EXECUTION
DRAFT

    GUARANTY

    


    THIS
GUARANTY (hereinafter referred to as this “Guaranty”) is made this ___ day of
October, 2009, by The Saint James Company, a North Carolina corporation
(“Guarantor”), to and for the benefit of Saphire Advisors, LLC, a Delaware
limited liability company (“Payee”).

    


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

    


    WHEREAS, Guarantor owns all of the
equity interests of Purchaser and will benefit from the transactions
contemplated by the Asset Purchase Agreement (Capitalized terms not defined
herein shall have the meanings given in the Asset Purchase Agreement);
and

    


    WHEREAS, Payee has required, as a
condition to entering into the Asset Purchase Agreement, that Guarantor execute
and deliver this Guaranty.

    


    NOW, THEREFORE, in consideration of the
foregoing and other good and valuable consideration, the receipt, adequacy and
sufficiency of which are hereby acknowledged, Guarantor covenants and agrees as
follows:

    


    1.           Guarantor.  Guarantor
absolutely, unconditionally, and irrevocably guarantees to Payee the full and
prompt payment of the Note, plus all expenses, including reasonable attorneys’
fees, paid or incurred by Payee in endeavoring to enforce or collect the
indebtedness owed under the Note.  No compromise, settlement, release
or discharge of, or indulgence with respect to, or any failure, neglect or
omission to enforce or exercise any right against Purchaser, Guarantor, or any
other guarantor, nor the fact that at any time all of the indebtedness
underlying the Note may have been paid in full, shall release or discharge
Guarantor.  Notwithstanding anything contained herein to the contrary,
the obligations of Guarantor hereunder are subordinated to the Farm Credit
Obligations (and those in place thereof, e.g., a Qualified Refinancing
(as defined in the Security Agreement)).  Notwithstanding anything to
the contained herein to the contrary, except during the pendency of any event of
default set forth in the documents underlying the Farm Credit Obligations or
Qualified Refinancing, as applicable, Guarantor’s obligations hereunder shall be
suspended (and, if such event of default is cured, such obligations shall become
re-effective and any payments suspended during the pendency of such event of
default, shall be promptly paid to Saphire Advisors); 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, the obligations of Guarantor
hereunder shall be restricted thereby.  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 obligations of Saint James, as guarantor under that this Guaranty,;
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.


    
      
         


      

      
        
        

        
          

        

      

      
         


      

    

    


    2.           Conversion of
Note.  Guarantor acknowledges Payee’s equity conversion rights
pursuant to Sections 8 and 9 of the Note.

    


    3.           Independent
Remedies.  In order to hold Guarantor liable and to enforce
Guaranty, there shall be no obligation on the part of Payee at any time to
resort for payment from Purchaser or any other guarantor, or any person, firm or
corporation liable for any portion of the obligations or debt of Purchaser, or
to any collateral, security, property, liens or other rights or remedies of
Payee in respect to such indebtedness or any part thereof, all of which is
hereby expressly waived by Guarantor.

    


    4.           Governing Law.
Guaranty has been negotiated, executed and delivered in, Illinois and shall be
governed by the laws of the State of California without reference to the
conflicts of law principles of that state.

    


    5.           Successors.  Guaranty,
and each and every part hereof, shall be binding upon Guarantor and upon the
heirs, legal representatives, successors and assigns of Guarantor and shall
inure to the benefit of Payee, its successors and assigns.

    


    6.           Waivers.  All
diligence in collection, and all presentment for payment, demand, protest and/or
notice, as to any and everyone, of protest, dishonor, default or nonpayment, and
notice of the creation and existence of any and all of the indebtedness
guaranteed hereunder, and of any security therefor, and of the acceptance of
this Guaranty, or extensions of credit or indulgences hereunder or of any other
matters or things whatsoever relating hereto are expressly waived.  No
delay on the part of Payee in the exercise of any right or remedy shall operate
as a waiver thereof, and no single or partial exercise by Payee of any right or
remedy shall preclude other or further exercise thereof, or the exercise of any
other right or remedy; nor shall any modification or waiver of any of the
provisions of Guaranty be binding upon Payee except as expressly set forth in a
writing duly signed and delivered on behalf of Payee.  No action of
Payee permitted hereunder nor any inaction on the part of Payee shall in any way
affect or impair the rights of Payee and the obligation of Guarantor under
Guaranty.


