SETTLEMENT AGREEMENT AND RELEASE
 
This Settlement Agreement and Release (this “Agreement”) is entered into
effective the 19th day of October 2010 memorializing the terms of the settlement
reached by and between the parties.   The parties to this Agreement are Cardiff
Partners, LLC (“Cardiff”), Monarch Bay Associates, LLC (“MBA”), David Walters
(“Walters”), Keith Moore (”Moore”) and Matt Szot (“Szot”, and together with
Cardiff, MBA, Walters and Moore,  collectively, the “Cardiff Parties”) and
Trans-Pacific Aerospace Company, Inc. (the “Company”).
 
RECITALS
 
WHEREAS, Cardiff has heretofore provided certain services to the Company
pursuant to the terms of a Support Services Agreement, dated June 29, 2009,
between Strands Management Company, LLC (now, Cardiff Partners, LLC) and
Pinnacle Energy Corp. (now, Trans-Pacific Aerospace Company, Inc.), as amended
through the date hereof (including, without, limitation, pursuant to Amendment
No. 1 to Support Services Agreement, dated as of January 12, 2010 between
Cardiff and Pinnacle Energy Corporation) (the “Support Services Agreement”);
 
WHEREAS, MBA has heretofore provided certain services to the Company pursuant to
the terms of a Placement Agent and Advisory Services Agreement, dated February
15, 2010 (the “Advisory Agreement”);
 
WHEREAS, Walters was previously employed by the Company pursuant to the terms of
an Employment Agreement, dated June 29, 2009, as amended (the “Employment
Agreement”);
 
WHEREAS, each of Walters and Moore has served as a member of the Company’s Board
of Directors and each of Walters and Szot has served as an officer of the
Company;
 
WHEREAS, prior to the transactions contemplated by this Agreement, the Cardiff
Parties (in the aggregate) own 4,989,854 shares of the Company’s common stock,
par value $.001 per share; and (b) warrants to purchase 4,000,000 shares of the
Company’s common stock.
 
WHEREAS, Company and the Cardiff Parties desire to enter into this Agreement in
order to terminate all relationships between the Cardiff Parties and the Company
and to resolve any disputes related to such relationships and the termination
thereof.
 
NOW, THEREFORE, in consideration for this release, the sufficiency of which is
hereby acknowledged, the parties agree as follows:
 
 
A.
SETTLEMENT

 
1.           Stock Payment in Settlement.

(a)  Concurrently herewith, the Company is issuing to Cardiff 1,838,649 shares
of its common stock, par value $.001 per share (the “Shares”), in satisfaction
of any and all amounts owed to any Cardiff Party under the Support Services
Agreement, the Advisory Agreement, the Employment Agreement or
otherwise.   919,325 of the Shares will be deposited into the escrow account
established to be released to Cardiff on the date that is nine months following
the date hereof and an additional 919,324 Shares will be shipped over-night to
Cardiff Partners, LLC (Address:  30950 Rancho Viejo Road, Suite 120, San Juan
Capistrano, CA 92675) for delivery on or about October 20, 2010.

 

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(b)  Cardiff agrees with the Company that:

(i)  Subject to Section A.1(b)(v), the stock certificates evidencing the Shares,
and each stock certificate issued in transfer thereof, will bear the following
legend:

“THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR WITH ANY SECURITIES COMMISSION
UNDER APPLICABLE STATE SECURITIES OR BLUE SKY LAWS AND HAVE BEEN ACQUIRED FOR
INVESTMENT PURPOSES ONLY AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE
OR DISTRIBUTION THEREOF.  SUCH SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS
THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT COVERING SUCH
SECURITIES OR THE ISSUER RECEIVES AN OPINION OF COUNSEL STATING THAT SUCH SALE
OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS
OF THE ACT.”

The stock certificates representing the Shares and each stock certificate issued
in transfer thereof, will also bear any legend required under any applicable
state securities law.

(ii)  Absent an effective registration statement under the Securities Act of
1933, as amended (the “Securities Act”) covering any proposed disposition of the
Shares or any part thereof, it will not offer for sale, sell, transfer, assign,
pledge, hypothecate or otherwise dispose of any or all of the Shares without
first providing the Company with an opinion of counsel to the effect that such
offer, sale, transfer, assignment, pledge, hypothecation or other disposition
will be exempt from the registration and the prospectus delivery requirements of
the Securities Act and the registration or qualification requirements of any
applicable state securities or blue sky laws, except that no such registration
or opinion will be required with respect to a transfer not involving a change in
beneficial ownership.

