##### 



Exhibit 10.71 EXECUTION VERSION THE CHALONE WINE GROUP, LTD.   THIRD AMENDMENT Dated as of August 15, 2004 To AMENDED AND RESTATED NOTE PURCHASE AGREEMENT
Dated as of April 19, 2002   Re: $5,000,000 Adjustable Rate Senior Secured Guaranteed Notes, Series A,
Due September 15, 2010
$10,000,000 Adjustable Rate Senior Secured Guaranteed Notes, Series B,
Due September 15, 2010
$15,000,000 Adjustable Rate Senior Secured Guaranteed Notes, Series C,
Due September 15, 2010




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THIRD AMENDMENT TO AMENDED AND RESTATED NOTE PURCHASE AGREEMENT This Third Amendment dated as
of August 15, 2004 (the or this Third
Amendment)to the Amended and Restated Note Purchase Agreement dated as of
April 19, 2002 is among The Chalone Wine Group, Ltd., a California corporation
(the Company),the Subsidiary Guarantors (as defined below) and Farm Credit
Services of America, PCA and Farm Credit Services of Minnesota Valley, PCA,
DBA FCS Commercial Finance Group (collectively, the Noteholders). RECITALS: A. The Company and the Noteholders have heretofore entered into that
certain Amended and Restated Note Purchase Agreement dated as of April 19,
2002, as amended
by that certain First Amendment to Amended and Restated Note Purchase
Agreement dated July
11, 2002 and that certain Second Amendment to Amended and Restated Note
Purchase
Agreement dated August 15, 2004 (as so amended and otherwise
amended, restated,
supplemented or otherwise modified from time to time, the Note
Agreement).The Company
has heretofore issued its $5,000,000 Adjustable Rate Senior Secured Notes,
Series A, Due
September 15, 2010 bearing PPN 157639 B*5 (the Series A Notes),its
$10,000,000 Adjustable
Rate Senior Secured Notes, Series B, Due September 15, 2010 bearing PPN
157639 C* 4 (the
Series B Notes),and its $15,000,000 Adjustable Rate Senior Secured
Notes, Series C, Due
September 15, 2010 bearing PPN 157639 B# 1 (the Series C Notes;the
Series A Notes, the
Series B Notes and the Series C Notes are hereinafter collectively
referred to as the Notes)
pursuant to the Note Agreement. The Noteholders are the holders of 100%
of the principal
amount of the Notes presently outstanding. B. Edna Valley Vineyard, a California general partnership (Edna Valley),
SHW Equity Co,, a Washington corporation (SHW),Canoe Ridge Vineyard,
LLC, a
Washington limited liability company (Canoe Ridge),Canoe Ridge
Winery, Inc., a
Washington corporation (CRW), and Staton Hills Winery Company Limited, a
Washington
corporation (Staton;Edna Valley, SHW, Canoe Ridge, CRW and Staton are
hereinafter
collectively referred to as the Subsidiary Guarantors),have heretofore
entered into those
certain Amended and Restated Subsidiary Guarantee Agreements, each dated
as of April 19,
2002 (collectively, the Subsidiary Guarantee Agreements)under and
pursuant to which each
of the Subsidiary Guarantors guaranteed the payment of the Notes and the
performance by the
Company of its obligations under the Note Agreement. C. The Company and the Noteholders now desire to amend the Note
Agreement in the respects, but only in the respects, hereinafter set
forth. The Subsidiary
Guarantors now desire to affirm their respective obligations under the
Subsidiary Guarantee
Agreements. D. All requirements of law have been fully complied with and all other
acts
and things necessary to make this Third Amendment a valid, legal and
binding instrument
according to its terms for the purposes herein expressed have been done or
performed.




