EXHIBIT 10.1
INDEMNITY AGREEMENT
THIS INDEMNITY AGREEMENT (this "Agreement") is made and entered into as
of February 25, 2002, by and among SmartGate Inc., a Nevada corporation
("SmartGate") and the persons and entities set forth on Schedule "A" and their
successors and assigns in interest, collectively hereinafter referred to as
("Indemnitees").
WITNESSETH:
WHEREAS, On even date herewith, SmartGate, SmartGate/RadioMetrix
Acquisition Corp. and Radio Metrix Inc. ("RadioMetrix") closed an Agreement
("Merger Agreement") of Merger and Plan of Reorganization ("Merger"); and
WHEREAS, the Indemnitees, at the time of the closing of the Merger were
either officers, directors or shareholders of RadioMetrix and SmartGate or
affiliates of the Indemnitees; and
WHEREAS, simultaneous with the closing of the Merger, SmartGate and the
Indemnitees (except Xxxxxx & Xxxxx, P.A.) executed a Quarterly Revenue Based
Payment Agreement, dated February 25, 2002 ("Quarterly Revenue Based Payment
Agreement"), a form of which is attached hereto as Exhibit "A", and a
Registration Rights Agreement dated February 25, 2002 ("Registration Rights
Agreement"), a form of which is attached hereto as Exhibit "B"; and
WHEREAS, the Indemnitees, by virtue of their positions with or holdings
in SmartGate and RadioMetrix have conflicts of interest with respect to the
Merger, and will have future conflicts of interest resulting from the merger
transaction or agreements delivered at the closing of the merger transaction or
the ongoing commercialization of the RadioMetrix Technology, SmartGate or its
subsidiary following the merger transaction; and
WHEREAS, the Independent Committee of the Board of Directors of
SmartGate, consisting of the non-interested Board members with respect to the
merger transaction ("Independent Committee") were made aware of said conflicts
of interest and same were fully disclosed by the Indemnitees prior to the
entering into and closing of the Merger; and
WHEREAS, the Independent Committee, in order to induce the Indemnitees
to enter into and close the Merger and continue to hold positions with
SmartGate, following the Merger, determined that it was appropriate for
SmartGate to indemnify the Indemnitees in accordance with the terms and
conditions as set forth hereinbelow; and
WHEREAS, the Indemnitees have required that they be indemnified by
SmartGate as a condition to entering into and closing the merger transaction
with SmartGate.
NOW, THEREFORE, in order to induce the Indemnitees to enter into and
close the Merger and continue to hold positions with SmartGate and in
consideration of their continued service and for other good and valuable
consideration, the receipt and sufficiency of which is acknowledged, and the
parties intending to be legally bound agree as follows:
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1. RECITALS. The Recitals are true and correct and are made an integral
part of this Agreement.
2. INDEMNIFICATION. Excluding a breach of any representations,
warranties or covenants of RadioMetrix as set forth in the Merger Agreement, or
a breach of any representations, warranties or covenants of the Indemnitees as
set forth in the Quarterly Revenue Based Payment Agreement or the Registration
Rights Agreement, SmartGate agrees to indemnify and hold the Indemnitees and
RadioMetrix and each of them jointly and severally, harmless from any claim,
loss or action, including costs and legal fees, resulting from or in any fashion
related to: (i) the merger transaction; (ii) the Merger Agreement and all
closing documents and agreements including, but not limited to, the Quarterly
Revenue Based Payment Agreement and the Registration Rights Agreement; (iii)
conflicts of interest to the extent disclosed to the Independent Committee; and
(iv) future conflicts of interest relating to the future implementation of the
Merger Agreement and closing documents and agreements including, but not limited
to, the Quarterly Revenue Based Payment Agreement and the Registration Rights
Agreement or any aspect relating to the commercialization of the RadioMetrix
Technology to the extent that such conflict of interest is or has been disclosed
to the Independent Committee.
3. FURTHER INDEMNIFICATION. SmartGate further agrees to indemnify and
hold the Indemnitees and RadioMetrix and each of them jointly and severally,
harmless from any claim, action or expense arising out of or relating to any
contract or liability relating to RadioMetrix set forth in the Merger Agreement,
Schedules and Exhibits thereto, closing documents or otherwise disclosed in
writing to the Independent Committee as part of the Merger.
