**Exhibit 10.23**

 

**CONFIDENTIAL SETTLEMENTAGREEMENT**

**AND GENERAL MUTUALRELEASE**

 

THIS CONFIDENTIAL AGREEMENT AND GENERAL MUTUAL RELEASE [sometimes, ‘thisAgreement’] is entered into between ETELOS, INC., a Delaware corporation[‘Etelos’] and Jeffrey L. Garon and the Jeffrey and Alesia Garon Family TrustDated August 22, 2002, Jeffrey L. Garon and Alesia Garon, Trustees[collectively, ‘Garon’][As used in this Agreement, Etelos and Garon are each a‘Party’ or, collectively, the ‘Parties’].

 

The “Effective Date” of this Agreement is eight days after its fullexecution.

 

RECITALS

 

A.                                   Etelos and Jeffrey L. Garon entered into an EmploymentAgreement dated August 11, 2007, pursuant to which Etelos and Garonentered into a Restricted Stock Purchase Agreement dated February 27, 2008[the ‘Employment Agreements’].

 

B.                                     The employment of Jeffrey L. Garon pursuant to theEmployment Agreement ended on September 18, 2008.

 

C.                                     The Parties also have been parties to the matter of Etelos, Inc.v. Jeffrey Garon before the American Arbitration Association [CaseNo. 74 166 00535 09 LMT] in which they have asserted various claims andcounterclaims relating to the Employment Agreements (the ‘Arbitration’).

 

D.                                    The Parties wish to compromise, settle and resolve alldisputes and claims between them arising out of the Employment Agreements andthe Arbitration without any admission of liability or wrongdoing and in orderto avoid the time and expense of continuing to litigate these matters.  THEREFORE, it is agreed as follows:

 

AGREEMENT

 

1.                                       As of the Effective Date of this Agreement, theEmployment Agreements are terminated and shall have no further force andeffect.

 

2.                                       All claims and counterclaims asserted by the Partiesin the matter of Etelos, Inc. v. Jeffrey Garon are dismissed withprejudice concurrently with the Effective Date of this Agreement and theParties will immediately take all steps reasonably necessary to notify theAmerican Arbitration Association that this matter has been settled and shouldbe closed and dismissed with prejudice, including all claims, counterclaimsand/or causes of action that

 

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were alleged therein. In accordance with the arbitration clause in theEmployment Agreement dated August 11, 2007, the Parties will share theAmerican Arbitration Association costs equally between them.

 

3.                                       Garon, separately and collectively, represents andwarrants that [a] it owns 2,356,655 shares of restricted common stock ofEtelos, Inc. [ ‘the Shares’] [b] it has not pledged, sold, delivered,transferred, assigned, or hypothecated any interest in the Shares, [c] otherthan the claims asserted by Etelos, it has good and marketable title to theShares and is conveying the Shares to Etelos free and clear of any liens andencumbrances, [d] the Shares constitute 100% of the Etelos common stock ownedby Garon, except for 11,580 other shares held by Garon in street name, and [e]except as stated herein, Garon does not own any further interest in Etelos, norany right to acquire any further interest in Etelos whether by means of option,warrant, subscription, or other interest. Nothing in the Agreement shall restrict the right of Garon to buy orsell shares of Etelos in the open market after the Effective Date.

 

4.                                       Garon and Etelos each represent and warrant that he/ithave not filed any claims against the other Party in any court, alternativedispute resolution provider, state or federal agency, or in any other forumother than in the matter of Etelos, Inc. v. Jeffrey Garon beforethe American Arbitration Association. Garon, separately and collectively, further represents and warrants thatapart from the Arbitration no claims against any of Etelos’ present or pastdirectors, officers, or shareholders, employees, consultants, agents, attorneysor affiliates, have been filed by Garon or on behalf of Garon before any court,alternative dispute resolution provider, state or federal agency.

 

5.                                       Etelos will repurchase from Garon 2,356,655 shares ofEtelos common stock for the price of $0.0741 per share or $174,688.99 in theaggregate [the ‘Stock Repurchase Price’].

