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ETHOS ENVIRONMENTAL, INC.

SECURITIES PURCHASE AGREEMENT

This Securities Purchase Agreement (the “Agreement”) is made as of August 1,
2008, by and between Ethos Environmental, Inc., a Nevada corporation (the
“Company”) and MKM Opportunity Master Fund Limited, a Cayman Island corporation
(“Purchaser”).
 
RECITALS

Subject to the terms and conditions set forth in this Agreement and pursuant to
Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”)
and Rule 506 promulgated thereunder, the Company desires to issue and sell to
Purchaser, and Purchaser desires to purchase from the Company, securities of the
Company as more fully described in this Agreement.
 
AGREEMENT

In consideration of the mutual promises contained herein and other good and
valuable consideration, receipt of which is hereby acknowledged, the parties to
this Agreement agree as follows:
 
1.           Purchase and Sale of Securities.
 
(a)           Sale and Issuance of Securities. Subject to the terms and
conditions of this Agreement and the exhibits attached hereto, Purchaser agrees
to purchase at the Closing (as defined below), and upon payment of the Purchase
Price (as defined below) the Company agrees to sell and issue to Purchaser, the
following securities (the “Securities”):
 
(i)           a convertible promissory note in the amount of $300,000.00, in the
form attached to this Agreement as Exhibit A (the “Note”); and,
 
(ii)           a common stock purchase warrant for 1,000,000 shares of the
Company’s Common Stock, in the form attached to this Agreement as  Exhibit B
(the “Warrant”).
 
(b)           Payment of Purchase Price.  Payment of the Purchase Price must be
transmitted via bank wire to the Company as follows to:

Bank of America
7680 Girard Avenue
La Jolla, CA 92037
Tel. (858) 452-8400

Routing Number: 0260-0959-3

SWIFT NUMBER:  BOFAUS6S

ACCOUNT INFORMATION:

SteadyLaw Group, LLP
501 W. Broadway, Suite 800
San Diego, CA 92101
Tel. (619) 399-3102
Fax. (619) 330-1888

ATTORNEY CLIENT TRUST ACCOUNT
Account No. 16648-41027

 
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 (c)           Closing; Delivery.
 
(i)           The purchase and sale of the Securities shall take place at the
offices of the Company at such time and place as the Company and the Purchaser
mutually agree upon in writing (which time and place are designated as the
“Closing”).
 
(ii)           At the Closing, the Company shall deliver to the Purchaser the
Note and Warrant to be purchased by such Purchaser against (1) payment of the
Purchase Price therefor by wire transfer to the Company set forth above, and (2)
delivery of counterpart signature pages to this Agreement.
 
2.           [This Section 2 is intentionally left blank]
 
3.           Representations and Warranties of the Company.  The Company hereby
represents and warrants to Purchaser that:
 
(a)           Organization, Good Standing and Qualification.  The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Nevada and has all requisite corporate power and authority to
carry on its business as now conducted and as proposed to be conducted. The
Company is duly qualified to transact business and is in good standing in each
jurisdiction in which the failure so to qualify would have a material adverse
effect on its business or properties.
 
(b)           Authorization.  All corporate action on the part of the Company,
its officers and directors necessary for the authorization, execution and
delivery of this Agreement and the authorization, sale, issuance and delivery of
the Securities, the shares of the Company’s capital stock issuable on conversion
and/or exercise thereof, and the performance of all obligations of the Company
hereunder and thereunder has been taken or will be taken prior to the
Closing. The Agreement and the Note and Warrant, when executed and delivered by
the Company, shall constitute valid and legally binding obligations of the
Company, enforceable against the Company in accordance with their respective
terms except as limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance, and other laws of general application
affecting enforcement of creditors’ rights generally, and as limited by laws
relating to the availability of specific performance, injunctive relief, or
other equitable remedies.
 
(c)           Capitalization.  The authorized capital of the Company consists
of:
 
(i)           100,000,000 shares of Common Stock, $0.0001 par value of which
(excluding the Securities sold hereunder or pursuant to the Stock Purchase
Agreement of even date herewith by and between the Company and the Purchaser
(hereinafter, the “Stock Purchase Agreement”)) 39,520,174 shares of common stock
are issued and outstanding and no shares of preferred stock are issued and
outstanding. All of the outstanding shares of Common Stock have been duly
authorized, are fully paid and nonassessable and were issued in compliance with
all applicable federal and state securities laws.
 
(ii) The shares of common stock to be issued by the Company upon conversion of
the Notes, shall be issued from the shares currently being reserved by the
Company for delivery to the Company’s executives officers as earn out shares.
 
(iii) All shares of the Company’s common stock issuable upon the exercise of the
Warrant or conversion of the Note shall, upon issuance, be duly duly and validly
authorized and issued, fully paid and nonassessable.
 