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NOW, THEREFORE, upon the full and complete satisfaction of the conditions
precedent to the effectiveness of this Third Amendment set forth in
Section 7
hereof, the Company, the Subsidiary Guarantors and the Noteholders, for good
and valuable consideration the receipt and sufficiency of which is hereby
acknowledged, do hereby agree as follows: SECTION 1 Definitions; References.Unless otherwise specifically defined
herein, each term used herein which is defined in the Note Agreement shall have
the meaning assigned to such term in the Note Agreement. Each reference to
hereof, hereunder, herein and hereby and each other similar reference
and each reference to this Agreement and each other similar reference
contained in the Note Agreement shall from and after the date hereof refer to
the Note Agreement as amended hereby. SECTION 2 Amendments. (a) Schedule B to the Note Agreement shall be and is hereby amended by
adding the
definition of Proposed Acquisition as follows:  Proposed Acquisitionmeans, the proposed acquisition of
all or some portion of the Companys outstanding publicly held
            shares of common stock by an affiliate of Domaines Barons de
Rothschild (Lafite), announced on May 17, 2004 or a proposed
acquisition by a competing bidder or bidders of all or some
portion of the Companys outstanding publicly held shares of
common stock, as any such proposals may be amended from time to
time. (b) Schedule B to the Note Agreement shall be and is hereby amended by
adding the
following sentence at the end of the definition of Change of Control,
For the avoidance of
doubt, the consummation of the Proposed Acquisition shall constitute a
Change of Control. (c) Schedule B to the Note Agreement shall be and is hereby amended by
deleting the
definition of Consolidated EBIT and replacing the following definition
therefor: 
Consolidated EBITmeans, for any period, Consolidated Net
Income (computed without giving effect to any gains or losses from
dispositions of assets and other extraordinary items) plus
Consolidated Interest Expense plusincome tax expense plus
nonrecurring cash and non-cash charges allocated, accrued and/or
paid in respect of the Proposed Acquisition during the period from
May 17, 2004 to December 31, 2004 (not to exceed $1,000,000 in the
aggregate with respect to expenses, and not to exceed $1,500,000
in the aggregate with respect to any success fee paid or payable
in connection with the completion of the Proposed Acquisition (the
Permitted Success Fee), in each case, which were deducted in
determining Consolidated Net Income of the Company and its
Subsidiaries on a consolidated basis as determined in accordance
with GAAP. (d) Schedule B to the Note Agreement shall be and is hereby amended by
deleting the
definition of Consolidated EBITDA and replacing the following definition
therefor: 2




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 Consolidated EBITDA means, for any period, Consolidated
Net Income (computed without giving effect to any gains or losses
from dispositions of assets and other extraordinary items) plus
Consolidated Interest Expense plusincome tax expense plus
depreciation expense, amortization expense and other non-cash
expenses plusnonrecurring cash and non-cash charges allocated,
accrued and/or paid in respect of the Proposed Acquisition during
the period from May 17, 2004 to December 31, 2004 (not to exceed
$1,000,000 in the aggregate with respect to expenses, and not to
exceed $1,500,000 in the aggregate with respect to any the
Permitted Success Fee), in each case, which were deducted in
determining Consolidated Net Income of the Company and its
Subsidiaries on a consolidated basis as determined in accordance
with GAAP, (e) Schedule F to the Note Agreement shall be and is hereby amended and
restated in its entirety to read as set forth in Annex 1 hereto. SECTION 3 Representations and Warranties of the Company and Subsidiary
Guarantors.To induce the Noteholders to execute and deliver this Third
Amendment (which representations shall survive the execution and delivery of
this Third Amendment), each of the Company and the Subsidiary Guarantors
represent and warrant to the Noteholders that: (a) since December 31. 2003, there has been no change in the
condition,
financial or otherwise, of the Company and its Subsidiaries as shown
on the consolidated
balance sheet as of such date except changes in the ordinary course
of business, none of
which individually or in the aggregate has had, or reasonably could
be expected to have,
a Material Adverse Effect; (b) this Third Amendment has been duly authorized, executed and
delivered
by it and this Third Amendment constitutes the legal, valid and
binding obligation,
contract and agreement of the Company and Subsidiary Guarantors
enforceable against it
in accordance with its terms, except as enforcement may be limited
by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to
or limiting creditors
rights generally and general principles of equity
(regardless of whether such
enforceability is considered in a proceeding in equity or in law); (c) the Note Agreement, as amended by this Third Amendment,
constitutes
the legal, valid and binding obligation, contract and agreement of
the Company
enforceable against it in accordance with its terms, except as
enforcement may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar
laws relating to or
limiting creditors rights generally and general principles of
equity (regardless of whether
such enforceability is considered in a proceeding in equity or in
law); (d) the execution, delivery and performance by the Company and
Subsidiary
Guarantors of this Third Amendment (i) has been duly authorized by
all requisite
corporate action and, if required, shareholder action, (ii) does not
require the consent or
approval of any governmental or regulatory body or agency, and (iii)
will not (A) violate
(1) any provision of law, statute, rule or regulation or its
certificate of incorporation or
bylaws, (2) any order of any court or any rule, regulation or order
of any other agency or 3