 

6.                                       The Stock Repurchase Price will be paid in three equalamounts of $58,229.66 [each a ‘Payment’] on December 15, 2009,January 15, 2010, and February 16, 2010 [a ‘Payment Date’]. Each ofthe three Payments shall be by cashier’s check made payable to Jeffrey L. Garonand delivered to the Escrow Agent identified in Paragraph 8 by that Payment’scorresponding Payment Date. A Payment may be made prior to a Payment Date andthe Escrow Agent shall be instructed to perform its obligations, in accordancewith Paragraph 8 below, immediately upon receipt of any Payment. In the eventthat Etelos fails to make a Payment on the Payment Date, Garon may, inaccordance with Paragraph 8, below, issue a written notice of default to

 

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Etelos in accordance with the notice provisions in Paragraph 15, below, andproceed in accordance with Paragraph 8.

 

7.                                       Within 2 business days of the Effective Date of this Agreement,[a] Garon shall deliver certificate[s] for 2,356,655 shares to BNY MellonShareholder Services, Stock Transfer Agent for Etelos, and [b] request that theshares be reissued, without restrictive legend, in three new certificates [twofor 789,412 shares each, and one for 789,411 shares, labeled for purposes ofthis Agreement only as Certificates 1, 2 and 3, or a ‘Certificate’], and [c]direct that the Certificates be delivered to the Escrow Agent identified inParagraph 8 below.  Concurrently, Etelosshall instruct BNY Mellon [d] to remove all restrictive legends from theseshares and [e] to deliver to the Escrow Agent identified in Paragraph 8 below.

 

8.                                       Within five business days of the execution of thisAgreement, the Parties shall mutually agree upon a third party Escrow Agent,who shall be instructed: [a] to take custody of the three Certificates, [b] totake custody from Garon of fully executed and medallion guaranteed assignmentsseparate from certificate for each of the Certificates to transfer all theshares represented by that Certificate to Etelos, [c] to receive the Payments,[d] to forward the Payments to Garon immediately upon receipt, and [e] for eachsuch Payment, to deliver to Etelos a Certificate, together with Garon’s fullyexecuted and medallion guaranteed assignment separate from certificate for thatCertificate, immediately upon receipt of a Payment. In the event that Etelosfails to make a Payment on the Payment Dates in Paragraph 6, Garon may issue awritten notice of default to Etelos in accordance with the notice provisions inParagraph 15.  Etelos shall have fourdays following receipt of the notice of default to deliver the Payment to theEscrow Agent and cure the default.  IfEtelos fails to cure the default, then Garon may instruct the Escrow Agent todeliver to him the Certificate for the shares of stock to have been purchasedby that Payment.  The Parties shallsubsequently enter into an Escrow Agent Agreement, which will be attached asExhibit A to this Agreement and incorporated herein by reference.  Etelos shall pay costs of the Escrow.  Any breach of the Escrow Agent Agreement bythe Escrow Agent shall not be deemed a breach of this Agreement and shall haveno effect on the enforceability of this Agreement.

 

9.                                       In connection with the wage and expense claimsasserted by Jeffrey L. Garon, Etelos agrees to pay to Jeffrey L. Garon theamount of $28,600.00, in full settlement of all such claims, which amount shallbe paid within two (2) business days of the Effective Date of thisAgreement.

 

10.                                 In connection with the execution of this Agreement,Etelos will file a current report on Form 8K with the SEC.  With respect to the disputes

 

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between the Parties and this Confidential Settlement Agreement and MutualGeneral Release, the report will disclose the following: “On November XX,2009, Etelos entered into a settlement agreement with its former CEO Jeffrey L.Garon.  The settlement agreement resolvedthe arbitration proceeding that was filed on June 22, 2009, and providedfor the dismissal and release of all claims between the parties and theiraffiliates.  In connection with thesettlement agreement, Etelos agreed to repurchase 2,356,655 shares of commonstock previously issued to Garon at the original purchase price ofapproximately $175,000.  Etelos hasagreed to pay for the shares of common stock in three payments of approximately$58,000 each, on December 15, 2009, January 15, 2010, andFebruary 16, 2010. Each payment obligation is secured by an interest inthe shares being purchased and the shares can be released to Mr. Garon ifa payment is not made when due in accordance with the terms of the settlementagreement.”

