AMENDMENT TO UNSECURED PROMISSORY NOTE
DUE NOVEMBER 10, 2009
WHEREAS, the parties to that certain Unsecured Promissory Note,
dated
November 10, 2008 (the "Note"), in the initial Principal Amount
of
$150,000.00 are The Saint James Company, a North Carolina
corporation
(the "Company") and Pinnacle Resources, Inc., a Wyoming
corporation
(the "Payee");
WHEREAS each of the Company and the Payee desires to amend the Note
to
provide for certain conversion and registration rights;
NOW, THEREFORE, in consideration of these presents, and for such
other
good and valuable consideration, the receipt and sufficiency of
which
are hereby acknowledged, the parties agree to amend the Note
(this
"Amendment") by providing for additional Sections 5, 6, and 7,
as
follows:
Section 5. Conversion.
a) Voluntary Conversion. At any time
after the date of this
Amendment and until the Note is no longer outstanding, this
Note
(inclusive of principal and all accrued and unpaid interest
thereon)
shall be convertible, in whole or in part, into shares of common
stock
of the Company (the "Common Stock") at the option of the Payee, at
any
time and from time to time (subject to the conversion limitations
set
forth in Section 5(c) hereof). The Payee shall effect
conversions by
delivering to the Company a Notice of Conversion, the form of which
is
attached hereto as Annex A (a "Notice of Conversion"),
specifying
therein the principal amount and the accrued and unpaid
interest
thereon of this Note to be converted and the date on which such
conversion shall be effected (such date, the "Conversion
Date"). If no
Conversion Date is specified in a Notice of Conversion, the
Conversion
Date shall be the date that such Notice of Conversion is deemed
delivered hereunder. To effect conversions hereunder, the
Payee shall
not be required to surrender this Note to the Company physically
unless
the entire principal amount of this Note, plus all accrued and
unpaid
interest thereon, has been so converted. Conversions
hereunder shall
have the effect of lowering the outstanding principal amount and
the
unpaid interest thereon of this Note in an amount equal to the
applicable conversion. The Payee and the Company shall
maintain
records showing the principal amount(s) and the accrued and
unpaid
interest thereon so converted and the date of such
conversion(s). The
Company may deliver an objection to any Notice of Conversion within
one
Business Day of delivery of such Notice of Conversion. In the
event of
any dispute or discrepancy, the records of the Payee shall be
controlling and determinative in the absence of manifest
error. The
Payee, and any assignee by acceptance of this Amendment and of
the
Note, acknowledge and agree that, by reason of the provisions of
this
paragraph, following conversion of a portion of the Note, the
unpaid
and unconverted principal amount of the Note may be less than
the
amount stated on the face thereof.
b) Conversion Price. The conversion price
in effect on any
Conversion Date shall be $0.50, subject to adjustment herein
(the
"Conversion Price").