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government binding upon it, or (3) any provision of any material
indenture, agreement or other instrument to which it is a party or by
which its properties or assets are or may be bound, including, without
limitation, the Credit Agreement, or (B) result in a breach or
constitute (along or with due notice or lapse of time or both) a default
under any indenture, agreement or other instrument referred to in clause
(iii)(A)(3) of this Section 3(d); (e) as of the date hereof and after giving effect to this Third
Amendment, no
Default or Event of Default has occurred which is continuing; and (f) except as otherwise set forth in the Schedules to the Note
Agreement or on
Schedule I hereto, all the representations and warranties contained
in Section 5 of the
Note Agreement are true and correct in all material respects with
the same force and
effect as if made by the Company and Subsidiary Guarantors on and as
of the date hereof. SECTION 4 Amendment to Post-Closing Undertakings Agreement.Subject to the
terms and conditions hereof, the completion deadline of the third post-closing
condition specified on Schedule I of the Post-Closing Undertakings Agreement
(the requirement of delivery of fully executed acknowledgements of bailees or
collateral access agreements with respect to Inventory located at third-party
locations or at locations leased by the Company or a Subsidiary Guarantor),
shall be changed from May 28,2004 to August 31, 2004. SECTION 5 Affirmation of Subsidiary Guarantee Agreements,Each of the
Subsidiary Guarantors hereby affirm each of their obligations under their
respective Subsidiary Guarantee Agreements after giving effect to this Third
Amendment. SECTION 6 Covenant.The Company shall provide to the Noteholders, in form
and substance satisfactory to them, all such further information relating to
expenses related to and other financial aspects of the Proposed Acquisition,
the Processing Payables (as defined in the Credit Agreement) and stock options
issued by the Company or its Subsidiaries as the Noteholders may reasonably
request, SECTION 7 Conditions to Effectiveness of this Amendment.This Third
Amendment shall not become effective until, and shall become effective when,
each and every one of the following conditions shall have been satisfied: (a) executed counterparts of this Third Amendment, duly executed by
the
Company, the Subsidiary Guarantors and the Required Holders, shall
have been delivered
to the Noteholders; (b) the Noteholders shall have received evidence satisfactory to
them that the
Credit Agreement has been amended and restated which amendment and
restatement
shall be in form and substance satisfactory to the Noteholders; (c) the representations and warranties of the Company and the
Subsidiary
Guarantors set forth in Section 3 hereof are true and correct on and
with respect to the date
hereof; 4




