FOLLOWING IS AN APPROXIMATION OF THE CONTENTS OF BD1, ATTACHMENT TO DEPOSITION OF BARRY DOWNEY. CONTENTS ARE TAKEN FROM EMAIL AND ARE NOT NECESSARILY THE CONTENTS OF THE ACTUAL DEPOSITION. =============================================================== =============================================================== 1-11 (unmarked) SOFTWARE LICENSE AGREEMENT Between Systemics Inc. ("Systemics"), a Nevis Corporation, and DigiGold.net Ltd. ("DigiGold"), a Nevis Corporation, for the "Ricardo" (SOX/DBS) Product. This agreement which is to become effective 1 June 1999, is made between Systemics ("LICENSOR"), and DigiGold ("LICENSEE"). WITNESSETH THAT, in consideration of the mutual promises made in this agreement and the payment of the consideration, the parties agree as follows: ARTICLE 1. DEFINITIONS ARTICLE 2. LICENSE AND TITLE WARRANTY LICENSOR grants LICENSEE the following licenses and rights: A worldwide exclusive right and license to install and use the licensed articles on any computer. "Licensed Articles" shall be described in Attachment 1. LICENSOR warrants that it has title to the Ricardo product as defined in Paragraph 2 (a) and has the right to agree to every term of this agreement. LICENSEE may make backup archival copies of the licensed articles. Title, ownership rights, and intellectual property rights in the Software shall remain in LICENSOR and/or its suppliers. The Software is protected by copyright and other intellectual property laws and by international treaties. ARTICLE 3. IMPROVEMENTS AND METHODS LICENSOR agrees to tender in writing for incorporation into the "licensed rights" a like license under any U.S. or foreign patents or copyright applications now or hereafter owned or enjoyed by the LICENSOR that claim any improvement of any method or process applying to the licensed product. LICENSEE at its option may accept such written tender by a written instrument mailed within six months after receipt of tender. Such additional licenses shall be upon the same terms as this license and shall terminate upon any termination or cancellation of this agreement. ARTICLE 4. FOREIGN FILING LICENSEE at its option may file at its own expense in any country an application for patent or copyright corresponding to any U.S. LICENSOR is not excluded from filing any application where LICENSEE elects not to file such application. LICENSOR on request shall promptly execute papers to enable LICENSEE to file foreign applications as provided in this article. Once LICENSEE files at its own expense under Par. 4 (a), it shall thereafter have and retain control over the resulting application, and any application that is a division or a continuation in whole or in part of that application, any patent or copyright issuing on any such application, and any patent or copyright that is a reissue or extension of any such patent or copyright until the cancellation or termination of this license Agreement, whichever occurs first. LICENSEE shall give LICENSOR thirty days written notice prior to abandonment of the maintenance or prosecution of any foreign patent or application included in the "Licensed Articles" together with sufficient information to enable LICENSOR to assume control over it within the notice period, and LICENSOR shall then be entitled at its option to assume such control. ARTICLE 5. LIMITED WARRANTY LICENSOR warrants that for a period of 120 days after delivery of a copy of the Software to LICENSEE: - the physical media on which this copy of the software is distributed will be free from defects in materials and workmanship under normal use, and - the Software will perform in substantial accordance with the Documentation To the extent permitted by applicable law, the foregoing limited warranty is in lieu of all other warranties and conditions, express or implied, and LICENSOR disclaims any and all implied warranties or conditions, including any implied warranty of title, noninfringement, merchantability or fitness for a particular purpose, regardless of whether LICENSOR knows or had reason to know of LICENSEE's needs. No employee, agent, dealer or distributor of LICENSOR is authorized to modify this limited warranty, nor to make additional warranties. Some jurisdictions do not allow the exclusion of implied warranties, so the above exclusion may not apply. This warranty gives LICENSEE specific legal rights, and licensee may also have other rights which may vary depending upon the jurisdiction. ARTICLE 6. LIMITED REMEDY LICENSOR's entire liability and LICENSEE's exclusive remedy shall be: - the replacement of any diskette's or other media not meeting LICENSOR's Limited Warranty which is returned with a copy of the receipt, or - If LICENSOR is unable to deliver a replacement diskette(s) or other media that is free of defects in materials or workmanship, LICENSEE may terminate theis agreement by returning the Software and Documentation and the consideration shall be refunded. In no event will LICENSOR be liable for any damages, including any lost profits, lost savings, or other incidental or consequential damages arising from the use or the inability to use the software, or for any claim by any other party. Some jurisdictions do not allow the limitation or exclusion of liability for incidental or consequential damages, so the above may not apply. ARTICLE 7. TERM AND TERMINATION This license agreement takes effect upon execution and LICENSEE's use of the software items and remains effective until terminated. This Agreement shall extend for a period of 5 years and may be extended by the mutual agreement of the parties. This Agreement will terminate due to the failure of either party to comply with any term or condition after 30 days written notice of the breach of the term or condition. ARTICLE 8. CONFIDENTIALITY The Software contains trade secrets and proprietary know-how that belong to LICENSOR and