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Exhibit 10.66 [Execution
Version]    THE CHALONE WINE GROUP, LTD.   AMENDED AND RESTATED CREDIT AGREEMENT Dated as of May 11, 2004   COOPERATIEVE CENTRALE RAIFFEISEN 
BOERENLEENBANK B.A.,
RABOBANK INTERNATIONAL, NEW YORK BRANCH Lead Arranger, Administrative Agent, Swingline Lender and Issuing Lender




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TABLE OF CONTENTS PageARTICLE I            DEFINITIONS
    
    
    1SECTION 1.01 Certain Defined Terms
    
    
    1SECTION 1.02 Accounting Principles
    
    
    25(a) Accounting Terms
    
    
    25(b) GAAP Changes
    
    
    25(c) Fiscal Year and Fiscal Quarter
    
    
    25SECTION 1.03 Interpretation
    
    
    25ARTICLE II            THE LOANS
    
    
    26SECTION 2.01 The Loans
    
    
    26(a) Revolving Loans
    
    
    26(b) Term Loans
    
    
    27(c) Swingline Loans
    
    
    27SECTION 2.02 Borrowing Procedure  Revolving Loans and Term Loans
    
    
    27(a) Notice to the Agent
    
    
    27(b) Notice to the Lenders
    
    
    28(c) Non-Receipt of Funds
    
    
    28SECTION 2.03 Borrowing ProcedureSwingline Loans
    
    
    28(a) Notice to the Agent
    
    
    28(b) Participations in Swingline Loans
    
    
    29SECTION 2.04 Lending Offices
    
    
    30SECTION 2.05 Evidence of Indebtedness
    
    
    30SECTION 2.06 Minimum Amounts
    
    
    30SECTION 2.07 Required Notice
    
    
    31ARTICLE III            THE LETTERS OF CREDIT
    
    
    31SECTION 3.01 The Letter of Credit Subfacility
    
    
    31(a) Letters of Credit
    
    
    31(b) Conditions to Issuance
    
    
    32SECTION 3.02 Issuance, Amendment and Renewal of Letters of Credit
    
    
    32(a) Notice to Issuing Lender of Issuance Request
    
    
    32(b) Issuance of Letters of Credit
    
    
    33(c) Notice to Issuing Lender of Amendment Request
    
    
    33(d) Notice to Issuing Lender of Renewal Request
    
    
    33(e) Expiry of Letters of Credit
    
    
    34(f) Conflicts with L/C-Related Documents
    
    
    34(g) Delivery of Copies of Letters of Credit
    
    
    34(h) Notices to Lenders
    
    
    34
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PageSECTION 3.03 Participations, Drawings and Reimbursements
    
    
    34(a) Participations of Lenders in Additional Letters of Credit
    
    
    34(b) Drawing and Reimbursement
    
    
    35(c) Funding by Lenders
    
    
    35(d) L/C Unreimbursed Drawings
    
    
    35(e) Obligation of Lenders Absolute
    
    
    36SECTION 3.04 Repayment of Participations
    
    
    36SECTION 3.05 Role of the Issuing Lender
    
    
    36(a) No Responsibility of Issuing Lender
    
    
    36(b) No Liability of Agent/IB-Related Persons
    
    
    37SECTION 3.06 Obligations of Borrower Absolute
    
    
    37SECTION 3.07 Cash Collateral Pledge
    
    
    38SECTION 3.08 Letter of Credit Fees
    
    
    38(a) Certain Letter of Credit Fees
    
    
    38(b) Certain Additional Fees and Charges
    
    
    39(c) Fees Nonrefundable
    
    
    39SECTION 3.09 Applicability of ISP98
    
    
    39SECTION 3.10 Letter of Credit Amounts
    
    
    39ARTICLE IV            INTEREST AND FEES; CONVERSION OR CONTINUATION
    
    
    39SECTION 4.01 Interest
    
    
    39(a) Interest Rate
    
    
    39(b) Interest Periods
    
    
    39(c) Interest Payment Dates
    
    
    40(d) Notice to the Borrower and the Lenders
    
    
    40SECTION 4.02 Default Rate of Interest
    
    
    41SECTION 4.03 Fees
    
    
    41(a) Commitment Fee
    
    
    41(b) Upfront Fee
    
    
    41(c) Annual Agency Fee
    
    
    41(d) Fees Nonrefundable
    
    
    41SECTION 4.04 Computations
    
    
    42SECTION 4.05 Conversion or Continuation
    
    
    42(a) Election
    
    
    42(b) Automatic Conversion
    
    
    42(c) Notice to the Agent
    
    
    42(d) Notice to the Lenders
    
    
    42SECTION 4.06 Highest Lawful Rate
    
    
    43ARTICLE V            REDUCTION OF COMMITMENTS; REPAYMENT; PREPAYMENT
    
    
    43
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PageSECTION 5.01 Reduction or Termination of the Commitments
    
    
    43(a) Optional Reduction or Termination
    
    
    43(b) Mandatory Termination
    
    
    43(c) Other Mandatory Reductions
    
    
    43(d) Notice
    
    
    44(e) Adjustment of Commitment Fee; No Reinstatement
    
    
    44SECTION 5.02 Repayment of the Loans
    
    
    44(a) Revolving Loans
    
    
    44(b) Term Loans
    
    
    44(c) Swingline Loans
    
    
    44SECTION 5.03 Prepayments
    
    
    44(a) Optional Prepayments
    
    
    45(b) Mandatory Prepayments
    
    
    45(c) Order of Application
    
    
    46(d) Notice; Application
    
    
    47ARTICLE VI            YIELD PROTECTION AND ILLEGALITY
    
    
    47SECTION 6.01 Inability to Determine Rates
    
    
    47SECTION 6.02 Funding Losses
    
    
    47SECTION 6.03 Regulatory Changes
    
    
    48(a) Increased Costs
    
    
    48(b) Capital Requirements
    
    
    48(c) Requests
    
    
    49SECTION 6.04 Illegality
    
    
    49SECTION 6.05 Funding Assumptions
    
    
    49SECTION 6.06 Obligation to Mitigate
    
    
    49SECTION 6.07 Substitution of Lenders
    
    
    49SECTION 6.08 Reserves on Eurodollar Rate Loans
    
    
    50ARTICLE VII            PAYMENTS
    
    
    50SECTION 7.01 Pro Rata Treatment
    
    
    50SECTION 7.02 Payments
    
    
    50(a) Payments
    
    
    50(b) Application
    
    
    50(c) Extension
    
    
    51SECTION 7.03 Taxes
    
    
    51(a) No Reduction of Payments
    
    
    51(b) Deduction or Withholding; Tax Receipts
    
    
    51(c) Indemnity
    
    
    51(d) Forms
    
    
    52(e) Mitigation
    
    
    52
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Page(f) Specified Swap Contracts
    
    
    53SECTION 7.04 Non-Receipt of Funds
    
    
    53SECTION 7.05 Sharing of Payments
    
    
    53ARTICLE VIII            CONDITIONS PRECEDENT
    
    
    54SECTION 8.01 Conditions Precedent to the Effectiveness of the Amendment
and Restatement
    
