PLACEMENT AGENT AND ADVISORY
SERVICES AGREEMENT

This Placement Agent and Advisory Services Agreement (this "Agreement") is made
as of February 15, 2010 (the “Effective Date”), by and between Pinnacle Energy
Corp., a Nevada company (together with its subsidiaries, the "Company"), and
Monarch Bay Associates, LLC, a California limited liability company
("MBA").  MBA and the Company agree as follows:

1.
Engagement of MBA:  The Company hereby engages MBA, and MBA hereby accepts such
engagement, to act as:

(a)
the Company's placement agent, on an exclusive basis, with respect to finding
investors (the “Investors”) for one or more offerings of the Company’s
securities (including placements of the Company’s debt) in a transaction or
transactions exempt from registration under the Securities Act of 1933, as
amended, and in compliance with the applicable laws and regulations of any
jurisdiction in which securities are sold under this Agreement (each, a
“Financing”); and

(b)
the Company’s advisor, on an exclusive basis, in identifying and introducing
prospective parties to an acquisition, merger, joint venture or any other
similar transaction or relationship, directly or indirectly, involving the
Company (an “M&A Transaction”).

(c)
the Company will provide MBA with the right of first refusal for twelve (12)
months from the date of the termination of this Agreement to serve as a
financial advisor or to act as a joint financial advisor on at least equal
economic terms on any public or private financing (debt or equity), merger,
business combination, recapitalization or sale of some or all of the equity or
assets of the Company (collectively, “Future Services”).  In the event the
Company notifies MBA of its intention to pursue an activity that would enable
MBA to exercise its right of first refusal to provide Future Services, MBA shall
notify the Company of its election to provide such Future Services, including
notification of the compensation and other terms to which MBA claims to be
entitled, within thirty (30) days of written notice by the Company.  In the
event the Company engages MBA to provide such Future Services, MBA will be
compensated consistent with the success fee set forth in Section 2 of this
Agreement, unless mutually agreed otherwise by the Company and MBA.

The Company acknowledges and agrees that MBA's obligations hereunder are on a
reasonable best efforts basis only and that the execution of this Agreement does
not constitute a commitment by MBA to purchase any securities and does not
ensure the successful placement of any securities or any portion thereof or the
success of MBA with respect to securing any other financing, a M&A Transaction
on behalf of the Company.  MBA will act solely as a broker with respect to
identifying and negotiating with potential investors in a Financing and
potential parties to an M&A Transaction. MBA will not act as an underwriter in
any Financing or M&A Transaction.

 
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2.
MBA's Compensation:  The Company hereby agrees to pay MBA fees in such amount
and upon such terms and conditions contained herein upon the successful
completion of a Financing, a M&A Transaction as follows:

Success Fees.  The Company will pay MBA a Success Fee, as described below, when
the Company closes on a Financing or an M&A Transaction during the Term (as
hereinafter defined) of this Agreement or during a one-year period thereafter.

Computation and Payment of Success Fees.

(i)  Financings.  For each Financing, the Success Fee will be (a) a cash fee
equal to 8% of gross proceeds raised in the Financing (including, without
limitation, upon exercise of any warrants issued in the Financing) and (b)
warrants (the “MBA Warrants”) to purchase 8% of the total number of shares of
common stock issued and issuable by the Company to Investors under and in
connection with the Financing, including (without limitation) shares issuable
upon conversion or exercise of the securities sold in the Financing, at an
exercise price equal to the purchase price of the common stock sold in the
Financing or, in the event that securities convertible into common stock are
sold in the Financing, the conversion price of such securities.

The cash portion of the Success Fee will be due and payable upon the closing of
each Financing and will be payable directly to MBA from the escrow established
for such closing or in such other manner as may be acceptable to MBA.

MBA Warrants will have a five (5) year term (or such longer term as is provided
in any warrants issued in the Financing) and will provide for cashless exercise
(even if the Investors do not have such a right).  MBA Warrants will have the
benefit of anti-dilution protection against issuances of securities at prices
(or with conversion or exercise prices, in the case of convertible securities,
warrants, options or rights) below the exercise price of MBA Warrants. MBA
Warrants will not be callable or redeemable. The shares underlying MBA Warrants
will be included in the first registration statement filed by the Company
covering the securities issued in the Financing (or securities issuable upon
conversion or exercise thereof).  MBA Warrants will be transferable within MBA’s
organization, at MBA’s discretion.  MBA Warrants will contain such other terms
and conditions no less favorable to MBA than the term and conditions of any
warrants issued to the Investors in the Financing.