    
      
         


      

      
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    7.           Attorneys’
Fees.  In the event any suit or action is brought by Payee or
Guarantor under Guaranty to enforce any of its terms, or in any appeal
therefrom, it is agreed that the prevailing party shall be entitled to recover
its costs and expenses, including, without limitation, reasonable attorneys’
fees from the non-prevailing party.

    


    8.           Notices.  Whenever
any party hereto desires or is required to give any notice, demand or request
with respect to Guaranty, each such communication shall be in writing and shall
be effective only if it is delivered by personal service, sent by express
courier service with guaranteed next day receipted delivery, charges prepaid or
by facsimile or e-mail with verification of receipt, addressed as follows, (i)
if to Guarantor, to Richard Hurst, with a copy (which shall not constitute
notice) to Baker & Hostetler LLP, 600 Anton Boulevard, Suite 900, Costa
Mesa, California 92626-7221, Attention:  Randy Katz,
Facsimile:  (714) 966-8802, and (ii) if to Payee, to the addresses set
forth on Exhibit A attached to the Note, with a copy (which shall not constitute
notice) to Horwood Marcus & Berk Chartered, 180 North LaSalle Street, Suite
3700, Chicago, Illinois 60601, Attention:  Keith H. Berk, Esq.,
Facsimile:  (312) 264-2582.  Each such communication shall
be effective when received by the addressee thereof in the case of personal
service, facsimile or e-mail or, if sent by express courier, within one business
day after delivery to such courier.  Any party may change its address
for such communications by giving notice thereof to the other party in
conformity with this Section
8.

    


    9.           Entire Agreement;
Amendment.  This Guaranty constitutes the entire agreement
between Payee and Guarantor with respect to the subject matter hereof and
supersedes all prior such agreements and understandings, both written and
oral.  Guaranty may not be modified or amended except by a written
instrument signed by Payee and Guarantor.

    


    10.         General.  Article
and paragraph headings used in this Guaranty are for convenience of reference
only and are not to be part of this Guaranty for any other
purpose.  This Guaranty may be executed in any number of counterparts
and by different parties hereto on separate counterparts, and all such
counterparts taken together shall be deemed to constitute one
instrument.

    


    11.         Waiver of Jury Trial, Venue,
Jurisdiction.  GUARANTOR WAIVES ANY RIGHT TO TRIAL
BY JURY ON ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS (I) UNDER
THIS GUARANTY OR (II) ARISING FROM THE TRANSACTIONS CONTEMPLATED BY THIS
GUARANTY AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A
COURT AND NOT BEFORE A JURY.  GUARANTOR IRREVOCABLY AGREES THAT ALL
ACTIONS OR PROCEEDINGS IN ANY WAY, MANNER OR RESPECT ARISING OUT OF OR FROM OR
RELATED TO THIS GUARANTY SHALL BE LITIGATED ONLY IN COURTS HAVING SITUS WITHIN
THE CITY OF SAN FRANCISCO, STATE OF CALIFORNIA.  GUARANTOR HEREBY
CONSENTS AND SUBMITS TO THE EXCLUSIVE JURISDICTION OF ANY LOCAL, STATE OR
FEDERAL COURT LOCATED WITHIN SAID CITY AND STATE.  GUARANTOR HEREBY
WAIVES ANY RIGHT IT MAY HAVE TO TRANSFER OR CHANGE VENUE OF ANY SUCH ACTION OR
PROCEEDING.


    
      
         


      

      
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    IN WITNESS WHEREOF, Guarantor has
caused this Guaranty to be executed as of the date first set forth
above.

    


    THE SAINT
JAMES COMPANY

    


    By:
_______________________

    Its:
_______________________


    
      
         


      

      
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