    
    54(a) Fees and Expenses
    
    
    54(b) Loan Documents
    
    
    54(c) Documents and Actions Relating to Collateral
    
    
    54(d) Additional Closing Documents and Actions
    
    
    55(e) Corporate Documents
    
    
    56(f) Legal Opinions
    
    
    56(g) Senior Secured Note Documents
    
    
    57(h) Pro-Forma Debt to EBITDA Ratio
    
    
    57SECTION 8.02 Conditions Precedent to All Credit Extensions
    
    
    57(a) Notice
    
    
    57(b) Material Adverse Effect
    
    
    57(c) Representations and Warranties; No Default
    
    
    57(d) Additional Documents
    
    
    58ARTICLE IX            REPRESENTATIONS AND WARRANTIES
    
    
    58SECTION 9.01 Representations and Warranties
    
    
    58(a) Organization and Powers
    
    
    58(b) Authorization; No Conflict
    
    
    58(c) Binding Obligation
    
    
    58(d) Consents
    
    
    58(e) No Defaults
    
    
    59(f) Title to Properties; Liens; Use
    
    
    59(g) Litigation
    
    
    59(h) Compliance with Environmental Laws
    
    
    59(i) Governmental Regulation
    
    
    59(j) ERISA
    
    
    59(k) Subsidiaries
    
    
    60(l) Margin Regulations
    
    
    60(m) Taxes
    
    
    60(n) Patents and Other Rights
    
    
    60(o) Insurance
    
    
    61(p) Financial Statements
    
    
    61(q) Liabilities
    
    
    61(r) Labor Disputes, Etc.
    
    
    61(s) Solvency
    
    
    61(t) Disclosure
    
    
    61
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PageARTICLE X            COVENANTS
    
    
    61SECTION 10.01 Reporting Covenants
    
    
    61(a) Financial Statements and Other Reports
    
    
    62(b) Additional Information
    
    
    64SECTION 10.02 Financial Covenants
    
    
    65(a) Leverage Ratio
    
    
    65(b) Minimum Consolidated Tangible Net Worth
    
    
    65(c) Interest Coverage Ratio
    
    
    65(d) Fixed Charge Coverage Ratio
    
    
    66(e) Capital Expenditures
    
    
    66SECTION 10.03 Additional Affirmative Covenants
    
    
    67(a) Preservation of Existence, Etc
    
    
    67(b) Payment of Obligations
    
    
    67(c) Maintenance of Insurance
    
    
    67(d) Keeping of Records and Books of Account
    
    
    68(e) Inspection Rights
    
    
    68(f) Compliance with Laws, Etc.
    
    
    68(g) Maintenance of Properties, Etc.
    
    
    68(h) Licenses
    
    
    68(i) Action Under Environmental Laws
    
    
    69(j) Use of Proceeds
    
    
    69(k) Additional Subsidiaries
    
    
    69(l) Proceeds of Events of Loss
    
    
    69(m) Conversion of Shareholder Subordinated Debt to Equity
    
    
    69(n) Further Assurances and Additional Acts
    
    
    69SECTION 10.04 Negative Covenants
    
    
    70(a) Indebtedness
    
    
    70(b) Liens; Negative Pledges
    
    
    71(c) Change in Nature of Business
    
    
    71(d) Restrictions on Fundamental Changes
    
    
    71(e) Sales of Assets
    
    
    72(f) Loans and Investments
    
    
    72(g) Sales and Leasebacks
    
    
    73(h) Distributions
    
    
    73(i) Amendments of Certain Documents
    
    
    74(j) Redemption of Subordinated Debt
    
    
    74(k) Transactions with Related Parties
    
    
    75(l) Hazardous Substances
    
    
    75(m) Accounting Changes
    
    
    75(n) Foreign Subsidiaries
    
    
    75ARTICLE XI            EVENTS OF DEFAULT
    
    
    75
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PageSECTION 11.01 Events of Default
    
    
    75(a) Payments
    
    
    75(b) Representations and Warranties
    
    
    75(c) Failure by Borrower to Perform Certain Covenants
    
    
    75(d) Failure by Borrower to Perform Other Covenants
    
    
    76(e) Insolvency; Voluntary Proceedings
    
    
    76(f) Involuntary Proceedings
    
    
    76(g) Default Under Other Indebtedness
    
    
    76(h) Judgments
    
    
    77(i) ERISA
    
    
    77(j) Dissolution, Etc.
    
