LOCK-UP AGREEMENT
 
THIS LOCK-UP AGREEMENT (this “Agreement”) is made as of this ____ day of
October, 2009 (the “Effective Date”), by and among The Saint James Company, a
North Carolina corporation (the “Company”), and the other parties listed on the
signature pages hereto (each such party, a “Shareholder” and, collectively, the
“Shareholders”).
 
Recitals
 
A.           The Company, its wholly-owned subsidiary, The Saint James Eos Wine
Company, a California corporation (“Saint James Eos”), and one of the
Shareholders, among other persons, are parties to a series of agreements,
certain provisions of which relate to the issuance of two million two hundred
twenty-five thousand shares (the “Transaction Shares”) of the Company’s common
stock, par value $0.001 per share (the “Common Stock”), all of which Transaction
Shares are certificated in the name of one of the Shareholders and constitute
“restricted securities” as that term is defined in Rule 144(a)(3) of Regulation
D, as promulgated by the Securities and Exchange Commission (the
“Commission”).  In addition to the Transaction Shares, one of the Shareholders
is the holder of the Company’s Secured Promissory Note (the “Note”),
convertible, from time-to-time at such Shareholder’s option, into additional
shares of Common Stock in amounts to be calculated as of the conversion dates
thereof (the “Note Shares”).  In addition to the Transaction Share and Note
Shares, the Company and Saint James EOS have agreed, contingent upon the
achievement of certain milestones, to issue up to three hundred thousand
additional shares of Common Stock (the “Earnout Shares”).
 
B.           Without violating the restrictions on transfer set forth in this
Agreement, the Shareholders may transfer some or all of the Transaction Shares
to one or more affiliated persons (the “Shareholder Affiliates”), each of whom
(i) is listed as a potential transferee of Transaction Shares on Exhibit A
attached hereto, (ii) must be an “accredited investor” (as that term is defined
in Rule 501(a) of Regulation D) as of the date of such transfer, and (iii) must
become a party to this Agreement in connection with such transfer.
 
C.           Each of the Shareholders has agreed to the terms set forth in this
Agreement in order to induce the Company into issuing and certificating the
Transaction Shares and permitting the potential conversion of the Note, the
resulting issuance and certification of the Note Shares, and the contingent
issuance and certification of the Earnout Shares.
 
D.           Each of the Shareholders has agreed that the Transaction Shares,
the Note Shares, and the Earnout Shares shall be subject to the restrictions on
transfer set forth herein and to all of the provisions hereof.  The Transaction
Shares, the Note Shares, and the Earnout Shares shall be collectively referred
to herein as the “Agreement Shares”; the Transaction Shares, as certificated as
of the date of this Agreement, shall be referred to herein as the “Transaction
Share Certificates”; and the Transaction Shares, the Note Shares, and Earnout
Shares, if, when, and as issued and certificated, shall be collectively referred
to herein as the “Agreement Share Certificates.”
 
NOW, THEREFORE, in consideration of the foregoing and the mutual promises and
agreements hereinafter contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:

 
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Agreement
 
1.           Transfers by a Shareholder.  In respect of the Transaction Shares
and Earnout Shares, the period that commences on the SEC Effectiveness Date (as
that term is defined in Section 1.2, below) and concludes on the Transaction
Termination Date (as that term is defined in Section 4.1, below) is referred to
herein as the “Transaction Transfer Restriction Period.”  In respect of the Note
Shares, the period that commences on the SEC Effectiveness Date and concludes on
the Note Termination Date (as that term is defined in Section 4.1, below) is
referred to herein as the “Note Transfer Restriction Period.”
 
