SETTLEMENT AGREEMENT AND GENERAL MUTUAL RELEASE
GENERAL
MUTUAL RELEASE
This
Settlement Agreement and General Mutual Release (“Agreement”) is made and
entered into as of October 16, 2008, by and between Ethos Environmental, Inc., a
Nevada corporation, (“ETHOS”) and GreenBridge Capital Partners, IV, LLC, a
Delaware limited liability company, (“GBCP”). ETHOS and GBCP are
sometimes referred to herein as “Party” or “Parties”.
RECITALS
The
Parties execute this Agreement with reference to and in contemplation of the
following facts:
1. On
August 7, 2007, Ethos entered into a Commercial Property Purchase Agreement and
Joint Escrow Instructions (the “Property Sale Agreement”) with GBCP. The
Property Sale Agreement provided for the sale of the Ethos’ facility (the
“Premises”), located at 0000 Xxxxxxx Xxxx Xxxxx xx Xxx Xxxxx, Xxxxxxxxxx, to
GBCP for a price of $7,875,000 in cash (the “Purchase Price”).
2. As
part of the Property Sale Agreement, and in consideration of the Purchase Price,
Ethos also entered into a Subscription Agreement (the “Subscription Agreement”)
with GBCP for the sale of 2,500,000 shares of its common stock (the “Shares”) in
a private placement. The Purchase Price was allocated as follows: (1) $5,875,000
to the purchase of the Premises and (2) $2,000,000 to the purchase of the
Shares.
4. Pursuant
to a Registration Rights Agreement (the “Registration Rights Agreement”) between
Ethos and GBCP executed simultaneously to the Subscription Agreement, Ethos
agreed to register the Shares for resale under the Securities Act.
5. The
Registration Rights Agreement further provided that in the event that Ethos did
not obtain a Notice of Effectiveness from the Securities and Exchange Commission
("SEC") registering the Shares for resale on or before February 15, 2008 (the
"Filing Deadline"), GBCP would be entitled to a liquidated damages payment,
subject to the terms and conditions of the Registration Rights Agreement, for
each 30-day period after the Filing Deadline during which such registration
statement has not been declared effective by the SEC.
6. As
of October 6, 2008, GBCP has received 2,265,428 shares of Ethos common stock per
the terms of the Registration Rights Agreement, with such shares representing
liquidated damages for the months of February, March, April and May
2008.
AGREEMENT
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. Payment. ETHOS
shall pay to GBCP 10,200,000 shares of Ethos common stock simultaneously to the
execution of this Agreement.
1
B. 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.
C. 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 underlying action, subsequent discussions and negotiations, and the
drafting of this Agreement.
D. 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.
E. 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 in the United States
mail, and properly addressed to the Party at its address below, or at any other
address that such Party may designate by written notice to the other Parties,
with copies to the counsel at the addresses shown below, or to such other
counsel as the Parties may designate by written notice to the other
Parties. Notice shall be effective immediately upon personal
delivery, after five (5) calendar days if made by regular mail or after two (2)
business days if given by overnight mail or by facsimile.
|
If
to ETHOS:
|
Attn:
Xxxxxx Xxxxx
0000
Xxxxxxx Xxxx Xxxxx
Xxx
Xxxxx, XX 00000
Fax:
(000) 000-0000
|
|
If
to GBCP:
|
GreenBridge
Capital Partners, IV, LLC
Attn:
Xxxxx X. Xxxxxxxxxxx
00000
Xxx Xxxxxxx
Xxxxxx
Xxxxx, XX 00000
Fax:
(000) 000-0000
|
F. Mutual
Release. GBCP, on the one hand, and ETHOS, on the other hand,
for themselves and their respective predecessors, successors, affiliates,
officers, directors, principals, partners, employees, executors, beneficiaries,
representatives, agents, assigns, attorneys, and all others claiming by or
through them hereby release and forever discharge each other and their
respective predecessors, successors, affiliated entities, subsidiaries, parent
companies, affiliates, officers, directors, principals, partners, employees,
executors, beneficiaries, representatives, agents, assigns, and attorneys from
any and all claims, causes of action, suits, proceedings, debts, contracts,
controversies, claims and demands of any kind, nature or description, that were
alleged, or could have been alleged, with respect to the Registration Rights
Agreement and all related documents, whether based upon a tort, contract or
other theory of recovery, and whether for compensatory damages, punitive damages
or other relief in law, equity or otherwise.
