Exhibit 10.77
REIMBURSEMENT AND INDEMNITY AGREEMENT
This Agreement, dated January 15, 2002, is by and between Mountain Reservoir
Corporation ("MRC") and Vertical Computer Systems, Inc. ("VCSY").
WHEREAS, Xxxxxxx Xxxx agreed, on October 31, 2001, to pledge 10,450,000 (Ten
Million Four Hundred Fifty Thousand) shares of VCSY common stock (the "Pledged
Shares") on VCSY's behalf to FARIASFARIASRobert Xxxxxx. ("XXXXXX") as collateral
for loans made to VCSY.
WHEREAS, VCSY has agreed to reimburse and indemnify MRC for any costs incurred
by MRC with respect to the loans made by XXXXXX on VCSY's behalf.
WHEREAS, it is the intention of the parties that in the event of any default and
sale of any Pledged SHARES that MRC shall receive replacement shares and
reimbursement of any costs, including taxes for selling or receiving the
replacement shares.
THEREFORE, the parties hereby confirm their agreement as follows:
1. In the event of that VCSY defaults on the Loan for which Pledged Shares have
been pledged as collateral and any Pledged Shares are sold pursuant to the Xxxx
pledge agreement, VCSY shall:
a. issue a number of new shares of VCSY common stock (the "Replacement
Shares") equal to the number of the Pledged shares actually sold by
MRC, XXXXXX, or their agent or designee pursuant to Xxxx'x pledge
agreement .
b. use it best efforts to (i) cause any Replacement Shares that are
issued to be freely tradable and without restriction to MRC and (ii)
register the Replacement Shares with the Securities Exchange
Commission.
c. reimburse MRC for any costs or expenses in connection with the sale
of any Pledged shares or the issuance by VCSY of any Replacement
Shares. Such reimbursement of expenses shall include, without
limitation, any tax consequences (federal, state, and local, if any)
and brokerage fees. MRC shall provide all documentation reasonably
necessary in order for VCSY to reimburse MRC.
2. VCSY shall defend, protect, indemnify and hold harmless MRC from and against
any and all actions, causes of action, suits, claims, losses, costs, penalties,
fees, liabilities and damages, and expenses in connection with the Loan for
which MRC pledged the Pledged Shares as collateral to XXXXXX, including
reasonable attorneys' fees and disbursements (the "Indemnified Liabilities"),
incurred by MRC as a result of, or arising out of, or relating to (a) any
misrepresentation or breach of any representation or warranty made by VCSY with
regard to the Loan for which the Pledged Shares are pledged, or any other
certificate, instrument or document contemplated hereby or thereby, (b) any
breach of any covenant, agreement or obligation of VCSY in this Agreement or any
other certificate, instrument or document contemplated hereby or thereby, or (c)
any cause of action, suit or claim brought or made against MRC and arising out
of or resulting from the execution, delivery, performance or enforcement of this
Agreement or any other instrument, document or agreement executed pursuant
hereto by MRC, any transaction financed or to be financed in whole or in part,
directly or indirectly, with the proceeds of the issuance of the Loan in which
the Pledged Shares were pledged as collateral. To the extent that the foregoing
undertaking by VCSY may be unenforceable for any reason, VCSY shall make the
maximum contribution to the payment and satisfaction of each of the Indemnified
Liabilities, which is permissible under applicable law.
The parties hereby agree to the foregoing on the date first set forth above.
Accepted and Agreed to by:
"Mountain Reservoir Corporation"
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Xxxxx Xxxxx, President
Accepted and Agreed to by:
"VCSY"
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Xxxxxxx Xxxxx
Secretary, Vertical Computer Systems, Inc.