    
    77(k) Material Adverse Effect
    
    
    77(l) Change in Ownership or Control
    
    
    77(m) Failure by Guarantor to Perform Covenants; Invalidity of Guaranties
    
    
    78(n) Environmental Indemnity
    
    
    78(o) Subordination Provisions
    
    
    78(p) Collateral Documents
    
    
    78SECTION 11.02 Effect of Event of Default
    
    
    78SECTION 11.03 Application of Funds
    
    
    79ARTICLE XII            THE AGENT
    
    
    79SECTION 12.01 Authorization and Action
    
    
    79SECTION 12.02 Limitation on Liability of Agent; Notices; Closing
    
    
    80(a) Limitation on Liability of Agent and Issuing Lender
    
    
    80(b) Notices
    
    
    80(c) Closing
    
    
    81SECTION 12.03 Agent and Affiliates
    
    
    81SECTION 12.04 Notice of Defaults
    
    
    81SECTION 12.05 Non-Reliance on Agent and Issuing Lender
    
    
    81SECTION 12.06 Indemnification
    
    
    82SECTION 12.07 Delegation of Duties
    
    
    82SECTION 12.08 Successor Agent
    
    
    82SECTION 12.09 Collateral Matters
    
    
    83(a) Authorization
    
    
    83(b) Collateral Releases
    
    
    83SECTION 12.10 Agent May File Proofs of Claim
    
    
    83SECTION 12.11 Lead Arranger
    
    
    84ARTICLE XIII            MISCELLANEOUS
    
    
    84SECTION 13.01 Amendments and Waivers
    
    
    84SECTION 13.02 Notices
    
    
    85
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Page(a) Notices
    
    
    85(b) Facsimile and Telephonic Notice
    
    
    86(c) Electronic Mail
    
    
    86SECTION 13.03 No Waiver; Cumulative Remedies
    
    
    86SECTION 13.04 Costs and Expenses; Indemnification
    
    
    86(a) Costs and Expenses
    
    
    86(b) Indemnification
    
    
    87(c) Other Charges
    
    
    88(d) Obligations Under Existing Credit Agreement
    
    
    88SECTION 13.05 Right of Set-Off
    
    
    88SECTION 13.06 Survival
    
    
    88SECTION 13.07 Obligations Several
    
    
    88SECTION 13.08 Benefits of Agreement
    
    
    89SECTION 13.09 Binding Effect; Assignment
    
    
    89(a) Binding Effect
    
    
    89(b) Assignment
    
    
    89SECTION 13.10 Governing Law
    
    
    91SECTION 13.11 Submission to Jurisdiction
    
    
    91SECTION 13.12 Waiver of Jury Trial
    
    
    92SECTION 13.13 Limitation on Liability
    
    
    92SECTION 13.14 Confidentiality
    
    
    93SECTION 13.15 Entire Agreement
    
    
    93SECTION 13.16 Payments Set Aside
    
    
    94SECTION 13.18 Counterparts
    
    
    94SECTION 13.19 Acknowledgments
    
    
    94SECTION 13.20 USA Patriot Act Notice
    
    
    94
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ANNEXES

Annex 1
    
    Pricing GridSCHEDULESSchedule 1
    
    Commitments and Pro Rata SharesSchedule 2
    
    Lending Offices; Addresses for NoticesSchedule 3
    
    Existing IndebtednessSchedule 4
    
    Existing LiensSchedule 5
    
    LitigationSchedule 6
    
    SubsidiariesSchedule 7
    
    [Reserved]Schedule 8
    
    [Reserved]Schedule 9
    
    Affiliate TransactionsEXHIBITSExhibit A
    
    Form of Borrowing Base CertificateExhibit B
    
    Form of Compliance CertificateExhibit C
    
    Form of Deed of TrustExhibit D
    
    [Reserved]Exhibit E-1
    
    [Reserved]Exhibit E-2
    
    [Reserved]Exhibit F
    
    [Reserved]Exhibit G
    
    Form of Revolving NoteExhibit H-1
    
    Form of Borrower and Subsidiary Guarantor Security AgreementExhibit H-2
    
    Form of Security Agreement of Edna Valley VineyardExhibit I
    
    Form of Swingline NoteExhibit J
    
    Form of Term NoteExhibit K
    
    Form of Notice of BorrowingExhibit L
    
    [Reserved]Exhibit M
    
    Form of Assignment and AssumptionExhibit N
    
    Form of Update CertificateExhibit O
    
    Form of Guarantor Consent






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AMENDED AND RESTATED CREDIT AGREEMENT THIS AMENDED AND RESTATED CREDIT AGREEMENT (this Agreement), dated as of
May 11, 2004, is made among The Chalone Wine Group, Ltd., a California
corporation (the Borrower), the financial institutions listed on the
signature pages of this Agreement under the heading LENDERS (each a Lender
and, collectively, the Lenders), Cooperatieve Centrale
Raiffeisen-Boerenleenbank B.A., Rabobank International, New York Branch
(Rabobank) as letter of credit issuing bank (in such capacity, the Issuing
Lender), as swingline lender (in such capacity, the Swingline Lender) and as
administrative agent for the Lenders hereunder (in such capacity, the Agent); WHEREAS, the Borrower, the Agent, the Issuing Lender, the Swingline Lender
and the Lenders entered into a Credit Agreement dated as of April 19, 2002, as
amended by that certain First Amendment to Credit Agreement and Consent dated
as of August 23, 2002 and that certain Second Amendment to Credit Agreement,
Waiver and Consent dated as of March 30, 2004 (as so amended, the Existing
Credit Agreement); WHEREAS, the Lenders have made and maintained Loans and the Issuing Lender
has issued Letters of Credit pursuant to the Existing Credit Agreement; and WHEREAS, the Borrower has requested that the Lenders agree to amend and
restate the Existing Credit Agreement, to extend the term of the credit
facilities therein described, and to continue to maintain the Loans and the
existing Letters of Credit pursuant to the amended and restated credit
facilities contemplated hereby. NOW THEREFORE, the Agent, the Issuing Lender, the Swingline Lender and the
Lenders are willing to enter into such amendment and restatement of the
Existing Credit Agreement upon the terms and subject to the conditions set
forth in this Agreement. ARTICLE I  SECTION 1.01 Certain Defined Terms. As used in this Agreement (including
in the recitals hereof), the following terms shall have the following meanings: Acquisition means any transaction or series of related transactions for
the purpose of, or resulting, directly or indirectly, in (a) the acquisition of
all or substantially all of the assets of a Person, or any line or segment of
business or division of a Person, (b) the acquisition of in excess of 50% of
the capital stock, partnership interests, membership interests or equity of any
Person, or otherwise causing any Person to become a Subsidiary, or (c) a merger
or consolidation or any other combination with another Person (other than a
Person that is a Subsidiary) provided that (i) the Borrower or a Subsidiary is
the surviving entity or (ii) after giving effect to such merger or
consolidation, such other Person has become a Subsidiary of the Borrower. 1




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Administrative Questionnaire means an Administrative Questionnaire in a
form supplied by the Agent. Affected Lender has the meaning set forth in Section 6.07. Affiliate means any Person which, directly or indirectly, controls, is
controlled by or is under common control with another Person. For purposes of
the foregoing, control, controlled by and under common control with with
respect to any Person shall mean the possession, directly or indirectly, of the
power (i) to vote 10% or more of the securities having ordinary voting power of
the election of directors of such Person, or (ii) to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or by contract or otherwise. Agent has the meaning set forth in the introduction to this Agreement. Agent/IB-Related Persons means Rabobank as Agent, Swingline Lender and
Issuing Lender, any successor Agent arising under Section 12.08, together with
their respective Affiliates, and the officers, directors, employees, agents and
attorneys-in-fact of such Persons and Affiliates. Agents Account means the account of the Agent set forth on Schedule 2
or such other account as the Agent from time to time shall designate in a
written notice to the Borrower and the Lenders. Amendment Closing Date means the date on which all conditions precedent
set forth in Section 8.01, and in Section 8.02 with respect to any Credit
Extensions to be made on the Amendment Closing Date, are satisfied or waived by
all the Lenders (or, in the case of Section 8.01(a), waived by the Person
entitled to receive such payment). Applicable Fee Amount means with respect to the commitment fee and
letter of credit fee payable hereunder, the amount set forth opposite the
indicated Level below the heading Commitment Fee and Letter of Credit Fee,
respectively, in the pricing grid set forth on Annex I in accordance with the
parameters for calculations of such amount also set forth on Annex I. Applicable Margin means (i) with respect to Base Rate Loans, the amount
set forth opposite the indicated Level below the heading Revolving Loan Base
Rate Spread or Term Loan Base Rate Spread, as applicable, in the pricing
grid set forth on Annex I in accordance with the parameters for calculations of
such amounts also set forth on Annex I, and (ii) with respect to Eurodollar
Rate Loans, the amount set forth opposite the indicated Level below the heading
Revolving Loan Eurodollar Rate Spread or Term Loan Eurodollar Rate Spread,
as applicable, in the pricing grid set forth on Annex I in accordance with the
parameters for calculations of such amounts also set forth on Annex I. Assignment and Assumption means an Assignment and Assumption, in
substantially the form of Exhibit M. 2




