SETTLEMENT AGREEMENT AND MUTUAL RELEASE

THIS SETTLEMENT AGREEMENT AND MUTUAL RELEASE ("Agreement") is entered into as of
the 30th day of August, 2007, by and between ALPHA ENERGY ("Alpha"), CLEAR SKIES
GROUP, INC. ("Clear Skies"), and QUIXOTIC SYSTEMS, INC. ("Quixotic"). For the
purposes of this Agreement, the term "Alpha" shall be defined to include Alpha
Energy, Alpha Technologies Services, Inc. as well as all other Alpha Group
entities. All of the above referenced entities and individuals shall be referred
to collectively as the "Parties."
 
RECITALS
 
A. Alpha has commenced a lawsuit against Quixotic titled Alpha Energy, et al. v.
Quixotic , Systems, Inc., United States District Court for the Western District
of Washington Case No. 2:07-CV-01130 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 Quixotic
purchased from Alpha. With limited exception, at the direction of Quixotic,
these goods were shipped to Clear Skies.

B. In the interest of avoiding the expense, uncertainty and delay of further
litigation, the Parties have agreed to compromise and settle the Lawsuit and all
claims raised therein on the terms and conditions set forth below. The purpose
of this Agreement is to achieve a full and complete settlement and compromise of
all claims asserted in the Lawsuit.

TERMS AND CONDITIONS

1. Quixotic and Clear Skies collectively shall pay Alpha, or its assign, the
total sum of Two Hundred Six Thousand Seven Hundred and Seventy Eight and 00/100
U.S. Dollars ($206,778.00) (the "Settlement Amount"). Quixotic and Clear Skies
are jointly and severally liable for the entire Settlement Amount- In the event
of the insolvency, bankruptcy, receivership, or any other reorganization of
either Clear Skies or Quixotic, the other entity will remain liable for the
remaining Settlement Amount. Payments of the Settlement Amount shall be made in
accordance with the following payment schedule.

 
(a)
Seventy-Five Thousand Dollars ($75,000.00) to be paid within 72 hours of the
execution of this Agreement;

(b)
Beginning on September 15, 2007, Quixotic and Clear Skies shall pay to Alpha the
sum of Twenty—Five Thousand Dollars ($25,000) each month for five (5)
consecutive months. The final payment of Six Thousand Seven Hundred Seventy
Eight Dollars ($6,778.00) shall be made in the sixth consecutive month. Each of
these payments must be wired to Alpha pursuant to the terms specified in section
(c) below no later than the 15th day of each month in which the payment is due;

(c)
In the absence of farther written notice by Alpha or its assignee, payments
shall be made by wire transfer to the following:

 

--------------------------------------------------------------------------------

 
Beneficiary Name
ALPHA ENERGY
   
Beneficiary Address
 
   
Account No:
 
   
ABA Routing No:
 
   
Swift Number
 
   
Bank and Address:
 
 
 

 
2. Concurrent with the execution of this Agreement, Quixotic and Clear Skies
will execute and deliver to counsel for Alpha the Confession of Judgment
attached to this Agreement as Exhibit A. In the event of a default by Quixotic
and Clear Skies in the timely payment of any payment due in a accordance with
paragraph 1, if such default is not cured within three (3) business days after
notice of said default, then Alpha shall be entitled to file the Confession of
Judgment for entry. Notice of default to Quixotic and Clear Skies shall be
deemed given upon the e-wiling of such notice to Richard@quixotic-systems.com on
behalf of Quixotic and to rparker@clearskiesgroup.com on behalf of Clear Skies.
In such event, all payments previously received by Alpha from Quixotic and Clear
Skies pursuant to paragraph 1 of this Agreement shall be credited against the
principal amount of the Confession of Judgment in partial satisfaction thereof.
 
Alpha shall hold the Confession of Judgment in trust until Quixotic and Clear
Skies have paid the full settlement amount of $206,778.00, as described in
Paragraph 1, at which time Alpha shall destroy the judgment or, at Quixote's or
Clear Skies' option, surrender the judgment to them.
 
3. In consideration for the promises made herein, Quixotic and Clear Skies
hereby release and forever discharge Alpha, and Alpha hereby releases and
forever discharges Quixotic and Clear Skies, from any and all claims, liens,
indebtedness, demands, grievances, charges, causes of action, obligations,
damages or liabilities of any kind or nature whatsoever, arising out of or
relating to the claims raised in the Lawsuit. This waiver includes, but is not
limited to, claims for costs and attorneys' fees. This release does not extend
to any other potential claims or liabilities aside from those arising from the
invoices referenced in and attached to the Complaint filed in, the Lawsuit. This
release shall also include a release of all claims by Quixotic and Clear Skies
against Alpha.
 