1.1           Restrictions on Transfer.  During the Transaction Transfer
Restriction Period or the Note Transfer Restriction Period, as relevant, no
Shareholder shall offer, sell, contract to sell, encumber, pledge, assign
(except in respect of an assignment to a revocable trust of which the
Shareholder is the primary beneficiary and the trust has executed this Agreement
to become a party hereto or from a Shareholder to one of the Shareholder
Affiliates), transfer, hypothecate, grant any option to purchase, grant a
security interest in, otherwise directly or indirectly dispose of, or otherwise
alienate or obtain any economic value from, or give (whether or not for value)
(each, a “Transfer”) any of the Agreement Shares, unless (x) such Transfer
consists solely of Transaction Shares and is made solely to a Shareholder
Affiliate who has executed a copy of this Agreement or (y) such Transfer of
Agreement Shares has been (1) made in accordance with the terms set forth in
Sections 1.2 or 1.3, below, or (2) otherwise approved as an amendment to this
Agreement in the manner set forth in Section 4.6, below.  Further, during the
Transaction Transfer Restriction Period or the Note Transfer Restriction Period,
as relevant, any Transfer attempted to be made, purported to be made, or
otherwise not made in full accordance with this Agreement (including the
provisions set forth in subsections (x) and (y), above), shall be
void.  Accordingly, the Company shall not, and shall not be obligated to, treat
any such attempted or purported transferee in any such unapproved, void
transaction as a shareholder or creditor of, or as a contracting party with, the
Company for any purpose.
 
1.2           Permitted Transfers of Transaction Shares.  In respect of the
Transaction Shares and Earnout Shares, for each 12-month period (each, a
“Transaction Lapse Year”) commencing on the date on which a resale Registration
Statement in respect of the Agreement Shares has been declared effective by the
Securities and Exchange Commission (the “SEC Effectiveness Date”), the
restrictions on Transfer, as set forth in Section 1.1, above, shall lapse in the
manner set forth in this Section 1.2 and, from and after the Transaction
Termination Date, all of such restrictions on Transfer shall lapse.  Except as
limited hereinbelow, during each Transaction Lapse Year, the restrictions on
Transfer in the percentage amounts set forth below of each Shareholder’s (or
Shareholder Affiliate’s) Transaction Shares and Earnout Shares shall lapse:
 
First Transaction Lapse Year
up to 20%, ratably by Transaction Lapse Year Quarter;
Second Transaction Lapse Year
up to 30%, ratably by Transaction Lapse Year Quarter;
Third Transaction Lapse Year
up to 30%, ratably by Transaction Lapse Year Quarter;
Fourth Transaction Lapse Year
up to 20%, ratably by Transaction Lapse Year Quarter.

 
 
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Notwithstanding the above, if, during any relevant Transaction Lapse Year
Quarter (except for such quarters in the First Transaction Lapse Year), the
Common Stock is then listed for trading on the NYSE or The NASDAQ Stock Market
(a “Stock Exchange”), then the number of Transaction Shares and Earnout Shares
in respect of which the restrictions on Transfer may lapse shall be the lesser
of such percentage or a number that is equivalent to the aggregate number of
shares of Common Stock sold during the immediately preceding Transaction Lapse
Year Quarter, as reported by such Stock Exchange (net of all Transfers of
Transaction Shares and Earnout Shares by such Shareholder or Shareholder
Affiliate during such immediately preceding Transaction Lapse Year
Quarter).  If, however, during any relevant Transaction Lapse Year Quarter, the
Common Stock is then quoted for trading on the OTC Bulletin Board, the Pink OTC
Markets Inc., or other interdealer quotation system (each, an “OTC Market”),
then the number of Transaction Shares and Earnout Shares in respect of which the
restrictions on Transfer may lapse shall be the lesser of such percentage or 50%
of the aggregate number of shares of Common Stock reported as having been traded
during the immediately preceding Transaction Lapse Year Quarter, as reported by
the relevant OTC Market (net of all Transfers of Transaction Shares and Earnout
Shares during such immediately preceding Transaction Lapse Year Quarter).
 