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Attributable Indebtedness means, on any date, (a) in respect of any
Capital Lease of any Person, the capitalized amount thereof that would appear
on a balance sheet of such Person prepared as of such date in accordance with
GAAP, and (b) in respect of any Synthetic Lease Obligation, the capitalized
amount of the remaining lease payments under the relevant lease that would
appear on a balance sheet of such Person prepared as of such date in accordance
with GAAP if such lease were accounted for as a Capital Lease. Bankruptcy Code means Title 11 of the United States Code entitled
Bankruptcy. Base Rate means for any day the higher of: (a) 0.50% per annum above
the latest Federal Funds Rate; and (b) the rate of interest in effect for such
day as publicly announced from time to time by Rabobank as its reference rate.
(The reference rate is a rate set by Rabobank based upon various factors
including Rabobanks costs and desired return, general economic conditions and
other factors, and is used as a reference point for pricing some loans, which
may be priced at, above, or below such announced rate.) Any change in the
reference rate announced by Rabobank shall take effect at the opening of
business on the day specified in the public announcement of such change. Each
change in the interest rate on the Loans or other Obligations bearing interest
at the Base Rate based on a change in the Base Rate shall be effective as of
the effective date of such change in the Base Rate. Base Rate Loan means a Revolving Loan, a Term Loan or an L/C Advance
bearing interest based on the Base Rate. Borrower has the meaning set forth in the introduction to this
Agreement. Borrower and Subsidiary Guarantor Security Agreement means the amended
and restated Security Agreement among the Borrower and the Subsidiary
Guarantors (other than Edna Valley Vineyard) in substantially the form of
Exhibit H-1 in favor of the Collateral Agent for the benefit of the Agent, the
Lenders and the Senior Noteholders. Borrowers Account means the account of the Borrower set forth on
Schedule 2, or such other account as the Borrower from time to time shall
designate in a written notice to the Agent. Borrowing means a borrowing consisting of a Revolving Loan, a Swingline
Loan or a Term Loan, or of simultaneous Revolving Loans, Swingline Loans or
Term Loans, as the case may be, made at any one time by the Borrower from the
Lenders pursuant to Article II or III. Borrowing Base means, in respect of the Borrower at any time, the
aggregate sum of (i) in the case of Eligible Inventory consisting of bulk wine
to be sold in the bulk wine market, 60% of (A) fair market value (as reported
in the most recently published quarterly Turrentine Collateral Value Report or,
if not available, an equivalent compilation selected in the Agents reasonable
discretion) minus (B) Grower Payables, if any, incurred in connection with such
bulk wine, plus (ii) in the case of Eligible Inventory consisting of other bulk
wine, 70% of (A) book value at the date of determination minus (B) Grower
Payables, if any, incurred in connection with such bulk wine, plus (iii) in the
case of Eligible Inventory consisting of cased 3




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wine or separately bottled wine, 65% of the posted F.O.B. selling price at
the date of determination for the immediately preceding calendar month, plus
(iv) in the case of Eligible Inventory consisting of Wine Bottling Inventory,
60% of book value at the date of determination (in the case of each of the
preceding clauses (i), (ii), (iii) and (iv), net of depletion allowances), plus
(v) 85% of Eligible Receivables at such time, minus (vi) $7,000,000. Borrowing Base Certificate means a certificate of a Responsible Officer
of the Borrower, in substantially the form of Exhibit A, with such changes
thereto as the Agent or any Lender may from time to time reasonably request. Business Day means a day other than a Saturday, a Sunday, or a day on
which commercial banks in New York City, New York, are authorized to close and,
if the applicable day relates to any Eurodollar Rate Loan, means a Eurodollar
Business Day. Canoe Ridge Intercompany Loan Amount means the sum of (i) $7,000,000
plus (ii) on each anniversary of the Original Closing Date, 10% of the Canoe
Ridge Intercompany Loan Amount in effect immediately prior to such anniversary. Capital Lease means, for any Person, any lease of property (whether
real, personal or mixed) which, in accordance with GAAP, would, at the time a
determination is made, be required to be recorded as a capital lease in respect
of which such Person is liable as lessee. Change of Control means (a) any person (as such term is used in
subsections 13(d) and 14(d) of the Exchange Act) or group of persons on or
after the Original Closing Date other than members of the Board of Directors of
the Borrower and their affiliates (as such term is used in Rule 405 of the
Securities Act of 1933), is or becomes the beneficial owner (as defined in
Rule 13d-3 under said Act), directly or indirectly, of securities of the
Company representing 51% or more of the combined voting power of the Borrowers
then-outstanding voting securities, or (b) the existing directors for any
reason cease to constitute a majority of the Borrowers board of directors.
Existing directors means (x) individuals constituting the Borrowers board of
directors on the Original Closing Date, and (y) any subsequent director whose
election by the board of directors or nomination for election by the Borrowers
shareholders was approved by a vote of at least a majority of the directors
then in office, which directors either were directors on the Original Closing
Date or whose election or nomination for election was previously so approved. Collateral means the property described in the Collateral Documents, and
all other property now existing or hereafter acquired which may at any time be
or become subject to a Lien in favor of the Collateral Agent, the Agent or the
Lenders pursuant to the Collateral Documents or otherwise, securing the payment
and performance of the Obligations. Collateral Agent means Rabobank in its capacity as collateral agent for
the Lenders and the holders of the Senior Secured Notes pursuant to the
Intercreditor and Collateral Agency Agreement, and any successor collateral
agent thereunder. Collateral Documents means the Deeds of Trust, the Security Agreements,
the Patent and Trademark Security Agreement, any other agreement pursuant to
which the Borrower, 4




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the Guarantors or any other Person provides a Lien on its assets in favor
of the Lenders, or in favor of the Collateral Agent or the Agent for the
benefit of the Lenders, or in favor of the Collateral Agent for the benefit of
the Agent, the Lenders and the Senior Noteholders, and all financing
statements, fixture filings, patent, trademark and copyright filings,
assignments, acknowledgments and other filings, documents and agreements made
or delivered pursuant thereto. Commitment means, for each Lender, the sum of its Term Commitment and
its Revolving Commitment. Compliance Certificate means a certificate of a Responsible Officer of
the Borrower, in substantially the form of Exhibit B, with such changes thereto
as the Agent or any Lender may from time to time reasonably request. 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 plus
income tax expense, in each case, which were deducted in determining
Consolidated Net Income of the Borrower and its Subsidiaries on a consolidated
basis as determined in accordance with GAAP. 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 plus
income tax expense plus depreciation expense, amortization expense and other
non-cash expenses, in each case, which were deducted in determining
Consolidated Net Income of the Borrower and its Subsidiaries on a consolidated
basis as determined in accordance with GAAP. Consolidated Indebtedness means, as of any date of determination, (a)
the total Indebtedness of the Borrower and its Subsidiaries on a consolidated
basis minus (b) 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 Borrower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) minus (c) until such time as the Indebtedness owing as of
the date hereof by the Borrower to the estate of Richard Graff is repaid in
full, Indebtedness owing by the Borrower to the estate of Richard Graff in a
principal amount not to exceed $1,000,000. Consolidated Interest Expense means, for any period, interest expense
(including that attributable to Capital Leases) of the Borrower and its
Subsidiaries on a consolidated basis, including all commissions, discounts and
other fees and charges owed with respect to standby letters of credit, as
determined in accordance with GAAP. Consolidated Net Income means, for any period, the net income of the
Borrower and its Subsidiaries on a consolidated basis for such period taken as
a single accounting period, as determined in accordance with GAAP. 5




