QUARTERLY REVENUE BASED PAYMENT AGREEMENT
This Quarterly Revenue Based Payment 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
WHEREAS, pursuant to an Agreement of Merger and Plan of Reorganization
by and among SmartGate, SmartGate/RadioMetrix Acquisition Corp. and RadioMetrix
Inc. ("RadioMetrix") which was entered into as of February 25, 2002 ("Merger
Agreement") and closed on even date herewith ("Closing"), the Recipients are
entitled to a certain quarterly revenue based payment; and
WHEREAS, the parties hereto, by this Agreement, wish to memorialize and
set forth the terms, conditions and details of the quarterly revenue based
NOW, THEREFORE, in consideration of the foregoing and the covenants,
promises and representations set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which is acknowledged, the parties
intending to be legally bound, agree as follows:
1. CERTAIN DEFINITIONS. As used in this Agreement, the following
terms shall have the following respective meanings:
"Change of Control" shall mean that SmartGate has: entered into
a merger transaction in which SmartGate is not the survivor; or sold shares
representing sixty (60%) percent or more of the then outstanding shares in a
transaction; or sold all or substantially all (i.e. - seventy [70%] percent or
more of the fair market value) of the RadioMetrix Technology related assets; or
sold or granted a master license to the RadioMetrix Technology to a third party
in which the stockholders are different than the stockholders of SmartGate.
"RadioMetrix Technology" shall mean all applications or uses
(save and except only those covered by the Sublicense Agreement between
RadioMetrix and SmartGate, L.C. dated February 14, 1997, as amended by Amendment
dated March 2, 1999 which is incorporated by reference) based upon or covered by
the License Agreement between RadioMetrix and SDR Metro Inc. dated March 14,
1992 as amended by Amendment dated May 26, 1998 which is incorporated by
reference. The present or future validity or enforceability of the Sublicense
Agreement or the License Agreement shall not affect their use for the
definitional purpose as set forth herein.
"Revenue Based Payment" shall mean a quarterly revenue-based
payment equal to seven (7%) percent of all Revenue from the RadioMetrix
"Revenue from the RadioMetrix Technology" shall mean all revenue
of any description, including but not limited to, revenue from product sales,
licenses, sublicenses, royalties, leases, asset sales, joint ventures or other
consideration, payments, income or revenue derived from or related to the
"Super Majority" shall mean the holders of seventy-five percent
(75%) of the Recipients' entitlement to the Revenue Based Payment or Termination
Payment, which shall
include any of the Recipients' respective heirs, successors or assigns who
acquire all or any part of the entitlement of a Recipient.
"Termination Payment" shall mean a one-time payment in an
amount equal to the full commercial value of the Revenue Based Payments
determined pursuant to Paragraph 4 of this Agreement which, once paid in full,
has the result of terminating SmartGate's ongoing obligation to pay Revenue
Based Payments under this Agreement.
2. REVENUE BASED PAYMENT.
a. Until terminated by a Termination Payment pursuant to
this Agreement, SmartGate shall pay to the Recipients the Revenue Based Payment
as defined herein.
b. Each Revenue Based Payment shall be paid within fifteen
(15) calendar days following each fiscal quarter of SmartGate.
c. Unless otherwise agreed by SmartGate and the Super
Majority, each Revenue Based Payment shall be paid one-half (1/2) in cash and
one-half (1/2) in SmartGate common stock. The SmartGate common stock shall be
valued at seventy-five (75%) percent of the average closing market price for the
thirty (30) calendar days immediately preceding the end of the applicable
d. In the event any Revenue Based Payment is not paid when
due, such unpaid Revenue Based Payment(s) shall accrue interest at the lower of
eighteen (18%) percent or the amount permissible under law per annum from the
due date until the date said Revenue Based Payment (or Revenue Based Payments)
is paid in full.
e. Annually, the Quarterly Revenue Based Payments made
shall be reviewed by SmartGate's independent public accountants, which shall
provide the manner of calculation and the amount of payment due for the year.
The Recipients shall have the right to independently audit said calculation. If
any payment is underpaid by greater than ten percent (10%) of the amount that
should have been paid, SmartGate shall immediately pay the unpaid amount with
interest on such unpaid amount at the lower of eighteen percent (18%) or the
amount permissible under law per annum from the date the unpaid amount should
have been paid until it is paid in full.
f. The Revenue Based Payment shall be made to the
Recipients (or their respective heirs, successors or assigns) in the following