INDEMNITY AND GUARANTY AGREEMENT
THIS
INDEMNITY AND GUARANTY AGREEMENT (this "Agreement"),
is made
as of the 25th day of August, 2007, by Xxxx Xxxxx ("Green"), whose address
is 000 Xxxxxxxxx Xxxxxx, Xxxx Xxxxxxxxx, XX 00000, and Clar Skies Group, Inc.
,
a New York corporation whose
address is 000 Xxxxxxxxx Xxxxxx, Xxxx Xxxxxxxxx, Xxx Xxxx (“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 00 Xxxxxxx Xxxxxx, Xxxxx X, Xxx Xxxx, Xxx Xxxx 00000.
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.
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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 this Agreement is or
must
be rescinded or returned for any reason whatsoever (including, but not limited
to, the insolvency, bankruptcy or reorganization of such Indemnitor), then
the
obligations of Indemnitor Parties hereunder shall, to the extent of the payment
rescinded or returned, be deemed to have continued in existence, notwithstanding
such previous payment made by any Indemnitor, or receipt of payment by Quixotic,
and the obligations of Indemnitor Parties hereunder shall continue to be
effective or be reinstated, as the case may be, as to such payment, all as
though such previous payment by such Indemnitor had never been made.
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4. Waivers
by Indemnitor.
To the
extent permitted by law, Indemnitor Parties each hereby waive and agree not
to
assert or take advantage of:
(a) Any
right
to require Quixotic to proceed against any other person or to proceed against
or
exhaust any security held by Quixotic at any time or to pursue any other remedy
in Quixotic's power or under any other agreement before proceeding against
Indemnitor Parties (or any of them) hereunder;
(b) The
defense of the statute of limitations in any action hereunder;
(c) Any
defense that may arise by reason of the incapacity, lack of authority, death
or
disability of any other person or persons or the failure of Quixotic to file
or
enforce a claim against the estate (in administration, bankruptcy or any other
proceeding) of any other person or persons;
(d) Demand,
presentment for payment, notice of nonpayment, protest, notice of protest and
all other notices of any kind, or the lack of any thereof, including, without
limiting the generality of the foregoing, notice of the existence of any action
or non-action on the part of any endorser or creditor of Indemnitor Parties
(or
any of them) or on the part of any other person or entity whomsoever under
this
or any other instrument;
(e) Any
defense based upon an election of remedies by Quixotic; Indemnitor;
(f) Any
right
or claim of right to cause a marshalling of the assets of any
Indemnitor;
(g) Any
principle or provision of law, statutory or otherwise, which is or might be
in
conflict with the terms and provisions of this Agreement;
(h) Any
invalidity, irregularity or unenforceability, in whole or in part, of this
Agreement or the Settlement Agreement;
(i) Any
deficiencies in the ability of Quixotic to collect or to obtain performance
from
any persons now or hereafter liable for the payment and performance of any
obligation hereby guaranteed;
(j) An
assertion or claim that the automatic stay provided by 11 U.S.C. §362 or any
other stay provided under 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, shall operate or be interpreted
to
stay, interdict, condition, reduce or inhibit the ability of Quixotic to enforce
any of its rights, whether now or hereafter required, which Quixotic may have
against any Indemnitor;
(k) Any
modifications of the Settlement Agreement or any obligation of Clear Skies
pursuant thereto by operation of law or by action of any court, whether pursuant
to 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, or otherwise; and
(l) Any
action, occurrence, event or matter consented to by Indemnitor Parties under
Section 5(e) hereof, under any other provision hereof, or otherwise.
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5. General
Provisions.
(a) Fully
Recourse.
All of
the terms and provisions of this Agreement are recourse obligations of
Indemnitor Parties and not restricted by any limitation on personal liability.
(b) Unsecured
Obligations.
Indemnitor Parties hereby acknowledge that that Quixotic would not enter into
the Settlement agreement and refrain from taking action against the Indemnitor
Parties but for the unsecured personal liability undertaken by Indemnitor
Parties herein. Indemnitor Parties further hereby acknowledge that even though
the warranties, covenants or agreements of Indemnitor Parties contained herein
may be identical or substantially similar to covenants or agreements of Clear
Skies set forth in the Settlement Agreement, it being the intent of Quixotic
to
create separate obligations of Indemnitor Parties hereunder which can be
enforced against Indemnitor Parties without regard to the Settlement
Agreement.
(c) No
Subrogation; No Recourse Against Quixotic.
