Document:

ASSET
PURCHASE AGREEMENT

     

    by
and among

     

    PINNACLE
ENERGY CORP.,

     

    HARBIN
AEROSPACE COMPANY, LLC

     

    and

     

    THE
CONTROLLING MEMBERS IDENTIFIED HEREIN

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    ASSET
PURCHASE AGREEMENT

     

    ASSET
PURCHASE AGREEMENT, dated as of January 27, 2010 (this “Agreement”), by and
among Pinnacle Energy Corp., a Nevada corporation (“Buyer”), Harbin
Aerospace Company, LLC, a Nevada limited liability company ("Seller"), and Nikki
Lynn McKay and William Reed McKay (together, the “Controlling
Members”).

     

    WITNESSTH:

     

    WHEREAS,
Seller conducts a business which designs, engineers and manufactures aircraft
component parts (the “Business”);

     

    WHEREAS,
Buyer desires to purchase substantially all of the assets of the Business from
Seller, and Seller desires to sell substantially all of the assets of the
Business to Buyer, upon the terms and subject to the conditions hereinafter set
forth; and

     

    WHEREAS,
the parties hereto desire that such purchase and sale is effected by means of a
transaction which is described in Section 368 of the United States Internal
Revenue Code of 1986, as amended (the “Code”) and accorded tax-free treatment
thereunder; and

     

    NOW,
THEREFORE, the parties hereto agree as follows:

     

    ARTICLE
I

    DEFINITIONS

     

    Section
1.01     Definitions.

     

    (a)        The
following terms, as used herein, have the following meanings:

     

    “Closing Date” means
the date of the Closing.

     

    “Environmental Laws”
means any and all federal, state, local and foreign statutes, laws (including
common or case law), regulations, ordinances, rules, judgments, judicial
decisions, orders, decrees, codes, plans, injunctions, permits, concessions,
grants, franchises, licenses, agreements or governmental restrictions, relating
to the environment or to emissions, discharges or releases of pollutants,
contaminants, petroleum or petroleum products, chemicals or industrial, toxic,
radioactive or hazardous substances or wastes into the environment, including
(without limitation) ambient air, surface water, ground water, or land, or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of pollutants, contaminants, petroleum
or petroleum products, chemicals or industrial, toxic, radioactive or hazardous
substances or wastes or the clean-up or other remediation thereof.

     

    “Intellectual Property
Right” means any trademark, service mark, registration thereof or
application for registration therefore, trade name, invention, patent, patent
application, trade secret, know-how, copyright, copyright registration,
application for copyright registration, or any other similar type of proprietary
intellectual property right, in each case which is owned or licensed by Seller
or any affiliate of Seller and used or held for use in the
Business.

    
      
         

      

      
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    “Lien” means, with
respect to any asset, any mortgage, lien, pledge, charge, security interest or
encumbrance of any kind in respect of such asset.

     

     “Permitted Lien” means
(i) Liens for taxes not yet due or being contested in good faith, or (ii) Liens
which do not materially detract from the value of the Purchased Assets as now
used, or materially interfere with any present or intended use of such Purchased
Asset.

     

    “Person” means an
individual, a corporation, a partnership, an association, a trust or other
entity or organization, including a government or political subdivision or an
agency or instrumentality.

     

    “Post-Closing Tax
Period” means any Tax period (or portion thereof) ending after the
Closing Date.

     

    “Pre-Closing Tax
Period” means any Tax period (or portion thereof) ending on or before the
close of business on the Closing Date.

     

    "Taxes" means any net
income, alternative or add-on minimum tax, gross income, gross receipts, sales,
uses, ad valorem, franchise, capital, paid-up capital, profits, greenmail,
license, withholding, payroll, employment, excise, severance, stamp, occupation,
premium, property, environmental or windfall profit tax, custom, duty or other
tax, governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest or any penalty, addition to tax or additional amount
imposed by any governmental authority (domestic or foreign) responsible for the
imposition of any such tax.

     

    (b)    Each
of the following terms is defined in the Section set forth opposite such
term:

     

    
      
        
          
            	
                    Term

                  	 
      	
                    Section

                  
	
                    Assumed
      Liabilities

                  	 
      	
                    2.03

                  
	
                    Benefit
      Arrangements

                  	 
      	
                    3.17(c)

                  
	
                    Business

                  	 
      	
                    Recitals

                  
	
                    Buyer
      Shares

                  	 
      	
                    2.06

                  
	
                    Buyer
      Securities

                  	 
      	
                    2.07

                  
	
                    Closing

                  	 
      	
                    2.07

                  
	
                    Code

                  	 
      	
                    Recitals

                  
	
                    Commission
      Documents

                  	 
      	
                    4.05

                  
	
                    Contracts

                  	 
      	
                    2.01(b)

                  
	
                    Damages

                  	 
      	
                    7.02

                  
	
                    Employee
      Benefit Plan

                  	 
      	
                    3.17(c)

                  
	
                    Excluded
      Assets

                  	 
      	
                    2.02

                  
	
                    Excluded
      Liabilities

                  	 
      	
                    2.04

                  
	
                    Governmental
      Entity

                  	 
      	
                    3.03

                  
	
                    HKCO

                  	 
      	
                    2.01

                  
	
                    HKCO
      Agreement

                  	 
      	
                    2.01

                  
	
                    Material
      Adverse Effect

                  	 
      	
                    3.01

                  
	
                    Permits

                  	 
      	
                    3.12

                  
	
                    Purchased
      Assets

                  	 
      	
                    2.01

                  
	
                    Purchase
      Price

                  	 
      	
                    2.06

                  
	
                    Securities
      Act

                  	 
      	
                    2.07

                  
	
                    Seller
      Balance Sheet

                  	 
      	
                    3.08

                  
	
                    Seller
      Balance Sheet Date

                  	 
      	
                    3.06

                  
	
                    Series
      A Warrant

                  	 
      	
                    2.06

                  
	
                    Series
      B Warrant

                  	 
      	
                    2.06

                  
	
                    Transferred
      Employee

                  	 
      	
                    5.03(f)

                  

          

        

      

    

     

    
      
         

      

      
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    ARTICLE
II

    PURCHASE
AND SALE

     

    Section
2.01   Purchase
and Sale.  Upon the terms and subject to the conditions of this
Agreement, Buyer agrees to purchase from Seller and Seller agrees to sell,
transfer, assign and deliver, or cause to be sold, transferred, assigned and
delivered, to Buyer at Closing, free and clear of all Liens, other than
Permitted Liens, all of the assets, properties and business, other than the
Excluded Assets, of every kind and description, wherever located, real, personal
or mixed, tangible or intangible, owned, held or used in the conduct of the
Business by Seller as the same shall exist on the Closing Date, including all of
the assets shown on the Seller Balance Sheet and not disposed of in the ordinary
course of business, and all assets of the Business thereafter acquired by Seller
(the “Purchased
Assets”), and including, without limitation, all right, title and
interest of Seller in, to and under:

     

    (a)     All
personal property and interest therein, including equipment, furniture, office
equipment, communications equipment,

     

    (b)     All
rights under all contracts, agreements, leases, licenses, commitments, sales and
purchase orders and other instruments, including without limitation the items
listed on Section
3.11 of the Seller Disclosure Schedule (collectively, the “Contracts”);

     

    (c)     All
accounts, notes and other receivables, including (without limitation) those set
forth in Schedule
A hereto;

     

    (d)     All
prepaid expenses to the extent relating to the operation of the
Business;

     

    (e)     All
of Seller’s rights, claims, credits, causes of action or rights of set-off
against third parties relating to the Purchased Assets, including (without
limitation) un-liquidated rights under manufacturers’ and vendors’
warranties;

     

    (f)     All
patents, copyrights, trademarks, trade names, service marks, service names,
technology know-how, processes, trade secrets, inventions, proprietary data,
formulae, research and development data, computer software programs and other
intangible property and any applications for the same used in the Business,
including (without limitation) the items listed on Section 3.16 of the
Seller Disclosure Schedule;

    
      
         

      

      
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    (g)     All
transferable licenses, permits or other governmental authorizations affecting,
or relating in any way to, the Business, including (without limitation) the
items listed on Section 3.12 of the
Seller Disclosure Schedule;

     

    (h)     All
books, records, files and papers, whether in hard copy or computer format, used
in the Business, including (without limitation) engineering information, sales
and promotional literature, manuals and data, sales and purchase correspondence,
lists of present and former suppliers, lists of present and former customers,
personnel and employment records, and any information relating to Tax imposed on
the Purchased Assets;

     

    (i)      All
computer software programs and data used in connection with the
Business;

     

    (j)      All
of Seller’s interest in the company (“HKCO”) to be formed
pursuant to that certain Agreement (the “HKCO Agreement”),
dated January 19, 2010, between Seller, Ma Jing, Liu Pan-Rong and China
International Business Consultancy, LLC a California LLC;

     

    (k)     All
of Seller’s interest in the WFOE, the China JV and any other entities described
by the HKCO Agreement or contemplated by the parties thereto;

     

    (l)      All
of Seller’s rights under the HKCO Agreement; and

     

    (m)    All
goodwill associated with the Business or the Purchased Assets, together with the
right to represent to third parties that Buyer is the successors to the
Business.

     

    Section
2.02       Excluded
Assets.  Buyer expressly understands and agrees that the
following assets and properties of Seller (the “Excluded Assets”)
will be excluded from the Purchased Assets:

     

    (a)     All
minute books and ownership records of Seller; and

     

    (b)     Any
Purchased Assets sold or otherwise disposed of in the ordinary course of the
operation of the Business and not in violation of any provisions of this
Agreement during the period from the date hereof until the Closing
Date.

     

    Section
2.03       Assumption
of Liabilities.  Upon the terms and subject to the conditions
of this Agreement, Buyer agrees, effective at the time of the Closing to assume
the liabilities identified on Schedule B hereto
(the “Assumed
Liabilities”).

     

    Section
2.04       Excluded
Liabilities.  Notwithstanding any provision in this Agreement
or any other writing to the contrary, Buyer is assuming only the Assumed
Liabilities and is not assuming any other liability or obligation of Seller (or
any predecessor owner of all or part of its business and assets) of whatever
nature whether presently in existence or arising hereafter.  All such
other liabilities and obligations shall be retained by and remain obligations
and liabilities of Seller (all such liabilities and obligations not being
assumed being herein referred to as the “Excluded
Liabilities”), and, notwithstanding anything to the contrary in this
Section 2.04,
none of the following shall be Assumed Liabilities for the purposes of this
Agreement:

    
      
         

      

      
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    (a)     Any
liability or obligation for Tax arising from or with respect to the Purchased
Assets or the operations of the Business which is incurred in or attributable to
the Pre-Closing Tax Period;

     

    (b)     Any
liability or obligation under the Contracts that arises after the Closing Date
but that arises out of or relates to any breach that occurred on or before the
Closing Date;

     

    (c)     Any
liability or obligation relating to employee benefits or compensation
arrangements existing on or prior to the Closing Date not specifically
identified as an Assumed Liability;  and

     

    (d)     Any
liability or obligation relating to an Excluded Asset.

     

    Section
2.05     Assignment
of Contracts and Rights.  Anything in this Agreement to the
contrary notwithstanding, this Agreement shall not constitute an agreement to
assign any Purchased Asset or any claim or right or any benefit arising
thereunder or resulting therefrom if an attempted assignment thereof, without
the consent of a third party thereto, would constitute a breach or other
contravention thereof to in any way adversely affect the rights of Buyer or
Seller thereunder.  Each of Seller and Buyer will use their best
efforts (but without any payment of money by Seller or Buyer) to obtain the
consent of the other parties to any such Purchased Asset or any claim or right
or any benefit arising thereunder for the assignment thereof to Buyer as Buyer
may request.  If such consent is not obtained, or if an attempted
assignment thereof would be ineffective or would adversely affect the rights of
Seller thereunder so that Buyer would not in fact receive all such rights, each
of Seller and Buyer will cooperate in a mutually agreeable arrangement under
which Buyer would obtain the benefits and assume the obligations thereunder in
accordance with this Agreement, including subcontracting, sublicensing, or
subleasing to Buyer, or under which Seller would enforce for the benefit of
Buyer, with Buyer assuming Seller’s obligations, any and all rights of Seller
against a third party thereto.  Seller will promptly pay to Buyer when
received all monies received by Seller under any Purchased Asset or any claim or
right or any benefit arising thereunder.  In such event, Seller and
Buyer shall, to the extent the benefits therefrom and obligations thereunder
have not been provided by alternative arrangements satisfactory to Buyer and
Seller, negotiate in good faith an adjustment in the consideration paid by Buyer
for the Purchased Assets.

     

    Section
2.06     Purchase Price; Allocation
of Purchase Price.