it is being made available to LICENSEE in strict confidence. Any use or disclosure of the software, or of its algorithms, protocols or interfaces, other than in strict accordance with this license agreement, may be actionable as a violations of LICENSOR's trade secret rights. ARTICLE 9. SUBLICENSES ARTICLE 10. SUCCESSORS AND ASSIGNS This Agreement shall bind and inure to the benefit of each of the parties, and their respective successors in interest and assigns. HOWEVER, this agreement is assignable only by the mutual written agreement of the parties. Approval of assignment shall not be unreasonably withheld. It is contemplated that Systemics will transfer its rights hereunder to a subsidiary or affiliate within 12 months of the execution of this Agreement. LICENSEE has been advised of this contemplated assignment. ARTICLE 11. NOTICES, COMMUNICATIONS, PAYMENTS LICENSEE may send all notices and reports and other communications and may make all payments under this license to Ian Grigg at iang@systemics.com. LICENSOR may send all notices, tenders, and other communications to Douglas Jackson at djackson@digigold.net. All notice periods and other times for taking any action mentioned in this license shall start on the day that such notice or other communication is actually mailed. ARTICLE 12. CHOICE OF LAW This agreement and any disputes arising under it shall be governed by the laws of Nevis excluding conflict of law provisions (except to the extent applicable law, if any, provides otherwise). The application of the United Nations Convention on Contracts for the International Sale of Goods is expressly excluded. ARTICLE 13. ALTERATIONS This Agreement cannot be altered except by an instrument in writing signed by an authorized representative of the LICENSEE and an authorized representative of the LICENSOR. ARTICLE 14. ACCEPTANCE The criteria for acceptance of the successful operation of the licensed articles shall be the successful operation of the program using LICENSOR test data and /or a mutually acceptable set of test data generated by the LICENSEE. This test and acceptance shall precede any productive operation of the programs other than file maintenance, or conversion of data. Failure of the LICENSEE to show that the programs are unacceptable within seventy-five (75) days from a date that LICENSOR presents the programs as ready for test, shall constitute acceptance of the programs. ARTICLE 15. EXCLUSIVE AGREEMENT BETWEEN THE PARTIES This is the only licensing agreement between the parties for the articles described in Attachments 1 and 2 hereto. This Agreement supersedes all prior oral and written agreements, negotiations or dealings concerning this Software and constitutes the entire Agreement between the parties. 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. ARTICLE 17. MAINTENANCE AND SUPPORT Maintenance and support of the software and articles licensed and described in Attachments 1 and 2 hereto will be the subject of a separate agreement between the parties. ARTICLE 18. DISPUTES AND ARBITRATION All disputes arising under this Agreement between the parties shall be subject to Arbitration. The rules governing the resort to arbitration, the conduct of the proceedings and the application of the decision of the arbitrator or arbitrators will be the subject of a separate Arbitration Agreement which is hereby incorporated by reference and made a part of this agreement. IN WITNESS WHEREOF, the parties have caused this agreement to be executed in duplicate originals by their duly authorized representatives on the dates set forth below. ATTACHMENT 1 Systemics will license DigiGold one unit of the Ricardo product in its current form, for use within the jurisdiction of Nevis. The Ricardo product, as licensed and supplied to Nevis, will include: Software. Installation services on one platform. Initial support. Major Bug Rectification. Disclaimers on intellectual property. Ongoing Support A support contract would normally be required immediately for the purposes of Consulting in Issuance, Training, and Facilities Planning. This agreement defers such a contract on the basis that initially, the product will be delivered in Beta form. Therefore, it is agreed that substantial benefits will be gained by both parties in working together to take the product into Release form. Once the product is raised to release level within DigiGold, Systemics reserves the right to negotiate a support contract on a similar basis to other customers. Features The Ricardo product includes these general features: Reliability of operation. DBS and Nymous capability. Clients with payments capabilities. An Issuer that serves the Issuance of instruments with governance capabilities. A high level of confidentiality, integrity and authentication. Additional Exclusive Clause DigiGold acquires a 2 year exclusive on metal-based issues such as their product called DigiGold. Specifically, they have exclusive rights to use Systemics' Ricardo product for: The four metals: gold, silver, platinum, palladium. Any index that includes more than the greater of the proportions of these metals, in sum, included in the following two indices: Goldman Sachs Commodity Index Commodity Research Bureau Composite Futures Index For a period of 2 calendar years from the public availability of the first DigiGold currency. No other exclusivity is implied or given. Limitations DigiGold acknowledges that The product is not transferable, except where the company itself is transferred. The product is limited to branding and legal operating within the jurisdiction of Nevis. Note that this geographical limitation does not limit any user of the system, nor does it limit the location of servers. DigiGold is responsible for any taxes, duties, fees that may be incurred in the process of purchasing this product. DigiGold Purchase of Ricardo from Systemics