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Consolidated Rent Expense means, for any period, operating lease expense
of the Borrower and its Subsidiaries on a consolidated basis, as determined in
accordance with GAAP. Consolidated Tangible Net Worth means, as of any date of determination,
Consolidated Total Assets plus Subordinated Debt minus Consolidated Total
Liabilities; provided, however, that there shall be excluded from Consolidated
Total Assets all assets which would be classified as intangible assets in
accordance with GAAP, 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. Consolidated Total Assets means, as of any date of determination, the
total assets of the Borrower and its Subsidiaries on a consolidated basis, as
determined in accordance with GAAP. Consolidated Total Liabilities means, as of any date of determination,
the total liabilities of the Borrower and its Subsidiaries on a consolidated
basis, as determined in accordance with GAAP. Credit Extension means each of (a) the making of any Term Loans,
Revolving Loans or Swingline Loans hereunder; (b) the continuation of any
Eurodollar Rate Loan or conversion of any Loan pursuant to Section 4.05; (c)
the issuance of any Letters of Credit hereunder; and (d) the amendment or
renewal of any Letters of Credit hereunder. Deed of Trust means each deed of trust or mortgage entered into by the
Borrower, any Guarantor or any other Person, as trustor or mortgagor, for the
benefit of the Collateral Agent or the Agent, as beneficiary or mortgagee on
behalf of the Lenders and the Senior Noteholders, delivered in connection with
the Original Closing, and the additional deed of trust delivered in connection
with this Agreement, each in substantially the form of Exhibit C. Default means an Event of Default or an event or condition which with
notice or lapse of time or both would constitute an Event of Default. Defaulting Lender means any Lender that (a) has failed to fund any
portion of the Loans or participations in L/C Obligations required to be funded
by it hereunder within one Business Day of the date required to be funded by it
hereunder, (b) has otherwise failed to pay over to the Agent or any other
Lender any other amount required to be paid by it hereunder within one Business
Day of the date when due, unless the subject of a good faith dispute, or (c)
has been deemed insolvent or become the subject of a bankruptcy or insolvency
proceeding. Dollars and the sign $ each means lawful money of the United States. Edna Valley Intercompany Loan Amount means the sum of (i) $20,000,000
plus (ii) on each anniversary of the Original Closing Date, 10% of the Edna
Valley Intercompany Loan Amount in effect immediately prior to such
anniversary. 6




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Edna Valley Security Agreement means the amended and restated Security
Agreement of Edna Valley Vineyard in substantially the form of Exhibit H-2, in
favor of the Collateral Agent for the benefit of the Agent, the Lenders and the
Senior Noteholders. Effective Amount means (i) with respect to any Revolving Loans,
Swingline Loans and Term Loans on any date, the aggregate outstanding principal
amount thereof after giving effect to any Borrowings and prepayments or
repayments of Term Loans, Revolving Loans and Swingline Loans, as the case may
be, occurring on such date; and (ii) with respect to any outstanding L/C
Obligations on any date, the amount of such L/C Obligations on such date after
giving effect to any issuances of Letters of Credit occurring on such date and
any other changes in the aggregate amount of the L/C Obligations as of such
date, including as a result of any reimbursements of outstanding unpaid
drawings under any Letters of Credit or any reductions in the maximum amount
available for drawing under Letters of Credit taking effect on such date;
provided that for purposes of subsection 5.03(b), the Effective Amount shall be
determined without giving effect to any mandatory prepayments to be made under
subsection 5.03(b). Eligible Assignee has the meaning set forth in Section 13.09. Eligible Inventory means, in respect of the Borrower at any time, the
aggregate amount of the Borrowers and each Subsidiary Guarantors Inventory
consisting of bulk wine, cased wine, separately bottled wine, Wine Bottling
Inventory, which is of marketable quality and held for sale or use in the
ordinary and usual course of business, net of applicable allowances and
reserves (including allowances or reserves for shrinkage or obsolescence),
excluding the following: (i) Inventory (other than bulk wine and Wine Bottling Inventory)
consisting of raw materials, supplies or work in process; (ii) Inventory which is not owned by the Borrower or a Subsidiary
Guarantor free and clear of all Liens and rights of others (other than the
Liens in favor of the Agent on behalf of the Lenders, Growers Liens or
Production Liens); (iii) Inventory in which the Agent on behalf of the Lenders shall not have
a valid and perfected first priority Lien, other than Growers Liens or
Production Liens; (iv) Inventory which is located in any location other than California,
Washington, the locations listed on Schedule 1 to the Security Agreements, or
any other locations agreed to in writing after the Original Closing Date by the
Agent; (v) subject to the further restrictions in clause (vi) of this definition,
if applicable, Inventory which is not in the direct possession of the Borrower
or a Subsidiary Guarantor (except for Inventory at one of the locations set
forth in Part 1 of Schedule 1 to the Security Agreements or at a location set
forth in a notice from the Borrower or a Subsidiary Guarantor to the Agent
pursuant to Section 5(e) of the Security Agreements, which shall be considered
eligible if the Agent has received a collateral access agreement, in form and
substance reasonably satisfactory to it, with respect to any Inventory located
at leased locations); 7




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(vi) Inventory on lease or consignment or subject to warehousing
arrangements, except for Inventory subject to warehousing arrangements (1) in
form and substance acceptable to the Agent and approved in writing by the Agent
and (2) which contain, or as to which the Agent has received, a subordination
and/or waiver by the warehouseman in form and substance reasonably satisfactory
to the Agent; (vii) Inventory which is used or intended to be used in research and
development; (viii) Inventory which is obsolete, unmerchantable, spoiled, damaged or
unfit for sale or further processing; (ix) Inventory which is packaging, shipping, or advertising materials
(other than the Wine Bottling Inventory); and (x) Inventory which is, in the exercise of the Agents reasonable credit
judgment, exercised in good faith, unacceptable due to age, type, category or
quantity or is otherwise ineligible. Any Inventory which is at any time Eligible Inventory, but which
subsequently fails to meet any of the foregoing requirements, shall forthwith
cease to be Eligible Inventory until such time as such Inventory shall meet all
of the foregoing requirements. Eligible Receivable Debtor means, for purposes of clause (xi) of the
definition of Eligible Receivables, a Receivable Debtor for which the
Borrower has provided or caused to be provided to the Agent financial
statements of such Receivable Debtor which are satisfactory in form and
substance to the Agent and the Majority Lenders and who the Agent and the
Majority Lenders deem creditworthy in their reasonable credit judgment. Eligible Receivables means, in respect of the Borrower at any time, the
aggregate amount of the Borrowers and each Subsidiary Guarantors Receivables,
payable in cash in Dollars, net of applicable allowances, reserves, discounts,
returns, credits or offsets (including allowances or reserves for doubtful
accounts), excluding the following: (i) Receivables for which the Borrowers or a Subsidiary Guarantors right
to receive payment has not been fully earned by performance or is contingent
upon the fulfillment of any condition whatsoever or which otherwise do not
arise from a bona fide completed transaction; (ii) Receivables against which there are asserted any defenses,
counterclaims, discounts (other than normal trade discounts) or offsets of any
nature, whether well-founded or otherwise (but only to the extent of such
asserted defenses, counterclaims, discounts or offsets) to the extent not
already deducted as an allowance for doubtful accounts; (iii) Receivables that do not comply in all material respects with all
applicable legal requirements, including all laws, rules, regulations and
orders of any Governmental Authority; 8




