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.


    
      
         


      

      
        
        

        
          

        

      

      
         


      

    


    (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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