>Protection</h2> Whereas at current phase of development of this emerging market it is difficult to estimate the <u> future price </u> of this license to third parties, it is agreed that if Systemics subsequently sells equivalent rights or products [equivalent in terms of technical functionality, as distinguished from exclusivity provisions, which shall not be impaired] to another entity for less money, that the difference between the price which DigiGold.net paid and later, lower price would be credited to DigiGold.net for purposes of additional technical support or hardware/software upgrades. <P> If, however, Systemics succeeds in selling comparable rights or products to another entity at a higher price, no additional consideration from DigiGold.net is required for the goods and services within the scope of this agreement. <h2>Potential Liabilities</h2> <u> Each party declares that the other is not liable for consequential damages through non-performance of software, systems, payment media or other factors. </u> <P> --- You are currently subscribed to e-gold-list as: archive@jab.org To unsubscribe send a blank email to [EMAIL PROTECTED]