     

    (a)          The
purchase price for the Purchased Assets (the “Purchase Price”)
is:

     

    (i)           
8,000,000 authorized, but unissued, shares of Common Stock, par value $0.001 per
share, of Buyer (the “Buyer
Shares”);

     

    (ii)           a
Series A Common Stock Purchase Warrant, substantially in the form of Exhibit A-1 hereto,
to purchase 4,000,000 shares of Common Stock of Buyer (the “Series A Warrant”);
and

    
      
         

      

      
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    (iii)           a
Series B Common Stock Purchase Warrant, substantially in the form of Exhibit A-2 hereto,
to purchase 4,000,000 shares of Common Stock of Buyer (the “Series B
Warrant”).

     

    The
Purchase Price shall be paid as provided in Section
2.07.

     

    (b)           Seller
and Buyer agree to report an allocation of the Purchase Price among the
Purchased Assets in a manner entirely consistent with the allocation set forth
on Schedule C
hereto, and agree to act in accordance with such allocation in the preparation
of financial statements and filing of all tax returns and in the course of any
tax audit, tax review or tax litigation relating thereto.

     

    Section
2.07          Closing.  The
closing (the “Closing”) of the
purchase and sale of the Purchased Assets and the assumption of the Assumed
Liabilities hereunder shall take place at the offices of Buyer in San Juan
Capistrano, California as soon as possible, but in no event later than three
business days, after the satisfaction of the conditions set forth in Article VI,
or at such other time or place as Buyer and Seller may agree.  At the
Closing,

     

    (a)        Buyer
shall deliver to Seller stock certificates representing the Buyer
Shares;

     

    (b)        Buyer
shall deliver to Seller the Series A Warrant and the Series B
Warrant.

     

    (c)        Seller
and Buyer shall enter into an Assignment and Assumption Agreement substantially
in the form attached hereto as Exhibit B;
and

     

    (d)        Seller
shall deliver to Buyer such deeds, bills of sale, assignment, certificates or
title, documents and other instruments of transfer and conveyance as may
reasonably be requested by Buyer, each in form and substance satisfactory to
Buyer and its legal counsel and executed by Seller.

     

    All Buyer
Shares, the Series A Warrant and the Series B Warrant (collectively, the “Buyer Securities”) to
be issued hereunder shall be deemed “restricted securities” as
defined in paragraph (a) of Rule 144 under the Securities Act of 1933, as
amended (the “Securities
Act”).  All Buyer Securities to be issued under the terms of
this Agreement shall be issued pursuant to an exemption from the registration
requirements of the Securities Act, under Section 4(2) of the Securities Act and
the rules and regulations promulgated thereunder.  Certificates
representing the Buyer Securities to be issued hereunder shall bear a
restrictive legend in substantially the following form:

    

    The
securities represented by this certificate have not been registered under the
Securities Act of 1933, as amended, and may not be offered for sale, sold, or
otherwise disposed of, except in compliance with the registration provisions of
such Act or pursuant to an exemption from such registration provisions, the
availability of which is to be established to the satisfaction of the
Company.

    
      
         

      

      
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    Section
2.08     Tax
Consequences.  For federal income tax purposes, the
transactions contemplated hereby are intended to constitute a "reorganization"
within the meaning of Section 368 of the Code. The parties to this Agreement
hereby adopt this Agreement as a "plan of reorganization" within the meaning of
Sections 1.368-2(g) and 1.368-3(a) of the United States Treasury Regulations,
and each party is intended to be a "party to the reorganization" within the
meaning of Section 368 of the Code.

     

    ARTICLE
III

    REPRESENTATIONS
AND WARRANTIES OF SELLER AND CONTROLLING MEMBERS

     

    Seller
and the Controlling Members, jointly and severally, hereby represent and warrant
to Buyer that:

     

    Section
3.01      Organization.

     

    (a)           Seller
is a limited liability company duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization and has all
requisite power and authority to own, lease and operate its properties and to
carry on its business as now being conducted.  Seller is duly
qualified or licensed and in good standing to do business in each jurisdiction
in which the property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification or licensing necessary, except
in such jurisdictions where the failure to be so duly qualified or licensed and
in good standing would not in the aggregate have a material adverse effect on
the business, assets, condition (financial or otherwise), results of operations
or prospects of the Business (a “Material Adverse
Effect”).

     

    (b)           Except
for the interest in HKCO and any subsidiary entities described by the HKCO
Agreement, Seller does not directly or indirectly own any equity or similar
interest in, or any interest convertible into or exchangeable or exercisable for
any equity or similar interest in, any corporation, partnership, limited
liability company, joint venture or other business association or
entity.

     

    Section
3.02      Authorization.  The
execution, delivery and performance by Seller of this Agreement and the
consummation by it of the transactions contemplated hereby are within its
organizational powers and have been duly authorized by all necessary
organizational action of Seller.  This Agreement has been duly and
validly executed and delivered by Seller and each Controlling Member and
constitutes a valid and binding agreement of each of them, enforceable against
it in accordance with its terms.

     

    Section
3.03       Governmental
Authorization; Consents.

     

    (a)           The
execution, delivery and performance by Seller of this Agreement require no
action by or in respect of, or filing with, any governmental body, agency,
official or authority (a “Governmental
Entity”).

    
      
         

      

      
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    (b)           Except
as set forth on Section 3.03 of the
Seller Disclosure Schedule, no consent, approval, waiver or other action by an
Person (other than any governmental body, agency, official or authority referred
to in (a) above) under any contract, agreement, indenture, lease, instrument, or
other document to which Seller is a party or by which it is bound is required or
necessary for the execution, delivery and performance of this Agreement by
Seller or the consummation of the transactions contemplated hereby.

     

    Section
3.04     Non-Contravention.  The
execution, delivery and performance by Seller of this Agreement do not and will
not (i) contravene or conflict with the articles of organization or operating
agreement of Seller, (ii) contravene or conflict with or constitute a violation
of any provision of any law, regulation, judgment, injunction, order or decree
binding upon or applicable to Seller; (iii) constitute a default under or give
rise to any right of termination, cancellation or acceleration of any right or
obligation of Seller or to a loss of any benefit to which Seller is entitled
under any provision of any agreement, contract, or other instrument binding upon
Seller or any license, franchise, permit or other similar authorization held by
Seller or (iv) result in the creation or imposition of any Lien on any Purchased
Asset.

     

    Section
3.05     Sufficiency
of and Title to Purchased Assets.

     

    (a)           The
Purchased Assets constitute, and on the Closing Date will constitute, all or the
assets or property used or held for use in the Business.

     

    (b)           Upon
consummation of the transaction contemplated hereby, Buyer will have acquired
good and marketable title in and to, or a valid leasehold interest in, each of
the Purchased Assets, free and clear of all Liens, except for Permitted
Liens.

     

    Section
3.06     Financial
Statements.  The unaudited financial statements of operations
for the Business taken as a whole for the period from the inception of Seller
through December 31, 2009 (the “Seller Balance Sheet
Date”) previously delivered to Buyer fairly present, in conformity with
generally accepted accounting principles applied on a consistent basis (except
as indicated in the notes thereto), the financial position of the Business taken
as a whole as of the dates thereof and its results of operations and cash flows
for the periods then ended (subject to normal year-end adjustments in the case
of interim financial statements).

     

    Section
3.07     Absence
of Certain Changes.  Except as set forth in Section 3.07 of the
Seller Disclosure Schedule, since the Seller Balance Sheet Date, Seller has
conducted the Business in the ordinary course consistent with past practices and
there has not been:

     

    (a)  any
material adverse change in the business, assets, condition (financial or
otherwise), results of operations or prospects of the Business;

     

    (b) any
incurrence, assumption or guarantee by Seller of any indebtedness for borrowed
money with respect to the Business;

     

    (c)  any
creation or other incurrence of any Lien on any Purchased Asset other than in
the ordinary course of business consistent with past practices;

    
      
         

      

      
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    (d)  any
making of any loan, advance or capital contributions to or investment in any
Person;

     

    (e)  any
damage, destruction or other casualty loss (whether or not covered by insurance)
affecting the Business or any Purchased Asset which, individually or in the
aggregate, could reasonably be expected to have a Material Adverse
Effect;

     

    (f)  any
transaction or commitment made, or any contract or agreement entered into, by
Seller relating to any Purchased Asset or the Business (including the
acquisition or disposition of any assets) or any relinquishment by Seller of any
material contract or other right, other than transactions and commitments in the
ordinary course consistent with past practices and those contemplated by this
Agreement;

     

    (g)  any
change in any method of accounting or accounting practice by either Seller with
respect to the Business, except for any such change after the date hereof
required by reason of a concurrent change in generally accepted accounting
principles; or

     

    (j)  any
(i) grant of any severance or termination pay to any employee of the Business,
(ii) entering into of any employment, deferred compensation or other similar
agreement (or any amendment to any such existing agreement) with any employee of
the Business, (iii) increase in benefits payable under an existing severance or
termination pay policies or employment agreements or (iv) increase in
compensation, bonus or other benefits payable to employees of the
Business.

     

    Section
3.08     No
Undisclosed Liabilities.  Except as and to the extent set forth
in Section 3.08 of
the Seller Disclosure Schedule, there are no liabilities of the Business of any
kind whatsoever, whether accrued, contingent, absolute, determined, determinable
or otherwise, and there is no existing condition, situation or set of
circumstances which could reasonably be expected to result in such a liability,
other than:

     

    (a)  Liabilities
disclosed or provided for in the unaudited balance sheet of the Business as of
December 31, 2009 (the “Seller Balance
Sheet”) previously delivered to Buyer;

     

    (b)  Liabilities
incurred in the ordinary course of business consistent with past practice since
the Seller Balance Sheet Date, which in the aggregate are not material to the
Business; and

     

    (c)  Liabilities
not required under generally accepted accounting principles to be shown on the
Seller Balance Sheet for reasons other than the contingent nature thereof or the
difficulty of determining the amount thereof.

     

    Section
3.09     Properties.  Seller
has good and marketable title to, or in the case of leased property has valid
leasehold interests in, all Purchased Assets (whether real or personal, tangible
or intangible) reflected on the Seller Balance Sheet or acquired after the
Seller Balance Sheet Date, except for properties and assets sold since the
Seller Balance Sheet Date in the ordinary course of business consistent with
past practices or as contemplated by this Agreement.  No Purchased
Asset is subject to any Lien, except:

    
      
         

      

      
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    (a)  Liens
disclosed on the Seller Balance Sheet;

     

    (b)  Liens
for taxes not yet due or being contested in good faith (and for which adequate
accruals or reserves have been established on the Seller Balance Sheet);
or

     

    (c)  Liens
which do not materially detract from the value of such property or assets as now
used.

     

    Section
3.10     Litigation.  Except
as set forth in Section 3.10 of the
Seller Disclosure Schedule, there is no action, suit, investigation, proceeding,
review pending against, or to the knowledge of Seller threatened against or
affecting, the Business or any Purchased Asset before any court or arbitrator or
any Governmental Entity which, if determined or resolved adversely in accordance
with the plaintiff’s demands, could reasonably be expected to have a Material
Adverse Effect or which in any manner challenges or seeks to prevent, enjoin,
alter or materially delay the transactions contemplated hereby.

     

    Section
3.11      Material
Contracts.

     

    (a)  Except
for agreements, contracts, plans, leases, arrangements or commitments set forth
in Section 3.11
of the Seller Disclosure Schedule, with respect to the Business, Seller is not a
party to or subject to:

     

    (i)    
  Any lease providing for annual rentals of $5,000 or
more;

     

    (ii)    
Any contract for the purchase of materials, supplies, goods, services, equipment
or other assets providing for annual payments by Sellers of $10,000 or
more;

     

    (iii)   
Any sales, distribution or other similar agreement providing for the sale by
Seller of materials, supplies, goods, services, equipment or other assets that
provides for annual payments to Seller of $10,000 or more;

     

    (iv)   
Any partnership, joint venture or other similar contract or
arrangement;

     

    (v)   
Any contract relating to indebtedness for borrowed money or the deferred
purchase price of property (whether incurred, assumed, guaranteed or secured by
any asset), except contracts relating to indebtedness incurred in the ordinary
course of business in an amount not exceeding $10,000;

     

    (vi)   
Any license agreement, franchise agreement or agreement in respect of similar
rights granted to or held by Seller;

     

    (vii)  
Any agency, dealer, reseller, sales representative or similar
agreement;

     

    (viii)  Any
agreement, contract or commitment that substantially limits the freedom of
Seller to compete in any line of business or with any Person or in any area or
to own, operate, sell, transfer, pledge or otherwise dispose of or encumber any
Purchased Asset or which would so limit the freedom of Buyer after the Closing
Date;

    
      
         

      

      
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    (ix)     Any
agreement, contract or commitment which is or relates to an agreement with or
for the benefit of any affiliate of Seller; or

     

    (x)      Any
other contract or commitment not made in the ordinary course of business that is
material to Seller.

     

    (b)  Each
agreement, contract, plan, lease, arrangement and commitment required to be
disclosed on Section
3.11 of the Seller Disclosure Schedule is a valid and binding agreement
of Seller and is in full force and effect, and neither Seller nor any other
party thereto is in default in any material respect under the terms of any such
agreement, contract, plan, lease, arrangement or commitment, nor to the
knowledge of Seller, has any event or circumstance occurred that, with notice or
lapse of time or both, would constitute any event of default
thereunder.