4. ACKNOWLEDGMENT OF PRESENT AND FUTURE CONFLICTS OF INTEREST.
a. SmartGate has been fully advised of the conflicts of interest of
the Indemnitees. SmartGate has had full access to all books, records and other
documents of RadioMetrix and to ask questions of RadioMetrix' officers and
directors. SmartGate appointed an Independent Committee, and has vested said
Independent Committee with full and complete authority to negotiate, perform due
diligence and, in its sole discretion, to enter into and close this Agreement
and the Merger Agreement. The conflicts of interest of the Indemnitees were
expressly waived by the Independent Committee. Further, the Independent
Committee hereby waives: (i) any defense to the future enforceability or
validity of this Agreement arising out of or relating to the conflicts of
interest of the Indemnitees; and (ii) any claim or cause of action which may be
brought by SmartGate against the Indemnitees based upon or related to the
conflicts of interest.
b. In an effort to mitigate any potential conflict of interest which
may arise subsequent to the date hereof, the Indemnitees acknowledge and agree
that following the Effective Time of the Merger Agreement, SmartGate shall
conduct its business, including all aspects relating to the commercialization,
development, product introduction, product marketing and the establishment of
product and licensing pricing of the RadioMetrix Technology in a fashion deemed
by the Board of Directors to be in the best interest of SmartGate and its
stockholders without regard to the interests of the Indemnitees or with regard
to the Merger Consideration and Additional Merger Consideration issued under the
Merger Agreement. The Indemnitees hereby acknowledge the absolute discretion of
SmartGate and its Independent Committee to make any and all decisions regarding
the manner in which the RadioMetrix Technology shall be commercialized and
hereby waive any right to object thereto. In the event
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that the Board of Directors identifies any matter before the Board or SmartGate
which involves a conflict of interest between SmartGate and the Indemnitees, the
decision or matters relating to or affected by said conflict of interest shall
be exclusively and solely resolved by an Independent Committee appointed by the
Board of Directors. Such Independent Committee shall have full access to
independent legal counsel and independent advisors, including financial
advisors. In all such matters, including matters relating to the creation of an
Independent Committee of Directors or the determination of whether a conflict of
interest may be involved, all Indemnitees including, but not limited to, Messrs.
Xxxxxxx, Xxxxxx and Xxxxx, shall abstain. Any determination as to whether a
conflict of interest exists shall be determined by the Independent Members of
the Board of Directors with all interested or conflicted Directors abstaining.
5. ARBITRATION. Any controversy or claim arising out of or relating to
this Agreement, or the breach thereof, shall be exclusively settled by binding
arbitration before the American Arbitration Association situated in Tampa,
Florida before a panel of three (3) arbitrators. All aspects of the arbitration
shall be governed by the rules then in effect of the American Arbitration
Association. Arbitration shall be the sole and exclusive manner for resolving
all disputes hereunder. Judgment upon the award rendered by the arbitrators may
be entered in any court having jurisdiction thereof. Each party shall pay its
respective share of the fees, costs and expenses billed by the American
Arbitration Association and the arbitrators, and the prevailing party shall
recover from the non-prevailing party all of the prevailing party's costs,
expenses and fees it incurred in connection with the arbitration, including
reasonable attorneys' fees.
6. ASSIGNMENT.
a. SmartGate shall not assign this Agreement without first obtaining
the written permission of the Indemnitees.
b. Any one or all of the Indemnitees may assign this Agreement
without the permission of SmartGate.
7. NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by commercial
delivery service, or mailed by registered or certified mail (return receipt
requested) or sent via telecopy to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):
(a) If to SmartGate:
To: Independent Committee
SmartGate Inc.
0000 Xxxxxxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxx 00000
Attention: Independent Committee Member, Xxxxxx X. Xxxx
Fax: (000) 000-0000
Copy to:
Xxxxxxx & Xxxxxxx, P.C.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx
Fax: (000) 000-0000
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(b) If to Indemnitees:
To: The addresses set forth on Schedule "A".