 

11.                                 Mutual General Releases

 

(a)                                  In consideration of the payments to be made and thebenefits to be received by Garon pursuant to the Agreement, which Garon,individually and collectively, acknowledges are in addition to payments andbenefits which Garon would be entitled to receive absent the Agreement, Garon, forhimself/itself and his/its dependents, successors, successors in interests,assigns, heirs, trustees, executors and administrators (and his and their legalrepresentatives of every kind), hereby forever releases, dismisses, remises anddischarges Etelos, its predecessors, parents, subsidiaries, divisions, relatedor affiliated companies and other affiliates, officers, directors,stockholders, members, employees, consultants, heirs, successors, assigns,representatives, agents and counsel, including, without limiting the foregoing,in their individual and corporate capacities, Desmond D. Kolke, Daniel J. A.Kolke, Ronald A. Rudy, Andrew I. Liu, Robert Thordarson, and Kennedy A. Brooks(collectively, the “Releasees”) from any and all arbitrations, claims, fees(including claims for attorney’s fees), demands, causes of action, damages,suits, proceedings, actions and/or liabilities of any kind and everydescription, whether known or unknown (based upon any legal or equitabletheory, whether contractual, common-law, statutory, decisional, federal, state,local or otherwise) (together “claims”), which Garon now has or may have hadfor, upon, or by reason of any cause whatsoever against the Releasees, byreason of any actual or alleged act, omission, transaction, practice, conduct,occurrence, or other matter from the beginning of the world up to and includingthe Effective Date of this Agreement, including but not limited to:

 

i.                                          any and all claims in any way arising out of orrelating to Jeffrey L. Garon’s employment by or service with Etelos and thetermination of such employment by or service with Etelos;

 

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ii.                                       any and all claims of discrimination, including butnot limited to claims of discrimination on the basis of sex, race, age,national origin, marital status, religion or handicap, including, specifically,but without limiting the generality of the foregoing, any claims under the AgeDiscrimination in Employment Act, as amended, Title VII of the Civil Rights Actof 1964, as amended, the Americans with Disabilities Act, Section 806 ofthe Sarbanes Oxley Act of 2002; the Employee Retirement Income Security Act of1974, as amended (“ERISA”) (excluding claims for accrued, vested benefits underany employee benefit plan of Etelos in accordance with the terms of such planand applicable law); the California Fair Employment and Housing Act (“FEHA”),California Equal Pay Law, California Family Rights Act of 1991 (as amended),California Paid Family Leave Law, the California Whistleblower Protection Law;California Confidentiality of Medical Information law; California Family andMedical Leave law; California Electronic Monitoring of Employees law; any andall California Wages, Hours, and Working Conditions Laws; and

 

iii.                                    any and all claims of wrongful or unjust terminationor breach of any contract or promise, express or implied.  The release set forth herein is not intendedand does not release Etelos from any of its obligations under this Agreement.

 

(b)                                 In consideration of Garon executing this Agreement,Etelos and any of its past or present officers or directors (whether acting asagents for such entities or in their individual capacities) (hereinaftercollectively referred to as the “Company Releasors”), forever release anddischarge Garon, from any and all claims, demands, causes of action, fees,damages, suits, proceedings, actions and/or liabilities of any kind and everydescription, whether known or unknown (based upon any legal or equitabletheory, whether contractual, common-law, statutory, decisional, federal, state,local or otherwise) (together, “Claims”), which the  Company Releasors ever had, now have or mayhave against Garon by reason of any actual or alleged act, omission,transaction, practice, conduct, occurrence, or other matter from the beginningof the world up to and including the Effective Date of this Agreement.  The release set forth herein is not intendedand does not release Garon from any of his obligations under this Agreement.

