EXECUTION  DRAFT

TRADEMARK SECURITY AGREEMENT
 
This Trademark Security Agreement is made and entered into this ____ day of
October, 2009, by and between The Saint James Eos Wine Company, a California
corporation (“Pledgor”), and Saphire Advisors, LLC, a Delaware limited liability
company (“Secured Party”).
 
WITNESSETH:

WHEREAS, in connection with that certain Membership Interest Purchase Agreement,
dated October 12, 2009 (the “Purchase Agreement”), by and among Pledgor, Secured
Party and The Saint James Company, a North Carolina corporation, Pledgor is
executing and delivering to Secured Party that certain Secured Promissory Note
of Pledgor, dated of even date herewith, in favor of Secured Party in the
initial principal amount of $6,128,559.91 (the “Note”); and

WHEREAS, Secured Party has required, as a condition to entering into the
Purchase Agreement, that Pledgor execute and deliver this Trademark Security
Agreement (Capitalized terms not defined herein shall have the meanings given in
the Purchase Agreement).
 
NOW, THEREFORE, in consideration of the foregoing and other good and valuable
consideration, the receipt, adequacy, and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

1.           Pledge.  As security for the prompt and complete payment and
performance of Pledgor’s obligations under the Note (the “Obligations”), Pledgor
hereby pledges and grants a second or third priority security interest to
Secured Party in all of its right, title and interest, whether now existing or
hereafter arising or acquired, in and to any and all items of its intellectual
property, wherever located, including without limitation, the property set forth
below (collectively, the “Collateral”):
 
a.           each trademark and trademark application, including, without
limitation, each trademark and trademark application referred to in Schedule 1
annexed hereto, together with any reissues, continuations or extensions thereof
and all goodwill associated therewith;
 
b.           each trademark license, including, without limitation, each
trademark license listed on Schedule 1 annexed hereto, together with all
goodwill associated therewith;
 
c.           all products and proceeds of the foregoing, including, without
limitation, any claim by Pledgor against third parties for past, present or
future infringement of any trademark, including, without limitation, any
trademark referred to in Schedule 1 annexed hereto, any trademark issued
pursuant to a trademark application referred to in Schedule 1 and any trademark
licensed under any trademark license listed on Schedule 1 annexed hereto (items
(a) through (c) being herein collectively referred to as the “Collateral”);

 
 

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This security interest is granted in conjunction with the security interests
granted to the Secured Party pursuant to that certain Security Agreement dated
of even date herewith by and between Secured Party and Pledgor (the “Security
Agreement”) and subject to limitations set forth therein.  Pledgor hereby
acknowledges and affirms that the rights and remedies of the Secured Party with
respect to the security interest in the Collateral made and granted hereby are
more fully set forth in the Security Agreement, the terms and provisions of
which are incorporated by reference herein as if fully set forth herein.
 
2.           Priority of Liens; Subordination.  Secured Party hereby further
acknowledges the security interests granted hereby shall be a second priority
lien subordinate only to the security interests securing the obligations to
VinREIT pursuant to the VinREIT and the obligations to Farm Credit Obligations
(and those in place thereof, e.g., a Qualified Refinancing (as defined in the
Security Agreement)).  Secured Party agrees to execute a subordination agreement
with Farm Credit or the holder(s) of the security interest securing the
Qualified Refinancing, as applicable, in a form reasonably acceptable to Secured
Party’s counsel which provides that, except during the pendency of any event of
default set forth in the documents underlying the Farm Credit Obligations or
Qualified Refinancing, as applicable, payments shall be made when due under the
Note (and, if such event of default is cured, any payments suspended during the
pendency of such event of default, are promptly paid to Secured Party);
provided, however, that, if either Farm Credit or the entity that provides the
Qualifying Refinancing shall impose more “restrictive subordination provisions”
as a condition to providing Purchaser with access to its reasonably required
financing, Secured Party shall execute such further-restricted subordination
agreement.  For purposes of this Agreement, the phrase “restrictive
subordination provisions” means (i) reserve requirements imposed upon either or
both of Purchaser and Saint James, (ii) cash, free cash, or excess cash
requirements imposed upon either or both of Purchaser and Saint James, (iii)
financial ratios or financial statement ratios imposed upon either or both of
Purchaser and Saint James, (iv) requirements that all payments to grape growers
or suppliers for the current or upcoming season, as imposed upon either or both
of Purchaser and Saint James, shall have been made in full, or (v) equivalent
restrictions, such that Farm Credit or the Qualifying Financing entity has the
contractual right and power to limit or preclude the performance by the
Purchaser of its obligations to the Secured Party under the Note or the
obligations of Saint James, as guarantor under that certain Guaranty in favor of
the Secured Party, of even date herewith; subject to the Purchaser not being in
breach of any of its covenants in any such financing agreement, as of the
effective date of each financing agreement between the Purchaser and Farm Credit
or between the Purchaser and the Qualifying Financing entity, as appropriate.