(ii)  M&A Transactions.  For each M&A Transaction, the Success Fee will be a fee
in the same form of consideration paid or received by the Company equal to the
following schedule of the Total Consideration (as defined below) with respect to
such M&A Transaction:

5% of the first $5,000,000 of Total Consideration, or any part; plus,
4% of the second $5,000,000 of Total Consideration, or any part; plus,
3% of the third $5,000,000 of Total Consideration, or any part; plus,
2% of the next $5,000,000 of Total Consideration, or any part; plus,
1% of the balance of the Total Consideration. 

 
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As used herein. “Total Consideration" means, with respect to any M&A
Transaction, the total value of all cash, securities, or other property paid or
received, directly or indirectly, by the Company or its owners (at closing or in
the future) in connection with such M&A Transaction, including (without
limitation) in respect of (i) the assumption (by contract, operation of law or
otherwise) of any indebtedness or (ii) consulting, non-compete or similar
agreements.

The Success Fee will be due and payable upon the closing of each M&A Transaction
and will be payable directly to MBA from the escrow established for such closing
or in such other manner as may be acceptable to MBA; provided that in the case
of any installment or contingent payment made in respect of the M&A Transaction,
the Success Fee in respect of such installment or contingent payment shall be
due and payable on the date such payment is made.

3.
Certain Matters Relating to MBA’s Duties:

(a)
MBA shall (i) assist the Company in the preparation of   information documents
to be shared with potential Investors and parties to M&A Transactions (ii)
identify and screen potential Investors and parties to M&A Transactions, and
(iii) perform other related duties.

(b)
MBA shall perform its duties under this Agreement in a manner consistent with
the instructions of the Company. Such performance shall include the delivery of
information to potential interested parties, conducting due diligence, and
leading discussions with potential Investors and parties to M&A Transactions.

(c)
MBA shall not engage in any form of general solicitation or advertising in
performing its duties under this Agreement. This prohibition includes, but is
not limited to, any mass mailing, any advertisement, article or notice published
in any magazine, newspaper or newsletter and any seminar or meeting where the
attendees have been invited by any mass mailing, general solicitation or
advertising.

(d)
MBA is and will hereafter act as an independent contractor and not as an
employee of the Company and nothing in this Agreement shall be interpreted or
construed to create any employment, partnership, joint venture, or other
relationship between MBA and the Company. MBA will not hold itself out as
having, and will not state to any person that MBA has, any relationship with the
Company other than as an independent contractor. MBA shall have no right or
power to find or create any liability or obligation for or in the name of the
Company or to sign any documents on behalf of the Company.

4.
Certain Matters Relating to Company’s Duties:

(a)
The Company shall promptly provide MBA with all relevant information about the
Company (to the extent available to the Company in the case of parties other
than the Company) that shall be reasonably requested or required by MBA, which
information shall be complete and accurate in all material respects at the time
furnished.

 
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(b)
The Company recognizes that in order for MBA to perform properly its obligations
in a professional manner, it is necessary that MBA be informed of and, to the
extent practicable, participate in meetings and discussions between the Company
and any third party, including, without limitation, any prospective purchaser of
the Company’s securities, relating to the matters covered by the terms of MBA's
engagement.

(c)
The Company agrees that any report or opinion, oral or written, delivered to it
by MBA is prepared solely for its confidential use and shall not be reproduced,
summarized, or referred to in any public document or given or otherwise divulged
to any other person without MBA's prior written consent, except as may be
required by applicable law or regulation.

(d)
The Company will provide Consultant with the right of first refusal for one year
from the date of the termination of this Agreement to serve as a financial
advisor or to act as a joint financial advisor on at least equal economic terms
on any public or private financing (debt or equity), merger, business
combination, recapitalization or sale of some or all of the equity or assets of
the Company (collectively, “Future Services”).  In the event the Company
notifies Consultant of its intention to pursue an activity that would enable
Consultant to exercise its right of first refusal to provide Future Services,
Consultant shall notify the Company of its election to provide such Future
Services, including notification of the compensation and other terms to which
Consultant claims to be entitled, within thirty (30) days of written notice by
the Company.  In the event the Company engages Consultant to provide such Future
Services, Consultant will be compensated consistent with Section 3.0 of this
Agreement, unless mutually agreed otherwise by the Company and Consultant.

