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INDEMNITY AND GUARANTY AGREEMENT
THIS
INDEMNITY AND GUARANTY AGREEMENT (this
"Agreement"), is
made as of the 25th day of August, 2007, by Ezra Green
("Green"), whose address is 757 Harrisson Street, West Hempstead,
NY 11552, and Clar Skies Group, Inc. , a New York
corporation whose
address is 757 Harrisson Street, West Hempstead, New York
(“Clear Skies”). Clear Skies and Green being referred
to herein collectively as "Indemnitor Parties" and individually as
"Indemnitor"), jointly and severally, in favor of Quixotic Systems,
Inc. , a New York corporation
("Quixotic"), whose
address is 90 Bedford Street, Suite A, New York, New York
10014.
WITNESSETH :
WHEREAS,
Alpha Energy has commenced a lawsuit against Quixotic titled
Alpha Energy, a division of Alpha Technologies Services, Inc.
v. Quixotic Systems, Inc. , United States District Court for
the Western District of Washington Case No. 2:07-CV-1130 MJB
(the "
Lawsuit "),
which is presently pending. In the Lawsuit, Alpha has asserted
claims for breach of contract and unjust enrichment in relation to
the failure to pay for certain goods (the
"Goods") ordered
by Quixotic from Alpha; and
WHEREAS,
with limited exception, Quixotic ordered the goods on behalf
of Clear Skies and these goods were shipped to or as directed
by Clear Skies; and
WHEREAS,
in the interest of avoiding the expense, uncertainty and delay
of further litigation, Alpha Energy, Alpha Technologies
Services, Inc. as well as all other Alpha Group entities
("
Alpha ")
Clear Skies and Quixotic have agreed to compromise and settle the
Lawsuit and all claims raised therein pursuant to a Settlement
Agreement and Mutual Release dated as of the date hereof (the
"
Settlement Agreement "),
the purpose of which is to achieve a full and complete settlement
and compromise of all claims asserted in the Lawsuit;
and
WHEREAS,
as a condition to Quixotic entering into the Settlement
Agreement and
refraining from taking legal action against Clear Skies in
connection with the goods ordered by
Quixotic on behalf of Clear Skies referred to above, Quixotic
has required that Indemnitor Parties indemnify Quixotic from
and against and guarantee payment to or on behalf of
Quixotic of
all liability or obligations incurred or that may be incurred
by Quixotic in connection with the Lawsuit
and the Settlement Agreement, any non-performance by Clear
Skies under the Settlement
Agreement and all legal fees and other costs incurred by
Quixotic in connection with the
Lawsuit, negotiating and entering into the Settlement
Agreement, and enforcing any of Quixotic's rights under the
Settlement Agreement or hereunder; and
WHEREAS,
Green is the founder, a principal equity holder, officer and
director of Clear Skies and the entering into the Settlement
Agreement by Clear Skies and this Agreement by each Indemnitor
is of substantial benefit to each Indemnitor.
NOW,
THEREFORE, to induce Quixotic to enter into the Settlement
Agreement and refrain from taking legal action against the
Indemnitor Parties Skies and in consideration of the foregoing
premises and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged,
Indemnitor Parties hereby covenant and agree for the benefit
of Quixotic, as follows:
1.
Indemnity
and Guaranty.
(a)
Indemnitor
Parties hereby assume liability for, hereby guarantee payment
to or on behalf of Quixotic, hereby agree to pay, protect,
defend (at Quixotic's option) and save Quixotic harmless from
and against, and hereby indemnify Quixotic from and against
any and all liabilities, obligations, losses, damages, costs
and expenses (including, without limitation, attorneys' fees,
including the attorneys' fees incurred by Quixotic in
connection with the Lawsuit and the claims made therein, the
negotiation of the Settlement Agreement and the preparation
and negotiation of the this Agreement), causes of action,
suits, claims, demands and judgments of any nature or
description whatsoever (collectively, "
Costs ")
which may at any time be imposed upon, incurred by or awarded
against Quixotic as a result of the Lawsuit and the claims made
therein, the Settlement Agreement and any failure by Clear Skies to
timely make any and all payments to Alpha as may be required under
the Settlement Agreement, it being acknowledged and agreed to by
the Indemnitor Parties that, notwithstanding anything to the
contrary contained in the Settlement Agreement, as between Clear
Skies and Quixotic, Clear Skies is liable for all amounts payable
under the Settlement Agreement, and shall timely pay any and all
such amounts as and when due.