If, as of the end of each Transaction Lapse Year, any Shareholder has not had
the opportunity to Transfer such Shareholder’s relevant percentage, as set forth
above, during such Transaction Lapse Year, then, during the next succeeding
Transaction Lapse Year, the restrictions on Transfer shall be deemed to have
been modified for such year to permit a lapse of restrictions on Transfer of
that number of additional Transaction Shares and Earnout Shares equivalent to
15% of the aggregate amount of such Shareholder’s initial Transaction Shares and
Earnout Shares (net of any Transaction Shares and Earnout Shares transferred to
the Shareholder Affiliates), less those Transaction Shares and Earnout Shares
Transferred during the previous Transaction Lapse Year (the “Additional Lapse
Transaction and Earnout Shares”), in addition to the lapse of restrictions on
Transfer in respect of any other Transaction Shares and Earnout Shares whose
restrictions on Transfer would lapse during such Transaction Lapse Year.  The
restrictions on Transfer of such Additional Lapse Transaction and Earnout Shares
shall be ratable by Transaction Lapse Year Quarter during such Transaction Lapse
Year.
 
1.3           Permitted Transfers of Note Shares.  In respect of the Note
Shares, for each 12-month period (each, a “Note Lapse Year”) commencing on the
SEC Effectiveness Date, the restrictions on Transfer, as set forth in Section
1.1, above, shall lapse in the manner set forth in this Section 1.3 and, from
and after the Note Termination Date, all of such restrictions on Transfer shall
lapse.  Except as limited hereinbelow, during each Note Lapse Year, the
restrictions on Transfer in the percentage amounts set forth below of each
Shareholder’s (or Shareholder Affiliate’s) Note Shares shall lapse:
 
First Note Lapse Year
up to 20%, ratably by Note Lapse Year Quarter;
Second Note Lapse Year
up to 30%, ratably by Note Lapse Year Quarter;
Third Note Lapse Year
up to 30%, ratably by Note Lapse Year Quarter;
Fourth Note Lapse Year
up to 20%, ratably by Note Lapse Year Quarter.

 
 
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Notwithstanding the above, if, during any relevant Note Lapse Year Quarter
(except for such quarters in the First Note Lapse Year), the Common Stock is
then listed for trading on the NYSE or The NASDAQ Stock Market (a “Stock
Exchange”), then the number of Note Shares in respect of which the restrictions
on Transfer may lapse shall be the lesser of such percentage or a number that is
equivalent to the aggregate number of shares of Common Stock sold during the
immediately preceding Note Lapse Year Quarter as reported by such Stock Exchange
(net of all Transfers of Note Shares by such Shareholder or Shareholder
Affiliate during such immediately preceding Note Lapse Year Quarter).  If,
however, during any relevant Note Lapse Year Quarter, the Common Stock is then
quoted for trading on the OTC Bulletin Board, the Pink OTC Markets Inc., or
other interdealer quotation system (each, an “OTC Market”), then the number of
Note Shares in respect of which the restrictions on Transfer may lapse shall be
the lesser of such percentage or 50% of the aggregate number of shares of Common
Stock reported as having been traded during the immediately preceding Note Lapse
Year Quarter as reported by the relevant OTC Market (net of all Transfers of
Note Shares during such immediately preceding Note Lapse Year Quarter).
 
If, as of the end of each Note Lapse Year, any Shareholder has not had the
opportunity to Transfer such Shareholder’s relevant percentage, as set forth
above, during such Note Lapse Year, then, during the next succeeding Note Lapse
Year, the restrictions on Transfer shall be deemed to have been modified for
such year to permit a lapse of restrictions on Transfer of that number of
additional Note Shares equivalent to 15% of such Shareholder’s initial Note
Shares (net of any Note Shares transferred to the Shareholder Affiliates), less
those Note Shares Transferred during the previous Note Lapse Year (the
“Additional Lapse Note Shares”), in addition to the lapse of restrictions on
Transfer in respect of any other Note Shares whose restrictions on Transfer
would lapse during such Note Lapse Year.  The restrictions on Transfer of such
Additional Lapse Note Shares shall be ratable by Note Lapse Year Quarter during
such Note Lapse Year.
 