 

(c)                                  As a further consideration and inducement for thisAgreement, to the extent permitted by law, Garon and Etelos each hereby waivesand releases any and all rights under Section 1542 of the California CivilCode or any analogous state, local, or federal law, statute, rule, order orregulation that Garon and Etelos have or may have with respect to eachother.  California Civil CodeSection 1542 reads as follows:

 

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**“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITORDOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTINGTHE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS ORHER SETTLEMENT WITH THE DEBTOR.”**

 

Garon and Etelos each hereby expressly agrees that this release shallextend and apply to all unknown, unsuspected and unanticipated injuries anddamages, as well as any that are now disclosed, arising prior to the parties’execution of this Agreement.  Thisrelease does not extend to those rights, which as a matter of law cannot bewaived, including but not limited to unwaivable rights Garon may have under theCalifornia Labor Code.  Nothing in thisAgreement shall limit Garon’s right to file a charge or complaint with anystate or federal agency or to participate or cooperate in such a manner.

 

(d)                                 Notwithstanding the foregoing, nothing in thisAgreement shall be construed to prevent Garon from filing a charge with orparticipating in an investigation conducted by any governmental agency,including, without limitation, the United States Equal Employment OpportunityCommission (“EEOC”) or applicable state or city fair employment practicesagency, to the extent required or permitted by law.  Nevertheless, Garon understands and agreesthat he is waiving any relief available (including, for example, monetarydamages or reinstatement), under any of the claims and/or causes of actionwaived in this Agreement, including but not limited to financial benefit ormonetary recovery from any lawsuit filed or settlement reached by the EEOC oranyone else with respect to any claims released and waived in this Agreement.

 

(e)                                  Garon and Etelos each understands and acknowledgesthat each Party does not admit any violation of law, liability or invasion ofany of his rights and that any such violation, liability or invasion isexpressly denied. The consideration provided for this Agreement is made for thepurpose of settling and extinguishing all claims and rights (and every othersimilar or dissimilar matter) that Garon and Etelos ever had or now may haveagainst each other to the extent provided in this Agreement.  Each Party further agrees and acknowledgesthat no representations, promises or inducements have been made by the otherParty other than as appear in this Agreement.

 

(f)                                    Jeffrey L. Garon further agrees and acknowledges that:

 

i.                                          The release provided for herein releases claims to andincluding the date of this Agreement;

 

ii.                                       Garon has been advised by Etelos to consult with legalcounsel prior to executing this Agreement, has had an opportunity to consultwith and to be advised by legal counsel of his/its choice, fully understandsthe terms of this

 

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Agreement, and enters into this Agreement freely, voluntarily and intendingto be bound;

 

iii.                                    Jeffrey L. Garon acknowledges that he has up to 21days to review and consider the terms of this Agreement prior to its execution,to consult with an attorney of his choosing, to decide whether or not to signthe Agreement, and that he may use as much of the 21-day period as he desires;and

 

iv.                                   Jeffrey L. Garon may revoke this Agreement withinseven (7) calendar days after signing this Agreement, provided that anysuch revocation must be written and dated within the seven-day period, deliveredin writing to Daniel J. A. Kolke, Chairman of the Board of Etelos, and suchwritten notice must be actually received by Daniel J. A. Kolke, Chairman of theBoard of Etelos no later than the close of business on the 7th day afterJeffrey L. Garon executes this Agreement. If Jeffrey L. Garon does exercise hisright to revoke this Agreement, all of the terms and conditions of theAgreement shall be of no force and effect, and Etelos shall not have anyobligation to make payments or provide benefits to Garon as set forth in thisAgreement.

 

(g)                                 Garon, separately and collectively, and Etelos, eachcovenants and agrees that he/it will never file a lawsuit, arbitration demand,or other complaint or demand, asserting any claim, that is released in thisAgreement, against the other Party or its directors or officers.

 

12.                                 Mutual Non-Disparagement and ConfidentialityAgreements and Agreement to Maintain Confidentiality

 

(a)                                  Garon, separately and collectively, agrees that he/itwill not publicly disparage (or induce or encourage others to publiclydisparage) Etelos or its management or members of its Board of Directors.  Etelos agrees that it shall direct themembers of its management and of its Board of Directors not to publiclydisparage (or induce or encourage others to publicly disparage) Garon.