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(iv) Receivables which represent a prepayment or progress payment or
arising out of the placement of goods on consignment, guaranteed sale or other
arrangement by reason of which the payment by the Receivable Debtor may be
conditional or contingent; (v) Receivables which are not owned by the Borrower or a Subsidiary
Guarantor free and clear of all Liens and rights of others (other than the
Liens in favor of the Collateral Agent or the Agent on behalf of Lenders,
Growers Liens or Production Liens); (vi) Receivables in which the Collateral Agent or the Agent, on behalf of
the Lenders, shall not have a valid and perfected first-priority Lien (other
than Growers Liens or Production Liens); (vii) Receivables owing (A) by the United States or any department, agency
or instrumentality thereof or (B) by a State or any department, agency,
instrumentality or political subdivision thereof (other than State owned stores
or other equivalent alcohol beverage control Receivable Debtors to the extent
that there are no statutory, regulatory or other governmental restrictions on
the grant of security interests in Receivables due from such Receivable
Debtors), unless, in the case of Receivables described in sub-clause (A), the
Agent has agreed to the contrary in writing and the Borrower has complied with
the Federal Assignment of Claims Act with respect to such Receivables; (viii) Receivables owing by any Receivable Debtor who is not a resident of
or located in the United States or the Dominion of Canada; (ix) Receivables not paid in full within 90 days from the date of invoice
(to the extent not already deducted as an allowance for doubtful accounts); (x) Receivables owing by any Receivable Debtor who has failed to make full
payment within 90 days from the date of invoice on more than 20% of the
aggregate amount of Receivables owing to the Borrower and the Subsidiary
Guarantors by such Receivable Debtor; (xi) that portion of Receivables owing by any single Receivable Debtor
(other than Youngs Market or an Eligible Receivable Debtor) which exceeds 20%
of the aggregate amount of Eligible Receivables owing to the Borrower and the
Subsidiary Guarantors by all Receivable Debtors (to the extent not already
deducted as an allowance for doubtful accounts); (xii) Receivables which constitute the proceeds of Inventory which
Inventory is at the same time included in the Borrowing Base; (xiii) Receivables owing by any Receivable Debtor who is the subject of an
Insolvency Proceeding; (xiv) Receivables owing by any Affiliate of the Borrower or of a
Subsidiary Guarantor; and (xv) Receivables with respect to which the Agent, in its reasonable
discretion, deems the creditworthiness or financial condition of the Receivable
Debtor to be unsatisfactory 9




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or the prospect of payment or performance to be impaired, and other
Receivables which, in the exercise of the Agents good faith reasonable credit
judgment, are otherwise ineligible. Any Receivable which is at any time an Eligible Receivable, but which
subsequently fails to meet any of the foregoing eligibility requirements, shall
forthwith cease to be an Eligible Receivable until such time as such Receivable
shall meet all of the foregoing requirements. Environmental Indemnity means the Environmental Indemnity of the
Borrower and the Subsidiary Guarantors, delivered in connection with the
Original Closing. Environmental Laws means all federal, state or local laws, statutes,
common law duties, rules, regulations, ordinances and codes, together with all
administrative orders, directives, requests, licenses, authorizations and
permits of, and agreements with (including consent decrees), any Governmental
Authorities, in each case relating to or imposing liability or standards of
conduct concerning public health, safety and environmental protection matters,
including the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, the Clean Air Act, the Federal Water Pollution Control Act of
1972, the Solid Waste Disposal Act, the Federal Resource Conservation and
Recovery Act, the Toxic Substances Control Act, the Emergency Planning and
Community Right-to-Know Act, the California Hazardous Waste Control Law, the
California Solid Waste Management, Resource Recovery and Recycling Act, the
California Water Code and the California Health and Safety Code. ERISA means the Employee Retirement Income Security Act of 1974,
including (unless the context otherwise requires) any rules or regulations
promulgated thereunder. ERISA Affiliate means any trade or business (whether or not
incorporated) which is under common control with the Borrower or any Guarantor
within the meaning of Section 4001(a)(14) of ERISA and Sections 414(b), (c) and
(m) of the Internal Revenue Code. Eurodollar Business Day means a Business Day on which dealings in Dollar
deposits are carried on in the interbank eurodollar market where the eurodollar
funding operations of Rabobank are customarily conducted. Eurodollar Rate means for each Interest Period for each Eurodollar Rate
Loan (i) the rate of interest per annum determined by the Agent to be the
offered rate appearing on the Telerate Page (as defined below) for Dollar
deposits having a maturity comparable to such Interest Period, at approximately
11:00 A.M. (London time) two Eurodollar Business Days prior to the commencement
of such Interest Period; or (ii) if the rate referenced in the preceding clause
(i) does not appear on such page or service or such page or service shall not
be available, the rate of interest per annum equal to the rate determined by
the Agent to be the offered rate on such other page or other service that
displays an average British Bankers Association Interest Settlement Rate for
Dollar deposits (for delivery on the first day of such Interest Period) having
a maturity comparable to such Interest Period, at approximately 11:00 A.M.
(London time) two Eurodollar Business Days prior to the commencement of such
Interest Period; or (iii) if the rates referenced in the preceding clauses (i)
and (ii) are not available, the rate of interest per annum 10




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determined by the Agent to be the rate at which deposits in Dollars would
be offered by Rabobank to major banks in the interbank eurodollar market where
the eurodollar funding operations of Rabobank are customarily conducted, at
approximately 10:00 A.M. (New York time), two Eurodollar Business Days before
the first day of such Interest Period, in an amount substantially equal to the
proposed Eurodollar Rate Loan to be made, continued or converted by Rabobank.
As used in this definition, Telerate Page means the page of the Telerate
screen (or any successor thereto) that displays an average British Bankers
Association Interest Settlement Rate for deposits in the relevant currency (for
delivery on the first day of such Interest Period). Eurodollar Rate Loan means a Revolving Loan or a Term Loan bearing
interest based on the Eurodollar Rate. Event of Default has the meaning set forth in Section 11.01. Event of Loss means with respect to any asset of the Borrower or its
Subsidiaries any of the following: (i) any loss, destruction or damage of such
asset; (ii) any pending or threatened institution of any proceedings for the
condemnation or seizure of such asset or of any right of eminent domain; or
(iii) any actual condemnation, seizure or taking, by exercise of the power of
eminent domain or otherwise, of such asset, or confiscation of such asset or
requisition of the use of such asset. Existing Credit Agreement has the meaning set forth in the recitals
hereto. Fee Letter means that certain letter agreement dated as of May 11, 2004,
between the Borrower and Rabobank. Federal Funds Rate means, for any day, the rate per annum (rounded
upward, if necessary, to the nearest 1/100 of 1%), as determined by the Agent,
equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published for any day of determination (or if such day of
determination is not a Business Day, for the next preceding Business Day) by
the Federal Reserve Bank of New York, or, if such rate is not so published for
any day which is a Business Day, the average of the quotations for such day on
such transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it. Final Maturity Date means May 11, 2010. Foreign Lender has the meaning set forth in Section 7.03(d). Foreign Subsidiary means each Subsidiary of the Borrower organized under
the laws of any jurisdiction outside of the United States or which is domiciled
outside of the United States. FRB means the Board of Governors of the Federal Reserve System, and any
Governmental Authority succeeding to any of its principal functions. GAAP means generally accepted accounting principles in the U.S. as in
effect from time to time. 11




