AMENDMENT TO UNSECURED PROMISSORY NOTE DUE NOVEMBER 10, 2009
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 ▇▇▇▇▇ 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”).
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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 issuable 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
portion 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 the 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 hereof) 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.
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d)
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Mechanics of
Conversion.
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i. 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,
limitation or termination, or any breach or alleged breach by the Payee or any
other Person of any obligation to the Company or any violation or alleged
violation of law by the Payee or any other Person, and irrespective of any other
circumstance which might otherwise limit such obligation of the Company to the
Payee in connection with the issuance of such Conversion Shares; provided, however, that such delivery
shall not operate as a waiver by the Company of any such action the Company may
have against the Payee.
iv. Reservation of Shares
Issuable Upon Conversion. The Company covenants that it will
at all times reserve and keep available out of its authorized and unissued
shares of Common Stock for the sole purpose of issuance upon conversion of the
Note, as herein provided, free from preemptive rights or any other actual
contingent purchase rights of Persons other than the Payee, not less than such
aggregate number of shares of the Common Stock as shall be issuable (taking into
account the adjustments of Section 6) upon the conversion of the outstanding
principal amount of the Note and payment of interest hereunder. The
Company covenants that all shares of Common Stock that shall be so issuable
shall, upon issue, be duly authorized, validly issued, fully paid and
nonassessable.
v. Fractional
Shares. No fractional shares or scrip representing fractional
shares shall be issued upon the conversion of the Note. As to any
fraction of a share that the Payee would otherwise be entitled to purchase upon
such conversion, the Company shall at its election, either pay a cash adjustment
in respect of such final fraction in an amount equal to such fraction multiplied
by the Conversion Price or round up to the next whole share.
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vi. Transfer
Taxes. The issuance of certificates for shares of the Common
Stock on conversion of the Note shall be made without charge to the Payee for
any documentary stamp or similar taxes that may be payable in respect of the
issue or delivery of such certificates, provided that, the Company shall not be
required to pay any tax that may be payable in respect of any transfer involved
in the issuance and delivery of any such certificate upon conversion in a name
other than that of the Payee and the Company shall not be required to issue or
deliver such certificates unless or until the person or persons requesting the
issuance thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been
paid.
Section
6.
Certain
Adjustments.
a) Stock Dividends and Stock
Splits. If the Company, at any time while the Note is
outstanding: (A) pays a stock dividend or otherwise makes a
distribution or distributions payable in shares of Common Stock on shares of
Common Stock or any Common Stock Equivalents (which, for avoidance of doubt,
shall not include any shares of Common Stock issued by the Company upon
conversion of, or payment of interest on, the Note); (B) subdivides outstanding
shares of Common Stock into a larger number of shares; (C) combines (including
by way of a reverse stock split) outstanding shares of Common Stock into a
smaller number of shares; or (D) issues, in the event of a reclassification of
shares of the Common Stock, any shares of capital stock of the Company, then the
Conversion Price shall be multiplied by a fraction of which the numerator shall
be the number of shares of Common Stock (excluding any treasury shares of the
Company) outstanding immediately before such event and of which the denominator
shall be the number of shares of Common Stock outstanding immediately after such
event. Any adjustment made pursuant to this Section shall become
effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution and shall become
effective immediately after the effective date in the case of a subdivision,
combination, or re-classification.