 
(e)
The Company represents and warrants that: (i) it has full right, power and
authority  to enter into this Agreement and to perform all of its obligations
hereunder; (ii) this Agreement has been duly authorized and executed by and
constitutes a valid and binding agreement of the Company enforceable in
accordance with its terms; and (iii) the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby do not
conflict with or result in a breach of the Company's certificate of
incorporation or by-laws. Further, this Agreement and the transactions
contemplated herein shall not conflict with or result in the breach of any
agreement to which the Company is a party at the time the transactions
contemplated herein are consummated.

 
 
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5.
Term; Termination of Agreement. The initial term of this Agreement shall be from
the Effective Date through the first anniversary thereof (the “Initial
Term”).  After the Initial Term, the term of this Agreement will automatically
be extended for an additional successive one-year periods unless either party
provides written notice to the other party of its intent not to so extend the
term at least 30 days before the expiration of the then current term.  Either
party may terminate this Agreement prior to its expiration by notifying the
other party in writing upon a material breach by that other party, unless such
breach is curable and is in fact cured within fifteen (15) days after such
notice.  Notwithstanding the foregoing, all provisions of this Agreement
(including Exhibit A hereto) other than Sections 1, 3 and 4 (a) and (b) shall
survive the termination or expiration of this Agreement.  MBA shall be entitled
to compensation under Section 2 (and payment for expenses under Section 12)
based on the completion of a Financing or a M&A Transaction prior to the
termination or expiration of this Agreement or during the period one year
following termination so long as any Investors or party to a M&A Transaction, as
the case may be, (or any affiliate of any such person or entity) were identified
by the Company or introduced by MBA to the Company.  MBA will provide to the
Company within ten business days after the expiration or termination of this
Agreement a list of all persons or entities identified by the Company or
introduced by MBA to the Company pursuant to this Agreement (the “Introduction
List”).  Within five business day following the delivery of the Introduction
List to the Company, the Company will provide MBA with written notice of any
objections to the inclusion of any person or entity in the Introduction List and
state the basis for each objection in reasonable detail.   The inclusion of a
person or entity in the Introduction List shall be deemed conclusive in making a
later determination as to whether a Success Fee is payable hereunder, unless the
Company shall have made a timely and proper objection.  The parties will
cooperate to resolve the status of any person or entity as to which the Company
shall have made a timely and proper objection.

Except as otherwise specifically provided for herein, the Company shall have no
liability to MBA should the Company terminate this Agreement prior to the
completion of a Financing or an M&A Transaction.

6.
Indemnification.  The indemnification provisions set forth in Exhibit A hereto
are incorporated by reference and are a part of this Agreement.

7.
Notices. Any notice, consent, authorization or other communication to be given
hereunder shall be in writing and shall be deemed duly given and received when
delivered personally, when transmitted by fax during the normal business hours
of the party receiving such notice so long a copy of that notice is also send by
certified mail, return receipt requested at the time it is transmitted by
fax,  five business  days after being mailed by certified mail, return receipt
requested or one business day after being sent by a nationally recognized
overnight delivery service, charges and postage prepaid, properly addressed to
the party to receive such notice, at the following address or fax number for
such party (or at such other address or fax number as shall hereafter be
specified by such party by like notice):

(a)
If to the Company, to:
     
Bill McKay, President
 
Pinnacle Energy Corp.
 
30950 Rancho Viejo Road, Suite 120
 
San Juan Capistrano, CA 92675
 
Telephone Number:  (626) 833-3824
 
Fax Number:  (626) 602-9523
 
E-mail: wrmckay@gmail.com

 
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(b)
If to MBA, to:
     
Keith Moore, Principal
 
Monarch Bay Associates, LLC
 
30950 Rancho Viejo Rd #120
 
San Juan Capistrano, California 92675
 
Telephone Number: (949) 373-7281
 
Fax Number: (815) 301-8099
 
E-mail: keith@monarchbayassociates.com

8.
Company to Control Transactions.  The terms and conditions under which the
Company would enter into a Financing or an M&A Transaction shall be at the sole
discretion of the Company.  Nothing in this Agreement shall obligate the Company
to actually consummate a Financing or an M&A Transaction.  The Company may
terminate any negotiations or discussions at any time and reserves the right not
to proceed with a Financing or an M&A Transaction.

9.
Confidentiality of Company Information. MBA, and its officers, directors,
employees and agents shall maintain in strict confidence and not copy, disclose
or transfer to any other party (1) all confidential business and financial
information regarding the Company and its affiliates, including without
limitation, projections, business plans, marketing plans, product development
plans, pricing, costs, customer, vendor and supplier lists and identification,
channels of distribution, and terms of identification of proposed or actual
contracts and (2) all confidential technology of the Company. In furtherance of
the foregoing, MBA agrees that it shall not transfer, transmit, distribute,
download or communicate, in any electronic, digitized or other form or media,
any of the confidential technology of the Company. The foregoing is not intended
to preclude MBA from utilizing, subject to the terms and conditions of this
Agreement, the Financing or Offering Memorandum and/or other documents prepared
or approved by the Company.  Further, the Company must approve the Financing or
Offering Memorandum, being prepared by MBA, before it is mailed to prospective
Investors or parties to an M&A Transaction.