(d) Enforceability.  The execution and delivery by Company of this Agreement,
the issuance of the Securities and the shares of common stock issuable upon the
exercise and/or conversion of the Securities, will result in legally binding
obligations that are enforceable against the Company in accordance with the
respective terms and provisions of the Agreement, the Note and the Warrant.
 
 
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(e) Additional Representations and Warranties. The Company hereby adopts and
incorporates by reference the representations and warranties of the Company set
forth in Article III of the Stock Purchase Agreement as though such
representations and warranties are expressly set forth at full herein.
 
4.           Representations and Warranties of the Purchaser.  Purchaser hereby
represents and warrants to the Company that:
 
(a)           Authorization. Purchaser has full power and authority to enter
into this Agreement.  This Agreement when executed and delivered by the
Purchaser, will constitute valid and legally binding obligations of the
Purchaser, enforceable in accordance with its terms, except as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance, and any other laws of general application affecting enforcement of
creditors’ rights generally, and as limited by laws relating to the availability
of a specific performance, injunctive relief, or other equitable remedies.
 
(b)           Purchase Entirely for Own Account.  This Agreement is made with
the Purchaser in reliance upon the Purchaser’s representation to the Company,
which by the Purchaser’s execution of this Agreement, the Purchaser hereby
confirms, that the Securities to be acquired by the Purchaser will be acquired
for investment for the Purchaser’s own account, not as a nominee or agent, and
not with a view to the resale or distribution of any part thereof, and that the
Purchaser has no present intention of selling, granting any participation in, or
otherwise distributing the same.  By executing this Agreement, the Purchaser
further represents that the Purchaser does not presently have any contract,
undertaking, agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect to the
Securities. The Purchaser has not been formed for the specific purpose of
acquiring any of the Securities.
 
(c)           Knowledge. Purchaser acknowledges that he has had access to the
Company’s filings with the Securities and Exchange Commission and has reviewed
in particular the risk factors for investors contained in those filings.
Purchaser further acknowledges that the Company has continued to sustain
operating losses since the last financial statements filed. The Purchaser is
aware of the Company’s business affairs and financial condition and has acquired
sufficient information about the Company to reach an informed and knowledgeable
decision to acquire the Securities.
 
(d)           Restricted Securities.  The Purchaser understands that the
Securities (and the shares of common stock issuable upon the exercise and/or
conversion thereof) have not been registered under the Securities Act. Unless
registered, the Purchaser may only sell or transfer the Securities (and the
shares of common stock issuable upon the exercise and/or conversion thereof)
pursuant to a specific exemption from the registration provisions of the
Securities Act.  The Purchaser understands that the Securities are “restricted
securities” under applicable U.S. federal and state securities laws and that,
pursuant to these laws, the Purchaser must hold the Securities indefinitely
unless they are registered with the Securities and Exchange Commission and
qualified by state authorities, or an exemption from such registration and
qualification requirements is available.  The Purchaser further acknowledges
that if an exemption from registration or qualification is available, it may be
conditioned on various requirements including, but not limited to, the time and
manner of sale, the holding period for the Securities, and on requirements
relating to the Company which are outside of the Purchaser’s control, and which
the Company is under no obligation and may not be able to satisfy.
 
(e)           [This Section 4(e) is intentionally left blank]
 
(f)           Legends.  The Purchaser understands that the Securities, and any
shares of common stock issuable upon the exercise and/or conversion thereof may
bear one or all of the following legends:
 
(i)  
A legend substantially similar to the following form:

 
 “THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A
VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF.  NO SUCH SALE
OR DISTRIBUTION MAY BE AFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT
RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM REASONABLY SATISFACTORY TO
THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF
1933.”
 
 
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(ii)           Any legend required by the Blue Sky laws of any state to the
extent such laws are applicable to the shares represented by the certificate so
legended.
 
(g)           Accredited Investor. The Purchaser is an accredited investor as
defined in Rule 501(a) of Regulation D promulgated under the Securities Act.
 
5.           Conditions of the Purchasers’ Obligations at Closing.  The
obligations of Purchaser to the Company under this Agreement are subject to the
fulfillment, on or before the Closing, of each of the following conditions,
unless otherwise waived:
 
(a)             Representations and Warranties.  The representations and
warranties of the Company contained and incorporated by reference in Section 3
shall be true on and as of the Closing with the same effect as though such
representations and warranties had been made on and as of the date of the
Closing.
 
(b)             Qualifications.  All authorizations, approvals or permits, if
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Securities pursuant to this Agreement shall be obtained and effective as of
the Closing.
 
6.           Conditions of the Company’s Obligations at Closing.  The
obligations of the Company to Purchaser under this Agreement are subject to the
fulfillment, on or before the Closing, of each of the following conditions,
unless otherwise waived:
 
(a)           Representations and Warranties. The representations and warranties
of Purchaser contained in Section 4 shall be true on and as of the Closing with
the same effect as though such representations and warranties had been made on
and as of the Closing.
 