(iii) It consents to the Company’s making a notation on its records or giving
instructions to any transfer agent of the Shares in order to implement the
restrictions on transfer of the Shares contemplated by this Section A.1(b).

(iv) Until such time as one or more of the requirements set forth in Section
A.1(b)(v) have been satisfied, the Shares shall be restricted securities under
the Securities Act and may be transferable only in accordance with this
Agreement or the requirements of the Securities Act or any other applicable
federal or state law, rule or regulation.

 
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(v) The Company shall remove any legend endorsed on a stock certificate
evidencing Shares pursuant to this Section A.1(b), and any stop transfer
instructions and record notations with respect to such Shares and issue a
certificate without such legend to the holder of such Shares: (a) if such Shares
are transferred in a transaction registered under the Securities Act or (b) if
such holder provides the Company with an opinion of counsel to the effect that a
sale or transfer of such Shares may be made under Rule 144 under the Securities
Act  or otherwise without registration under the Securities Act and are not
restricted following such sale or transfer.  Whenever a certificate representing
the Shares is required to be issued to a the holder without a legend, in lieu of
delivering physical certificates representing the Shares, provided the Company’s
transfer agent is participating in the DTC Fast Automated Securities Transfer
program, the Company shall use its reasonable best efforts to cause its transfer
agent to electronically transmit the Shares to the holder by crediting the
account of the holder's Prime Broker with DTC through its DWAC system.

2.           Termination of Relationships.  Each Cardiff Party understands and
agrees that (a) all relationships and agreements, written or oral, of any kind
whatsoever (including the Support Services Agreement, the Advisory Agreement and
the Employment Agreement) between any Cardiff Party (or their affiliates) and
the Company (or its affiliates) are hereby terminated, (b) none of Walters,
Moore and Szot is any longer an officer or director or, or adviser or consultant
to, the Company or any of its affiliates, and (c) neither any Cardiff Party nor
any of their affiliates is entitled to any compensation or benefits of any kind
from the Company or any of its affiliates for any services rendered or expenses
incurred.

3.           Attorneys Fees.  The Company and the Cardiff Parties agree and
understand that each party shall bear their own attorneys fees and expenses that
they may incur, or have incurred, in connection with the negotiation, review and
execution of this Agreement.

4.           Mutual Release.  Each party is fully and forever releasing and
discharging the other party, its/his officers, directors, employees, affiliates,
related entities and agents (the “Releasees”) from any claims, and covenanting
not to sue or otherwise institute any legal proceeding against any Releasee with
respect to any matter arising out of or relating to any agreement or
relationship with any Releasee (including, without limitation, any and all
contractual, tort or other common law claims, whether legal or equitable) the
releasing party may have that are based on the relationship of the Cardiff
Parties with the Company or any other Releasee at any time prior to the date of
execution of this Agreement, or on any other event occurring prior to the date
of this Agreement.

In addition, and in further consideration of the foregoing, each party hereby
expressly waives any and all rights and benefits conferred upon it by the
provisions of Section 1542 of the Civil Code of the State of California (and any
similar law or regulation of any other jurisdiction), which states 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.

 
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EACH PARTY AGREES:  (A) THAT ITS WAIVER OF RIGHTS UNDER THIS RELEASE IS KNOWING
AND VOLUNTARY; (B) THAT IT UNDERSTANDS THE TERMS OF THIS RELEASE; AND (C) THAT
IT HAS HAD THE OPPORTUNITY TO CONSULT WITH AN ATTORNEY PRIOR TO EXECUTING THIS
RELEASE.

Notwithstanding the foregoing, this release shall exclude, and nothing herein
waives or releases: (i) a Cardiff Party’s  rights or claims to indemnification,
contribution and/or payment of related expenses under (a) any applicable law,
(b) the Company’s articles of incorporation, bylaws or other corporate
organizational documents, as applicable, or (c) any directors and officers
insurance policies under which a Cardiff Party is eligible to receive coverage;
or (ii) the rights of a Cardiff Party to continue to own the shares of the
Company’s common stock identified in the 5th recital to this Agreement; provided
that the Cardiff Parties are hereby waiving and releasing any and all claims
that they may have against any Releasee arising from or relating to such
ownership..