     

    Section
3.12     License
and Permits.   Section 3.12 of the
Seller Disclosure Schedule correctly describes each license, franchise, permit
or other similar authorization affecting, or relating in any way to, the
Business, together with the name of the Governmental Entity issuing such license
or permit (the “Permits”).  Except
as set forth on Section 3.12 of the
Seller Disclosure Schedule, such Permits are valid and in full force and effect
and are transferable by Seller, and none of the Permits will be terminated or
impaired or become terminable as a result of the transactions contemplated
hereby.  Upon consummation of such transactions, Buyer will have all
right, title and interest to all such Permits.

     

    Section
3.13     Insurance. Section 3.13 of the
Seller Disclosure Schedule sets forth a list of all insurance policies and
fidelity bonds covering the Purchased Assets, the business and operations of the
Business and its employees.  There is no claim by Seller pending under
any of such policies or bonds as to which coverage has been questioned, denied
or disputed by the underwriters of such policies or bonds.  All
premiums payable under all such policies and bonds have been paid and Seller is
otherwise in full compliance with the terms and conditions of all such policies
and bonds.  Such policies of insurance and bonds (or other policies
and bonds providing substantially similar insurance coverage) have been in
effect since March 11, 2009 and remain in full force and effect.  Such
policies of insurance and bonds are of the type and in amounts customarily
carried by Persons conducting businesses similar to the
Business.  Seller does not know of any threatened termination of, or
premium increase with respect to, any of such policies or bonds.

     

    Section
3.14      Compliance
with Laws.  Seller is not in violation of, since March 11, 2009
has not violated, and to Seller’s knowledge, is not under investigation with
respect to or has been threatened to be charged with or given notice of any
violation of, any law, rule, ordinance or regulation, or judgment, order or
decree entered by any court, arbitrator or Governmental Entity applicable to the
Purchased Assets or the conduct of the Business, except for violations that have
not had and could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.

     

    Section
3.15      Receivables.  All
accounts, notes receivable and other receivables (other than receivables
collected since the Seller Balance Sheet Date) reflected on the Seller Balance
Sheet are, and all accounts and notes receivable arising from or otherwise
relating to the Business at the Closing Date will be, valid genuine and fully
collectible in the aggregate amount thereof, subject to normal and customary
trade discounts, less any reserves for doubtful accounts recorded on the Seller
Balance Sheet.  All accounts, notes receivable and other receivables
arising out of or relating to the Business at the Seller Balance Sheet Date have
been included in the Seller Balance Sheet.

    
      
         

      

      
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    Section
3.16    Intellectual
Property.

     

    (a)           Section 3.16 of the
Seller Disclosure Schedule sets forth a list of all Intellectual Property
Rights, specifying as to each, as applicable: (i) the nature of such
Intellectual Property Right, (ii) the owner of such Intellectual Property Right,
(ii) the jurisdictions by or in which such Intellectual Property Right is
recognized without regard to registration or has been issued or registered or in
which an application for such issuance or registration has been filed, including
the respective registration or application numbers; and (iv) material licenses,
sublicenses and other agreements as to which Seller or any of its affiliates is
a party and pursuant to which any Person is authorized to use such Intellectual
Property Right, including the identity of the parties thereto and a description
of the nature and subject matter thereof.

     

    (b)           (i)   Seller
has not during the three years preceding the date of this Agreement been sued or
charged in writing with or been a defendant in any claim, suit, action or
proceeding relating to the Business that has not been finally terminated prior
to the date hereof and that involves a claim of infringement of patents,
trademarks, service marks or copyrights, and (ii) Seller has no knowledge of any
other claim or infringement by Seller, and no knowledge of any continuing
infringement by any other Person of any Intellectual Property
Rights.  No Intellectual Property Right is subject to any outstanding
order, judgment, decree, stipulation or agreement restricting the use thereof by
Seller with respect to the Business or restricting the licensing thereof by
Seller to any Person.  Seller has not entered into any agreement to
indemnify any other Person against any charge of infringement of any patent,
trademark, service mark or copyright.

     

    (c)           None
of the processes and formulae, research and development results and other
know-how relating to the Business, the value of which is contingent upon
maintenance of the confidentiality thereof, has been disclosed by Seller or any
affiliate thereof to any Person other than employees, representatives and agents
of Seller.

     

    Section
3.17    Employees.

     

    (a)           Section 3.17 of the
Seller Disclosure Schedule sets forth a true and complete list of (a) the names,
titles, annual salaries and other compensation of all employees of the Business
whose annual base salary exceeds $50,000 and (b) the wage rates for non-salaried
employees of the Business (by classification). None of such employees and no
other key employee of the Business has indicated to Seller that he intends to
resign or retire as a result of the transaction contemplated by this Agreement
or otherwise within two years after the Closing Date.

    

    (b)  Seller does not have any
collective bargaining arrangements or agreements covering any of employees of
the Business.  Except as set forth on Section 3.17 of the
Seller Disclosure Schedule, Seller has no employment contract, agreement
regarding proprietary information, non-competition agreement, non-solicitation
agreement, confidentiality agreement, or any other similar contract or
restrictive covenant, relating to the right of any employee or consultant of the
Business.

    
      
         

      

      
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    (c)           Except
as set forth in Section 3.17 of the
Seller Disclosure Schedule, Seller does not have, or contribute to, any pension,
profit-sharing, option, other incentive plan, or any other type of Employee
Benefit Plan (as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”)), or have any
obligation to or customary arrangement with employees of the Business for
bonuses, incentive compensation, vacations, severance pay, sick pay, sick leave,
insurance, service award, relocation, disability, tuition refund, or other
benefits, whether oral or written (collectively, “Benefit
Arrangements”).    Neither Seller nor any affiliate
has incurred with respect to any Employee Benefit Plan any liability to the
Pension Benefit Guaranty Corporation or other liability that could become, after
the Closing Date, an obligation of Buyer or any of their
affiliates.

    

    (d)  No Transferred Employee
will become entitled to any retirement, severance or similar benefit or enhanced
benefit solely as a result of the transactions contemplated hereby.

    

    Section
3.18   Environmental
Compliance.
Seller has obtained all material approvals, authorization, certificates,
consents, licenses, orders and permits or other similar authorizations of all
governmental authorities, or from any other person, that are required under
any  Environmental Laws in connection with the
Business.  Except for such instances as would not individually or in
the aggregate have a Material Adverse Effect, there are no past or present
events, conditions, circumstances, incidents, actions or omissions relating to
or in any way affecting the Business or any Purchased Asset that violate or may
violate any Environmental Law after the Closing Date or that may give rise to
any environmental liability, or otherwise form the basis of any claim, action,
demand, suit, proceeding, hearing, study or investigation (i) under any
Environmental Law, or (ii) based on or related to the manufacture, processing,
distribution, use, treatment, storage (including without limitation underground
storage tanks), disposal, transport or handling, or the emission, discharge,
release or threatened release of any hazardous substance.

     

    Section
3.19    Tax
Matters.  Except as set forth in Section 3.19 of the
Seller Disclosure Schedule:

     

    (a)           Seller
has timely paid all Taxes, and all interest and penalties due thereon and
payable by it for the Pre-Closing Tax Period which will have been required to be
paid on or prior to the Closing Date, the non-payment of which would result in a
Lien on any Purchased Asset, would otherwise adversely affect the Business or
would result in Buyer becoming liable or responsible therefore.

     

    (b)           Seller
has established, in accordance with generally accepted accounting principles
applied on a basis consistent with that of preceding periods, adequate reserves
for the payment of, and will timely pay all Tax liabilities, assessments,
interest and penalties which arise from or with respect to the Purchased Assets
or the operation of the Business and are incurred in or attributable to the
Pre-Closing Tax Period, the non-payment of which would result in a Lien on any
Purchased Asset, would otherwise adversely affect the Business or would result
in Buyer becoming liable or responsible therefore.

    
      
         

      

      
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    Section
3.20    Books and
Records.  The records and
documents of Seller accurately reflect in all material respects the information
relating to the Business, the location of the Purchased Assets, and the nature
of all transactions giving rise to the obligations or accounts receivable of the
Business.

     

    Section
3.21    Finders’
Fees.  There is no investment banker, broker, finder or other
intermediary which has been retained by or is authorized to act on behalf of
Seller who might be entitled to any fee or commission from Buyer or any of their
respective affiliates upon consummation of the transactions contemplated by this
Agreement.

     

    Section
3.22    No
Questionable Payments.  Neither Seller, nor any officer, agent,
employee, or other person associated with, or acting on behalf of, Seller, nor
any member of Seller has, directly or indirectly:  used any corporate
funds for unlawful contributions, gifts, entertainment, or other unlawful
expenses relating to political activity; made any unlawful payment to foreign or
domestic government officials or employees or to foreign or domestic political
parties or campaigns from corporate funds; violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended; or made any bribe, rebate, payoff,
influence payment, kickback, or other unlawful payment.

     

    Section
3.23    Other
Information.  None of the documents or information delivered to
Buyer in connection with the transactions contemplated by this Agreement
contains any untrue statement of material fact or omits to state a material fact
necessary in order to make the statements contained therein not
misleading.

     

    Section
3.24    Investment
Representations and Covenants.

     

    (a)           Seller
represents that it is acquiring the Buyer Securities for its own account and for
investment only and not with a view to distribution or resale thereof within the
meaning of such phrase as defined under the Securities Act.  Seller
shall not dispose of any part or all of such Buyer Securities in violation of
the provisions of the Securities Act and the rules and regulations promulgated
under the Securities Act by the Securities and Exchange Commission and all
applicable provisions of state securities laws and regulations.

     

    (b)           The
certificate or certificates representing the Buyer Securities shall bear a
legend in substantially the form set forth in Section 2.07
hereof.

     

    (c)           Seller
acknowledges being informed that the Buyer Securities shall be unregistered,
shall be “restricted
securities” as defined in paragraph (a) of Rule 144 under the Securities
Act, and must be held indefinitely unless (a) they are subsequently
registered under the Securities Act, or (b) an exemption from such
registration is available.

     

    (d)           Seller
acknowledges that it has been afforded access to all material information which
they have requested relevant to their decision to acquire the Buyer Securities
and to ask questions of Buyer’s management and that, except as set forth herein,
neither Buyer nor anyone acting on behalf of Buyer has made any representations
or warranties to Seller which have induced, persuaded, or stimulated the Seller
to acquire such Buyer Securities.

    
      
         

      

      
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    (e)           Either
alone, or together with its investment advisor(s), Seller has the knowledge and
experience in financial and business matters to be capable of evaluating the
merits and risks of the prospective investment in the Buyer Securities, and
Seller is and will be able to bear the economic risk of the investment in such
Buyer Securities.

     

    ARTICLE
IV

    REPRESENTATIONS
AND WARRANTIES OF

    BUYER

     

    Buyer
hereby represents and warrants to Seller that:

     

    Section
4.01    Organization.  Buyer
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has all requisite power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted.

     

    Section
4.02    Corporate
Authorization.  The execution, delivery and performance by
Buyer of this Agreement and the consummation by Buyer of the transactions
contemplated hereby are within Buyer’s corporate powers and have been duly
authorized by all necessary corporate action of Buyer.  This Agreement
has been duly and validly executed and delivered by Buyer and constitutes a
valid and binding agreement of Buyer, enforceable against Buyer in accordance
with its terms.

     

    Section
4.03    Governmental
Authorization; Consents.

     

    (a)           The
execution, delivery and performance by Buyer of this Agreement require no action
by or in respect of, or filing with, any Governmental Entity.

     

    (b)           No
consent, approval, waiver or other action by an Person (other than any
Governmental Entity referred to in (a) above) under any contract, agreement,
indenture, lease, instrument, or other document to which Buyer is a party or by
which it is bound is required or necessary for the execution, delivery and
performance of this Agreement by Buyer or the consummation of the transactions
contemplated hereby.

     

    Section
4.04    Non-Contravention.  The
execution, delivery and performance by Buyer of this Agreement do not and will
not (i) contravene or conflict with the certificate of incorporation or bylaws
of Buyer, or (ii) contravene or conflict with or constitute a violation of any
provision of any law, regulation, judgment, injunction, order or decree binding
upon or applicable to Buyer.

    
      
         

      

      
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    Section
4.05    Commission
Documents, Financial Statements.  Buyer has timely
filed all reports, schedules, forms, statements and other documents required to
be filed by it with the Securities and Exchange Commission (the “Commission”) pursuant
to the reporting requirements of the Securities Exchange Act of 1934, as amended
(the “Exchange
Act”) (all of the foregoing including filings incorporated by reference
therein being referred to herein as the “Commission
Documents”).  At the times of their respective filings, the
Form 10-Q for the fiscal quarter ended July 31, 2009 (the “Form 10-Q”) and the
Form 10-K for the fiscal year ended October 31, 2008, as amended (the “Form 10-K”) complied
in all material respects with the requirements of the Exchange Act and the rules
and regulations of the Commission promulgated thereunder, and the Form 10-Q and
Form 10-K did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.  As of their respective dates, the financial
statements of Buyer included in the Commission Documents complied as to form in
all material respects with applicable accounting requirements and the published
rules and regulations of the Commission.  Such financial statements
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto or (ii) in
the case of unaudited interim statements, to the extent they may not include
footnotes or may be condensed or summary statements), and fairly present in all
material respects the financial position of Buyer and its subsidiaries as of the
dates thereof and the results of operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments).

