THIRD AMENDMENT TO CREDIT AGREEMENT
                       -----------------------------------

         THIS THIRD AMENDMENT TO CREDIT AGREEMENT (this  "AMENDMENT"),  dated as
                                                          ---------
of March 30, 2001,  is entered into by and among  CHALONE WINE GROUP,  LTD. (the
"BORROWER"), and COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., "RABOBANK
 --------
NEDERLAND," NEW YORK BRANCH (the "Bank").

                                    RECITALS
                                    --------

         A. The Borrower and the Bank are parties to a Credit Agreement dated as
of March 31, 1999, as amended by a First Amendment to Credit  Agreement dated as
of September  15, 2000,  and a Second  Amendment to Credit  Agreement and Waiver
dated as of February 9, 2001 (as so amended, the "CREDIT AGREEMENT") pursuant to
                                                  ----------------
which the Bank has extended certain credit facilities to the Borrower.

         B. The Borrower has requested  that the Bank agree to (i) amend certain
financial  covenants  set forth in Section 5.3 of the Credit  Agreement and (ii)
extend the scheduled  maturity of the Revolving Loans for an additional  364-day
period.
         NOW, THEREFORE, for valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereto hereby agree as follows:

         1. DEFINED TERMS.  Unless otherwise  defined herein,  capitalized terms
            -------------
used herein (including in the Recitals above and in the Consent and Agreement of
Guarantors  attached  hereto)  shall have the  meanings  assigned to them in the
Credit Agreement.

         2. AMENDMENT.  Subject to the terms and conditions  hereof,  the Credit
            ---------
Agreement is hereby amended as follows:.

              (a) Section 1.1 is hereby  amended by  amending  the defined  term
"REVOLVING  LOAN  MATURITY  DATE" by  deleting  the date  "March  31,  2001" and
 -------------------------------
replacing it with "March 30, 2002".

              (b) Section  2.3(A) is hereby amended and restated in its entirety
as follows:

                           "(A) TERM LOAN. The unpaid  principal  balance of the
                                ---------
              Term Loan shall bear interest calculated at a fluctuating rate per
              annum  equal to, at the  Borrower's  option  (except as  otherwise
              provided herein) (I) the LIBOR Rate plus 1.50% during any Interest
              Period or (II) the Reference Rate plus 0%."

              (c)  Section  2.3(B) is hereby  amended by deleting  the  interest
margin "0.875%" and replacing it with "1.375%".

              (d) Section  5.3(A) is hereby amended and restated in its entirety
as follows:

                           "(A) [Intentionally omitted.]"


                                       1.

<PAGE>


              (e) Section  5.3(B) is hereby amended and restated in its entirety
as follows:

                           "(B) The Borrower  shall  maintain,  for each rolling
              4-quarter period, a ratio of (i) EBIT for such 4-quarter period to
              (ii)  Interest  Expense  for such  4quarter  period,  in each case
              determined in accordance with GAAP on a consolidated basis, of not
              less than (1) 1.50 to 1.00,  measured  as of March 31,  2001,  (2)
              1.25 to  1.00,  measured  as of June  30,  2001,  (3) 1.50 to 1.00
              measured as of September 30, 2001,  and December 31, 2001, and (4)
              1.75 to 1.00,  measured  as of March 31,  2002 and the last day of
              each fiscal  quarter  thereafter."

              (f) Section 5.3(C) is hereby amended and restated in  its entirety
as follows:

                           "(C) The Borrower will maintain a ratio of (i) EBITDA
              to  (ii)  the  sum  of  (A)  the  current  portion  of  long  term
              Indebtedness plus (B) Interest Expense, in each case determined in
              accordance  with GAAP for the Borrower and its  Subsidiaries  on a
              consolidated  basis  for the  rolling  4quarter  period  then most
              recently ended, of not less than (1) 1.75 to 1.00,  measured as of
              the last day of each fiscal  quarter  through  September 30, 2001,
              (2) 1.90 to  1.00,  measured  as of the  last  day of each  fiscal
              quarter ending after  September 30, 2001,  through March 31, 2002,
              (3) 2.00 to  1.00,  measured  as of the  last  day of each  fiscal
              quarter  ending after March 31, 2002,  through  December 31, 2004,
              and (4) 1.25 to 1.00,  measured  as of the last day of each fiscal
              quarter  thereafter."

              (g) Section 5.3(D) is hereby amended and restated in its entirety
as follows:

                           "(D)  The  Borrower  shall  maintain  a ratio  of (i)
              senior  long term  indebtedness  PLUS the  current  portion of all
              other long term debt to (ii)  senior long term  indebtedness  PLUS
              the current portion of all other long term  indebtedness  PLUS Net
              Worth,  in each  case  determined  in  accordance  with  GAAP on a
              consolidated  basis, of not more than 0.50 to 1.00, measured as of
              the last day of each fiscal quarter."

              (h) Section 5.3(E) is hereby amended and restated in  its entirety
as follows:

                           "(E) The  Borrower  shall not permit its Tangible Net
              Worth to be less than (i) $56,000,000  plus (ii) 50% of net income
              earned in each quarterly  accounting period commencing after March
              31, 2001 (without  deduction  for losses),  plus (iii) 100% of all
              Net  Issuance  Proceeds  after  March  31,  2001,   determined  in
              accordance with GAAP on a consolidated  basis,  measured as of the
              last day of each fiscal  quarter.  As used herein,  "NET  ISSUANCE
              PROCEEDS" means, as to any issuance of equity by any Person,  cash
              proceeds  received  or  receivable  by such  Person in  connection
              therewith,  net  of  out-of-pocket  costs  and  expenses  paid  or
              incurred  in  connection  therewith  in favor of any Person not an
              Affiliate  of such  Person."