1.4           Audit Rights.  Any party to this Agreement shall have the right at
any time, and from time to time, after a Transfer (other than a Transfer in
respect of an assignment to a revocable trust of which the Shareholder is the
primary beneficiary and the trust has executed this Agreement to become a party
hereto or a Transfer to a Shareholder Affiliate) of any Agreement Shares by a
Shareholder or a Shareholder Affiliate (each, a “Transferring Shareholder”), to
require such Transferring Shareholder to, and the Transferring Shareholder
shall, provide such requesting party (an “Auditing Party”) with a copy of all
documents or other materials or written memoranda of verbal communications,
which documentation shall evidence the date and nature of a Transfer of
Agreement Shares.
 
2.           The Company and its Transfer Agent.  The Company is hereby
authorized, empowered, and directed to disclose the existence of this Agreement
to its transfer agent, to provide a copy hereof to its transfer agent, and to
instruct its transfer agent to put “stop-transfer” instructions on its books and
records in respect of all extant and subsequently certificated Agreement Shares,
other than those certificates, which, in accordance with the provisions of
Sections 1.2 and 1.3, above, and the other terms hereof, are to be deposited
with The Depository Trust Company, or another recognized depositary, for
re-registration into the name of its nominee, CEDE & Co., or a nominee of such
other depositary and, if the Common Stock is so eligible, into The Depository
Trust Company Automated Securities Transfer Program for crediting to such
Shareholder’s account.  The Company and its transfer agent are hereby
authorized, empowered, and instructed not to authorize or effectuate, directly
or indirectly, any Transfer if such Transfer would constitute a violation or
breach of this Agreement.

 
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3.           Legended Agreement Share Certificates.
 
3.1           Legend Imprinting.  Each Agreement Share Certificate shall be
presented to the Company or its transfer agent (and thereafter to the Company’s
transfer agent) for the imprinting of the following legend on the face thereof:
 
“THE SALE, ENCUMBRANCE, PLEDGE, ASSIGNMENT, TRANSFER, HYPOTHECATION OF, OR THE
GRANT OF AN OPTION OR SECURITY INTEREST IN THE SECURITIES REPRESENTED BY THIS
CERTIFICATE IS SUBJECT TO THE TERMS AND CONDITIONS OF A CERTAIN LOCK-UP
AGREEMENT BY AND AMONG THE SHAREHOLDER, THE COMPANY, AND CERTAIN OTHER HOLDERS
OF COMMON STOCK OF THE COMPANY.  COPIES OF SUCH AGREEMENT MAY BE OBTAINED UPON
WRITTEN REQUEST TO THE SECRETARY OF THE COMPANY.”
 
3.2           Legend Removal.  The Company agrees that it will, no later than
seven business days following the delivery by any Shareholder, Shareholder
Affiliate, or their respective transfer agent of a Agreement Share Certificate
representing shares for which the restrictions on Transfer have lapsed as set
forth in Section 1.2 or Section 1.3, deliver or cause to be delivered to such
Shareholder, Shareholder Affiliate, or their respective transfer agent, as
applicable, an Agreement Share Certificate representing such shares that is free
from all restrictive and other legends.  Certificates for stock subject to
legend removal hereunder shall be transmitted by the transfer agent to such
Shareholder by crediting the account of such Shareholder’s prime broker with the
Depository Trust Company System.
 
4.           Miscellaneous Provisions.
 
4.1           Term.  Unless earlier terminated pursuant to an amendment hereof,
in respect of the Transaction Shares and Earnout Shares, this Agreement shall
terminate upon the conclusion of the fourth Transaction Lapse Year (the
“Transaction Termination Date”) and, in respect of the Note Shares, this
Agreement shall terminate upon the conclusion of the fourth Note Lapse Year (the
“Note Termination Date”).
 
4.2           Ownership.  Each Shareholder represents and warrants that such
Shareholder is the sole record and beneficial owner of the Agreement Shares
(except for the Transaction Shares that may be assigned by a Shareholder to a
Shareholder Affiliate, in respect of which such Shareholder represents and
warrants that the Shareholder Affiliate is the beneficial owner of certain
Transaction Shares), that all such Transaction Shares are represented by
Transaction Share Certificates, that no Note Shares are issued and outstanding,
and that, except as otherwise referenced in this Section 4.2, no other person
has any interest (other than a community property interest) therein.
 