(b)           Qualifications.  All authorizations, approvals or permits, if any,
of any governmental authority or regulatory body of the United States or of any
state that are required in connection with the lawful issuance and sale of the
Securities pursuant to this Agreement shall be obtained and effective as of the
Closing.
 
7.           Miscellaneous.
 
(a)           Successors and Assigns.  The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties.  Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations,
or liabilities under or by reason of this Agreement, except as expressly
provided in this Agreement.
 
(b)           Governing Law.  This Agreement shall be governed by and construed
in accordance with the laws of the State of New York, without regard to
conflicts of laws principles that would result in the application of the
substantive laws of another jurisdiction. Any action brought by any party
against the others concerning the transactions contemplated by this Agreement
shall be brought only in the state or federal courts located in the County of
New York, State of New York. All parties agree to submit to the jurisdiction of
such courts. The prevailing party or parties shall be entitled to recover from
the losing party or parties its reasonable attorney’s fees and costs. In the
event that any provision of this Agreement is invalid or unenforceable under any
applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law.  Any such provision which
may prove invalid or unenforceable under any law shall not affect the validity
or enforceability of any other provision of this Agreement.  Nothing contained
herein shall be deemed or operate to preclude either party hereto from bringing
suit or taking other legal action against the other in any other jurisdiction to
enforce a judgment of any court located in New York County, City and State of
New York, in favor of the prevailing party.
 
 
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(c)           Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
 
(d)           Titles and Subtitles.  The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
 
(e) Notices.   All notices, demands, requests, consents, approvals, and other
communications required or permitted hereunder shall be in writing and, unless
otherwise specified herein, shall be (i) personally served, (ii) deposited in
the mail, registered or certified, return receipt requested, postage prepaid,
(iii) delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram, or facsimile, addressed as set forth
below or to such other address as such party shall have specified most recently
by written notice.  Any notice or other communication required or permitted to
be given hereunder shall be deemed effective (a) upon hand delivery or delivery
by facsimile, with accurate confirmation generated by the transmitting facsimile
machine, at the address or number designated below (if delivered on a business
day during normal business hours where such notice is to be received), or the
first business day following such delivery (if delivered other than on a
business day during normal business hours where such notice is to be received)
or (b) on the second business day following the date of mailing by express
courier service, fully prepaid, addressed to such address, or upon actual
receipt of such mailing, whichever shall first occur.  The addresses for such
communications shall be: (i) if to the Company: 6800 Gateway Park Drive, San
Diego, Ca 92154, Fax: 619.575.9300, with a copy to Luis Carrillo, Esq.,
SteadyLaw Group, LLP, 501 W. Broadway Suite 800, San Diego, CA 92101 (ii) if to
the Purchaser:  MKM Opportunity Master Fund, Limited, 644 Broadway, Fourth
Floor, New York, New York 10012, facsimile , with a copy to Charles J. Hecht,
Esq., Hecht & Associates, P.C., 275 Madison Avenue, 28th Floor, New York, New
York 10016, facsimile: (212) 490-3263, e-mail: .

(f)           Amendments and Waivers.  No provision of this Agreement or the
Note or Warrant may be waived or amended except in a written instrument signed,
in the case of an amendment, by the Company and the Purchaser, or in the case of
a waiver, by the party against whom enforcement of any such waiver is
sought.  No waiver of any provision shall be deemed to be a continuing waiver in
the future or a waiver of any other provision, condition or requirement hereof,
nor shall any delay or omission of either party to exercise any right hereunder
in any manner impair the exercise of any such right.
 
(g)           Severability.  If one or more provisions of this Agreement are
held to be unenforceable under applicable law, the parties agree to renegotiate
such provision in good faith, in order to maintain the economic position enjoyed
by each party as close as possible to that under the provision rendered
unenforceable.  In the event that the parties cannot reach a mutually agreeable
and enforceable replacement for such provision, then (i) such provision shall be
excluded from this Agreement, (ii) the balance of the Agreement shall be
interpreted as if such provision were so excluded and (iii) the balance of the
Agreement shall be enforceable in accordance with its terms.
 
(h)           Entire Agreement.  This Agreement, the documents referred to
herein, the provisions incorporated herein by reference and the documents
annexed as exhibits hereto constitute the entire agreement between the parties
hereto pertaining to the subject matter hereof, and any and all other written or
oral agreements existing between the parties hereto are expressly canceled.
 
(i)           Corporate Securities Law.  THE SALE OF THE SECURITIES WHICH ARE
THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF
CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF THE SECURITIES OR
THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO THE
QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM THE
QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA CORPORATIONS
CODE.  THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED
UPON THE QUALIFICATION BEING OBTAINED UNLESS THE SALE IS SO EXEMPT.
 
IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
 
 
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COMPANY:                                                                                  PURCHASER:

 
ETHOS ENVIRONMENTAL, INC.
MKM OPPORTUNITY MASTER FUND, LIMITED

 

By:    By:       Enrique de Vilmorin, President    Its              

 
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