All communications regarding any possible transactions, requests for due
diligence or other information, requests for facility tours, product
demonstrations or management meetings, will be submitted or directed to the
Company, and MBA shall not contact any employees, customers, suppliers or
contractors of the Company or its affiliates without express
permission.  Nothing in this Agreement shall constitute a grant of authority to
MBA or any representatives thereof to remove, examine or copy any particular
document or types of information regarding the Company, and the Company shall
retain control over the particular documents or items to be provided, examined
or copied. If a Financing or an M&A Transaction is not consummated, or if at any
time the Company so requests, MBA and its representatives will return to the
Company all copies of information regarding the Company in their possession.

The provisions of this Section shall survive any termination of this Agreement.

 
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10.
Press Releases, Etc.  The Company shall control all press releases or
announcements to the public, the media or the industry regarding any Financing,
M&A Transaction or business relationship involving the Company or its
affiliates.  Except for communication to Investors in furtherance of this
Agreement, MBA will not disclose the fact that discussions or negotiations are
taking place concerning a possible Financing or a M&A Transaction involving the
Company, or the status or terms and conditions thereof.

11.
Due Diligence: Neither the Company, nor any of its directors, officers or
stockholders, should, in any way rely on MBA to perform any due diligence with
respect to the Company.  It is expressly understood and agreed that the
Investors and parties to any M&A Transaction will conduct their own due
diligence on the Company and the opportunity.

12.
Expenses, Etc.  The Company will pay to MBA a non-accountable expense fee equal
to 3% of gross proceeds raised in each Private Placement (the “Non-Accountable
Fee”), which will be used to pay MBA’s travel and other expenses.  The
Non-Accountable Fee will be paid in the same time and manner as the Success
Fee.    The Company will pay all other costs and expenses incident to the
issuance, offer, sale and delivery of each Private Placement, including but are
not limited to state “Blue Sky” fees, legal fees, printing costs, travel costs,
mailing, couriers, and personal background checks.

13.
Compliance with Laws.  MBA represents and warrants that it shall conduct itself
in compliance with applicable federal and state laws.  MBA represents that it is
not a party to any other Agreement, which would conflict with or interfere with
the terms and conditions of this Agreement.

14.
Assignment Permissable.  MBA reserves the right to assign a portion of this
Agreement to one or more sub-agents with respect to any Financing or M&A
Transaction, subject to the prior written consent of the Company.  Any approved
sub-agent shall be paid a portion of Success Fees as may be determined by
MBA.    The Company does acknowledge that MBA may pay other consultants or
agents in connection with the Financing(s) and M&A Transaction(s).

15.
Amendments.  Neither party may amend this Agreement or rescind any of its
existing provisions without the prior written consent of the other party.

16.
Governing Law; Dispute Resolution.  This Agreement shall be deemed to have been
made in the State of California and shall be construed, and the rights and
liabilities determined, in accordance with the law of the State of California,
without regard to the conflicts of laws rules of such jurisdiction. Any
controversy or claim relating to or arising from this Agreement (an "Arbitrable
Dispute") shall be settled by arbitration in accordance with the Commercial
Arbitration Rules of the American Arbitration Association (the "AAA") as such
rules may be modified herein or as otherwise agreed by the parties in
controversy. The forum for arbitration shall be Orange County, California.
Following thirty (30) days notice by any party of intention to invoke
arbitration, any Arbitrable Dispute arising under this Agreement and not
mutually resolved within such thirty (30) day period shall be determined by a
single arbitrator upon which the parties agree.

 
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17.
Waiver.  Neither MBA’s nor the Company’s failure to insist at any time upon
strict compliance with this Agreement or any of its terms nor any continued
course of such conduct on their part shall constitute or be considered a waiver
by MBA or the Company of any of their respective rights or privileges under this
Agreement.

18.
Severability. If any provision herein is or should become inconsistent with any
present or future law, rule or regulation of any sovereign government or
regulatory body having jurisdiction over the subject matter of this Agreement,
such provision shall be deemed to be rescinded or modified in accordance with
such law, rule or regulation.  In all other respects, this Agreement shall
continue to remain in full force and effect.