     

    Section
4.06    Absence
of Certain Changes.  Since July 31, 2009, except as disclosed
in the Commission Documents, Buyer has conducted its business in the ordinary
course consistent with past practices and there has not been any material
adverse change in the business, operations, properties, prospects or financial
condition of Buyer and its subsidiaries, taken as a whole;

     

    Section
4.07    Litigation.  There
is no action, suit, investigation, proceeding, review pending against, or to the
knowledge of the Buyer threatened against or affecting, Buyer before any court
or arbitrator or any Governmental Entity which in any manner challenges or seeks
to prevent, enjoin, alter or materially delay the transactions contemplated
hereby.

     

    Section
4.08    Environmental
Compliance. Buyer
has obtained all material approvals, authorization, certificates, consents,
licenses, orders and permits or other similar authorizations of all governmental
authorities, or from any other person, that are required under
any  Environmental Laws in connection with the it
business.  Except for such instances as would not individually or in
the aggregate have a material adverse effect on the business, assets, condition
(financial or otherwise), results of operations or prospects of Buyer’s
business, there are no past or present events, conditions, circumstances,
incidents, actions or omissions relating to or in any way affecting the Buyer’s
business that violate or may violate any Environmental Law after the Closing
Date or that may give rise to any environmental liability, or otherwise form the
basis of any claim, action, demand, suit, proceeding, hearing, study or
investigation (i) under any Environmental Law, or (ii) based on or related to
the manufacture, processing, distribution, use, treatment, storage (including
without limitation underground storage tanks), disposal, transport or handling,
or the emission, discharge, release or threatened release of any hazardous
substance.

     

    Section
4.09    Finders’
Fees.  There is no investment banker, broker, finder or other
intermediary which has been retained by or is authorized to act on behalf of
Buyer who might be entitled to any fee or commission from Seller or any of its
affiliates upon consummation of the transactions contemplated by this
Agreement.

    
      
         

      

      
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    Section
4.10    Validity
of Buyer Securities to be Issued.  The Buyer Securities to be
issued at the Closing are validly authorized and, when such Buyer Securities
have been duly delivered pursuant to the terms of this Agreement, will not have
been issued in violation of any preemptive or similar right of stockholder. When
the Buyer Shares have been duly delivered pursuant to the terms of this
Agreement, such Buyer Shares will be validly issued, fully paid, and
nonassessable.   The shares of Buyer Common Stock issuable upon
exercise of the Series A and Series B Warrants, when issued and paid for in
accordance with the terms of the Series A and Series B Warrants, will be duly
and validly issued, fully-paid and non-assessable.

     

    ARTICLE
V

    COVENANTS

     

    Section
5.01     Covenants
of Seller and Controlling Members.  Seller and the Controlling
Members agree that:

     

    (a)           No
Inconsistent Actions.  During the period from the date of this
Agreement and continuing until the Closing Date, Seller will not (i) take or
agree or commit to take any action that would make any representation and
warranty of Seller inaccurate in any respect at, or as of any time prior to, the
Closing Date, or (ii) omit or agree or commit to omit to take any action
necessary to prevent any such representation or warranty from being inaccurate
in any respect at any such time.

     

    (b)           Confidentiality.  Prior
to the Closing Date and after any termination of this Agreement, Seller and its
affiliates will hold, and will use best efforts to cause their respective
officers, directors, employees, accountants, counsel, consultants, advisors and
agents to hold, in confidence, unless compelled to disclose by judicial or
administrative process or by other requirements of law, all confidential
documents and information concerning Buyer furnished to Seller or its affiliates
in connection with the transaction contemplated by this Agreement, except to the
extent that such information can be shown to have been (i) previously known on a
nonconfidential basis by Seller, (ii) in the public domain through no fault of
Seller or (iii) later lawfully acquired by Seller from sources other than Buyer;
provided that
Seller may disclose such information to its officers, directors, employees,
accountants, counsel, consultants, advisors and agents in connection with the
transactions contemplated by this Agreement and to its lenders in connection
with obtaining the financing for the transactions contemplated by this Agreement
so long as such Persons are informed by Seller of the confidential nature of
such information and are directed by Seller to treat such information
confidentially.  The obligation of Seller and its affiliates to hold
such information in confidence shall be satisfied if they exercise the same care
with respect to such information as they would take to preserve the
confidentiality of their own similar information.  If this Agreement
is terminated, Seller and its affiliates will, and will use best efforts to
cause their respective officers, directors, employees, accountants, counsel,
consultants, advisors and agents to, destroy or deliver to Buyer, upon request,
all documents and other materials, and all copies thereof, obtained by Seller
and its affiliates or on their behalf from Buyer in connection with this
Agreement that are subject to such confidence.

    
      
         

      

      
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    (c)           Access to
Information.  Upon reasonable notice and subject to
restrictions contained in confidentiality agreements to which such party is
subject (from which such party shall use reasonable efforts to be released),
Seller shall afford to the officers, employees, accountants, counsel and other
representatives of Buyer, access, during normal business hours during the period
prior to the Closing, to the Seller’s properties, books, contracts, commitments
and records to the extent relating to the Purchased Assets and, during such
period, Seller shall furnish promptly to the other all information concerning
the Purchased Assets as Buyer may reasonably request.  Unless
otherwise required by law or court order, Buyer will hold any such information
which is nonpublic in confidence until such time as such information otherwise
becomes publicly available through no wrongful act of Buyer, and in the event of
termination of this Agreement for any reason Buyer shall promptly return all
nonpublic documents obtained from Seller, and any copies or summaries made of
such documents, to Seller.

     

    (d)           Noncompetition.

     

    (i)           For
a period of three full years following the Closing Date, neither Seller nor any
of its affiliates shall (x) engage, either directly or indirectly, as a
principal or for its own account or solely or jointly with others, or as
stockholder in any corporation or joint stock association, in any business that
competes with the Business as it exists on the Closing Date; or (y) employ or
solicit, or receive or accept the performance of services by, any Transferred
Employee.

     

    (ii)           If
any provision contained in this Section 5.01(d) shall
for any reason be held invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect the other provisions
of this Section, but this Section shall be construed as if such invalid, illegal
or unenforceable provision had never been contained herein.  It is the
intention of the parties that if any of the restrictions or covenants contained
herein is held to cover a geographic area or to be for a length of time which is
not permitted by applicable law, or in any way construed too broad or to any
extent invalid, such provision shall not be construed to be null, void and of no
effect, but to the extent such provision would be valid or enforceable under
applicable law, a court of competent jurisdiction shall construe and interpret
or reform this Section to provide for a covenant having the maximum enforceable
geographic area, time period and other provisions (not greater than those
contained herein) as shall be valid and enforceable under applicable
law.  Seller acknowledges that Buyer would be irreparably harmed by
any breach of this Section and that there would be no adequate remedy at law or
in damages to compensate Buyer for any such breach.  Seller agrees
that Buyer shall be entitled to injunctive relief requiring specific performance
by Seller of this Section, and Seller consents to entry thereof.

     

    Section
5.02     Covenants
of Buyer.  Buyer agrees that:

     

    (a)           No
Inconsistent Actions.  During the period from the date of this
Agreement and continuing until the Closing Date, Buyer will not (i) take or
agree or commit to take any action that would make any representation and
warranty of Buyer inaccurate in any respect at, or as of any time prior to, the
Closing Date or (ii) omit or agree or commit to omit to take any action
necessary to prevent any such representation or warranty from being inaccurate
in any respect at any such time.

    
      
         

      

      
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    (b)           Confidentiality.  Prior
to the Closing Date and after any termination of this Agreement, Buyer and its
affiliates will hold, an will use best efforts to cause their respective
officers, directors, employees, accountants, counsel, consultants, advisors and
agents to hold, in confidence, unless compelled to disclose by judicial or
administrative process or by other requirements of law, all confidential
documents and information concerning Seller or the Purchased Assets furnished to
Buyer or its affiliates in connection with the transaction contemplated by this
Agreement, except to the extent that such information can be shown to have been
(i) previously known on a nonconfidential basis by Buyer, (ii) in the public
domain through no fault of Buyer or (iii) later lawfully acquired by Buyer from
sources other than Seller; provided that Buyer
may disclose such information to its officers, directors, employees,
accountants, counsel, consultants, advisors and agents in connection with the
transactions contemplated by this Agreement and to its lenders in connection
with obtaining the financing for the transactions contemplated by this Agreement
so long as such Persons are informed by Buyer of the confidential nature of such
information and are directed by Buyer to treat such information
confidentially.  The obligation of Buyer and its affiliates to hold
such information in confidence shall be satisfied if they exercise the same care
with respect to such information as they would take to preserve the
confidentiality of their own similar information.  If this Agreement
is terminated, Buyer and its affiliates will, and will use best efforts to cause
their respective officers, directors, employees, accountants, counsel,
consultants, advisors and agents to, destroy or deliver to Seller, upon request,
all documents and other materials, and all copies thereof, obtained by Buyer and
its affiliates or on their behalf from Seller in connection with this Agreement
that are subject to such confidence.

     

    (c)           Access to
Information.  Upon reasonable notice and subject to
restrictions contained in confidentiality agreements to which such party is
subject (from which such party shall use reasonable efforts to be released),
Buyer shall afford to the officers, employees, accountants, counsel and other
representatives of Seller, access, during normal business hours during the
period prior to the Closing, to all of Buyer’s properties, books, contracts,
commitments and records and, during such period, Buyer shall furnish promptly to
the other all information concerning Buyer’s business, properties and personnel
as Seller may reasonably request, in each case, to the extent necessary to
permit Seller to determine any matter relating to its rights and obligations
hereunder or to any period ending on or before the Closing
Date.  Unless otherwise required by law or court order, Seller will
hold any such information which is nonpublic in confidence until such time as
such information otherwise becomes publicly available through no wrongful act of
Seller, and in the event of termination of this Agreement for any reason Seller
shall promptly return all nonpublic documents obtained from Buyer, and any
copies or summaries made of such documents, to Buyer.

     

    Section
5.03    Covenants
of All Parties.  Each party agrees that:

     

    (a)           Best
Efforts.  Subject to the terms and conditions of this
Agreement, each of the parties hereto agrees to use its best efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this
Agreement.  The parties each agree to execute and deliver such other
documents, certificates, agreements and other writings and to take such other
actions as may be necessary or desirable in order to consummate or implement
expeditiously the transactions contemplated by this Agreement.

    
      
         

      

      
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    (b)           Certain
Filings.  The parties will cooperate with one another (i) in
determining whether any action by or in respect of, or filing with, any
Governmental Entity is require or any actions, consents, approvals or waivers
are required to be obtained from parties to any material contracts, in
connection with the transactions contemplated by this Agreement and (ii) in
taking such actions or making any such filings, furnishing information required
in connection therewith and seeking timely to obtain any such actions, consents,
approvals or waivers.

     

    (c)           Public
Announcements.  The parties shall consult with each other
before issuing any press releases or otherwise making public statements with
respect to the transactions contemplated hereby and in making any filings with
any federal or state governmental or regulatory agency or with any national
securities exchange with respect there

     

    (d)           Notices.  Each
of the parties shall give prompt notice to the other party of: (a) any
notice of, or other communication relating to, a default or event which, with
notice or the lapse of time or both, would become a default, received by it or
any of its subsidiaries subsequent to the date of this Agreement and prior to
the Closing, under any agreement, indenture or instrument material to the
financial condition, properties, businesses or results of operations of it and
its subsidiaries, taken as a whole, to which it or any of its subsidiaries is a
party or is subject; and (b) any notice or other communication from any
third party alleging that the consent of such third party is or may be required
in connection with the transactions contemplated by this Agreement, which
consent, if required, would breach the representations contained in Articles III and
IV.

     

    (e)            Tax
Cooperation; Allocation of Taxes.

     

    (i)           Seller
and Buyer agree to furnish or cause to be furnished to each other, upon request,
as promptly as practicable, such information and assistance relating to the
Purchased Assets and the Business as is reasonably necessary for the filing of
all Tax returns, and making of any election related to Taxes, the preparation
for any audit by any taxing authority, and the prosecution or defense of any
claim, suit or proceeding relating to any Tax return.  Seller and
Buyer shall cooperate with each other in the conduct of any audit or other
proceeding related to Taxes involving the Business and each shall execute and
deliver such powers of attorney and other documents as are necessary to carry
out the intent of this Section
5.03(e).