The Parties

This agreement is negotiated between DigiGold Ltd, a company incorporated in Iceland, and Systemics Ltd, a company incorporated in Ireland.

The Agreement

Systemics will sell DigiGold one unit of the Ricardo product in its current form, for use within the jurisdiction of Iceland.

The Product

The Ricardo product, as sold and supplied to DigiGold, will include:

  1. Software.
  2. Installation services on one platform.
  3. Initial support.
  4. Major Bug Rectification.
  5. Disclaimers on intellectual property.

Ongoing Support

A support contract would normally be reqiured immediately for the purposes of Consulting in Issuance, Training, and Facilities Planning. This agreement defers such a contract on the basis that initially, the product will be delivered in Beta form. Therefore, it is agreed that substantial benefits will be gained by both parties in working together to take the product into Release form.

Once the product is raised to release level within DigiGold, Systemics reserves the right to negotiate a support contract on a similar basis to other customers.

Features

The Ricardo product includes these general features:

Additional Exclusive Clause

DigiGold acquires a 2 year exclusive on metal-based issues such as their product called DigiGold. Specifically, they have exclusive rights to use Systemics' Ricardo product for:

No other exclusivity is implied or given.

Limitations

DigiGold acknowledges that

  1. The product is not transferable, except where the company itself is transferred.
  2. The product is limited to branding and legal operating within the jurisdiction of Iceland. Note that this geographical limitation does not limit any user of the system, nor does it limit the location of servers.
  3. DigiGold is responsible for any taxes, duties, fees that may be incurred in the process of purchasing this product.

Consideration

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.

Protection

Whereas at current phase of development of this emerging market it is difficult to estimate the future price 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.

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.

Potential Liabilities

Each party declares that the other is not liable for consequential damages through non-performance of software, systems, payment media or other factors.

What are "consequential damages?"