THE BALANCE OF THIS PAGE INTENTIONALLY IS LEFT BLANK.

 
 

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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Trademark Security Agreement as of the date first set forth above.

PLEDGOR:
 
SECURED PARTY:
     
THE SAINT JAMES EOS WINE COMPANY
 
SAPHIRE ADVISORS, LLC
         
By:
  
 
By:
  
Its:
  
 
Its:
  

STATE OF ____________
)
 
) ss
COUNTY OF ___________
)

On this ___ day of October, 2009, before me personally appeared the person whose
signature is set forth above, to me known, who, being duly sworn, did depose and
say that he is the above-indicated officer of The Saint James EOS Wine Company,
and which executed the above instrument; and that he signed his name thereto by
authority of the board of directors of said entity.
 
  
Notary Public

STATE OF ILLINOIS
)
 
) ss
COUNTY OF COOK
)

On this ___ day of October ___, 2009, before me personally appeared the person
whose signature is set forth above, to me known, who, being duly sworn, did
depose and say that he is the manager of the limited liability company which is
the manager of Saphire Advisors, LLC, and which executed the above instrument;
and that he signed his name thereto by authority of the manager of said limited
liability company.
 
  
Notary Public

 
 

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SCHEDULE 1 TO
TRADEMARK SECURITY AGREEMENT

Trademarks

U.S. Trademark
 
Owner
 
App. Date
 
Ser. No.
 
Reg. No.
 
Date Reg.
                     
EOS
 
Sapphire
 
May 8, 1997
 
75288344
 
2200574
 
October 27, 1998
                     
Novella
 
Emerald
 
February 14, 2001
 
76212219
 
2725215
 
June 10, 2003
                     
Cupa Grandis
 
Sapphire
 
May 19, 2003
 
76515430
 
2819488
 
March 2, 2004
                     
Lost Angel
 
Sapphire
 
June 12, 2009
 
77758502
                             
Grail
 
Sapphire
 
February 14, 2006
 
78814410
                             
Carneros Signature Reserve
 
Emerald
 
February 14, 2006
 
78814300
 
3381831
 
February 12, 2008
                     
Carneros Creek
 
Emerald
 
March 3, 2006
 
78828973
 
3255431
 
June 26, 2007
                     
Wildhurst Tree Design
 
Emerald
 
March 1, 2006
 
78826921
 
3187345
 
December 19, 2006
                     
Ramshead Design
 
Emerald
 
March 1, 2006
 
78826910
 
3187344
 
December 19, 2006
                     
Ramshead
 
Emerald
 
February 14, 2006
 
78814389
 
3187145
 
December 19, 2006
                     
Los Carneros Reserve
 
Emerald
 
February 14, 2006
 
78814316
 
3226186
 
April 3, 2007
                     
Wildhurst
 
Emerald
 
February 14, 2006
 
78814262
 
3187143
 
December 19, 2006
                     
Carneros Creek Winery
 
Emerald
 
June 7, 1985
 
73541746
 
1383637
 
February 18, 1986

 
 

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