b) Fundamental
Transaction. If, at any time while the Note is outstanding,
(A) the Company effects any merger or consolidation of the Company with or
into another Person; (B) the Company effects any sale of all or substantially
all of its assets in one transaction or a series of related transactions; (C)
any tender offer or exchange offer (whether by the Company or another Person) is
completed, pursuant to which holders of Common Stock are permitted to tender or
exchange their shares for other securities, cash or property; or (D) the Company
effects any reclassification of the Common Stock or any compulsory share
exchange, pursuant to which the Common Stock is effectively converted into or
exchanged for other securities, cash, or property (in any such case, a “Fundamental Transaction”),
then, upon any subsequent conversion of the Note, the Payee shall have the right
to receive, for each Conversion Share that would have been issuable upon such
conversion immediately prior to the occurrence of such Fundamental Transaction,
the same kind and amount of securities, cash, or property as it would have been
entitled to receive upon the occurrence of such Fundamental Transaction if it
had been, immediately prior to such Fundamental Transaction, the holder of one
share of Common Stock (the “Alternate
Consideration”). For purposes of any such conversion, the
determination of the Conversion Price shall be appropriately adjusted to apply
to such Alternate Consideration based on the amount of Alternate Consideration
issuable in respect of one share of Common Stock in such Fundamental
Transaction, and the Company shall apportion the Conversion Price among the
Alternate Consideration in a reasonable manner reflecting the relative value of
any different components of the Alternate Consideration. If holders
of Common Stock are given any choice as to the securities, cash, or property to
be received in a Fundamental Transaction, then the Payee shall be given the same
choice as to the Alternate Consideration it receives upon any conversion of the
Note following such Fundamental Transaction. To the extent necessary
to effectuate the foregoing provisions, any successor to the Company or
surviving entity in such Fundamental Transaction shall issue to the Payee a new
note consistent with the foregoing provisions and evidencing the Payee’s right
to convert such note into Alternate Consideration. The terms of any
agreement pursuant to which a Fundamental Transaction is effected shall include
terms requiring any such successor or surviving entity to comply with the
provisions of this Section 6(b) and ensuring that the Note (or any such
replacement security) will be similarly adjusted upon any subsequent transaction
analogous to a Fundamental Transaction.
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c) Calculations. All
calculations under this Section 6 shall be made to the nearest cent or the
nearest 1/100th of a
share, as the case may be. For purposes of this Section 6, the number
of shares of Common Stock deemed to be issued and outstanding as of a given date
shall be the sum of the number of shares of Common Stock (excluding any treasury
shares of the Company) issued and outstanding.
d) Notice to the
Payee.
i. Adjustment to Conversion
Price. Whenever the Conversion Price is adjusted pursuant to
any provision of this Section 6, the Company shall promptly deliver to each
Payee a notice setting forth the Conversion Price after such adjustment and
setting forth a brief statement of the facts requiring such
adjustment.
ii. Notice to Allow Conversion
by ▇▇▇▇▇. If (A) the Company shall declare a dividend (or any
other distribution in whatever form) on the Common Stock, (B) the Company shall
declare a special nonrecurring cash dividend on or a redemption of the Common
Stock, (C) the Company shall authorize the granting to all holders of the Common
Stock of rights or warrants to subscribe for or purchase any shares of capital
stock of any class or of any rights, (D) the approval of any stockholders of the
Company shall be required in connection with any reclassification of the Common
Stock, any consolidation or merger to which the Company is a party, any sale or
transfer of all or substantially all of the assets of the Company, of any
compulsory share exchange, whereby the Common Stock is converted into other
securities, cash, or property, or (E) the Company shall authorize the voluntary
or involuntary dissolution, liquidation, or winding up of the affairs of the
Company, then, in each case, the Company shall cause to be filed at each office
or agency maintained for the purpose of conversion of the Note, and shall cause
to be delivered to the Payee at its last address as it shall appear upon the
Note Register, at least twenty (20) calendar days prior to the applicable record
or effective date hereinafter specified, a notice stating (x) the date on which
a record is to be taken for the purpose of such dividend, distribution,
redemption, rights, or warrants, or if a record is not to be taken, the date as
of which the holders of the Common Stock of record to be entitled to such
dividend, distributions, redemption, rights or warrants are to be determined or
(y) the date on which such reclassification, consolidation, merger, sale,
transfer or share exchange is expected to become effective or close, and the
date as of which it is expected that holders of the Common Stock of record shall
be entitled to exchange their shares of the Common Stock for securities, cash or
other property deliverable upon such reclassification, consolidation, merger,
sale, transfer or share exchange, provided that the failure to deliver such
notice or any defect therein or in the delivery thereof shall not affect the
validity of the corporate action required to be specified in such
notice. The Payee is entitled to convert the Note during the 20-day
period commencing on the date of such notice through the effective date of the
event triggering such notice.