     

    (ii)         All
real property, personal property and similar ad valorem obligations levied with
respect to the Purchased Assets for a taxable period which includes (but does
not end on) the Closing Date shall be apportioned between Seller and Buyer as of
the Closing Date based on the number of days of such taxable period included in
the Pre-Closing Tax Period and the number of days of such taxable period
included in the Post-Closing Tax Period.  Seller shall be liable for
the proportionate amount of such taxes that is attributable to the Pre-Closing
Tax Period, and Buyer shall be liable for the proportionate amount of such taxes
that is attributable to the Post-Closing Tax Period.  Within 90 days
after the Closing, Seller and Buyer shall present a statement to the other
setting forth the amount of reimbursement to which each is entitled under this
Section 5.03(e)
together with such supporting evidence as is reasonably necessary to calculate
the proration amount. The proration amount shall be paid by the party owing it
to the other within 10 days after delivery of such
statement.  Thereafter, Seller shall notify Buyer upon receipt of any
bill for real or personal property taxes relating to the Purchased Assets, part
or all of which are attributable to the Pre-Closing Period, and shall promptly
deliver such bill to Buyer who shall pay the same to the appropriate taxing
authority, provided that if such bill covers the Pre-Tax Closing Period, Seller
shall also remit prior to the due date of assessment to Buyer payment for the
proportionate amount of such bill that is attributable to the Pre-Closing Tax
Period.  In the event that either Seller or Buyer shall thereafter
make a payment for which it is entitled to reimbursement under this Section 5.03(e), the
other party shall make such reimbursement promptly, but in no event later than
30 days after the presentation of a statement setting forth the amount of
reimbursement to which the presenting party is entitled along with such
supporting evidence as is reasonably necessary to calculate the amount of
reimbursement.  Any payment required under this Section and not made
within 10 days after delivery of the statement shall bear interest at the rate
per annum determined, from time to time, under the provisions of Section
6621(a)(2) of the Code for each day until paid.

    
      
         

      

      
        20

        
          

        

      

      
         

      

    

    (iii)        Any
transfer, documentary, sales, use or other Taxes assessed upon or with respect
to the transfer of the Purchase Assets to Buyer and any recording or filing fees
with respect thereto shall be the responsibility of Seller.

     

    (f)           Employee
Matters.

     

    (i)           On
the Closing Date, Buyer will offer employment to those employees of the Business
as it may determine in its sole discretion; provided that Buyer
may terminate at any time after the Closing Date the employment of any employee
who accepts such offer.  Any such offers will be at such salary or
wage and benefit levels and on such other terms and conditions as Buyer shall in
its sole discretion deem appropriate.  The employees who accept and
commence employment with Buyer are hereinafter collectively referred to as the
“Transferred
Employees”.  Seller will not take, and Seller will cause each
of its subsidiaries not to take, any action which would impede, hinder,
interfere or otherwise compete with Buyer’s effort to hire any Transferred
Employees.  Buyer shall not assume responsibility for any Transferred
Employee until such employee commences employment with Buyer.

     

    (ii)          Seller
shall retain all obligations and liabilities under Employee Benefit Plans and
Benefit Arrangements in respect of each employee or former employee (including
any beneficiary thereof) who is not a Transferred Employee.  Seller
shall retain all liabilities and obligations in respect of benefits accrued as
of the Closing Date by Transferred Employees under the Employee Benefit Plans
and Benefit Arrangements, and neither Buyer nor any affiliate shall have any
liability with respect thereto. Except as expressly set forth herein, no assets
of any Employee Benefit Plan or Benefit Arrangement shall be transferred to
Buyer or any of its affiliates or to any plan of Buyer or any of its
affiliates.

     

    (iii)        With
respect to the Transferred Employees (including any beneficiary or dependent
thereof), Seller shall retain (A) all liabilities and obligations arising under
any group life, accident, medical, dental or disability plan or similar
arrangement (whether or not insured) to the extent that such liability or
obligation relates to contributions or premiums accrued (whether or not
payable), or to claims incurred (whether or not reported), on or prior to the
Closing Date, (B) all liabilities and obligations arising under any worker’s
compensation arrangement to the extent such liability or obligation relates to
the period prior to the Closing Date, including liability for any retroactive
workman’s compensation premiums attributable to such period and (C) all other
liabilities and obligations arising under the Employee Benefit Plans and the
Benefit Arrangements to the extent any such liability or obligation relates to
the period prior to the Closing Date, including without limitation, accruals
through the Closing Date under any bonus plan or arrangement, any vacation
plans, arrangements and policies.

    
      
         

      

      
        21

        
          

        

      

      
         

      

    

    (iv)        No
provision of this Section 5.03(f) shall
create any third party beneficiary or other rights in any employee or former
employee (including any beneficiary or dependent thereof) of Seller or of any of
its subsidiaries in respect of continued employment (or resumed employment) with
either Buyer or the Business or any of their affiliates and no provision of this
Section 5.03(f)
shall create any such rights in any such Person in respect of any benefits that
may be provided, directly or indirectly, under any employee benefit plan or
arrangement which may be established by Buyer or any of its
affiliates.  No provision of this Agreement shall constitute a
limitation on the rights to amend, modify or terminate after the Closing Date
any such plans or arrangements of Buyer or any of its affiliates.

     

    (g)         Post-Closing
Matters.   As promptly as practicable following the
Closing:

     

    (i)           The
corporate name of Buyer will be changed to “Harbin Aerospace,
Inc.”;

     

    (ii)           The
size of Buyer’s Board of Directors will be increased to two members consisting
of William McKay and David Walters; and

     

    (iii)           William
McKay will be appointed to serve as Buyer’s Chief Executive
Officer.

     

    ARTICLE
VI

    CONDITIONS

     

    Section
6.01     Conditions
to Each Party's Obligations.  The obligation of each party to
consummate the Closing is subject to the satisfaction of the following
conditions: 

     

    (a)   All
authorizations, consents, orders or approvals of, or declarations or filings
with, or expirations or terminations of waiting periods imposed by, any
Governmental Entity, and all required third party consents (as set forth on
Section 3.03 of
the Seller Disclosure Schedule), shall have been filed, occurred or been
obtained.

     

    (b)   No
statute, rule, regulation, executive order, decree or injunction shall have been
enacted, entered, promulgated or enforced by any court or governmental authority
which prohibits the consummation of the Closing and shall be in
effect.

     

    Section
6.02     Conditions
to Obligation of Buyer.  The obligation of Buyer to consummate
the Closing is subject to the satisfaction of the following further
conditions:

     

    (a)   The
representations and warranties of Seller set forth in this Agreement shall be
true and correct as of the date of this Agreement, and shall also be true in all
material respects (except for such changes as are contemplated by the terms of
this Agreement and such changes as would be required to be made in the exhibits
to this Agreement if such schedules were to speak as of the Closing Date) on and
as of the Closing Date with the same force and effect as though made on and as
of the Closing Date, except if and to the extent any failures to be true and
correct would not, in the aggregate, reasonable be expected to have a Material
Adverse Effect.

    
      
         

      

      
        22

        
          

        

      

      
         

      

    

    (b)   Seller
shall have performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing
Date.

     

    (c)   Buyer
shall have received a certificate signed by the Chief Executive Officer of
Seller confirming Sections 6.02(a) and
(b).

     

    (d)   Buyer
shall have received (i) resolutions duly adopted by the sole member of
Seller approving the execution and delivery of this Agreement and all other
necessary or proper organizational action to enable Seller to comply with the
terms of this Agreement, and (ii) all other documents it may reasonably
request relating to the existence of Seller and the authority of Seller for this
Agreement, all in form and substance reasonable satisfactory to
Buyer.

     

    (e)   The
HKCO Agreement shall remain in full force and effect and shall not have been
amended or modified from the version previously delivered to
Buyer.   No party thereto shall be in default of its obligations
under the HKCO Agreement or given notice of its intention not proceed with the
transactions contemplated thereby.

     

    Section
6.03     Conditions
to Obligation of Seller.  The obligation of Seller to
consummate the Closing is subject to the following further
conditions:

     

    (a)   The
representations and warranties of Buyer set forth in this Agreement shall be
true and correct as of the date of this Agreement, and shall also be true in all
material respects (except for such changes as are contemplated by the terms of
this Agreement and such changes as would be required to be made in the exhibits
to this Agreement if such schedules were to speak as of the Closing Date) on and
as of the Closing Date with the same force and effect as though made on and as
of the Closing Date.

     

    (b)   Buyer
shall have performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing
Date.

     

    (c)   Seller
shall have received a certificate signed by the Chief Executive Officer of Buyer
confirming Section
6.03(a) and (b).

     

    (d)   Seller
shall have received (i) resolutions duly adopted by the Board of Directors
of Buyer approving the execution and delivery of this Agreement and all other
necessary or proper corporate action to enable Buyer to comply with the terms of
this Agreement, and (ii) all other documents it may reasonably request
relating to the existence of Buyer and the authority of Buyer for this
Agreement, all in form and substance reasonable satisfactory to
Seller.

    
      
         

      

      
        23

        
          

        

      

      
         

      

    

     

    ARTICLE
VII

    SURVIVAL;
INDEMNIFICATION

     

    Section
7.01     Survival.  The
covenants, agreements, representations and warranties of the parties hereto
contained in this Agreement or in any certificate or other writing delivered
pursuant hereto or in connection herewith shall survive the Closing until the
second anniversary of the Closing Date or (a) in the case of Section 5.01(d), for
the period set forth therein, (b) in the case of Section 5.01(b) or
5.02(b), indefinitely and (c) in the case of covenants, agreements,
representations and warranties contained in Section 3.17, 3.19 5.03(e)
or 5.03(f), until expiration of the applicable statute of limitations
(giving effect to any waiver, mitigation or extension
thereof).  Notwithstanding the preceding sentence, any covenant,
agreement, representation or warranty in respect of which indemnity may be
sought under Section
7.02 shall survive the time at which it would otherwise terminate
pursuant to the preceding sentence, if notice of the inaccuracy or breach
thereof giving rise to such right to indemnity shall have been given to the
party against whom such indemnity may be sought prior to such time.

     

    Section
7.02     Indemnification.

     

    (a)            Seller
and the Controlling Members, jointly and severally, hereby indemnify Buyer
against and agree to hold it harmless from any and all damage, loss, liability
and expense (including without limitation reasonable expenses of investigation
and reasonable attorneys’ fees and expenses in connection with any action, suit
or proceeding) (“Damages”) incurred or
suffered by Buyer arising out of (i) any misrepresentation or breach of
warranty, covenant or agreement made or to be performed by Seller or the
Controlling Members pursuant to this Agreement or (ii) the failure of either
Seller or the Controlling Members to perform any Excluded Liability or any
obligation or liability of the Business relating to the Excluded
Assets.

     

    (b)            Buyer
hereby indemnifies Seller against and agrees to hold it harmless from any and
all Damages incurred or suffered by Seller arising out of (i) any
misrepresentation or breach of warranty, covenant or agreement made or to be
performed by Buyer pursuant to this Agreement or (ii) the failure of Buyer to
perform any Assumed Liability.

     

    Section
7.03     Procedures;
Exclusivity

     

    (a)           The
party seeking indemnification under Section 7.02 (the
“Indemnified
Party”) agrees to give prompt notice to the party against whom indemnity
is sought (the “Indemnifying Party”)
of the assertion of any claim, or the commencement of any suit, action or
proceeding in respect of which indemnity may be sought under such
Section.  The Indemnifying Party may at the request of the Indemnified
Party participate in and control the defense of any such suit, action, or
proceeding at its own expense.  The Indemnifying Party shall not be
liable under Section
7.02 for any settlement effected without its consent of any claim,
litigation or proceeding in respect of which indemnity may be sought
hereunder.

     

    (b)           After
the Closing, Section
7.02 will provide the exclusive remedy for any misrepresentation, breach
or warranty, covenant or other agreement (other than those contained in Sections 5.01(d), 5.01(b),
5.02(b) and 9.09) or other claim arising out of this Agreement or the
transactions contemplated hereby.

    
      
         

      

      
        24

        
          

        

      

      
         

      

    

    ARTICLE
VIII

    TERMINATION
AND AMENDMENT

     

    Section
8.01     Termination.  This
Agreement may be terminated at any time prior to the Closing Date:

     

    (a)   by
mutual consent of Buyer and Seller;

     

    (b)   by
either Buyer or Seller if the Closing shall not have been consummated before
March 31, 2010 (unless the failure to consummate the Closing by such date shall
be due to the action or failure to act of the party seeking to terminate this
Agreement); or

     

    (c)   by
either Buyer or Seller if (i) the conditions to such party's obligations shall
have become impossible to satisfy or (ii) any permanent injunction or other
order of a court or other competent authority preventing the consummation of the
Closing shall have become final and non-appealable.

     

    Section
8.02    Effect of
Termination.  In the event of the termination and abandonment
of this Agreement pursuant to Section 8.01
hereof, this Agreement shall forthwith become void and have no effect, without
any liability on the part of any party hereto or its affiliates, directors,
officers or stockholders, other than the provisions of Sections 5.01(b) and
 5.02(b).  Nothing contained in this Section 8.02
shall relieve any party from liability for any breach of this
Agreement.