4.3           Notices.  Unless otherwise provided, any notice required or
permitted pursuant to this Agreement shall be given in writing and shall be
deemed effectively given (i) upon personal delivery to the party to be notified,
(ii) two (2) days after deposit with an overnight delivery service, or (iii)
five (5) business days after deposit with the United States Post Office by
certified mail, return receipt requested, postage prepaid, and addressed to the
party to be notified at the address indicated for such party on the signature
page hereof, or at such other address as such party may designate by ten (10)
days’ advance written notice to the other parties.

 
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4.4           Successors and Assigns.  This Agreement and the rights and
obligations of the parties hereunder shall inure to the benefit of, and be
binding upon, their respective successors, assigns, and legal representatives.
 
4.5           Severability.  In the event one or more of the provisions of this
Agreement should, for any reason, be held to be invalid, illegal, or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not affect any other provisions of this Agreement, and this Agreement
shall be construed as if such invalid, illegal, or unenforceable provision had
never been contained herein.
 
4.6           Amendments.  No provision of this Agreement may be waived or
amended other than by a written instrument executed and delivered by the Company
and that number of Shareholders, who as of their execution and delivery of such
written instrument, then hold not less than seventy-five percent (75%) of the
then-extant Agreement Share Certificates.  No such amendment shall be effective
to the extent that it applies to less than all of the Shareholders.  No
consideration shall be offered or paid to any party to amend or consent to a
waiver or modification of any provision of this Agreement unless the same
consideration is also offered to all of the parties hereto.
 
4.7           Governing Law; Arbitration.  This Agreement shall be governed by
and construed under the laws of the State of California as applied to agreements
among California residents entered into and to be performed entirely within
California.  This Agreement shall be construed and interpreted without regard to
any presumption against the party causing this Agreement to be drafted.  Any
dispute, controversy, or claim arising out of or relating to this Agreement
shall be resolved by binding arbitration before a retired judge at JAMS in San
Francisco, California.  Any interim or final arbitration award by be enforced by
any court of competent jurisdiction.
 
4.8           Counterparts.  This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any party to this Agreement may execute this Agreement by
signing any such counterpart; signature pages may be detached from multiple
separate counterparts and attached to a single counterpart so that all
signatures are physically attached to the same counterpart.  Delivery of an
executed counterpart of a signature page to this Agreement by hand, fax, or
portable document format (.pdf) shall be effective as the delivery of a fully
executed counterpart of this Agreement.
 
4.9           Further Assurances.  At any time, and from time to time, each
party will execute such additional instruments and take such action as may be
reasonably requested by any other party to carry out the intent and purposes of
this Agreement.
 
[Signature Pages Follow]

 
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IN WITNESS WHEREOF, the parties have executed this Lock-Up Agreement as of the
date first above written.
 
THE SAINT JAMES COMPANY
 
By:
         
Name:
         
Title:
         
Address:
               

 
SHAREHOLDERS:
 
Saphire Advisors, LLC
 
381 Mallory Station Road, Suite 211
[name]
 
[street]
         
Franklin, Tennessee 37067
[Signature]
 
[city, state, postal code, country]
           
[number of Transaction Shares owned]
 
[facsimile number]
           
[name]
 
[street]
   
 
     
[number of Transaction Shares owned]
 
[city, state, postal code, country]
               
[facsimile number]

 
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EXHIBIT A
 
The following individuals or entities and their successors, affiliates, and
beneficiaries:
 
 
1.
Jeffrey Hopmayer and trusts for the benefit of Mr. Hopmayer and his family,
including without limitation, the Ashley Hopmayer Trust and Brittany Hopmayer
Trust

 
 
2.
Fred Read

 
 
3.
Rick Hannasch

 
 
4.
John Murray Blackshear 2005 Grantor Retained Annuity Trust

 
 
5.
Faye and Murray Blackshear

 
 
6.
Burt Stein

 
 
7.
Corporate Benefits, c/o Don Brain

 
 
8.
Jeff Richardson

 
 
9.
The David R Teckman Trust

 
10.
The Cheikha Family Trust

 
11.
Jeff & Stacy Rothenberger

 
 
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