AMENDMENT TO UNSECURED PROMISSORY NOTE
DUE ON DEMAND
 
WHEREAS, the parties to that certain Unsecured Promissory Note, dated December
29, 2008 (the “Note”), in the initial Principal Amount of $25,000.00 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”).
 
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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)
Mechanics of Conversion.

 
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 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 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.
 

 
THE SAINT JAMES COMPANY
 
A North Carolina corporation
       
By:
     
Wayne Gronquist, Secretary

 
Payee hereby acknowledges and agrees to the terms
herein as of the 5th day of June, 2009
 
PINNACLE RESOURCES, INC.
A Wyoming corporation
 
By:
     
Glen Gamble, President
 

 
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ANNEX A
 
NOTICE OF CONVERSION
 
The undersigned hereby elects to convert principal under the Unsecured
Promissory Note due on demand of The Saint James 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.
 

 
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:
                       

 
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SCHEDULE 1

CONVERSION SCHEDULE

The Unsecured Promissory Note due on demand in the aggregate principal amount of
$25,000.00 was issued by The Saint James Company.  This Conversion Schedule
reflects conversions made under Section 5 of the above-referenced Note.

Dated:

 
Date of Conversion
(or for first entry,
Original Issue Date)
 
 
Amount of
Conversion
 
Aggregate
Principal
Amount
Remaining
Subsequent to
Conversion
(or original
Principal
Amount)
 
 
Company Attest
                                                                               
                 

 
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