     

    Section
8.03     Amendment.  This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties hereto.

     

    Section
8.04    Extension;
Waiver.  At any time prior to the Closing Date, the parties
hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (iii) waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in a written instrument signed on behalf of such
party.

     

    ARTICLE
IX

    MISCELLANEOUS

     

    Section
9.01     Notices.  All
notices and other communications hereunder shall be in writing (and shall be
deemed given upon receipt) if delivered personally, telecopied (which is
confirmed) or mailed by registered or certified mail (return receipt requested)
to the parties at the following addresses (or at such other address for a party
as shall be specified by like notice):

     

    (a)   if
to Buyer, to:

    
      
         

      

      
        25

        
          

        

      

      
         

      

    

    Pinnacle
Energy Corp.

    30950
Rancho Viejo Rd #120

    San Juan
Capistrano, CA  92675

    Attn: David Walters, CEO

    and

     

    (b)   if
to Seller or the Controlling Members, to

     

    Harbin
Aerospace Company, LLC

    777
Woodward Blvd.

    Pasadena,
CA 91107

    Attn: William McKay, CEO

    

    Section
9.02     Descriptive
Headings.  The descriptive headings herein are inserted for
convenience only and are not intended to be part of or to affect the meaning or
interpretation of this Agreement.

     

    Section
9.03     Counterparts.  This
Agreement may be executed in two or more counterparts, all of which shall be
considered one and the same agreement and shall become effective when two or
more counterparts have been signed by each of the parties and delivered to the
other parties, it being understood that all parties need not sign the same
counterpart.

     

    Section
9.04     Entire
Agreement; Assignment.  This Agreement (a) constitutes the
entire agreement and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof
(other than any confidentiality agreement between the parties; any provisions of
such agreements which are inconsistent with the transactions contemplated by
this Agreement being waived hereby) and (b) shall not be assigned by operation
of law or otherwise, provided that Buyer may assign its rights and obligations
to any other wholly owned subsidiary of Buyer, but no such assignment shall
relieve Buyer of its obligations hereunder if such assignee does not perform
such obligations.

     

    Section
9.05     Governing
Law; Jurisdiction.  This Agreement will be deemed to be made in
and in all respects will be interpreted, construed and governed by and in
accordance with the law of the State of California without regard to any
applicable principles of conflicts of law. This Agreement shall not be
interpreted or construed with any presumption against the party causing this
Agreement to be drafted.  The parties agree that venue for any dispute
arising under this Agreement will lie exclusively in the state or federal courts
located in Orange County, California, and the parties irrevocably waive any
right to raise forum non conveniens or any other argument that Orange County,
California is not the proper venue.  The parties irrevocably consent
to personal jurisdiction in the state and federal courts of the state of
California.  The parties consent to process being served in any such
suit, action or proceeding by mailing a copy thereof to such party at the
address in effect for notices to it under this Agreement and agrees that such
service shall constitute good and sufficient service of process and notice
thereof.  Nothing in this Section 9.05 shall
affect or limit any right to serve process in any other manner permitted by
law.  The parties hereby agree that the prevailing party in any suit,
action or proceeding arising out of or relating to this Agreement shall be
entitled to reimbursement for reasonable legal fees from the non-prevailing
party.  The parties hereby waive all rights to a trial by
jury.

    
      
         

      

      
        26

        
          

        

      

      
         

      

    

    Section
9.06     Specific
Performance.  The parties hereto agree that if any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached, irreparable damage would occur, no
adequate remedy at law would exist and damages would be difficult to determine,
and that the parties shall be entitled to specific performance of the terms
hereof, in addition to any other remedy at law or equity.

     

    Section
9.07     Expenses.  Whether
or not the Closing is consummated, all costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such costs and expenses.

     

    Section
9.08     Publicity.  Except
as otherwise required by law or the rules of any national securities exchange,
for so long as this Agreement is in effect, neither Buyer nor Seller shall, or
shall permit any of its subsidiaries to, issue or cause the publication of any
press release or other public announcement with respect to the transactions
contemplated by this Agreement without prior consultation with the other
party.

     

    Section
9.09     Bulk
Sales Laws.  Buyer and Seller each hereby waive compliance by
Seller with the “bulk sales”, “bulk transfer” or similar laws of any
state.  Seller agrees to indemnify and Buyer harmless against any and
all claims, losses, damages, liabilities, costs and expenses incurred by Buyer
or any of its affiliates as a result of any failure to comply with any such
“bulk sales”, “bulk transfer” or similar laws.

     

    Section
9.10     Parties
in Interest.  This Agreement shall be binding upon and inure
solely to the benefit of each party hereto, and nothing in this Agreement,
express or implied, is intended to or shall confer upon any other person or
persons any rights, benefits or remedies of any nature whatsoever under or by
reason of this Agreement.

    
      
         

      

      
        27

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, Seller, the Controlling Members and Buyer have caused this
Agreement to be signed as of the date first written above.

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      
                                                        
                                                          
                                                            
                                                              	
                                                                      PINNACLE
      ENERGY CORP.

                                                                    	 
	 
      	 	 
	
                                                                      By:

                                                                    	 	 
	 
      	 	 
	
                                                                      Name:  David
      Walters

                                                                    	 
	 
      	 	 
	
                                                                      Title:  Chief
      Executive Officer

                                                                    	 
	 
      	 	 
	
                                                                      HARBIN
      AEROSPACE COMPANY, LLC

                                                                    	 
	 
      	 	 
	
                                                                      By:

                                                                    	 	 
	 
      	 	 
	
                                                                      Name:

                                                                    	 
	 
      	 	 
	
                                                                      Title:

                                                                    	 
	 
      	 	 
	
                                                                      CONTROLLING
      MEMBERS:

                                                                    	 
	 	 
	 	 	 
	 
      	 	 
	
                                                                      Nikki
      Lynn McKay

                                                                    	 
	 	 
	 
      	 	 
	 	 	 
	
                                                                      William
      Reed McKay

                                                                    	 

                                                            

                                                          

                                                        

                                                      

                                                    

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    
      
         

      

      
        28

        
          

        

      

      
         

      

    

    Exhibit
B

    

    Assignment
and Assumption Agreement

    

    ASSIGNMENT AND ASSUMPTION AGREEMENT
(this “Agreement”), dated as of ___ __, 2010, among Pinnacle Energy Corp., a
Nevada corporation (“Buyer”), Harbin Aerospace Company, LLC, a Nevada limited
liability company (“Seller”) and the Controlling Members identified
therein.

    

     WHEREAS, Seller and Buyer have
concurrently herewith consummated the purchase by Buyer of the Purchased Assets
pursuant to the terms and conditions of the Asset Purchase Agreement, dated
January __, 2010, between Buyer and Seller (the “Asset Purchase Agreement”;
terms defined in the Asset Purchase Agreement and not otherwise defined herein
being used herein as therein defined);

    

    WHEREAS, pursuant to the Asset Purchase
Agreement, Buyer has agreed to assume certain liabilities and obligations of
Seller;

    

    NOW, THEREFORE, in consideration of the
sale of the Purchased Assets and in accordance with the terms of the Asset
Purchase Agreement, Buyer and Seller agree as follows:

    

    1.  (a)  Seller
does hereby sell, transfer, assign and deliver to Buyer all of the right, title
and interest of Seller in, to and under the Purchased Assets.

    

    (b)  Buyer does hereby accept
all of the right, title and interest of Seller in, to and under the Purchased
Assets and Buyer assumes and agrees to pay, perform and discharge promptly and
fully when due any and all of the Assumed Liabilities and to perform all of the
obligations of Seller to be performed under any contracts, agreements or
understandings included in the Purchased Assets.

    

    2.  This Agreement may be
executed in any number of counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.  It shall be governed by and construed in accordance with
the laws of the State of Delaware, without giving effect to conflict of
laws.  Any action, suit, or proceeding arising out of, based on, or in
connection with this Agreement or the transactions contemplated hereby may be
brought in Orange County, California and each party covenants and agrees not to
assert, by way of motion, as a defense, or otherwise, in any such action, suit,
or proceeding, any claim that it or he is not subject personally to the
jurisdiction of such court, that its or his property is exempt or immune from
attachment or execution, that the action, suit, or proceeding is brought in an
inconvenient forum, that the venue of the action, suit, or proceeding is
improper, or that this Agreement or the subject matter hereof may not be
enforced in or by such court.

    

          IN
WITNESS WHEREOF, the parties have duly executed this Agreement as of the date
first written above.

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            	
                                    Pinnacle
      Energy Corp.

                                  	 
	 	 
	 	 
	
                                    By:

                                  	 
	 
      	 
	
                                    Harbin
      Aerospace Company, LLC

                                  	 
	 
      	 
	 	 
	
                                    By:

                                  	 

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
A

     

    None

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    SCHEDULE
B

     

    Promissory
Note between Harbin Aerospace Company and Theodora Kobal in the original
principal amount of $200,000 attached as Exhibit “A” to this
Schedule

     

    Promissory
Note (the “Harbin-Santa Anita Note”) between Harbin Aerospace Company and Santa
Anita Co., LLC a California LLC, in the original principal amount of $200,000
(Exhibit “B-1” to this Schedule), only to the extent that Santa Anita Co, LLC
agrees to exchange the Harbin-Santa Anita Note for a new note issued by Buyer in
the form of Exhibit B-2 attached to  this Schedule.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    SCHEDULE
C

     

    To be
agreed by parties prior to Closing.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    SELLER’S
DISCLOSURE SCHEDULE

     

    Section
3.03

     

    None

     

    Section
3.07

     

    None

     

    Section
3.08

     

    None

     

    Section
3.10

     

    None

     

    Section
3.11

     

    None,
other than:

     

    (iv)  Any
partnership, joint venture or other similar contract or
arrangement:

     

    
      	
               
      

            	
              ·

            	
              HKCO
      Agreement

            

    

     

    
      	
               
      

            	
              ·

            	
              Letter
      of Intent, Dated October 20, 2009 between Avic International Holding
      Corporation and Phoenix Bearing Company (dba for
  Seller)

            

    

     

    
      	
               
      

            	
              ·

            	
              Confidentiality
      and Non-Disclosure Agreement, dated August 27, 2009, between Beijing Hony
      Future Investment Advisor Ltd. and
Seller

            

    

     

    
      	
               
      

            	
              ·

            	
              Memorandum
      of Understanding Addendum, dated November 5, 2007, between Harbin Bearing
      Group CO, and Phoenix Bearing
Company

            

    

     

    (v)  Any
contract relating to indebtedness for borrowed money or the deferred purchase
price of property (whether incurred, assumed, guaranteed or secured by any
asset), except contracts relating to indebtedness incurred in the ordinary
course of business in an amount not exceeding $10,000:

     

    
      	
               
      

            	
              ·

            	
              Indebtedness
      listed on Schedule B

            

    
 

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Section
3.12

     

    None

     

    Section
3.13

     

    None

     

    Section
3.16

     

    Intellectual
Property Rights:  Seller is the owner and developer of all
intellectual property in its possession. This consists of a series of boxes of
data and materials, together with electronic files of drawings, formulae and
planning, all of which is physically in the possession of Seller at its offices
in Pasadena, CA.  None of the intellectual property has been
registered.  Seller intends to transfer a portion of the intellectual
property to HKCO as described in HKCO Agreement.

     

    Section
3.17

     

    None

     

    Section
3.19

     

    NoneTHIS
WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SAID ACT OR AN OPINION OF COUNSEL SATISFACTORY TO
THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT.

    

    PINNACLE
ENERGY CORP.

    SERIES A
COMMON STOCK PURCHASE WARRANT

    

    Warrant
No.: _A-1_

    

    February
1, 2010

    

    THIS
CERTIFICATE certifies that Harbin Aerospace Company, LLC, having an address at
777 Woodward Blvd., Pasadena, CA 91107, or permitted assignees is the registered
holder (the “Holder”) of
this Series A Common Stock Purchase Warrant (the “Warrant”) to purchase shares
of the common stock, $.001 par value per share (the “Common Stock”), of Pinnacle
Energy Corp., a corporation duly organized and validly existing under the laws
of the State of Nevada (the “Company”).  This
Warrant has been issued to the Holder in connection with the Asset Purchase
Agreement dated as of January 27, 2010 (together with all documents and filings
attached thereto, the “Purchase
Agreement”).

    

    FOR VALUE
RECEIVED, the Company hereby certifies that the Holder is entitled to purchase
from the Company Four Million (4,000,000) duly authorized, validly issued, fully
paid and nonassessable shares of Common Stock (the “Warrant Shares”) at a purchase
price per share equal to $0.50 (the “Warrant Price”), and subject
to the terms, conditions and adjustments set forth below in this Warrant and in
the Offering Documents.  The person or entity in whose name this
Warrant is registered on the records of the Company regarding registration and
transfers of this Warrant (the “Warrant Register”) is the
owner and holder thereof for all purposes, except as described in Section 6
hereof.

