AMENDMENT #1 SUPPORT SERVICES AGREEMENT
AMENDMENT
#1
This Amendment #1 to Support Services Agreement
(this “Amendment”) is
dated as of January 12, 2010 (the “Effective Date”), between
Cardiff Partners, LLC, a California limited liability company (“Cardiff”) and Pinnacle Energy
Corp., a Nevada corporation (“PENC”).
WHEREAS, Cardiff and PENC are
parties to that certain Support Services Agreement dated as of June 30, 2009
(the “Original Agreement,” and as amended by
this Amendment, the “Agreement”).
WHEREAS, PENC has not had
sufficient cash resources to pay Cardiff in accordance with the terms of the
Original Agreement.
WHEREAS, PENC desires to
provide the option to settle the past due MS Fees payable to Cardiff through the
issuance of PENC’s common stock.
WHEREAS, PENC desires to
expand the scope of Cardiff’s engagement under the Original Agreement to include
transaction execution support of PENC’s proposed acquisition of Harbin Aerospace
Company, LLC.
WHEREAS, PENC will issue to
Cardiff 2,500,000 shares of PENC’s common stock as consideration for such
additional services.
NOW THEREFORE, in
consideration of the premises and of the mutual conditions and agreements
contained herein, the parties agree as follows:
1. Defined
Terms. Capitalized terms used herein without definition shall
have the respective meanings ascribed to them in the Original
Agreement.
2. Payment
of MS Fees. Cardiff may, at
its option, elect from time to time (by written notice to PENC) to receive all
or any portion of MS Fees payable to it in the form of shares of PENC’s common
stock (“Shares”) as follows: The number of Shares to be issued
will equal (a) the outstanding balance of MS Fees to be repaid, divided by (b)
50% of the average of the closing prices for PENC common stock during the twenty
(20) trading day period ending one trading day prior to the date the notice of
election is sent by Cardiff to PENC.
3. Additional
Services and Compensation. Cardiff agrees to provide
PENC with transaction execution support services in connection with PENC”s
proposed acquisition of Harbin Aerospace Company, LLC, including (without
limitation): due diligence, business review of relevant transaction
documentation and audit support (the “Additional Services”). As
compensation for the Additional Services, PENC hereby agrees to issue to Cardiff
2,500,000 Shares.
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4. Investment
Representations. Cardiff represents and warrants to PENC that:
it is an “accredited investor” as defined in Rule 501 of Regulation D
promulgated under the Securities Act of 1933, as amended (the “Securities Act”), is
financially able to bear the economic risks of acquiring Shares, and has no need
for liquidity in this investment. It has such knowledge and experience in
financial and business matters in general, and with respect to businesses of a
nature similar to the business of PENC, so as to be capable of evaluating the
merits and risks of, and making an informed business decision with regard to,
the acquisition of the Shares. It is acquiring the Shares solely for its own
account and not with a view to or for resale in connection with any distribution
or public offering thereof, within the meaning of any applicable securities laws
and regulations, unless such distribution or offering is registered under the
Securities Act or an exemption from such registration is available. It has (i)
received all the information he has deemed necessary to make an informed
investment decision with respect to the acquisition of the Shares, including the
information PENC has filed publicly with the Securities and Exchange Commission
(the “SEC”), (ii) had an
opportunity to make such investigation as he has desired pertaining to PENC and
the acquisition of an interest therein, and to verify the information which is,
and has been, made available to it and (iii) had the opportunity to ask
questions of PENC concerning its business and operations. It has
received no public solicitation or advertisement with respect to the offer or
sale of the Shares. It realizes that the Shares are “restricted securities” as
that term is defined in Rule 144 promulgated by the SEC under the Securities
Act, the resale of the Shares is restricted by federal and state securities laws
and, accordingly, the Shares must be held indefinitely unless their resale is
subsequently registered under the Securities Act or an exemption from such
registration is available for their resale. It understands that any resale of
the Shares by it must be registered under the Securities Act (and any applicable
state securities law) or be effected in circumstances that, in the opinion of
counsel for PENC at the time, create an exemption or otherwise do not require
registration under the Securities Act (or applicable state securities laws). It
acknowledges and consents that certificates now or hereafter issued for the
Shares will bear a legend substantially as follows:
“THE
SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR QUALIFIED UNDER
ANY APPLICABLE STATE SECURITIES LAWS (THE “STATE ACTS”), HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED
EXCEPT PURSUANT TO A REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND
QUALIFICATION UNDER THE STATE ACTS OR PURSUANT TO EXEMPTIONS FROM SUCH
REGISTRATION OR QUALIFICATION REQUIREMENTS (INCLUDING, IN THE CASE OF THE
SECURITIES ACT, THE EXEMPTIONS AFFORDED BY SECTION 4(1) OF THE SECURITIES ACT
AND RULE 144 THEREUNDER). AS A PRECONDITION TO ANY SUCH TRANSFER, THE ISSUER OF
THESE SECURITIES SHALL BE FURNISHED WITH AN OPINION OF COUNSEL OPINING AS TO THE
AVAILABILITY OF EXEMPTIONS FROM SUCH REGISTRATION AND QUALIFICATION AND/OR SUCH
OTHER EVIDENCE AS MAY BE SATISFACTORY THERETO THAT ANY SUCH TRANSFER WILL NOT
VIOLATE THE SECURITIES LAWS.”
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Cardiff
understands that the Shares are being sold to it pursuant to the exemption from
registration and that PENC is relying upon the representations made herein as
one of the bases for claiming the exemption.
5. Full
Force and Effect; Conflicts; Governing Law. The Original
Agreement, as amended hereby, shall remain in full force and
effect. In the event of a conflict between the Original Agreement and
this Amendment, this Amendment shall control to the extent of the
conflict. This Amendment shall be governed by the laws of the State
of California, without references to conflict of law principles
thereof.
[Remainder
Left Blank – Signature Page Follows]
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IN WITNESS WHEREOF, the
parties have entered into this Amendment on the date first above
written.
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CARDIFF
PARTNERS, LLC,
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a
California limited liability company
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a
Nevada corporation
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By:
Xxxxx Xxxxx
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By:
Xxxxx Xxxxxxx
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Title:
Managing Member
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Title:
Chief Executive Officer
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Address:
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00000
Xxxxxx Xxxxx Xx #000
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Xxx
Xxxx Xxxxxxxxxx,
XX 00000
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