2
G. Release
of Unknown Claims Arising from Actions. The Parties
acknowledge that they are familiar with Section 1542 of the California Civil
Code, which provides as follows:
A GENERAL
RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO
EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM
MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.
The
Parties expressly waive and relinquish any and all rights and benefits which
they may have under, or which may be conferred upon them by the provisions of
Section 1542 of the California Civil Code, as well as under any other similar
state or federal statute or common law principle, with respect to all claims
alleged, or that could have been alleged, with respect to the Registration
Rights Agreement and all related documents. The Parties acknowledge
that such waiver shall not prevent the Parties from seeking damages against the
other resulting from a breach of this Agreement.
H. Entire
Agreement; No Oral Modification. This Agreement constitutes the complete
and entire written agreement of compromise, settlement and release between the
Parties and constitutes the complete expression of the terms of the settlement.
All prior and contemporaneous agreements, representations, and negotiations are
superseded and merged herein. The terms of this Agreement can only be amended or
modified by a writing, signed by duly authorized representatives of all Parties
hereto, expressly stating that such modification or amendment is
intended.
I. Future
Actions. The Parties hereto agree that, for their respective
selves, heirs, executors and assigns, they will abide by this Agreement, which
terms are meant to be contractual, and further agree that they will do such acts
and prepare, execute and deliver such documents as may reasonably be required in
order to carry out the purposes and intents of this Agreement.
J. Authority
to Execute. Each Party executing this Agreement represents
that it is authorized to execute this Agreement. Each person executing this
Agreement on behalf of an entity, other than an individual executing this
Agreement on his or her own behalf, represents that he or she is authorized to
execute this Agreement on behalf of said entity.
K. Warranty
Against Assignment. The Parties represent and warrant to each
other that they have not and will not encumber, assign or transfer or purport to
encumber, assign or transfer, in whole or in part, to any person, firm or
corporation whatsoever, any claim, debt, liability, demand, obligation, cost,
expense, damage, action or cause of action herein released or
settled.
L. Binding
on Successors. This Agreement shall inure to the benefit of
and shall be binding upon the Parties hereto and their respective heirs,
executors, successors, and assigns.
M. Construction
of Agreement. The Parties and their counsel have reviewed and
negotiated this Agreement, and the normal rule of construction to the effect
that any ambiguities in an agreement are to be resolved against the drafting
party shall not be employed in the interpretation of this
Agreement.
0
X. Xxxxxxxx. Xxxxxxxx
are informational only and shall not be used to interpret this
Agreement.
O. Voluntary
Agreement. The Parties have read this Agreement, have had the
benefit of counsel and freely and voluntarily enter into this
Agreement.
P. Tax
Consequences. The Parties to this Agreement acknowledge and
understand that there may be certain tax consequences which arise as a result of
the execution and performance of this Agreement and, by executing this
Agreement, each Party confirms that no other Party to this Agreement or any
counsel has made any representations regarding such consequences.
X. Xxxxxxxxx. If
a provision of this Agreement is held to be illegal or invalid, such provision
shall be (a) rewritten by the Court to be legal and valid so long as the
rewritten provision remains consistent with the intent of the Parties expressed
herein or (b) deemed to be severed and deleted. Neither such revision
nor such severance and deletion shall affect the validity of the remaining
provisions.
R. Counterparts. This
Agreement may be executed in counterparts and, if so executed, each counterpart
shall have the full force and effect of an original. Further, a telecopied
signature page by any signatory shall constitute an original for all
purposes.
S. Governing
Law. This Agreement shall be construed and enforced according
to the laws of the State of California.
IN
WITNESS WHEREOF, the Parties have entered into this Agreement made and effective
as of the date first hereinabove written.
|
Dated:
October 16, 2008
|
By:
|
||
| Name: Xxxxxx Xxxxx | |||
| Title: Chief Financial Officer | |||
|
GreenBridge Capital Partners,
IV, LLC
|
|||
|
Dated:
October 16, 2008
|
By:
|
/s/ | |
| Name: Xxxxx X. Xxxxxxxxxxx | |||
| Title: Managing Member | |||
4