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Section
7. Registration
Rights. If the Company at any time proposes to register any of
its securities under the Securities Act of 1933, as amended, for sale to the
public, whether for its own account or for the account of other security holders
or both, except with respect to Registration Statements on Forms S-4, S-8, or
another form not available for registering the Conversion Shares for sale to the
public, provided the Conversion Shares have not otherwise been registered for
resale pursuant to an effective registration statement, each such time it will
give at least ten days’ prior written notice to the Payee and to the record
holder(s) of the Conversion Shares, as relevant, of its intention so to
do. Upon the written request of the Payee and such record holders, as
appropriate, received by the Company within ten days after the giving of any
such notice by the Company to register any of the Conversion Shares not
previously registered, the Company will cause such Conversion Shares as to which
registration shall have been so requested to be included with the securities to
be covered by the registration statement proposed to be filed by the Company,
all to the extent required to permit the sale or other disposition of the
Conversion Shares so registered by the holder thereof (the “Seller”). In the
event that any registration pursuant to this Section 7 shall be, in whole or in
part, an underwritten public offering of common stock of the Company, the number
of Conversion Shares to be included in such an underwriting may be reduced by
the managing underwriter if and to the extent that the Company and the
underwriter shall reasonably be of the opinion that such inclusion would
adversely affect the marketing of the securities to be sold by the Company
therein; provided,
however, that the
Company shall notify the Seller in writing of any such
reduction. Standard mutual indemnification terms and conditions shall
apply in respect of any such registration statement. The Company
shall bear the costs and expenses of such registration; the Seller shall bear
the costs and expenses, including brokerage commissions and underwriter’s
discounts in respect of the resale of the Conversion
Shares. Notwithstanding the foregoing provisions, the Company may
withdraw or delay or suffer a delay of any registration statement referred to
herein without thereby incurring any liability to the Seller.
Except as to amended, all of the terms
and conditions of the Note are in full force and effect and have not been
modified or amended hereby.
IN WITNESS WHEREOF, the Company has
executed this Amendment as of this 5th day of
June, 2009.
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THE
SAINT ▇▇▇▇▇ COMPANY
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A
North Carolina corporation
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By:
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▇▇▇▇▇
▇▇▇▇▇▇▇▇▇,
Secretary
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▇▇▇▇▇
hereby acknowledges and agrees to the terms
herein as
of the 5th day of
June, 2009
PINNACLE
RESOURCES, INC.
A Wyoming
corporation
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By:
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▇▇▇▇
▇▇▇▇▇▇, President
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6
ANNEX
A
NOTICE
OF CONVERSION
The undersigned hereby elects to
convert principal under the Unsecured Promissory Note due November 10, 2009 of
The Saint ▇▇▇▇▇ Company, a North Carolina corporation (the “Company”), into shares of
common stock (the “Common
Stock”), of the Company according to the conditions hereof, as of the
date written below. If shares of Common Stock are to be issued in the
name of a person other than the undersigned, the undersigned will pay all
transfer taxes payable with respect thereto and is delivering herewith such
certificates and opinions as reasonably requested by the Company in accordance
therewith. No fee will be charged to the holder for any conversion,
except for such transfer taxes, if any.
By the delivery of this Notice of
Conversion the undersigned represents and warrants to the Company that its
ownership of the Common Stock does not exceed the amounts specified under
Section 5 of the Note, as determined in accordance with Section 13(d) of the
Exchange Act.
The undersigned agrees to comply with
the prospectus delivery requirements under the applicable securities laws in
connection with any transfer of the aforesaid shares of Common
Stock.
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Date
to Effect Conversion:
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Principal
Amount of Note to be Converted:
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Number
of shares of Common Stock to be issued:
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Signature:
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Name:
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Address
for Delivery of Common Stock Certificates:
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SCHEDULE
1
CONVERSION
SCHEDULE
The
Unsecured Promissory Note due on November 10, 2009 in the aggregate principal
amount of $150,000.00 was issued by The Saint ▇▇▇▇▇ Company. This
Conversion Schedule reflects conversions made under Section 5 of the
above-referenced Note.
Dated:
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Date
of Conversion
(or
for first entry,
Original
Issue Date)
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Amount
of
Conversion
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Aggregate
Principal
Amount
Remaining
Subsequent
to
Conversion
(or
original
Principal
Amount)
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Company
Attest
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