              (i) The Pricing Matrix attached as Annex I to the Credit Agreement
is hereby deleted in its entirety.


                                       2.


<PAGE>

         3. REPRESENTATIONS AND WARRANTIES. The Borrower hereby represents and
warrants to the Bank as of the Effective Date, as follows:

              (a) After giving effect to this Amendment, no Event of Default has
occurred and is continuing

              (b) All  representations  and warranties of the Borrower contained
in the Credit Agreement are true and correct.

              (c) The Borrower is entering  into this  Amendment on the basis of
its own investigation and for its own reasons, without reliance upon the Bank or
any other Person.

         4. EFFECTIVE DATE. This Amendment will  become  effective on  the  date
first above written (the "EFFECTIVE DATE"),  PROVIDED that each of the following
conditions precedent is satisfied:

              (a) The Bank has received (i) from  the  Borrower  a duly executed
original  (or,  if  elected by the Bank,  an  executed  facsimile  copy) of this
Amendment, and (ii) from each guarantor a duly executed original (or, if elected
by the Bank,  an  executed  facsimile  copy) of the  Consent  and  Agreement  of
Guarantors attached hereto.

              (b) All representations  and warranties  contained herein are true
and correct as of the Effective Date.

         5. RESERVATION OF RIGHTS. The Borrower acknowledges and agrees that the
Bank's  execution  and  delivery  of this  Amendment  shall not be deemed (i) to
create a course of dealing or otherwise  obligate the Bank to forbear or execute
similar  amendments  or waivers under the same or similar  circumstances  in the
future, or (ii) to waive,  relinquish or impair any right of the Bank to receive
any  indemnity  or  similar  payment  from any  Person as a result of any matter
arising from or relating to the subject matter of this Amendment.

         6. MISCELLANEOUS.

              (a) All terms,  covenants and  provisions of the Credit  Agreement
are and shall remain in full force and effect.

              (b) This Amendment shall be binding upon and inure to  the benefit
of the Borrower and the Bank and their  respective  successors  and assigns.  No
third party beneficiaries are intended in connection with this Amendment.

              (c)  This  Amendment   shall  be  governed  by  and  construed  in
accordance with the law of the State of California.

              (d) This Amendment may be executed in any number of  counterparts,
each of which shall be deemed an original,  but all such  counterparts  together
shall constitute but one and the same instrument.  Transmission of signatures of
any  party by  facsimile  shall  for all  purposes  be deemed  the  delivery  of
original,  executed  counterparts  thereof and the Bank is hereby  authorized to
make sufficient photocopies thereof to assemble complete counterparty documents,


                                       3.


<PAGE>

              (e) This Amendment,  together with the Credit Agreement,  contains
the entire and exclusive  agreement of the parties  hereto with reference to the
matters discussed herein and therein. This Amendment supersedes all prior drafts
and  communications  with respect  thereto.  This  Amendment  may not be amended
except in accordance with the provisions of Section 7.1 of the Credit Agreement.

              (f) If any term or  provision  of this  Amendment  shall be deemed
prohibited  by or invalid under any  applicable  law,  such  provision  shall be
invalidated without affecting the remaining  provisions of this Amendment or the
Credit Agreement, respectively.

              (g) The Borrower  covenants to pay to or reimburse the Bank,  upon
demand,  for all costs  and  expenses  (including  reasonable  attorneys'  fees)
incurred in connection with the development, preparation, negotiation, execution
and delivery of this Amendment.

              (h) This Amendment constitutes a "Loan Document" under and for all
purposes of the Credit Agreement and the other Loan Documents.

                            [SIGNATURE PAGE FOLLOWS.]









                                       4.


<PAGE>

         IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Amendment as of the date first above written.

                                        CHALONE WINE GROUP, LTD.

                                        By: /s/THOMAS B. SELFRIDGE
                                            ------------------------
                                        Name: Thomas B. Selfridge
                                              ----------------------
                                        Title: Pres/CFO
                                               ---------------------

                                        COOPERATIEVE CENTRALE RAIFFEISEN-
                                        BOERENLEENBANK B.A., "RABOBANK
                                        NEDERLAND," NEW YORK BRANCH

                                        By: /s/ EDWARD PAYSOR
                                            ------------------------
                                        Name:   Edward Paysor
                                              ----------------------
                                        Title:  Executive Director
                                               ---------------------


                                        By: /s/ ANGELO J. BALESTRIERI
                                            -------------------------
                                        Name:   Angelo J. Balestrieri
                                              -----------------------
                                        Title:  Vice President
                                               ----------------------


                                       5.

<PAGE>





                       CONSENT AND AGREEMENT OF GUARANTORS

                  Each  of the  undersigned,  in its  capacity  as a  guarantor,
acknowledges  that its  consent  to the  foregoing  Third  Amendment  to  Credit
Agreement  (the  "AMENDMENT")  is not  required,  but  each  of the  undersigned
nevertheless  does hereby  consent to the foregoing  Amendment.  Nothing  herein
shall in any way limit any of the terms or  provisions  of the  Guaranty  of the
undersigned  executed by the  undersigned in the Bank's favor, or any other Loan
Document  executed by the  undersigned  (as the same may be amended from time to
time), all of which are hereby ratified and affirmed in all respects.

         GUARANTORS:

         EDNA VALLEY VINEYARD,
         as a guarantor

         By:/s/THOMAS B. SELFRIDGE
            -------------------------
         Name:
         Title:



         CANOE RIDGE VINEYARD LLC,
         as a guarantor


         By:/s/THOMAS B. SELFRIDGE
            -------------------------
         Name:
         Title:


         SHW Equity Company,
         as a guarantor


         By:/s/THOMAS B. SELFRIDGE
            -------------------------
         Name:
         Title:


                                       6.