(b)
This
is a guaranty of payment and performance and not of
collection. The liability of Indemnitor Parties under this
Agreement shall be direct and immediate and not conditional or
contingent upon the pursuit of any remedies against
any other
person. Indemnitor Parties waive any right to require that an
action be brought against any other person. In the event, on
account of the Bankruptcy Reform Act of 1978, as amended, or any
other debtor relief law (whether statutory, common law, case law or
otherwise) of any jurisdiction whatsoever, now or hereafter in
effect, which may be or become applicable, either Indemnitor Party
shall be relieved of or fail to incur any debt, obligation or
liability as provided in the Settlement Agreement, the other
Indemnitor Party shall nevertheless be fully
liable
therefor. In the event of a default under the Settlement Agreement,
Quixotic shall have the right to enforce its rights, powers and
remedies thereunder or hereunder, in any order, and all rights,
powers and remedies available to Quixotic in such event shall be
non-exclusive and cumulative of all other rights, powers and
remedies provided thereunder or hereunder or by law or in equity.
If the indebtedness and obligations guaranteed hereby are partially
paid or discharged by reason of the exercise of any of the remedies
available to Quixotic, this Agreement shall nevertheless
remain
in full
force
and effect, and Indemnitor Parties shall remain liable for all
remaining indebtedness and obligations guaranteed
hereby.
2.
Indemnification Procedures .
(a)
If
any claim or action shall be brought against Quixotic based
upon any of the matters for which Quixotic is indemnified
hereunder, Quixotic shall notify Indemnitor Parties in writing
thereof and, at Quixotic's option, Indemnitor Parties shall
promptly assume the defense thereof, including, without
limitation, the employment of counsel acceptable to Quixotic
and the negotiation of any settlement; provided, however, that
any failure of Quixotic to notify any Indemnitor Parties of
such matter shall not impair or reduce the obligations of
Indemnitor Parties hereunder. Quixotic shall have the right,
at the expense of Indemnitor Parties (which expense shall be
included in Costs), to employ separate counsel in connection
with any such claim or action and to participate in the
defense thereof. In the event Indemnitor Parties shall fail,
upon the request of Quixotic, to discharge or undertake to
defend Quixotic against any claim, loss or liability for which
Quixotic is indemnified hereunder, Quixotic may, at its sole
option and election, defend or settle such claim, loss or
liability. Alternatively, Quixotic may, at its sole option and
election, defend or settle such claim, loss or liability. The
liability of Indemnitor Parties to Quixotic hereunder shall be
conclusively established by settlement entered into by
Quixotic, provided such settlement is made in good faith, the
amount of such liability to include both the settlement
consideration and the costs and expenses, including, without
limitation, attorneys' fees and disbursements, incurred by
Quixotic in effecting such settlement. In such event, such
settlement consideration, costs and expenses shall be included
in the Costs and Indemnitor Parties shall pay the same as
hereinafter provided. Quixotic's good faith in any such
settlement shall be conclusively established if the settlement
is made on the advice of independent legal counsel for
Quixotic.
(b)
Indemnitor
Parties shall not, without the prior written consent of
Quixotic: (i) settle or compromise any action, suit,
proceeding or claim or consent to the entry of any judgment
that does not include as an unconditional term thereof the
delivery by the claimant or plaintiff to Quixotic of a full
and complete written release of Quixotic (in form, scope and
substance satisfactory to Quixotic in its sole discretion)
from all liability in respect of such action, suit, proceeding
or claim and a dismissal with prejudice of such action, suit,
proceeding or claim; or (ii) settle or compromise any action,
suit, proceeding or claim in any manner that may adversely
affect Quixotic or obligate Quixotic to pay any sum or perform
any obligation as determined by Quixotic in its sole
discretion.
(c)
All
Costs shall be immediately reimbursable to Quixotic when and
as incurred and, in the event of any litigation, claim or
other proceeding, without any requirement of waiting for the
ultimate outcome of such litigation, claim or other
proceeding, and Indemnitor Parties shall pay to Quixotic any
and all Costs within ten (10) days after written notice from
Quixotic itemizing the amounts thereof incurred to the date of
such notice. In addition to any other remedy available for the
failure of Indemnitor Parties to periodically pay such Costs,
such Costs, if not paid within said ten-day period, shall bear
interest at 9% per annum.
3.
Reinstatement of Obligations .
If at any time all or any part of any payment made by any
Indemnitor or received by Quixotic from any Indemnitor under or
with respect to thi
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