8. RULES OF CONSTRUCTION. This Agreement shall not be construed more
stringently against any party regardless of which parties may have served as the
draftsman. SmartGate hereby acknowledges and agrees that neither Xxxxxx & Xxxxx,
P.A. nor any of its principals, including Xx. Xxxxxx and Xx. Xxxxx, provided any
legal advice or representation to SmartGate or its Independent Committee
regarding this Agreement or any aspect of the merger transaction. SmartGate
acknowledges that Xxxxxxx & Xxxxxxx PC served as its legal counsel in connection
with this Agreement and all aspects of the merger transaction. Xxxxxx & Xxxxx,
P.A. and its principals were expressly authorized to represent RadioMetrix in
connection with this Agreement and the merger transaction. Xxxxxx & Xxxxx, P.A.
and its principals were expressly released by the Independent Committee from any
conflicts of interest which may result (or which may have the appearance of
resulting) from: Xxxxxx & Xxxxx, P.A.'s representation of SmartGate in matters
unrelated to this Agreement; Xxxxxx & Xxxxx, P.A's representation of RadioMetrix
in the past and in the merger transaction; the merger transaction; or the
ownership of stock, officership or directorship in SmartGate or RadioMetrix by
any principal of Xxxxxx & Xxxxx, P.A. The provisions of this section are
incorporated by reference into and made an integral part of the Rules of
Construction sections of the Quarterly Revenue Based Payment Agreement and the
Registration Rights Agreement which are attached as Exhibits "A" and "B"
respectively.
9. MISCELLANEOUS. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida. This Agreement may be executed
by the parties hereto in separate counterparts, each of which, when so executed
and delivered, shall be an original but all counterparts shall together
constitute one and the same instrument. Facsimile signatures to this Agreement
are permitted and shall be deemed the same as the original signature of the
signing party for all purposes. This Agreement shall remain in full force and
effect until terminated by mutual agreement of the parties hereto.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
SmartGate Inc. Indemnitees
a Nevada Corporation
/s/ XXXXXX X. XXXX /s/ XXXXXX X. XXXXXX
------------------------ --------------------------
By: Xxxxxx X. Xxxx Xxxxxx X. Xxxxxx
Its: Chief Financial Officer
/s/ XXXXXXX X. XXXXXXX
--------------------------
Xxxxxxx X. Xxxxxxx
Xxxxxxx Xxxxxxx Xxxxxx Irrevocable
Trust u/a/d July 29, 1998
/s/ XXXXXXX X. XXXXX, Trustee
-----------------------------
Xxxxxxx X. Xxxxx, Trustee
Xxxxxxxxx Xxxxxxxx Xxxxxx
Irrevocable Trust u/a/d
July 29, 1998
/s/ XXXXXXX X. XXXXX, Trustee
-----------------------------
Xxxxxxx X. Xxxxx, Trustee
/s/ XXXXXX X. XXXX
--------------------------
Xxxxxx X. Xxxx
/s/ XXXXXXX X. XXXXX
--------------------------
Xxxxxxx X. Xxxxx
Xxxxxx & Xxxxx, P.A.
/s/ XXXXXX X. XXXXXX
--------------------------
By: Xxxxxx X. Xxxxxx
Its: President
SCHEDULE "A"
INDEMNITEES
Xxxxxx X. Xxxxxx
000 Xxxxx Xxxxx
Xxxxxxxx, Xxxxxxx 00000
Xxxxxxx X. Xxxxxxx
000 Xxxxx Xxxxx
Xxxxxxxx, Xxxxxxx 00000
Xxxxxxx Xxxxxxx Xxxxxx Irrevocable Trust
u/a/d July 29, 1998, and Xxxxxxx X. Xxxxx, Trustee
000 Xxxxx Xxxxx
Xxxxxxxx, Xxxxxxx 00000
Xxxxxxxxx Xxxxxxxx Xxxxxx Irrevocable Trust
u/a/d July 29, 1998 and Xxxxxxx X. Xxxxx, Trustee
000 Xxxxx Xxxxx
Xxxxxxxx, Xxxxxxx 00000
Xxxxxx X. Xxxx
0000 Xxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Xxxxxxx X. Xxxxx
000 Xxxxx Xxxxx
Xxxxxxxx, Xxxxxxx 00000
Xxxxxx & Xxxxx, P.A.
000 Xxxxx Xxxxx
Xxxxxxxx, Xxxxxxx 00000
FILING SCHEDULE PURSUANT TO PARAGRAPH 2.
INSTRUCTIONS TO ITEM 601 UNDER SECTION 229.601 EXHIBITS OF REGULATION S-K
Exhibit "A", the Quarterly Revenue Based Payment Agreement, is filed as
Item No. 10.18, and Exhibit "B", the Registration Rights Agreement, has been
attached as Item No. 4.18.