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(d) each Noteholder shall have received opinions in form and
substance
satisfactory to such Noteholder from special counsel for the Company
covering such
matters incident to the transactions contemplated hereby as such
Noteholder may
reasonably request; and (e) the Company shall have paid the reasonable fees and expenses of
McDermott, Will & Emery, counsel to the Noteholders, in
connection with the
negotiation, preparation, approval, execution and delivery of this
Third Amendment. SECTION 8 Miscellaneous. (a) This Third Amendment shall be construed in connection with and as
part of the
Note Agreement and the Post-Closing Undertakings Agreement, as the case may
be, and except as modified and expressly amended by this Third Amendment, all
terms, conditions and covenants contained in the Note Agreement and the
Post-Closing Undertakings Agreement, as the case may be, as amended on the
date hereof, are hereby ratified and shall be and remain in full force and
effect. (b) Any and all notices, requests, certificates and other instruments
executed and
delivered after the execution and delivery of this Third Amendment may
refer to the Note
Agreement without making specific references to this Third Amendment but
nevertheless all
such references shall include this Third Amendment unless the context
otherwise requires, (c) The descriptive headings of the various Sections or parts of
this Third
Amendment are for convenience only and shall not affect the meaning or
construction of any of
the provisions hereof. (d) This Third Amendment shall be governed by and construed in accordance
with
New York law. (e) The execution hereof by you shall constitute a contract between us for
the uses
and purposes hereinabove set forth, and this Third Amendment may be
executed in any number
of counterparts, each executed counterpart constituting an original, but
all together only one
agreement. 5




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IN .WITNESS WHEREOF, the parties hereto have caused this Third Amendment
to be duly executed by their respective authorized officers as of the day and
year first above written.
Title THE CHALONE WINE GROUP, LTD,By:
    
    /s/ THOMAS SELFRIDGETitle:
    
    President and CEOEDNA VALLEY VINEYARDBy:
    
    The Chalone Wine Group, Ltd.,Managing General PartnerBy:
    
    /s/ THOMAS SELFRIDGETitle:
    
    President and CEOSHW EQUITY CO.By:
    
    /s/ THOMAS SELFRIDGETitle:
    
    President and CEOCANOE RIDGE VINEYARD LLCBy:
    
    /s/ THOMAS SELFRIDGETitle:
    
    President and CEOCANOE RIDGE WINERY, INC,By:
    
    /s/ THOMAS SELFRIDGETitle:
    
    President and CEOSTATON HILLS WINERY COMPANY LIMITEDBy:
    
    /s/ THOMAS SELFRIDGETitle:
    
    President and CEO
 6




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Accepted and Agreed;
    
    FARM CREDIT SERVICES OF AMERICA,
PCABy:
    
    /s/ Bruce P. RouseTitle:
    
    Vice President
 7




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Accepted and Agreed:
    
    FARM CREDIT SERVICES OF MINNESOTA
VALLEY, PCA, DBA FCS COMMERCIAL
FINANCE GROUPBy:
    
    /s/ James M. GrafingName: James M. GrafingTitle:  SVP - Syndicated Finance
 8




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ANNEX 1 TO THIRD AMENDMENT FORM OF COMPLIANCE CERTIFICATE To Each Of The Purchasers
Listed In The Attached Schedule 2  Re: The Chalone Wine Group, Ltd. Ladies and Gentlemen: This Compliance Certificate is made and delivered pursuant to the Amended
and
Restated Note Purchase Agreement dated as of April 19, 2002 (as amended,
modified,
supplemented, renewed or extended from time to time, the Note Purchase
Agreement) among
The Chalone Wine Group, Ltd. (the Company), and each of the Purchasers
listed in the
attached Schedule 2, and reference is made thereto for full particulars
of the matters described
therein. All capitalized terms used in this Compliance Certificate and
not otherwise defined
herein shall have the meanings assigned to them in the Note Purchase
Agreement. This
Compliance Certificate relates to the accounting period ending
Fillinng rule. I am the [Chief Financial Officer] of the Company. I have reviewed the
terms of the Note Purchase Agreement and I have made, or caused to be made
under my supervision, a detailed review of the transactions and conditions of
the Company and its Subsidiaries during such accounting period. I hereby
certify that the information set forth on Schedule 1 hereto (and on any
additional schedules hereto setting forth further supporting detail) is true,
accurate and complete as of the end of such accounting period. I hereby further certify that (i) as of the date hereof, no Default has
occurred and is continuing, and (ii) on and as of the date hereof, there has
occurred no Material Adverse Effect since December 31,
[        ] in each case as may
be set forth in a separate attachment hereto describing in detail the nature
of each condition or event constituting an exception to the foregoing
statements, the period during which it has existed and the action which the
Company is taking or proposes to take with respect to each such condition or
event. IN WITNESS WHEREOF, the undersigned officer has signed this Compliance
Certificate this day of . Name:Title:
 EXHIBIT F
(to the Note Purchase Agreement)