c) Conversion Limitations. The Company
shall not effect any
conversion of the Note, and a Payee shall not have the right to
convert
any portion of the Note, to the extent that, after giving effect to
the
conversion set forth on the applicable Notice of Conversion, the
Payee
(together with the Payee's Affiliates, and any other person or
entity
acting as a group together with the Payee or any of the Payee's
Affiliates) would beneficially own in excess of the Beneficial
Ownership Limitation (as defined below). For purposes of the
foregoing
sentence, the number of shares of Common Stock beneficially owned
by
the Payee and its Affiliates shall include the number of shares
of
Common Stock issuance upon conversion of the Note with respect to
which
such determination is being made, but shall exclude the number
of
shares of Common Stock that are issuable upon (A) conversion of
the
remaining, unconverted principal amount of the Note beneficially
owned
by the Payee or any of its Affiliates, and (B) exercise or
conversion
of the unexercised or unconverted option of any other securities of
the
Company subject to a limitation on conversion or exercise analogous
to
the limitation contained herein beneficially owned by the Payee or
any
of its Affiliates. Except as set forth in the preceding
sentence, for
purposes of this Section 5(c), beneficial ownership shall be
calculated
in accordance with Section 13(d) of the Securities Exchange Act
of
1934, as amended (the "Exchange Act"), and the rules and
regulations
promulgated thereunder. To the extent that the limitation
contained in
this Section 5(c) applies, the determination of whether the Note
is
convertible (in relation to other securities owned by the Payee
together with any Affiliates) and of which principal amount of the
Note
is convertible shall be in the sole discretion of the Payee,
and the
submission of a Notice of Conversion shall be deemed to be the
Payee's
determination of whether the Note may be converted (in relation
to
other securities owned by the Payee together with any Affiliates)
and
which principal amount of the Note is convertible, in each case
subject
to eh Beneficial Ownership Limitation. To ensure compliance
with this
restriction, the Payee will be deemed to represent to the Company
each
time it delivers a Notice of Conversion that such Notice of
Conversion
has not violated the restrictions set forth in this paragraph and
the
Company shall have no obligation to verify or confirm the accuracy
of
such determination. In addition, a determination as to any
group
status as contemplated above shall be determined in accordance
with
Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder. For purposes of this Section 5(c),
in
determining the number of outstanding shares of Common Stock, the
Payee
may rely on the number of outstanding shares of Common Stock as
stated
in the most recent of the following: (A) the Company's most
recent
periodic or annual report, as the case may be; (B) a more recent
public
announcement by the Company; or (C) a more recent notice by the
Company
or the Company's transfer agent setting forth the number of shares
of
Common Stock outstanding. Upon the written or oral request of
a Payee,
the Company shall within two days on which the New York Stock
Exchange
is open for business (each, a "Trading Day") confirm orally and
in
writing to the Payee the number of shares of Common Stock then
outstanding. In any case, the number of outstanding shares of
Common
Stock shall be determined after giving effect to the conversion
or
exercise of securities of the Company, including the Note, by the
Payee
or its Affiliates since the date as of which such number of
outstanding
shares of Common Stock was reported. The "Beneficial
Ownership
Limitation" shall be 4.99% of the number of shares of the Common
Stock
outstanding immediately after giving effect to the issuance of
shares
of Common Stock issuable upon conversion of the Note held by the
Payee.
The Payee, upon not less than 61 days' prior notice to the Company,
may
increase or decrease the Beneficial Ownership Limitation provisions
of
this Section 5(c). Any such increase or decrease will not be
effective
until the 61st day after such notice is delivered to the
Company. The
provisions of this paragraph shall be construed and implemented in
a
manner otherwise than in strict conformity with the terms of
this
Section 5(c) to correct this paragraph (or any portion hereto) that
may
be defective or inconsistent with the intended Beneficial
Ownership
Limitation herein contained or to make changes or supplements
necessary
or desirable to properly give effect to such limitation.
The
limitations contained in this paragraph shall apply to a
successor
holder of the Note.
d) Mechanics of Conversion.
1. Conversion Shares Issuable Upon Conversion of Principal
Amount.
The number of shares of Common Stock issuable upon conversion of
the
Note (collectively, the "Conversion Shares") issuable upon a
conversion
hereunder shall be determined by the quotient obtained by dividing
(x)
the outstanding principal amount of the Note to be converted by (y)
the
Conversion Price.
ii. Delivery of Certificate Upon Conversion. Not later
than three
Trading Days after each Conversion Date (the "Share Delivery
Date"),
the Company shall deliver, or cause to be delivered, to the Payee
a
certificate or certificates representing the Conversion Shares
representing the number of Conversion Shares being acquired upon
the
conversion of the Note.
iii. Obligation Absolute. The Company's obligations to
issue and
deliver the Conversion Shares upon conversion of the Note in
accordance
with the terms hereof are absolute and unconditional, irrespective
of
any action or inaction by the Payee to enforce the same, any waiver
or
consent with respect to any provision hereof, the recovery of
any
judgment against any person or entity (either, a "Person") or
any
action to enforce the same, or any setoff, counterclaim,
recoupment,
limitatio
