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SETTLEMENT AGREEMENT AND MUTUAL GENERAL RELEASE
This Settlement Agreement and Mutual General Release (hereinafter
referred to as the “Settlement Agreement”), is
effective as of January ___, 2009, and is made by and between Ethos
Environmental, Inc., a Nevada corporation (the
“Company”) and Dick F. Chase, an individual
(“Chase”). Ethos and Chase shall hereinafter
collectively be referred to as “the
Parties.” This Agreement is made in consideration
of the following facts and recitals:
BACKGROUND INFORMATION
A. Whereas,
on March 31, 2008, the Company issued a Promissory Note to Chase in
the principal amount of $300,000 and bearing interest at 12% per
annum, payable monthly in arrears (the “2008 Note”).
The 2008 Note is due in full on March 31, 2009.
B. Whereas,
the Company is currently offering $1,000,000 of 12% Convertible
Debentures, pursuant to a private placement (the “Private
Placement”). The Private Placement is comprised of 20 Units
(each a “Unit”) offered at $50,000 per Unit, each Units
includes the 12% Convertible Debenture, a Common Stock Purchase
Warrant for the purchase of 100,000 shares of the Company’s
Common Stock at $0.25 per share and 33,000 shares of the
Company’s Common Stock are included as incentive shares for
the purchase of each Unit.
C. Whereas,
the Parties wish to: (i) amend the 2008 Note and convert $50,000 of
the principal amount due under the 2008 Note into one Unit under
the Private Placement; (ii) the Company and Chase shall enter into
those documents evidencing the Private Placement, including a
Securities Purchase Agreement, Convertible Debenture,
Common Stock Purchase Warrant and Security Agreement; (iii) the
Company shall issue a new note in the principal amount of $250,000
bearing interest at 12% per annum, due in full on or before
December 31, 2009 (the “New Note”); and, the New Note
shall provide that Chase shall have the right to convert any
amounts due under the New Note into additional Units based on each
new Unit purchased by entities or individuals introduced to or
referred by Chase to the Company.
D. Whereas,
as a result of negotiations between the Parties the foregoing
resolution is deemed by each Party to be fair and equitable, and by
this Settlement Agreement wish to compromise, resolve, waive and
release any and all claims, known or unknown, which exist or may
exist between them today, except for any claims that are intended
to survive this Settlement Agreement as set forth herein, on the
terms set forth herein.
AGREEMENT
Now, wherefore, for good and valuable consideration, the Parties
hereto agree as follows:
1. Mutual
General Release.
1.1 Release
By the Company. Except as to such rights or claims as
may be created by this Settlement Agreement or any agreement
executed by the Parties pursuant to this Settlement Agreement, and
subject to and conditioned upon the performance and completion of
the undertakings by Chase as set forth in Section 2, below, the
Company hereby discharges and releases Chase, and his assigns,
agents, representatives, attorneys, predecessors and successors in
interest, from any and all claims, demands, obligations, or causes
of action heretofore or hereafter arising out of, connected with,
or incidental to Chase’s relationship with the Company.
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1.2 Release
by Chase. Except as to such rights or claims as may be
created by this Settlement Agreement or any agreement executed by
the Parties pursuant to this Settlement Agreement, and subject to
and conditioned upon the performance and completion of the
undertakings by Company as set forth in Section 2, below, Chase
hereby discharges and releases the Company, and the Company’s
current and former officers, directors, employees, shareholders,
note holders, attorneys, assigns, agents, representatives,
predecessors and successors in interest, from any and all claims,
demands, obligations, or causes of action heretofore or hereafter
arising out of, connected with, or incidental to Chase’s
relationship with the Company prior to the effective date hereof.
1.3 Release
of Unknown Claims. The Parties acknowledge and
agree that this release applies to all claims for any injuries,
damages, losses or claims, whether known or unknown, foreseen or
unforeseen, patent or latent, that the Parties hereto now have or
may acquire, and each Party hereto hereby waives application of
California Civil Code Section 1542, and any and all provisions,
rights and benefits conferred by any law of any state or territory
of te United States, or principle of common law, which is similar,
comparable or equivalent to California Civil Code Section 1542.
(a) Each Party hereto certifies that such party is
aware of the provisions of California Civil Code Section 1542 which
states:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE
MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.
(b) The Parties understand and acknowledge the significance
and consequences of the waiver of California Civil Code Section
1542; and that this release and waiver of California Civil Code
1542 is a significant material part of the consideration of
entering into this Settlement Agreement. The Parties expressly
acknowledge that this Settlement Agreement except for ongoing
obligations set forth in the attached agreements, is intended to
include a release, without limitation, of all claims, and
acknowledges that the execution of this Settlement Agreement is
entered into for the purpose of extinguishing any such claim or
claims.
(c) The Parties further understand and acknowledge that if any
party hereto, or such Parties respective officers, directors,
employees, shareholders, attorneys, assigns, agents,
representatives, predecessors and successors in interest,
eventually discover additional damages or claims arising out of the
facts and claims released herein, that Party will not be able to
make any claim for any such losses or
damages. Furthermore, the Parties acknowledge that they
intend these consequences even as to claims for losses or damages
that may exist as of the date of this Settlement Agreement but
which the Parties hereto do not presently know to exist, and which
if known, would have materially affected the Party’s decision
to execute this Settlement Agreement.
1.4 The
Parties understand and agree the word “claims” to
include all actions, claims, and grievances, whether actual or
potential, known or unknown, and specifically but not exclusively
all claims arising and relating directly or indirectly out of any
of the facts, acts, omissions, events, damages and/or injuries
arising from or relating in any way to any litigation which is
pending between the Parties, that have arisen, or may arise in the
future, or from or relating directly or indirectly from any and all
events or relationships between the Parties. All such
claims (including related fines, penalties, interest,
attorneys’ fees and costs, rights of injunctive relief) are
forever barred by this Agreement and without regard to whether
those claims are based on any alleged breach of a duty arising in a
statute, contract, or tort; any alleged unlawful act, including,
without limitation, fraud and deceit, negligent misrepresentation,
conversion of labor, breach of partnership, intentional
interference with business contract, breach of contract; or any
other claim or cause of action; and regardless of the forum in
which it might be brought. 2
2. Agreements
and Undertakings of the Parties. Concurrently with the execution of
this Settlement Agreement, and as a conditioned precedent to the
settlement of the Parties contemplated by this Settlement
Agreement, the Parties shall enter into the following agreements
and undertakings:
2.1 Execution
of Private Placement Documents. The Company and Chase
shall enter into those certain Agreements comprising the
Company’s Private Placement, including a Securities Purchase
Agreement attached hereto as Exhibit 2.1.1, the Convertible
Promissory Note attached hereto as Exhibit 2.1.2, the Common Stock
Purchase Warrant attached hereto as Exhibit 2.1.3, and the Security
Agreement attached hereto as Exhibit 2.1.4.
2.2 Execution
of Promissory Note. The Company and Ch
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