    

    1.           Vesting of
Warrant.  This Warrant shall vest and become exercisable on the
date that the Company recognizes revenue, in accordance with U.S. GAAP, equal to
or exceeding $50,000,000 for any consecutive twelve-month period following the
Closing Date (as defined in the Acquisition Agreement) (“Vesting Date”).

    

    2.           Expiration of
Warrant.  This Warrant shall expire at 5:00 p.m., New York
local time, on January 31, 2015 (the “Expiration
Date”).

    

    3.           Exercise of
Warrant.  This Warrant shall be exercisable pursuant to the
terms of Section 1 and this Section 3 hereof.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    3.1           Manner of
Exercise.  This Warrant may only be exercised by the Holder
hereof, in accordance with the terms and conditions hereof, in whole or in part
with respect to any portion of this Warrant, into shares of Common Stock, during
normal business hours on any day other than a Saturday or a Sunday or a day on
which commercial banking institutions in New York, New York are authorized by
law to be closed (a “Business
Day”) on or prior to the Expiration Date with respect to such portion of
this Warrant, by surrender of this Warrant to the Company at its office
maintained pursuant to Section 8.2(a) hereof, accompanied by an exercise notice
in substantially the form attached to this Warrant as Exhibit A  duly
executed by or on behalf of the Holder together with  (a) or (b)
below:

    

    
      	
               
      

            	
              (a)

            	
              the
      payment of the Warrant Price in cash;
or

            

    

    

    (b)           (i)  the
Holder may, at its option, elect to exercise this Warrant, in whole or in part,
on a cashless basis, by surrendering this Warrant, with the purchase form
attached to this Warrant as Exhibit A duly executed by or on behalf of the
Holder, at the principal office of the Company, or at such other office or
agency as the Company may designate, by canceling a portion of this Warrant in
payment of the Warrant Price payable in respect of the number of Warrant Shares
purchased upon such exercise.  In the event of an exercise pursuant to
this subsection 3.1(b), the number of Warrant Shares issued to the Holder shall
be determined according to the following formula:

     

    
      
        
          
            
              
                
                  
                    
                      	
                              X =
      Y(A-B)

                            	 
      	 
      
	
                              A    
           

                            	 
      	 
      
	 	 	 
	
                              Where:  X
      =

                            	 
      	
                              the
      number of Warrant Shares that shall be issued to the
    Holder;

                            
	 	 	 
	
                              Y
      =

                            	 
      	
                              the
      number of Warrant Shares for which this Warrant is being exercised (which
      shall include both the number of Warrant Shares issued to the Holder and
      the number of Warrant Shares subject to the portion of the Warrant being
      cancelled in payment of the Warrant Price);

                            
	 	 	 
	
                              A
      =

                            	 
      	
                              the
      Fair Market Value (as defined below) of one share of Common Stock;
      and

                            
	 	 	 
	
                              B
      =

                            	 
      	
                              the
      Warrant Price then in
effect.

                            

                    

                  

                

              

            

          

        

      

    

     

    (ii)      
The Fair Market Value per share of Common Stock shall be determined as
follows:

     

    (1)              If
the Common Stock is listed on a national securities exchange, the Nasdaq
National Market, the OTC Bulletin Board or another nationally recognized trading
system as of the Exercise Date, as defined below, the Fair Market Value per
share of Common Stock shall be deemed to be the average of the high and low
reported sale prices per share of Common Stock thereon on the trading day
immediately preceding the Exercise Date, as defined below, (provided that if the
Common Stock is not so listed on such day, the Fair Market Value per share of
Common Stock shall be determined pursuant to clause (2) below).

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    (2) If the Common Stock is not
listed on a national securities exchange, the Nasdaq National Market, the OTC
Bulletin Board or another nationally recognized trading system as of the
Exercise Date, as defined below, the Fair Market Value per share of Common Stock
shall be deemed to be the amount most recently determined by the Board of
Directors of the Company or an authorized committee of the Board of Directors of
the Company (the “Board”) to represent the fair market value per share of the
Common Stock (including without limitation a determination for purposes of
granting Common Stock options or issuing Common Stock under any plan, agreement
or arrangement with employees of the Company); and, upon request of the Holder,
the Board (or a representative thereof) shall, as promptly as reasonably
practicable but in any event not later than 15 days after such request, notify
the Holder of the Fair Market Value per share of Common
Stock.  Notwithstanding the foregoing, if the Board has not made such
a determination within the three-month period prior to the Exercise Date, as
defined below, then (A) the Board shall make, and shall provide or cause to
be provided to the Holder notice of, a determination of the Fair Market Value
per share of the Common Stock within 15 days of a request by the Holder that it
do so, and (B) the exercise of this Warrant pursuant to this subsection
3.1(b) shall be delayed until such determination is made and notice thereof is
provided to the Holder.

    

    3.2           When Exercise
Effective.  Each exercise of this Warrant shall be deemed to
have been effected immediately prior to the close of business on the Business
Day on which this Warrant shall have been surrendered to the Company as provided
in Section 3.1 hereof (“Exercise Date”), and, at such time, the corporation,
association, partnership, organization, business, individual, government or
political subdivision thereof or a governmental agency (a “Person” or the “Persons”) in whose name or
names any certificate or certificates for shares of Common Stock shall be
issuable upon exercise as provided herein  shall be deemed to have
become the holder or holders of record thereof.

    

    3.3           Delivery of Stock
Certificates.  As soon as practicable after each exercise of
this Warrant, in whole or in part, and in any event within three (3) Business
Days thereafter, the Company at its expense (including the payment by it of any
applicable issue taxes) will cause to be issued in the name of and delivered to
the Holder hereof or, subject to Section 6 hereof, as the Holder (upon payment
by the Holder of any applicable transfer taxes) may direct:

    

    (a) a certificate or certificates
(with appropriate restrictive legends, as applicable) for the number of duly
authorized, validly issued, fully paid and nonassessable shares of Common Stock
to which the Holder shall be entitled upon exercise plus, in lieu of any
fractional share to which the Holder would otherwise be entitled, all issuances
of Common Stock shall be rounded up to the nearest whole share.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    (b) in case exercise is in part only,
a new Warrant of like tenor, dated the date hereof and calling in the aggregate
on the face thereof for the number of shares of Common Stock equal to the number
of shares called for on the face of this Warrant minus the number of shares
designated by the Holder upon exercise as provided in Section 3.1 hereof
(without giving effect to any adjustment thereof).

     

    3.4           Shares to be Fully Paid; Reservation
of Shares.  The Company covenants and agrees that all shares of
Common Stock which may be issued upon the exercise of rights presented by this
Warrant will, upon issuance by the Company, be validly issued, fully paid and
nonassessable, and free from preemptive rights and free from all taxes, liens
and charges with respect thereto.  The Company further covenants and
agrees that, from and after the date of issuance of the Warrant and during the
period within which the rights represented by this Warrant may be exercised, the
Company will at all times have authorized, and reserve, free from preemptive
rights, out of its authorized but unissued shares of Common Stock, solely for
the purpose of effecting the exercise of this Warrant, a sufficient number of
shares of Common Stock to provide for the exercise of the rights represented by
this Warrant.

    

    3.5           Company to Reaffirm
Obligations.  The Company will, at the time of each exercise of
this Warrant, upon the written request of the Holder hereof, acknowledge in
writing its continuing obligation to afford to the Holder all rights (including
without limitation any rights to registration of the shares of Common Stock
issued upon exercise) to which the Holder shall continue to be entitled after
exercise in accordance with the terms of this Warrant; provided, however, that if the
Holder shall fail to make a request, the failure shall not affect the continuing
obligation of the Company to afford the rights to such Holder.

    

    4.           Anti-dilution
Adjustment.

    

    4.1           Stock Dividends, Stock Splits,
Etc.   If the Company declares or pays a dividend on its
Common Stock payable in Common Stock or other securities, or subdivides the
outstanding Common Stock into a greater amount of Common Stock, then upon
exercise of this Warrant, for each Warrant Share acquired, Holder shall receive,
without cost to Holder, the total number and kind of securities to which Holder
would have been entitled had Holder owned the Warrant Shares of record as of the
date the dividend or subdivision occurred.

    

    4.2           Reclassifications, Exchange or
Substitution.  Upon any reclassification, exchange,
substitution, or other event that results in a change of the number and/or class
of the securities issuable upon exercise of this Warrant, Holder shall be
entitled to receive, upon exercise of this Warrant, the number and kind of
securities and property that Holder would have received for the Warrant Shares
if this Warrant had been exercised immediately before such reclassification,
exchange, substitution, or other event.  The Company or its successor
shall promptly issue to Holder a new Warrant for such new securities or other
property.  The new Warrant shall provide for adjustments which shall
be as nearly equivalent as may be practicable to the adjustments provided for in
this Section 4.2, including, without limitation, adjustments to the Warrant
Price and to the number of securities or property issuable upon exercise of the
new Warrant.  The provisions of this Section 4.2 shall similarly
apply to successive reclassifications, exchanges, substitutions, or other
events.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    4.3           Adjustments for Combinations,
Etc.   If the outstanding shares of Common Stock are
combined or consolidated, by reclassification or otherwise, into a lesser number
of shares, the Warrant Price shall be proportionately increased.

    

    4.4           Merger or
Consolidation.   In case of any consolidation of the
Company with, or merger of the Company into any other corporation, or in the
case of any sale or conveyance of all or substantially all of the assets of the
Company other than in connection with a plan of complete liquidation of the
Company, then as a condition of such consolidation, merger or sale or
conveyance, adequate provision will be made whereby the registered holder of the
Warrant will have the right to acquire and receive upon exercise of this Warrant
in lieu of the shares of Common Stock immediately theretofore subject to
acquisition upon the exercise of this Warrant, such shares of stock, securities
or assets as may be issued or payable with respect to or in exchange for the
number of shares of Common Stock immediately theretofore subject to acquisition
and receivable upon exercise of this Warrant had such consolidation, merger or
sale or conveyance not taken place.  In any such case, the Company
will make appropriate provision to insure that the provisions of this Section 4
hereof will thereafter be applicable as nearly as may be in relation to any
shares of stock or securities thereafter deliverable upon the exercise of this
Warrant.

     

    4.5           Notice of
Adjustments.  Upon any adjustment of the terms of this Warrant
pursuant to this Section 4, then and in each such case the Company shall
promptly deliver a notice to the registered Holder of this Warrant, which notice
shall state the Warrant Price resulting from such adjustment and the changes, if
any, in the number of Warrant Shares or kind of securities or other property
purchasable at such price upon the exercise hereof, setting forth in reasonable
detail the method of calculation and the facts upon which such calculation is
based.

    

    4.6           Adjustment in Number of
Securities.  Upon each adjustment of the Warrant Price pursuant
to the provisions of this Section 4, the number of securities issuable upon the
exercise of each Warrant shall be adjusted to the nearest full amount by
multiplying a number equal to the Warrant Price in effect immediately prior to
such adjustment by the number of Warrant Shares issuable upon exercise of the
Warrants immediately prior to such adjustment and dividing the product so
obtained by the adjusted Warrant Price.

    

    4.7           No Fractional
Shares.   No fractional shares shall be issuable upon
exercise of this Warrant and the number of Warrant Shares to be issued shall be
rounded down to the nearest whole share.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    5.             Reservation of
Shares.  The Company shall at all times reserve and keep
available out of its authorized but unissued shares of Common Stock, free from
all taxes, liens and charges with respect to the issue thereof and not be
subject to preemptive rights or other similar rights of stockholders of the
Company, solely for the purpose of issuing the shares of Common Stock underlying
this Warrant, such number of its shares of Common Stock as shall from time to
time be sufficient to effect the issuance or exercise thereof, and if at any
time the number of authorized but unissued shares of Common Stock shall not be
sufficient to issue the Common Stock and effect the exercise of this Warrant, in
addition to such other remedies as shall be available to Holder, the Company
shall take such corporate action as may, in the opinion of its counsel, be
necessary to increase the number of authorized but unissued shares of Common
Stock to such number of shares as shall be sufficient for such purposes,
including without limitation, using its best efforts to obtain the requisite
stockholder approval necessary to increase the number of authorized shares of
the Company’s Common Stock.  All shares of Common Stock issuable upon
exercise of this Warrant shall be duly authorized and, when issued upon
exercise, shall be validly issued and, in the case of shares, fully paid and
nonassessable and free from preemptive rights and free from taxes, liens and
charges with respect thereto.

    

    6.           No
Impairment.  The Company will not, by amendment of its charter
or through reorganization, consolidation, merger, dissolution, sale of assets or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of this Warrant but will at all times carry out all such
terms and take all such action as may be reasonably necessary or appropriate in
order to protect the rights of the holder of this Warrant against
impairment.

    

    7.           Restrictions on
Transfer.

    

    7.1           Restrictive
Legends.  This Warrant and each Warrant issued upon transfer or
in substitution for this Warrant pursuant to Section 7, each certificate for
Common Stock issued upon the exercise of any Warrant and each certificate issued
upon the transfer of any such Common Stock shall be transferable only upon
satisfaction of the conditions specified in this Section 7 and Section
8.4.  Each of the foregoing securities shall be stamped or otherwise
imprinted with a legend reflecting the restrictions on transfer set forth in
Section 7 and Section 8.4 hereof and any restrictions required under the
Securities Act of 1933, as amended (the “Act”).