5.           Confidentiality.  Each Cardiff Party acknowledges that in
connection with his or its relationship with the Company, he or it has had
access to, received or assisted in the development of, proprietary and
confidential information concerning the present and proposed business of the
Company.  This information includes, without limitation or designation as such,
the terms of contracts, customer relationships, pricing information, and other
information, which is not generally known to the public.  Each Cardiff Party
acknowledges and agrees that all such information is, and will at all times
remain, the sole and exclusive property of the Company.  Each Cardiff Party
acknowledges and agrees that he or it will hold such information in confidence
and not disclose any of such information to any third party. 6.  Representations
and Warranties of the Company.  The Company represents and warrants to the
Cardiff Parties that:(a)  The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada.  The
Company has all requisite corporate power and authority to own and operate its
properties and assets, to enter into this Agreement, to carry out the provisions
of this Agreement and to carry on its business as presently conducted.(b)  All
corporate action on the part of the Company, its directors and its stockholders
necessary for the authorization, execution, delivery and performance of this
Agreement by the Company and the performance of the Company’s obligations
hereunder, including the issuance and delivery of the Shares, has been
taken.  This Agreement, when executed and delivered by the Company, constitutes
a valid and binding obligation of the Company enforceable in accordance with its
terms, subject to laws of general application relating to bankruptcy,
insolvency, the relief of debtors and, with respect to rights to indemnity,
subject to federal and state securities laws.

 
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(c)  The Shares, when issued in compliance with the provisions of this
Agreement, will be validly issued, fully paid and nonassessable and free of any
liens, preemptive rights, rights of first refusal, restrictions or encumbrances,
other than those created by Cardiff.
 
(d)  All consents, approvals, orders, or authorizations of, or registrations,
qualifications, designations, declarations, or filings with, any governmental
authority, required on the part of the Company in connection with the valid
execution and delivery of this Agreement and the offer, sale or issuance of the
Shares have been obtained and are effective, except for notices required or
permitted to be filed with certain state and federal securities commissions,
which notices will be filed on a timely basis.
 
7. Representations and Warranties of Cardiff Parties.  Each Cardiff Party
represents and warrants to the Company that:(a)  Each of Cardiff and MBA is a
limited liability company duly organized, validly existing and in good standing
under the laws of the State of California.  Each of Cardiff and MBA has all
requisite power and authority to own and operate its properties and assets, to
enter into this Agreement, to carry out the provisions of this Agreement and to
carry on its business as presently conducted.(b)  All organizational action on
the part of each of Cardiff and MBA necessary for the authorization, execution,
delivery and performance of this Agreement by Cardiff and MBA and the
performance of Cardiff’s and MBA’s obligations hereunder has been taken.  This
Agreement, when executed and delivered by each Cardiff Party, constitutes a
valid and binding obligation of the Cardiff Party enforceable in accordance with
its terms, subject to laws of general application relating to bankruptcy,
insolvency, the relief of debtors and, with respect to rights to indemnity,
subject to federal and state securities laws.
 
(c)  Other than the Support Services Agreement, the Advisory Agreement and the
Employment Agreement, there are no relationships and agreements, written or
oral, of any kind whatsoever between any Cardiff Party (or their affiliates) and
the Company.
 
(d)  Cardiff is acquiring the Shares, solely for its own account and beneficial
interest for investment and not for sale or with a view to distribution of the
Shares or any part thereof, has no present intention of selling (in connection
with a distribution or otherwise), granting any participation in, or otherwise
distributing the same, and does not presently have reason to anticipate a change
in such intention.
 
(e)  Cardiff hereby: (i) acknowledges that it has had access to and reviewed the
periodic and other reports filed by the Company pursuant to the Securities
Exchange Act of 1934, as amended, (ii) acknowledges that it has received all the
information it has requested from the Company and he considers necessary or
appropriate for deciding whether to acquire the Shares, (iii) represents that it
has had an opportunity to ask questions and receive answers from the Company and
to obtain any additional information necessary to verify the accuracy of the
information given him and (iv) further represents that it has such knowledge and
experience in financial and business matters that it is capable of evaluating
the merits and risk of this investment.

