SETTLEMENT AGREEMENT AND GENERAL MUTUAL RELEASE

This Settlement Agreement and General Mutual Release (“Agreement”) is made and entered into as of December ___, 2008, by and between Ethos Environmental, Inc. (“ETHOS”) and MKM Opportunity Master Fund, Limited, a Cayman Islands corporation (“MKM”).  ETHOS and MKM are sometimes referred to herein as “Party” or “Parties”.

WHEREAS, on or about August 1, 2008, Ethos issued a Convertible Promissory Note to MKM for the principal amount of $300,000 (the “Note”).

WHEREAS, on or about August 1, 2008, Ethos issued a Common Stock Purchase Warrant to MKM for 1,000,000 shares of Ethos common stock (the “August Warrant”).

WHEREAS, on or about October 1, 2008, Ethos issued a Common Stock Purchase Warrant to MKM for 500,000 shares of Ethos common stock (the “October Warrant”).

WHEREAS, The Note, August Warrant and October Warrant shall collectively be referred to as the “Prior Agreements.”

WHEREAS, the parties have resolved to terminate the Prior Agreements and enter into a new Common Stock Purchase Warrant and a new Convertible Promissory Note pursuant to terms and conditions herein.

NOW, THEREFORE, in consideration of the mutual covenants set forth in this Agreement, and for other good and valuable consideration, the receipt and adequacy of which is acknowledged, the Parties covenant and agree as follows:

A.   Consideration .  As full consideration for the Settlement and Mutual General Release hereunder:

1.   MKM shall provide additional financing to ETEV in the amount of: (i) $150,000 within three (3) business days from the date of the Agreement; and, (ii) $100,000 within thirty (30) days from the date of this Agreement; and,

2.   ETEV shall: (i) issue to MKM five hundred thousand (500,000) shares of ETEV common stock within ten (10) business days from the date of this Agreement; (ii) pay five thousand dollars ($5,000) to MKM within ten (10) business days from the date of this Agreement; (iii) shall issue to MKM a five year Common Stock Purchase Warrant for the purchase of one million five hundred thousand (1,500,000) shares at a purchase price of $.25 per share; and, (iv) ETEV shall issue a replacement Convertible Promissory Note (the “New Note) in the principal amount of $450,000 bearing simple interest at a rate of ten percent (10%) per annum,  with the face value of the New Note to be increased to $550,000 upon receipt of the additional financing amount as set forth in Section A(1)(ii) above, with the New Note maturing and becoming due and payable on September 30, 2009.

B.   Breach; Action for Damages .  Either Party may seek damages against the other resulting from a breach of this Agreement.

C.   Attorneys’ Fees .  In the event of any action or proceeding instituted between the Parties in connection with any breach of this Agreement, the prevailing Party shall be entitled to recover from the losing Party all of the prevailing Party’s litigation costs and expenses, including attorneys’ fees and non-statutory costs.

D.   Each Party to Bear Previous Fees and Costs .  Except as otherwise set forth herein, each Party hereto shall be responsible for payment of its own attorneys’ fees, costs, and all other expenses incurred at any time with respect to the drafting of this Agreement.

E.   No Waiver .  The waiver by any party of the performance of any covenant, condition, promise or breach shall not invalidate this Agreement, nor shall it waive that Party’s or any other Party’s right to future performance of such covenant, condition or promise.  The failure to pursue or the delay in pursuing any remedy or in insisting upon full performance any covenant, condition or promise shall not prevent a party from later pursuing remedies or insisting upon full performance for the same or similar defaults, breaches or failures.

F.   Notices .  All notices, approvals, requests, demands and other communications required or permitted to be given under this Agreement shall be in writing and shall either be delivered in writing personally or sent by overnight mail delivery or sent by certified first class mail, postage prepaid, deposited