    

    7.2           Notice of Proposed Transfer; Opinion
of Counsel.  Subject to compliance with applicable securities
laws, this Warrant, and the rights evidenced hereby, may be transferred by any
registered holder hereof (a "Transferor"). On the surrender
for exchange of this Warrant, with the Transferor's endorsement in the form of
Exhibit B attached hereto (the “Transferor Endorsement Form")
and together with an opinion of counsel reasonably satisfactory to the Company
that the transfer of this Warrant will be in compliance with applicable
securities laws, the Company at its expense, twice, only, but with payment by
the Transferor of any applicable transfer taxes, will issue and deliver to or on
the order of the Transferor thereof a new Warrant or Warrants of like tenor, in
the name of the Transferor and/or the transferee(s) specified in such Transferor
Endorsement Form (each a "Transferee"), calling in the
aggregate on the face or faces thereof for the number of shares of Common Stock
called for on the face or faces of the Warrant so surrendered by the
Transferor.  No such transfers shall result in a public distribution
of the Warrant.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    7.3           Termination of Restrictions.
The restrictions imposed by this Section 7 upon the transferability of
Restricted Securities shall cease and terminate as to any particular Restricted
Securities: (a) which Restricted Securities shall have been effectively
registered under the Act, or (b) when, in the opinions of both counsel for the
Holder thereof and counsel for the Company, such restrictions are no longer
required in order to insure compliance with the Act or Section 8
hereof.  Whenever such restrictions shall cease and terminate as to
any Restricted Securities, the Holder thereof shall be entitled to receive from
the Company, without expense (other than applicable transfer taxes, if any), new
securities of like tenor not bearing the applicable legends required by Section
7.1 hereof.

    

    8.           Ownership, Transfer and
Substitution of Warrant.

    

    8.1           Ownership of
Warrant.  The Company may treat the person in whose name this
Warrant is registered in the Warrant Register maintained pursuant to Section
8.2(b) hereof as the owner and holder thereof for all purposes, notwithstanding
any notice to the contrary, except that, if and when any Warrant is properly
assigned in blank, the Company may (but shall not be obligated to) treat the
bearer thereof as the owner of such Warrant for all purposes, notwithstanding
any notice to the contrary.  Subject to Section 7 hereof, this
Warrant, if properly assigned, may be exercised by a new holder without a new
Warrant first having been issued.

    

    8.2          Office; Transfer and Exchange of
Warrant.

    

    (a)           The
Company will maintain as principal offices at 30950 Rancho Viejo Rd #120, San
Juan Capistrano, CA  92675 as the office where notices, presentations
and demands in respect of this Warrant may be made upon it until the Company
notifies the holder of this Warrant of any change of location of the
office.

    

    (b)           The
Company shall cause to be kept at its office maintained pursuant to Section
8.2(a) hereof a Warrant Register for the registration and transfer of this
Warrant.  The names and addresses of holders of this Warrant, the
transfers thereof and the names and addresses of transferees of this Warrant
shall be registered in such Warrant Register.  The Person in whose
name any Warrant shall be so registered shall be deemed and treated as the owner
and holder thereof for all purposes of this Warrant, and the Company shall not
be affected by any notice or knowledge to the contrary.

    

    (c)           Upon
the surrender of this Warrant, properly endorsed, for registration of transfer
or for exchange at the office of the Company maintained pursuant to Section
8.2(a) hereof, the Company at its expense will (subject to compliance with
Section 8 hereof, if applicable) execute and deliver to or upon the order of the
Holder thereof a new Warrant of like tenor, in the name of such holder or as
such holder (upon payment by such holder of any applicable transfer taxes) may
direct, calling in the aggregate on the face thereof for the number of shares of
Common Stock called for on the face of this Warrant so surrendered.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    8.3           Replacement of
Warrant.  Upon receipt of evidence reasonably satisfactory to
the Company of the loss, theft, destruction or mutilation of this Warrant and,
in the case of any such loss, theft or destruction of this Warrant, upon
delivery of indemnity reasonably satisfactory to the Company in form and amount
or, in the case of any mutilation, upon surrender of this Warrant for
cancellation at the office of the Company maintained pursuant to Section 8.2(a)
hereof, the Company at its expense will execute and deliver, in lieu thereof, a
new Warrant of like tenor and dated the date hereof.

    

    8.4           Restrictions on
Transfer.  In addition to the restrictions on transfer set
forth in Section 7 hereof, neither this Warrant nor any portion of this Warrant
may be transferred without the consent of the Company.

    

    9.           No Rights or Liabilities as
Stockholder.  No Holder shall be entitled to vote or receive
dividends or be deemed the holder of any shares of Common Stock or any other
securities of the Company which may at any time be issuable on the exercise
hereof for any purpose, nor shall anything contained herein be construed to
confer upon the Holder, as such, any of the rights of a stockholder of the
Company or any right to vote for the election of directors or upon any matter
submitted to stockholders at any meeting thereof, or to give or withhold consent
to any corporate action (whether upon any recapitalization, issuance of stock,
reclassification of stock, change of par value, consolidation, merger,
conveyance, or otherwise) or to receive notice of meetings, or to receive
dividends or subscription rights or otherwise until this Warrant shall have been
exercised and the shares of Common Stock purchasable upon the exercise hereof
shall have become deliverable, as provided herein.  The Holder will
not be entitled to share in the assets of the Company in the event of a
liquidation, dissolution or the winding up of the Company.

    

    10.           Notices of Record Date,
Etc.  In case the Company shall take a record of the holders of
its Common Stock (or other stock or securities at the time deliverable upon the
exercise of this Warrant) for the purpose of entitling or enabling them to
receive any dividend or other distribution, or to receive any right to subscribe
for or purchase any shares of stock of any class or any other securities, or to
receive any other right; or of any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any consolidation or
merger of the Company with or into another corporation (other than a
consolidation or merger in which the Company is the surviving entity), or any
transfer of all or substantially all of the assets of the Company; or of the
voluntary or involuntary dissolution, liquidation or winding-up of the Company,
then, and in each such case, the Company will mail or cause to be mailed to the
registered holder of this Warrant a notice specifying, as the case may be: (i)
the date on which a record is to be taken for the purpose of such dividend,
distribution or right, and stating the amount and character of such dividend,
distribution or right, or (ii) the effective date on which such reorganization,
reclassification, consolidation, merger, transfer, dissolution, liquidation or
winding-up is to take place, and the time, if any is to be fixed, as of which
the holders of record of Common Stock (or such other stock or securities at the
time deliverable upon the exercise of this Warrant) shall be entitled to
exchange their shares of Common Stock (or such other stock or securities) for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, transfer, dissolution, liquidation or
winding-up.  Such notice shall be mailed at least ten (10) days prior
to the record date or effective date for the event specified in such notice
unless such prior notice is waived by the registered holder of this
Warrant.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    11.           Notices.  Any
notice or other communication in connection with this Warrant shall be deemed to
be given if in writing (or in the form of a facsimile) addressed as hereinafter
provided and actually delivered at said address: (a) if to any Holder, at the
registered address of such holder as set forth in the Warrant Register kept at
the office of the Company maintained pursuant to Section 8.2(a) hereof, or (b)
if to the Company, to the attention of its Chief Financial Officer at its office
maintained pursuant to Section 8.2(a) hereof; provided, however, that the
exercise of any Warrant shall be effective in the manner provided in Section 3
hereof.

    

    12.           Payment of
Taxes.  The Company will pay all documentary stamp taxes
attributable to the issuance of shares of Common Stock underlying this Warrant
upon exercise of this Warrant; provided, however, that the
Company shall not be required to pay any tax which may be payable in respect of
any transfer involved in the registration of any certificate for shares of
Common Stock underlying this Warrant in a name other that of the
Holder.  The Holder is responsible for all other tax liability that
may arise as a result of holding or transferring this Warrant or receiving
shares of Common Stock underlying this Warrant upon exercise
hereof.

    

    13.           Warrant
Agent.  The Company shall serve as warrant agent under this
Warrant.  Upon thirty (30) days notice to the Holder, the Company may
appoint a new warrant agent.  Any corporation into which the Company
or any new warrant agent may be merged or any corporation resulting from any
consolidation to which the Company or any new warrant agent shall be a party or
any corporation to which the Company or any new warrant agent transfers
substantially all of its corporate trust or stockholders services business shall
be successor warrant agent under this Warrant without any further
act.  Any such successor warrant agent shall promptly cause notice of
its succession as warrant agent to be mailed (by first class mail, postage
prepaid) to the Holder at the Holder’s last address as shown on the Warrant
Register.

    

    14.           Miscellaneous.  This
Warrant and any term hereof may be changed, waived, discharged or terminated
only by an instrument in writing signed by the party against which enforcement
of the change, waiver, discharge or termination is sought. This Warrant shall be
construed and enforced in accordance with and governed by the laws of the State
of Nevada.  The section headings in this Warrant are for purposes of
convenience only and shall not constitute a part hereof.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    IN
WITNESS WHEREOF, the Company has caused this Common Stock Purchase Warrant to be
duly executed as of the date first above written.

    

    
      
        
          
            
              	 
      	
                      PINNACLE
      ENERGY CORP.

                    	 
	 
      	 
      	 
      	 
	 
      	
                      By:

                    	 
      	 
	 
      	 
      	
                         
      Name:

                    	 
	 
      	 
      	
                         
      Title:

                    	 

            

          

        

      

    

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    EXHIBIT
A

    

    PURCHASE
FORM

     

    
      	
              To:
      Pinnacle Energy Corp.:

            	
              Dated:____________

            

    

    

    The
undersigned, pursuant to the provisions set forth in the attached Warrant
(No. ___), hereby elects to purchase (check applicable
box):

     

    _________
shares of the Common Stock of Pinnacle Energy Corp. covered by such Warrant;
or

     

    the
maximum number of shares of Common Stock covered by such Warrant pursuant to the
cashless exercise procedure set forth in
subsection 3.1(b).

     

    The
undersigned herewith makes payment of the full Warrant Price for such shares at
the price per share provided for in such Warrant.  Such payment takes
the form of (check applicable
box or boxes):

     

    $______ in lawful money of the United
States; and/or

    

    the cancellation of such portion of the
attached Warrant as is exercisable for a total of _____ Warrant Shares (using a
Fair Market Value of $_____ per share for purposes of this calculation) ;
and/or

    

    the cancellation of such number of
Warrant Shares as is necessary, in accordance with the formula set forth in
subsection 3.1(b), to exercise this Warrant with respect to the maximum
number of Warrant Shares purchasable pursuant to the cashless exercise procedure
set forth in subsection 3.1(b).

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                	 
      	 	 
      
	 
      	
                                        Print
      or Type Name

                                      
	 
      	 
      
	 
      	 	 
      
	 
      	
                                        (Signature
      must conform in all respects to name of holder as
specified on the face
      of Warrant)

                                      
	 
      	 
      
	 
      	 	 
      
	 
      	
                                        (Street
      Address)

                                      
	 
      	 
      
	 
      	 	 
      
	 
      	
                                        (City)                      
         (State)       
        (Zip
Code)

                                      

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
B

    

    FORM OF
TRANSFEROR ENDORSEMENT

    (To be
signed only on transfer of Warrant)

     

    For value
received, the undersigned hereby sells, assigns, and transfers unto the
person(s) named below under the heading "Transferees" the right represented by
the within Warrant to purchase the percentage and number of shares of Common
Stock of PINNACLE ENERGY CORP. to which the within Warrant relates specified
under the headings "Percentage Transferred" and "Number Transferred,"
respectively, opposite the name(s) of such person(s) and appoints each such
person Attorney to transfer its respective right on the books of PINNACLE ENERGY
CORP. with full power of substitution in the premises.

    

    
      
        
          
            
              
                
                  	
                          Transferees

                        	 	
                          Percentage Transferred

                        	 	
                          Number Transferred

                        
	 
      	 	 
      	 	 
      

                

              

            

          

        

      

    

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            	
                                    Dated:  ______________,
      ___________

                                  	 	 
      
	 
      	 	
                                    (Signature
      must conform to name of holder as specified

                                  
	 
      	 	
                                    on
      the face of the warrant)

                                  
	 
      	 	 
      
	
                                    Signed
      in the presence of:

                                  	 	 
      
	 
      	 	 
      
	 
      	 	 
      
	
                                    (Name)

                                  	 	 
      
	 
      	 	
                                    (address)

                                  
	 
      	 	 
      
	
                                    ACCEPTED
      AND AGREED:

                                  	 	 
      
	
                                    [TRANSFEREE]

                                  	 	
                                     

                                  
	 	 	
                                    (address)

                                  
	 
      	 	 
      
	
                                    (Name)

                                  	 	 
      

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    

    
      
        
        

      

      
        12

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00167-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00167-of-00352.parquet"}]]