 

(b)                                 In consideration of this Agreement and theundertakings therein, the Parties, and their respective counsel, agree thatthey will not knowingly or voluntarily publicize, disclose, or characterize orcause to be publicized, disclosed, or characterized to any third person orentity any of the terms or conditions of this Agreement, the substance ofnegotiations leading up to or respecting this Agreement or any otherinformation which would assist a third person or entity in learning of suchterms and conditions or the substance of any such negotiations, except to theextent required by law.  Any oral orwritten comments by the Parties and their respective counsel about this Agreementshall be limited to statements that Etelos filed the arbitration demand againstJeffrey L. Garon, that Jeffrey L. Garon and the Jeffrey and Alesia Garon FamilyTrust Dated August 22, 2002 filed

 

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counterclaims in arbitration against Etelos and certain of its directorsand employees; and that all such claims and counterclaims were resolvedpursuant to a confidential settlement agreement.

 

(c)                                  Garon further agrees that he will maintain theconfidentiality of all Etelos trade secrets and proprietary information, unlessand until such information is made public through no actions of Garon.  By signing below, Garon acknowledges that asof the Effective Date of this Agreement, he/it has returned to Etelos any andall Company property with the exception of the backup of electronic informationthat Garon retained from his Etelos employment, which was produced to Etelos inthis Arbitration. By signing below, Garon further acknowledge and certify, forthemselves and their attorneys, that, as of ten days after the Effective Date,he/it/they have returned to Etelos or have destroyed all documents and copiesof documents (i) produced by Etelos in the Arbitration, or(ii) containing information originating with Etelos and obtained throughJeffrey Garon’s employment with Etelos as director, officer, employee,consultant and/or investment banker (including but not limited to the backup ofelectronic information that Garon retained from his Etelos employment).

 

13.                                 Nothing in this Agreement purports to preclude Garonfrom responding to or providing any information requested by legal process,such as by subpoena.  Garon agrees toreasonably notify Etelos of such requests, and that, in the event he issubpoenaed by any person or entity (including, but not limited to, anygovernment or quasi-government agency) to give testimony (by declaration,deposition, testifying in a court proceeding, or otherwise) which in any wayrelates to Garon’s employment or service with Etelos, he will give reasonablyprompt notice of such request to the current Etelos Board Chairman or hissuccessor, and will make no disclosure until Etelos has had a reasonableopportunity to contest the right of the requesting person or entity to suchdisclosure.

 

14.                                 Each of the Parties represents and warrants that he,she, or it has not sold, assigned, or transferred to any person or entity anyclaim, cause of action, or liability which is being released hereby.  In addition, each person executing thisAgreement on behalf of an entity corporation or trust represents and warrantsthat he or she has the power and authority to execute this Agreement and thatthe entry into this Agreement is a duly authorized act of such entity.

 

15.                                 Miscellaneous Provisions.

 

(a)                                  Waiver.  No provision of this Agreementshall be modified, waived or discharged unless the modification, waiver ordischarge is agreed to in writing and signed by the Party to be charged.  No waiver by any Party of any breach of, orof compliance with, any condition or provision of this Agreement by the

 

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other Party shall be considered a waiver of any other condition orprovision or of the same condition or provision at another time.

 

(b)                                 Whole Agreement.  No agreements, representations orunderstandings (whether oral or written, whether express or implied) which arenot expressly set forth in this Agreement have been made or entered into byeither party with respect to the subject matter of this Agreement.  This Agreement constitutes the entire,complete and integrated Agreement made between the Parties regarding thesubject matter hereof, and supersedes any prior agreements as to such subjectmatter.  This Agreement may be modified,altered or amended by the Parties only be means of a writing dated subsequentto the date of this Settlement Agreement and signed/acknowledged by theParties.  Under no circumstances may thisAgreement be modified orally by any Party.

 

(c)                                  Choice of Law.  The validity, interpretation,construction, performance of this Agreement shall be governed by the laws ofthe State of California, without giving effect to its conflicts of lawprinciples.

 

(d)                                 Severability.  The invalidity or unenforceabilityof any provision or provisions of this Agreement shall not affect the validityor enforceability of any other provision of this Agreement, which shall remainfull in force and effect.

