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").
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,
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 with 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
of 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. 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) 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 bee,
immediately prior to such Fundamental Transaction, the holder of one
share of Common Stock (the "Alternate Consideration"). For the
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.
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 Payee. 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 stock holders 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 (2) calendar days
prior to the applicable record or effective date hereinafter specified,
a notice stating (x) the date on which a record is to e 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 be come effective or
close, and the date as of which it is expected that holders of the
Common Stock of records 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, provide that the failure to deliver such notice or any
defect therein or in the delivery thereof shall not affect the validity
of the corporate actions required to be specified in such notice. The
Payee is entitled to convert eh Note during the 20-day period
commencing on the date of such notice through the effective date of the
event triggering such notice.
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 Form 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 filled 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.
THE SAINT ▇▇▇▇▇ COMPANY
A North Carolina corporation
By: /s/▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ hereby acknowledges and agrees to the terms herein as of the 5th
days of June, 2009
PINNACLE RESOURCES, INC.
A Wyoming corporation
By: /s/▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇▇, President
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 company with the prospectus delivery
requirements under the applicable securities laws in connection with
any transfer of the aforesaid shares of Common Stock.
Date to Effect Conversion:
Principal Amount of Note to be Converted:
Number of shares of Common Stock to be issued:
Signature:
Name:
Address for Delivery of Common Stock Certificates:
SCHEDULE 1
CONVERSION SCHEDULE
The Unsecured Promissory Note due November 10, 2009 in the aggregate
principal amount of $150,000.00 was issued by The Saint ▇▇▇▇▇ Company.
This Conversion Schedule reflects conversion made under Section 5 of
the above-referenced Note.
Dated:
Aggregate
Principal
Amount
Remaining
Subsequent to
Conversion
Date of Conversion (or original
(or for first entry, Amount of Principal
Original Issue Date) Conversion Amount) Company Attest
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