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Governmental Authority means any federal, state, local or other
governmental department, commission, board, bureau, agency, central bank,
court, tribunal or other instrumentality or authority, domestic or foreign,
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government. Grower Payables means, in respect of the Borrower or any Subsidiary
Guarantor, the aggregate amount due from the Borrower or such Subsidiary
Guarantor to any other Person on account of any crops, produce, or other farm
products supplied by such Person to the Borrower or such Subsidiary Guarantor
as to which crops, produce or other farm products such Person has statutory
lien rights. Growers Liens means statutory Liens securing the payment of amounts due
from the Borrower or any Subsidiary Guarantor to any other Person on account of
any crops, produce or other farm products supplied by such Person to the
Borrower or such Subsidiary Guarantor, including but not limited to, Liens in
favor of growers arising pursuant to Article 9 (commencing with Section 55631),
Chapter 6, Division 20 of the California Food and Agricultural Code, as now in
effect or hereafter amended. Guarantor means each Subsidiary Guarantor and each other Person party to
a Guaranty in its capacity as a guarantor hereunder. Guarantor Documents means each Guaranty and all other certificates,
documents, agreements and instruments delivered to the Agent, the Issuing
Lender and the Lenders under or in connection with a Guaranty. Guaranty means each Guaranty of each Guarantor, delivered in connection
with the Original Closing), and any other guaranty under any separate agreement
executed by any Guarantor pursuant to which it guarantees the Obligations. Guaranty Obligation means, as applied to any Person, any direct or
indirect liability, contingent or otherwise, of that Person with respect to any
Indebtedness, lease, dividend, letter of credit or other obligation (the
primary obligations) of another Person (the primary obligor), including any
obligation of that Person (i) to purchase, repurchase or otherwise acquire such
primary obligations or any property constituting direct or indirect security
therefor, or (ii) to advance or provide funds (A) for the payment or discharge
of any such primary obligation, or (B) to maintain working capital or equity
capital of the primary obligor or otherwise to maintain the net worth or
solvency or any balance sheet item, level of income or financial condition of
the primary obligor, or (iii) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary obligation
of the ability of the primary obligor to make payment of such primary
obligation, (iv) in connection with any synthetic lease or other similar off
balance sheet lease transaction, or (v) otherwise to assure or hold harmless
the holder of any such primary obligation against loss in respect thereof. Hazardous Substances means any toxic or hazardous substances, materials,
wastes, contaminants or pollutants, including asbestos, PCBs, petroleum
products and byproducts, and any substances defined or listed as hazardous
substances, hazardous 12




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materials, hazardous wastes or toxic substances (or similarly
identified), regulated under or forming the basis for liability under any
applicable Environmental Law. Indebtedness means, for any Person: (i) all indebtedness or other
obligations of such Person for borrowed money or for the deferred purchase
price of property or services; (ii) all obligations evidenced by notes, bonds,
debentures or similar instruments, including obligations so evidenced incurred
in connection with the acquisition of property, assets or businesses; (iii) all
indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property);
(iv) all obligations under Capital Leases and Synthetic Lease Obligations; (v)
all reimbursement or other obligations of such Person under or in respect of
letters of credit and bankers acceptances, and all net obligations in respect
of Rate Contracts in an amount equal to the Swap Termination Values thereof;
(vi) all reimbursement or other obligations of such Person in respect of any
bank guaranties, shipside bonds, surety bonds and similar instruments issued
for the account of such Person or as to which such Person is otherwise liable
for reimbursement of drawings or payments; (vii) all Guaranty Obligations; and
(viii) all indebtedness of another Person secured by any Lien upon or in
property owned by the Person for whom Indebtedness is being determined, whether
or not such Person has assumed or become liable for the payment of such
indebtedness of such other Person. For all purposes hereof, the Indebtedness of
any Person shall include the Indebtedness of any partnership or joint venture
(other than a joint venture that is itself a corporation or limited liability
company) in which such Person is a general partner or a joint venturer, unless
such Indebtedness is expressly made non-recourse to such Person (subject only
to customary recourse exceptions acceptable to the Agent in its reasonable
discretion). The amount of any Capital Lease or Synthetic Lease Obligation as
of any date shall be deemed to be the amount of Attributable Indebtedness in
respect thereof as of such date. Insolvency Proceeding means, with respect to any Person, (i) any case,
action or proceeding before any court or other Governmental Authority relating
to the bankruptcy, reorganization, insolvency, liquidation, receivership,
dissolution, winding-up or relief from debt of such Person, or (ii) any general
assignment by such Person for the benefit of creditors, composition,
marshalling of assets for creditors, or other, similar arrangement in respect
of its creditors generally or any substantial portion of its creditors, in each
case undertaken under U.S. Federal, state or foreign law, including the
Bankruptcy Code. Intercreditor and Collateral Agency Agreement means the Intercreditor
and Collateral Agency Agreement among the Lenders, the holders of the Senior
Secured Notes, the Collateral Agent and the other parties thereto, delivered in
connection with the Original Closing. Interest Payment Date means a date specified for the payment of interest
pursuant to Section 4.01(c). Interest Period means, with respect to any Eurodollar Rate Loan, the
period determined in accordance with Section 4.01(b) applicable thereto. 13




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Internal Revenue Code means the Internal Revenue Code of 1986, including
(unless the context otherwise requires) any rules or regulations promulgated
thereunder. Inventory means all inventory (as such term is defined in the UCC).
For purposes of this Agreement, bulk wine shall be deemed Inventory regardless
of whether bulk wine is properly classified as inventory under the UCC. IRS means the Internal Revenue Service, or any successor thereto. ISP means, with respect to any Letter of Credit, the International
Standby Practices 1998 published by the Institute of International Banking Law
& Practice (or such later version thereof as may be in effect at the time of
issuance). Issuing Lender has the meaning set forth in the introduction to this
Agreement. L/C Advance means each Lenders participation in any L/C Unreimbursed
Draw in accordance with its Pro Rata Share. L/C Amendment Application means (i) an application form for amendments
of outstanding standby letters of credit as shall at any time be in use at the
Issuing Lender, as the Issuing Lender shall request and as shall be
satisfactory to the Agent. L/C Application means such application form for issuances of standby
letters of credit as shall at any time be in use at the Issuing Lender, as the
Issuing Lender shall request and as shall be satisfactory to the Agent. L/C Commitment has the meaning specified in subsection 3.01(a). L/C Obligations means at any time the sum of (a) the aggregate undrawn
amount of all Letters of Credit, plus (b) the amount of all unreimbursed
drawings under all Letters of Credit, including all L/C Unreimbursed Draws.
For all purposes of this Agreement, if on any date of determination a Letter of
Credit has expired by its terms but any amount may still be drawn thereunder by
reason of the operation of Rule 3.14 of the ISP, such Letter of Credit shall be
deemed to be outstanding in the amount so remaining available to be drawn. L/C-Related Documents means the Letters of Credit, the L/C Applications,
the L/C Amendment Applications and any other document, agreement and instrument
relating to any Letter of Credit, including any of the Issuing Lenders
standard form documents for letter of credit issuances. L/C Unreimbursed Draw means an extension of credit resulting from a
drawing under any Letter of Credit which shall not have been reimbursed on the
date when made nor converted into a Borrowing of Revolving Loans under Section
2.01(a). Lenders has the meaning specified in the introductory clause hereto.
References to the Lenders shall include references to Rabobank in its capacity
as the Issuing Lender and the Swingline Lender; for purposes of clarification
only, to the extent that Rabobank may have any rights or obligations in
addition to those of the Lenders due to its status as the 14