 

(e)                                  Arbitration.  In the event of any dispute orcontroversy arising under or in connection with this Agreement, the partiesfirst shall attempt to settle the issue by negotiation or other informal means,to be followed, if necessary by mediation. If possible, the mediator shall be Paul Dubow, who served as arbitratorin the AAA matter.  If such mediationfails to resolve the dispute or controversy, then the dispute or controversyshall be settled by binding arbitration, and either party, within one year ofthe occurrence of the event giving rise to the claim or controversy or withinthe period of the applicable statute of limitations, if shorter, may submitsuch claim or controversy to binding arbitration in San Francisco, California,before one arbitrator in accordance with the Commercial Rules of theAmerican Arbitration Association then in effect.  Failure to serve notice of arbitration uponthe other within such time shall be deemed a waiver of the right to remedy suchclaim or controversy.  Costs shall beshared, but the arbitrator shall be authorized to award reasonable attorneys’fees and costs to the prevailing party. The parties shall request that all testimony in front of such arbitratorbe transcribed, and that any award be accompanied by findings of fact and astatement of the reasons for the decision. Judgment may be entered on the arbitrator’s award in any court havingcompetent jurisdiction.  Punitive damagesshall not be awarded.  The provisions ofthis subsection constitute a complete defense to, and may be asserted orpleaded successfully as such, in any motion to a court of competentjurisdiction for a stay of any action or proceeding commenced contrary to theintent of this provision.

 

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(f)  Attorneys’ Fees and Costs. Each Party shall bear its own attorneys’ fees, costs, and other expensesincurred in connection with the Arbitration, this Agreement, and the dismissalof the arbitration, including but not limited to the costs of expert witnessesand consultants.

 

(g)                                 No Assignment of Benefits.   The rightsof any person to payments or benefits under this Agreement shall not be madesubject to option or assignment, either by voluntary or involuntary assignmentor by operation of law, including (without limitation) bankruptcy, garnishment,attachment or other creditor’s process, and any action in violation of thisparagraph shall be void.

 

(h)                                 Assignment by Company.     Company may assign its rights under this Agreement only to a successor orother affiliated company.

 

(i)                                     Construction.                       Headings in this Agreement are for reference purposesonly and do not affect the provisions of this Agreement.  Pronouns are used without regard to gender ornumber.  The language of this Agreementshall be construed as a whole according to its fair meaning and not strictlyfor or against any of the Parties.

 

(j)                                     Notices.    Notices required to be given by the Agreement shall begiven in writing, delivered in hard copy by hand or Federal Express, or otherequivalent carrier, and also may be sent by e-mail, to the addresses for theParties listed below:

 

If to Etelos:

 

Etelos, Inc.

26828 Maple Valley Highway - #297

Maple Valley, WA 98038

With e-mail to:

Daniel J.A. Kolke, Chairman — danny.kolke@etelos-inc.com

Kennedy A. Brooks, VP & GC — kennedy.brooks@etelos-inc.com

 

If to Garon:

 

Jeffrey Garon

35 Tulip Court

Burlingame, CA  94101

With e-mail to: jgaron@mindspring.com

 

(k)                              Counterparts.  This Agreement may be executed incounterparts, each of which shall be deemed an original, but all of whichtogether will constitute one and the same instrument.

 

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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement asfollows:

 
| DATED: December       , 2009 |                                |                      |
|-----------------------------------------------------------------|-------------------------------------|---------------------------|
|                                                            |                                | JEFFREY L. GARON          |
|                                                            |                                |                      |
|                                                            |                                |                      |
| DATED: December       , 2009 |                                |                      |
|                                                            |                                | ALESIA GARON              |
|                                                            |                                |                      |
|                                                            |                                |                      |
| DATED: December       , 2009 | THE JEFFREY AND ALESIA GARON FAMILY |
|                                                            | TRUST DATED AUGUST 22, 2002         |
|                                                            |                                |                      |
|                                                            |                                |                      |
|                                                            | By:                                 |                      |
|                                                            |                                | JEFFREY L. GARON, Trustee |
|                                                            |                                |                      |
|                                                            |                                |                      |
|                                                            | By:                                 |                      |
|                                                            |                                | ALESIA GARON, Trustee     |
|                                                            |                                |                      |
| DATED: December       , 2009 | ETELOS, INC.                        |
|                                                            |                                |                      |
|                                                            |                                |                      |
|                                                            | By:                                 |                      |
|                                                            |                                |                      |
|                                                            | Its:                                |                      |

 

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