 
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(f)  Cardiff acknowledges that investment in the Shares involves a high degree
of risk, and represents that it is able, without materially impairing its
financial condition, to hold the Shares for an indefinite period of time and to
suffer a complete loss of his investment.  In addition, Cardiff (i) has such
knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risks of its investment in the Shares and
(ii) understands and has fully considered for purposes of this investment the
risks of this investment and understands that (w) this investment is suitable
only for an investor who is able to bear the economic consequences of losing its
entire investment, (x) the Company has a limited financial and operating
history, (y) the Shares represent an extremely speculative investment which
involves a high degree of risk of loss, and (z) there are substantial
restrictions on the transferability of the Shares; accordingly, it may not be
possible for Cardiff to liquidate its investment in the Shares in case of
emergency.  Cardiff understands that there have been no representations as to
the possible future value, if any, of the Shares.
 
(g)  Cardiff understands and acknowledges that the offering and issuance of the
Shares will not be registered under the Securities Act on the grounds that the
offering and issuance of the Shares are exempt from registration under the
Securities Act, and that the Company’s reliance upon such exemption is
predicated upon Cardiff’s representations set forth in this Agreement.  Cardiff
understands and acknowledges that the Shares must be held indefinitely and he
cannot dispose of the Shares unless the offer and sale of the Shares is
registered under the Securities Act or unless an exemption from registration is
available.
 
(h)  Cardiff is not relying on any statements or representations of the Company
or any of its agents with respect to the tax consequences of this investment and
the transactions contemplated by this Agreement and understands that Cardiff
(and not the Company) shall be responsible for Cardiff’s own tax liability that
may arise as a result of this investment or the transactions contemplated by
this Agreement.  Cardiff is not relying on any statements or representations of
the Company or any of its agents for legal advice with respect to this
investment or the transactions contemplated by this Agreement.
 
(i)  Cardiff is an “accredited investor” as such term is defined in Rule 501
under the Securities Act.
 
(j)  Cardiff agrees and covenants that at any time and from time to time it will
promptly execute and deliver to the Company such further instruments and
documents and will take such further action as the Company may reasonably
require in order to comply with state or federal securities laws or other
regulatory approvals.
 
 
B.
MISCELLANEOUS

 
1.           Binding on Successors and Heirs; Releasees are Intended
Beneficiaries.  This Agreement is binding upon and for the benefit of the
Company and its successors and assigns and each Cardiff Party and their
successors and assigns.  Each Releasee is an intended beneficiary of this
Agreement.
 
2.           Negotiation.  This Agreement is the product of arms length
negotiations and contains all the terms and conditions agreed upon by us
regarding the subject of the termination of the relationship of the Cardiff
Parties with the Company.  This Agreement shall be deemed jointly negotiated and
drafted.

 
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3.           Careful Consideration after Advice.  Each party hereby acknowledges
that it has read this Agreement carefully and understands the Release set forth
in Section A.4 and that it is agreeing to it voluntarily and without
coercion.  Each party further acknowledge that he was given sufficient time
within which to consider the Release and was given the opportunity by the to
consult with an attorney of its own choosing concerning the Release, and that
the waivers it has made herein are knowing, conscious and with full appreciation
that it is forever foreclosed from pursuing any of the rights so waived.
 
4.           Severability.  If any provision or portion of this Agreement is
held by a court of competent jurisdiction to be invalid or unenforceable, the
remaining provisions shall nevertheless continue in full force without being
impaired or invalidated in any way; provided, however, that this shall be deemed
to be made in any such invalid or unenforceable provision or portion such minor
changes, and only such minor changes, as are necessary to make it valid and
enforceable.
 
5.           Entire Agreement.  This Agreement sets forth the entire agreement
and understanding between the Cardiff Parties and the Company with respect to
the subject matter hereof and supersedes all prior contracts, agreements,
arrangements, communications, promises, discussions, negotiations,
representations and warranties between the Company and the Cardiff Parties,
whether oral or written, relating to the relationship of the Cardiff Parties
with the Company or the subject of the termination of his relationship.  In the
event that there are any inconsistencies between the terms of this Agreement and
any other agreement, the terms of this Agreement shall constitute an amendment
to, and shall supersede for all purposes, the relevant provision of that
document.
 
6.           Governing Law.  The laws of the State of California shall govern
this Agreement.

 
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In WITNESS HEREOF, the parties have executed this Agreement on the dates
indicated below.

Trans-Pacific Aerospace, Inc.
       
By:
     
William Reed McKay, CEO
 
Dated: 
         
CARDIFF PARTIES
               
Cardiff Partners, LLC
 
Dated:
                 
Monarch Bay Associates, LLC
 
Dated:
                 
Keith Moore
 
Dated:
                 
Matt Szot
 
Dated:
                 
David Walters
 
Dated:
   

 
 
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