In
connection with the foregoing, Indemnitor Parties expressly waive any and all
rights of subrogation to Quixotic against Alpha, and Indemnitor Parties hereby
waive any rights to enforce any remedy which Quixotic may have against Alpha.
Indemnitor Parties shall not have any right of recourse against Quixotic by
reason of any action Quixotic may take or omit to take under the provisions
of
this Agreement or under the provisions of the Settlement Agreement.
(d) Rights
Cumulative; Payments.
Quixotic's rights under this Agreement shall be in addition to all rights of
Quixotic under the Settlement Agreement or applicable law or in equity. FURTHER,
PAYMENTS MADE BY INDEMNITOR PARTIES UNDER THIS AGREEMENT SHALL NOT REDUCE IN
ANY
RESPECT THEIR OBLIGATIONS AND LIABILITIES UNDER THE SETTLEMENT AGREEMENT.
(e) No
Limitation on Liability.
No
action which Quixotic shall take or fail to take in connection with the Lawsuit,
the Settlement Agreement or hereunder, nor any course or dealing with Alpha
or
any other person, shall limit, impair or release Indemnitor Parties' obligations
hereunder, affect this Agreement in any way or afford any Indemnitor any
recourse against Quixotic. Nothing contained in this Section shall be construed
to require Quixotic to take or refrain from taking any action referred to
herein.
(f) Entire
Agreement; Amendment; Severability.
This
Agreement contains the entire agreement between the parties respecting the
matters herein set forth and supersedes all prior agreements, whether written
or
oral, between the parties respecting such matters. Any amendments or
modifications hereto, in order to be effective, shall be in writing and executed
by the parties hereto. A determination that any provision of this Agreement
is
unenforceable or invalid shall not affect the enforceability or validity of
any
other provision, and any determination that the application of any provision
of
this Agreement to any person or circumstance is illegal or unenforceable shall
not affect the enforceability or validity of such provision as it may apply
to
any other persons or circumstances.
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(g) Governing
Law; Binding Effect; Waiver of Acceptance.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of New York, with out regard to conflicts of laws principles. This
Agreement shall bind Indemnitor Parties and the heirs, personal representatives,
successors and assigns of Indemnitor Parties and shall inure to the benefit
of
Quixotic and the officers, directors, shareholders, agents and employees of
Quixotic and their respective heirs, successors and assigns. Notwithstanding
the
foregoing, no Indemnitor shall assign any of its rights or obligations under
this Agreement without the prior written consent of Quixotic, which consent
may
be withheld by Quixotic in its sole discretion. Indemnitor Parties hereby waive
any acceptance of this Agreement by Quixotic, and this Agreement shall
immediately be binding upon Indemnitor Parties.
(h) Notice.
All
notices, demands, requests or other communications to be sent by one party
to
the other hereunder or required by law shall be in writing and shall be deemed
to have been validly given or served by delivery of the same in person to the
intended addressee, or by depositing the same with Federal Express or another
reputable private courier service
for next business day delivery to the intended addressee at its address set
forth on the first
page of
this Agreement or at such other address as may be designated by such party
as
herein provided, or by depositing the same in the United States mail, postage
prepaid, registered or certified mail, return receipt requested, addressed
to
the intended addressee at its address set forth on the first page of this
Agreement or at such other address as may be designated by such party as herein
provided. All notices, demands and requests shall be effective upon such
personal delivery, or one (1) business day after being deposited with the
private courier service, or three (3) business days after being deposited in
the
United States mail as required above. Rejection or other refusal to accept
or
the inability to deliver because of changed address of which no notice was
given
as herein required shall be deemed to be receipt of the notice, demand or
request sent. By giving to the other party hereto at least fifteen (15) days'
prior written notice thereof in accordance with the provisions hereof, the
parties hereto shall have the right from time to time to change their respective
addresses and each shall have the right to specify as its address any other
address within the United States of America.
(i) No
Waiver; Time of Essence; Business Day.
The
failure of any party hereto to enforce any right or remedy hereunder, or to
promptly enforce any such right or remedy, shall not constitute a waiver thereof
nor give rise to any estoppel against such party nor excuse any of the parties
hereto from their respective obligations hereunder. Any waiver of such right
or
remedy must be in writing and signed by the party to be bound. This Agreement
is
subject to enforcement at law or in equity, including actions for damages or
specific performance.
(j) Captions
for Convenience; Definition.
The
captions and headings of the sections and paragraphs of this Agreement are
for
convenience of reference only and shall not be construed in interpreting the
provisions hereof. As used in this Agreement, unless otherwise expressly
provided to the contrary, the word "person" shall include natural persons and
all entities of any type, kind, nature and description and shall also include
common law trusts.