4. Alpha will dismiss the Lawsuit with prejudice and without award of costs or
attorneys' fees to any party by directing its attorneys to file the appropriate
pleading in the United States District Court for the Western District of
Washington within seven (7) days after the execution of this Agreement and the
Confession of Judgment by all parties.
 
2

--------------------------------------------------------------------------------

 
5. Quixotic and Clear Skies represent and warrant that they have not sold,
assigned, transferred, or encumbered any interest in any claim or demand which
would otherwise fall within the scope of the claims released pursuant to
Paragraph 3 of this Agreement.

6. Nothing in this Agreement shall be construed as an admission of any liability
on the part of any of the Parties for any of the claims or counterclaims
asserted in the Lawsuit.

7. The Parties agree that they shall not disclose or characterize the terms or
conditions of this Agreement, including the amount of the settlement, to any
third party except as required by court order or other legal or government
process, including, if necessary, disclosure to the Internal Revenue Service to
establish the nature of the settlement, or to its tax accountants, tax.
advisors, or tax counsel. The Parties agree to notify one another of any legal
or government process sufficiently in advance of responding to such process so
that the other party may, if it deems necessary, take steps to oppose such
disclosure.

8. This Agreement, and any companion documents referenced or provided for
herein, contains the entire agreement between the Parties regarding the matters
set forth herein. No party has entered into this Agreement based on any
representation or consideration not stated in this Agreement.

9. No change, modification or amendment of this Agreement shall be valid or
binding, unless such change, modification or amendment is in writing and signed
by the person(s) against whom the same is sought to be enforced.

10. This Agreement has been generated pursuant to the equal negotiations and
advice of the Parties and their counsel. Accordingly, this Agreement should not
be construed more favorably or unfavorably as to any one party hereto.

11. This Agreement shall be governed by Washington law. Quixotic and Clear Skies
consent to and shall be subject to personal jurisdiction in the state of
Washington for any dispute that arises out of this Agreement. The parties
further agree that venue for any dispute or action that arises out of this
Agreement shall be in Whatcom County Superior Court.

12. In the event of any controversy, claim or dispute arising out of or relating
to, this Agreement or the method and manner of the performance thereof or the
breach thereof, should any party file suit in order to enforce the terms of this
Agreement, the prevailing party in any such suit shall be entitled to recover,
in addition to any other relief, a reasonable sum for attorneys' fees, costs and
litigation expenses. If no party wholly prevails, the party that substantially
prevails shall be awarded a reasonable sum for attorneys' fees, costs and
litigation expenses.

13. The Parties each acknowledge and agree that they have reviewed this
Agreement in its entirety, and every part thereof including all exhibits
thereto, and that they understand same, that they have had the opportunity to
consult with their independent counsel as to the Agreement to the extent they
desire, and that the terms and conditions hereof adequately and correctly
reflect their respective understandings of the subject matter hereof.

14. The undersigned each covenant and warrant that they have the right and
authority to enter into this Agreement and carry out its terms. The undersigned
also each covenant and. warrant that anyone signing on behalf of any corporation
herein is and has been specially authorized pursuant to appropriate action of
the shareholders or directors thereof, as appropriate, to execute this Agreement
as the act and deed of such corporation.
 
3

--------------------------------------------------------------------------------

 
15. If any provision, or portion thereof, of this Agreement is held by a Court
of competent jurisdiction to be invalid under any applicable statute or rule of
law, the Parties agree that such invalidity shall not affect the validity of the
remaining portions of this Agreement and further agree to substitute for the
invalid provision a valid provision which most closely approximates the intent
and economic effect of the invalid provisions.

16. This Agreement may be executed in duplicate originals or counterparts. Each
party shall receive copies of all executed signature pages so that all parties
have a copy of the fully-executed Agreement for their records. This Agreement
shall not be binding on any party until original counterparts of this Agreement
have been executed by all parties hereto.
 

ALPHA ENERGY
 
QUIXOTIC SYSTEMS, INC.
     
By:
/s/ Apha
Energy                                                                                           
 
By:
/s/ Richard
Klein                                                                                           
         
Printed Name:
______________________________________  
Printed Name:
Richard
Klein                                                                               
         
Title:
___________________________________________  
Title:
President                                                                                                      
         
Dated:
_________________________________________  
Dated:August 29, 2007                          
                                                            
         
CLEAR SKIES GROUP, INC.
     
By:
/s/ Ezra
Green                                                                                              
               
Printed Name:
Ezra
Green                                                                                  
               
Title:
COO                                                                                                         
               
Dated:
8/30/07                                                                                               
     

 

--------------------------------------------------------------------------------