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Schedule 1
To Compliance Certificate Worksheet for Financial Covenants 
 Section 10.4(a)
 Leverage Ratio
    
    Actual
    
    RequiredA.
    
    Consolidated Indebtedness(i) total Indebtedness of the
Company and its Subsidiaries on a
consolidated basis
    
    $(ii) accounts payable to trade
creditors for goods and services
and current operating
liabilities (not the result of
the borrowing of money) incurred
in the ordinary course of the
Companys or the Subsidiaries
business in accordance with
customary terms and paid within
the specified time (unless
contested in good faith by
appropriate proceedings and
reserved for in accordance with
GAAP)
    
    $(iii) current operating liabilities (not
the result of the borrowing of
money) incurred in the ordinary
course of the Companys or the
Subsidiaries business in
accordance with customary terms
and paid within the specified
time (unless contested in good
faith by appropriate proceedings
and reserved for in accordance
with GAAP).
    
    $(iv) indebtedness owing by the
Company to the estate of Richard
Graff in a principal amount not
to exceed $1,000,000
    
    $




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Sum of (i) minus (ii) minus (iii)
minus (iv)
    
    $B.
    
    600% of Consolidated Rent Expense
(calculated on a rolling 4-quarter basis)
    
    $C.
    
    A + BD.
    
    Consolidated EBITDA (calculated
on a rolling 4-quarter basis)
    
    $(i) Consolidated Net Income (computed
without giving effect to any gains
or losses from dispositions of assets
and other extraordinary items)
    
    $(ii) Consolidated Interest Expense (iii)
income tax expense
    
    $(iv) depreciation expense, amortization
expense, other non-cash expenses
    
    $(v) nonrecurring cash and non-cash charges
incurred in respect of the
Proposed Acquisition during the period of
May 17, 2004 to December 31,2004
    
    $Sum of (i) + (ii) + (iii) + (iv) + (v)
    
    $E.
    
    Consolidated Rent Expense
(calculated on a rolling 4-quarter basis)
    
    $F.
    
    D + E
    
    $G.
    
    Ratio of C to F
    
:
    
    See Section 10.4(a) of the
Note Purchase AgreementSection 10.4(b)  Consolidated Tangible Net Worth
 EXHIBIT F
(to the Note Purchase Agreement)




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A.
    
    Minimum Consolidated Tangible
Net Worth Calculation(i) $76,000,000
    
    $
    
    $76,000,000(ii) Net Issuance Proceeds received
by the Company or any Subsidiary
from the sale or issuance of equity
securities to any Person other than
the Company or any Subsidiary after
December 31, 2001
    
    $(iii) Net Issuance Proceeds
received by the Company or any
Subsidiary from the sale or
issuance of Subordinated Debt to
any Person other than the
Company or any Subsidiary after
December 31, 2001d
    
    $(iv) 75% of positive
Consolidated
Net Income, if any, for each
fiscal
quarter elapsed after
December 31,2001
    
    $Sum of (i) + (ii) + (iii) + (iv)
    
    $B.
    