(k) Attorneys'
Fees.
In the
event it is necessary for Quixotic to retain the services of an attorney or
any
other consultants in order to enforce this Agreement, or any portion thereof,
Indemnitor Parties agree jointly and severally to pay to Quixotic any and all
costs and expenses, including, without limitation, attorneys' fees, incurred
by
Quixotic as a result thereof and such costs, fees and expenses shall be included
in Costs.
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(l) Successive
Actions.
A
separate right of action hereunder shall arise each time Quixotic acquires
knowledge of any matter indemnified or guaranteed by Indemnitor under this
Agreement. Separate and successive actions may be brought hereunder to enforce
any of the provisions hereof at any time and from time to time. No action
hereunder shall preclude any subsequent action, and Indemnitor Parties hereby
waive and covenant not to assert any defense in the nature of splitting of
causes of action or merger of judgments.
(m) SUBMISSION
TO JURISDICTION; WAIVER OF JURY
(1) INDEMNITOR
PARTIES, TO THE FULL EXTENT PERMITTED BY LAW, HEREBY KNOWINGLY, INTENTIONALLY
AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL, (A) SUBMITS
TO
PERSONAL JURISDICTION IN THE STATE OF NEW YORK OVER ANY SUIT, ACTION OR
PROCEEDING BY ANY PERSON ARISING FROM OR RELATING TO THIS AGREEMENT, (B) AGREES
THAT ANY SUCH ACTION, SUIT OR PROCEEDING MAY BE BROUGHT IN ANY STATE OR FEDERAL
COURT OF COMPETENT JURISDICTION SITTING IN NEW YORK COUNTY, NEW YORK, (C)
SUBMITS TO THE JURISDICTION OF SUCH COURTS, AND, (D) AGREES THAT NO INDEMNITOR
WILL BRING ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM. INDEMNITOR PARTIES
FURTHER CONSENT AND AGREE TO SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER LEGAL
PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING BY REGISTERED OR CERTIFIED U.S.
MAIL, POSTAGE PREPAID, TO THE INDEMNITOR PARTIES AT THE ADDRESS FOR NOTICES
DESCRIBED IN SECTION 5(h) HEREOF, AND CONSENTS AND AGREES THAT SUCH SERVICE
SHALL CONSTITUTE IN EVERY RESPECT VALID AND EFFECTIVE SERVICE (BUT NOTHING
HEREIN SHALL AFFECT THE VALIDITY OR EFFECTIVENESS OF PROCESS SERVED IN ANY
OTHER
MANNER PERMITTED BY LAW).
(2) INDEMVINITOR
PARTIES, TO THE FULL EXTENT PERMITTED BY LAW, HEREBY KNOWINGLY, INTENTIONALLY
AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL, WAIVE,
RELINQUISH AND FOREVER FORGOES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO THIS AGREEMENT
OR ANY CONDUCT, ACT OR OMISSION OF QUIXOTIC OR INDEMNITOR PARTIES, OR ANY OF
THEIR DIRECTORS, OFFICERS, PARTNERS, MEMBERS, EMPLOYEES, AGENTS OR ATTORNEYS,
OR
ANY OTHER PERSONS OR ENTITIES AFFILIATED WITH QUIXOTIC OR ANY INDEMNITOR, IN
EACH OR THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.
(n) Joint
and Several Liability.
Notwithstanding anything to the contrary herein, the representations,
warranties, covenants, agreements and obligations made and undertaken by each
Indemnitor herein, shall be joint and several.
7
(o) Counterparts.
This
Agreement may be executed in any number of counterparts, each of which shall
be
effective only upon delivery and thereafter shall be deemed an original, and
all
of which shall be taken to be one and the same instrument, for the same effect
as if all parties hereto had signed the same signature page. Any signature
page
of this Agreement may be detached from any counterpart of this Agreement without
impairing the legal effect of any signatures thereon and may be attached to
another counterpart of this Agreement identical in form hereto but having
attached to it one or more additional signature pages.
[No
Further Text on this Page; Signature Page Follows]
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IN
WITNESS WHEREOF, each Indemnitor has executed this first above
written.
| /s/ Xxxx Xxxxx |
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XXXX
XXXXX, an individual
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By:
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/s/ Xxxx Xxxxx |
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Title:
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Acknowledged
and Accepted:
|
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QUIXOTIC
SYSTEMS, INC.
|
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By:
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/s/ Xxxxxxx Xxxxx |
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Name:
Xxxxxxx Xxxxx
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Title:
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