19.
Counterparts. This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, and will become effective and binding upon
the parties at such time as all of the signatories hereto have signed a
counterpart of this Agreement.  All counterparts so executed shall constitute
one Agreement binding on all of the parties hereto, notwithstanding that all of
the parties are not signatory to the same counterpart.  Each of the parties
hereto shall sign a sufficient number of counterparts so that each party will
receive a fully executed original of this Agreement.

20.
Entire Agreement.  This Agreement (together with Exhibit A hereto) constitutes
the entire agreement between the Company and MBA. No other agreements,
covenants, representations or warranties, express or implied, oral or written,
have been made by any party hereto to any other party concerning the subject
matter hereof.  All prior and contemporaneous conversations, negotiations,
possible and alleged agreements, representations, covenants and warranties
concerning the subject matter hereof are merged herein and shall be of no
further force or effect.

Monarch Bay Associates, LLC (the “MBA”)
 
By: 
 
   
Keith Moore
Title:
Principal
   
Pinnacle Energy Corp. (the “Company”)
 
By: 
 
   
Bill McKay
Title:
President

 
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EXHIBIT A
Indemnification

The Company agrees that it shall indemnify and hold harmless, MBA, its  members,
managers, officers, employees, agents, affiliates and controlling persons within
the meaning of Section 20 of the Securities Exchange Act of 1934 and Section 15
of the Securities Act of 1933, each as amended (any and all of whom are referred
to as an "Indemnified Party"), from and against any and all losses, claims,
damages, liabilities, or expenses, and all actions in respect thereof
(including, but not limited to, all legal or other expenses reasonably incurred
by an Indemnified Party in connection with the investigation, preparation,
defense or settlement of any claim, action or proceeding, whether or not
resulting in any liability), incurred by an Indemnified Party with respect to,
caused by, or otherwise arising out of any transaction contemplated by this
Agreement or MBA's performing the services contemplated hereunder; provided,
however, the Company will not be liable to the extent, and only to the extent,
that any loss, claim, damage, liability or expense is finally judicially
determined to have resulted primarily from MBA's gross negligence or bad faith
in performing such services.

If the indemnification provided for herein is conclusively determined (by an
entry of final judgment by a court of competent jurisdiction and the expiration
of the time or denial of the right to appeal) to be unavailable or insufficient
to hold any Indemnified Party harmless in respect to any losses, claims,
damages, liabilities or expenses referred to herein, then the Company shall
contribute to the amounts paid or payable by such Indemnified Party in such
proportion as is appropriate and equitable under all circumstances taking into
account the relative benefits received by the Company on the one hand and MBA on
the other, from the transaction or proposed transaction under the Agreement or,
if allocation on that basis is not permitted under applicable law, in such
proportion as is appropriate to reflect not only the relative benefits received
by the Company on the one hand and MBA on the other, but also the relative fault
of the Company and MBA; provided, however, in no event shall the aggregate
contribution of MBA and/or any Indemnified Party be in excess of the net
compensation actually received by MBA and/or such Indemnified Party pursuant to
this Agreement.

              The Company shall not settle or compromise or consent to the entry
of any judgment in or otherwise seek to terminate any pending or threatened
action, claim, suit or proceeding in which any Indemnified Party is or could be
a party and as to which indemnification or contribution could have been sought
by such Indemnified Party hereunder (whether or not such Indemnified Party is a
party thereto), unless such consent or termination includes an express
unconditional release of such Indemnified Party, reasonably satisfactory in form
and substance to such Indemnified Party, from all losses, claims, damages,
liabilities or expenses arising out of such action, claim, suit or proceeding.

              In the event any Indemnified Party shall incur any expenses
covered by this Exhibit A, the Company shall reimburse the Indemnified Party for
such covered expenses within ten (10) business days of the Indemnified Party's
delivery to the Company of an invoice therefor, with receipts attached. Such
obligation of the Company to so advance funds may be conditioned upon the
Company's receipt of a written undertaking from the Indemnified Party to repay
such amounts within ten (10) business days after a final, non-appealable
judicial determination that such Indemnified Party was not entitled to
indemnification hereunder.

              The foregoing indemnification and contribution provisions are not
in lieu of, but in addition to, any rights which any Indemnified Party may have
at common law hereunder or otherwise, and shall remain in full force and effect
following the expiration or termination of MBA's engagement and shall be binding
on any successors or assigns of the Company and successors or assigns to all or
substantially all of the Company's business or assets.
Initials _______ Initials ________         

 
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