    Consolidated Tangible Net Worth(i) Consolidated Total Assets
    
    $(ii) Intangible Assets
(including goodwill,
organizational expense,
research and development
expense, patent applications,
patents, trademarks, trade
names, brands, copyrights,
trade secrets, customer lists,
licenses, franchises and
covenants not to compete)
    
    $(iii) Subordinated Debt
    
    $(iv) Consolidated Total Liabilities
    
    $Sum of (i) - (ii) + (iii) - (iv)
 EXHIBIT F
(to the Note Purchase Agreement)




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C.
    
    Excess (deficient) for
covenant compliance
    
    $(B minus A)Section 10.4(c)
 Interest Coverage
RatioA.
    
    Consolidated EBIT (calculated on a rolling 4-quarter basis)
    
    $(i) Consolidated Net Income (computed
without giving effect to any gains or
losses from dispositions of assets and
other extraordinary items)
    
    $(ii) Consolidated Interest Expense
    
    $(iii) income tax expense
    
    $(iv) nonrecurring cash and non-cash
charges incurred in respect of the
Proposed Acquisition during the period
from May 17, 2004 to December 31, 2004
    
    $Sum of (i) + (ii) + (iii) + (iv)
    
    $B.
    
    Consolidated Interest Expense
(calculated on a rolling 4-quarter basis)
    
    $C.
    
    Ratio of A to B
    
    $
    
    See Section 10.4(c) of
the Note Purchase AgreementSection 10.4(d)
 Fixed
Charge Coverage RatioA.
    
    Consolidated EBITDA
(calculated on a rolling
4-quarter basis)
    
    $
 EXHIBIT F
(to the Note Purchase Agreement)




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B. Fixed Charge calculation(i) Consolidated Interest Expense
(calculated on a rolling 4-quarter basis)
    
    $(ii) regularly scheduled
principal payments on
Indebtedness (including such
payments attributable to
Capital Leases) of the
Company and its Subsidiaries
for the four consecutive
fiscal quarters then most
recently ended
    
    $(iii) cash income taxes of
the Company and its
Subsidiaries for the four
consecutive fiscal quarters
then most recently ended
    
    $(iv) cash dividends of the
Company and its Subsidiaries
for the four consecutive
fiscal quarters then most
recently ended
    
    $Sum of (i) + (ii) + (iii) + (iv)
    
    $C. Ratio of A to B
    
    :
    
    See Section 10.4(d) of the
Note Purchase AgreementSection 10.4(e)(i). Capital Expenditure
on new wine barrelsA.
    
    Capital expenditures made on new
wine barrels during fiscal year to
date
    
    $B.
    
    Capital expenditures on new wine
barrels that could have been made
during prior fiscal year but which
were not made
    
    $C.
    
    Maximum permitted capital
expenditures on wine barrels
($  plus Line B above)
    
    $
 EXHIBIT F
(to the Note Purchase Agreement)




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D.
    
    Excess (deficient) for
covenant compliance (C
minus A)
    
    $Section 10.4(e)(ii)  Capital
Expenditure on other fixed or capital
assetsA.
    
    Capital expenditures made on
other
assets during fiscal year to date
    
    $B.
    
    Capital expenditures on other
assets
that could have been made during
prior fiscal year but which were
not made
    
    $C.
    
    Maximum permitted
capital
expenditures on other assets
($  plus Line B above)
    
    $D.
    
    Excess (deficient) for
covenant compliance (C minus A)
    
    $Section 10.8(h)
 Intercompany LoansA.
    
    Canoe Ridge Intercompany Loan Amount
    
    $
    
    Maximum amount permitted
$B.
    
    Edna Valley Intercompany Loan Amount
    
    $
    
    Maximum amount permitted
$C.
    
    SHW Intercompany Loan Amount
    
    $
    
    Maximum amount permitted
$D. A + B + C
    
    $
    
    Maximum amount permitted
$
 EXHIBIT F
(to the Note Purchase Agreement)