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Issuing Lender or the Swingline Lender, its status as such will be
specifically referenced. Unless the context otherwise clearly requires, the
Lenders shall include any such Person in its capacity as Swap Provider. Unless
the context otherwise clearly requires, references to any such Person as a
Lender shall also include any of such Persons Affiliates that may at any time
of determination be Swap Providers. Lending Office has the meaning set forth in Section 2.04. Letters of Credit means any standby letter of credit issued by the
Issuing Lender pursuant to Article III. Leverage Ratio has the meaning specified in subsection 10.02(a). Lien means any mortgage, deed of trust, pledge, security interest,
assignment, deposit arrangement, charge or encumbrance, lien (statutory or
other), or other preferential arrangement (including any conditional sale or
other title retention agreement, any financing lease having substantially the
same economic effect as any of the foregoing or any agreement to give any
security interest). Loan means an extension of credit, in the form of a Term Loan, Revolving
Loan, Swingline Loan or L/C Advance, by a Lender to the Borrower pursuant to
Article II or III. Loan Documents means this Agreement, the Notes, the Collateral
Documents, the Intercreditor and Collateral Agency Agreement, the Fee Letter,
each Guaranty, the Guarantor Documents, the Environmental Indemnity, any
documents evidencing or relating to Specified Swap Contracts and all other
certificates, documents, agreements and instruments delivered to the Agent, the
Issuing Lender and the Lenders under or in connection with this Agreement, and
all L/C-Related Documents. Majority Lenders means as at any time of determination Lenders then
holding in excess of 60% of the then aggregate sum of (i) the unused
Commitments at such time (for so long as the Commitments are in effect) plus
(ii) the unpaid principal amount of the Loans and participations in the L/C
Obligations and Swingline Loans at such time; provided, however , that any
Defaulting Lenders unused Commitments, Loans and participations shall be
excluded from the calculation of Majority Lenders. Material Adverse Effect means any event, matter, condition or
circumstance which (i) has or would reasonably be expected to have a material
adverse effect on the business, properties, results of operations or condition
(financial or otherwise) of the Borrower and its Subsidiaries taken as a whole;
(ii) would materially impair the ability of the Borrower, or any other Person
to perform or observe its obligations under or in respect of the Loan
Documents, or (iii) affects the legality, validity, binding effect or
enforceability of any of the Loan Documents or the perfection or priority of
any Lien granted to the Lenders, or the Collateral Agent or the Agent for the
benefit of the Lenders, under any of the Collateral Documents. Maximum Intercompany Loan Amount means the sum of (i) $35,000,000 plus
(ii) on each anniversary of the Original Closing Date, 10% of the Maximum
Intercompany Loan Amount in effect immediately prior to such anniversary. 15




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Minimum Amount has the meaning set forth in Section 2.06. Multiemployer Plan means a multiemployer plan as defined in Sections
3(37) and 4001(a)(3) of ERISA. Net Issuance Proceeds means, as to any issuance or other incurrence of
debt or 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. Net Proceeds means, as to any sale, transfer or other disposition of
assets (Disposition) by a Person, proceeds in cash, checks or other cash
equivalent financial instruments as and when received by such Person, net of:
(a) the direct costs relating to such Disposition excluding amounts payable to
such Person or any Affiliate of such Person, (b) sale, use or other transaction
taxes, and income taxes, paid or reasonably expected to be payable by such
Person as a direct result thereof, and (c) amounts required to be applied to
repay principal, interest and prepayment premiums and penalties on Indebtedness
secured by a Lien on the asset which is the subject of such Disposition. Net
Proceeds shall also include proceeds paid on account of any Event of Loss, net
of (i) all money actually applied or set aside within six months after the
receipt of such proceeds to repair, replace or reconstruct the damaged property
or property affected by the condemnation or taking, (ii) all of the costs and
expenses reasonably incurred in connection with the collection of such
proceeds, award or other payments, and (iii) any amounts retained by or paid to
parties having superior rights to such proceeds, awards or other payments. Notes means the Revolving Notes, the Swingline Note and the Term Notes. Notice means a Notice of Borrowing, a Notice of Conversion or
Continuation or a Notice of Prepayment. Notice of Borrowing has the meaning set forth in Section 2.02(a). Notice of Conversion or Continuation has the meaning set forth in
Section 4.05(c). Notice of Prepayment has the meaning set forth in Section 5.03(d). Obligations means the indebtedness, liabilities and other obligations of
the Borrower and the Guarantors to the Collateral Agent, the Agent or any
Lender under or in connection with the Loan Documents, including all Loans, all
interest accrued thereon, all fees due under this Agreement and all other
amounts payable by the Borrower to the Collateral Agent, the Agent or any
Lender thereunder or in connection therewith, whether now or hereafter existing
or arising, and whether due or to become due, absolute or contingent,
liquidated or unliquidated, determined or undetermined. OECD means the Organization for Economic Cooperation and Development. 16




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Operating Lease means, for any Person, any lease of any property of any
kind by that Person as lessee which is not a Capital Lease. Organization Documents means, (a) with respect to any corporation, the
certificate or articles of incorporation and the bylaws (or equivalent or
comparable constitutional documents with respect to any non-U.S. jurisdiction);
(b) with respect to any limited liability company, the articles of formation
and operating agreement; and (c) with respect to any partnership, joint
venture, trust or other form of business entity, the partnership, joint venture
or other applicable agreement of formation and any agreement, instrument,
filing or notice with respect thereto filed in connection with its formation
with the applicable Governmental Authority in the jurisdiction of its
formation, in each case as amended from time to time. Original Closing means the closing of the Existing Credit Agreement on
the Original Closing Date. Original Closing Date means April 19, 2002. Participant has the meaning set forth in Section 13.09(b). Participation Date has the meaning set forth in Section 3.03(c). Patent and Trademark Security Agreement means each Patent and Trademark
Security Agreement between the Borrower or a Subsidiary Guarantor and the
Collateral Agent, delivered in connection with the Original Closing. PBGC means the Pension Benefit Guaranty Corporation, or any successor
thereto. Pension Plan means any employee pension benefit plan covered by Title IV
of ERISA (other than a Multiemployer Plan) that is maintained for employees of
the Borrower, any Guarantor or any ERISA Affiliate or with regard to which the
Borrower, any Guarantor or an ERISA Affiliate is a contributing sponsor within
the meaning of Sections 4001(a)(13) or 4069 of ERISA. Permitted Investments means any of the following Dollar denominated
investments, maturing within one year from the date of acquisition, selected by
the Borrower: (i) marketable direct obligations issued or unconditionally guaranteed by
the United States government or issued by any agency thereof and backed by the
full faith and credit of the United States; (ii) marketable direct obligations issued by any state of the United
States or any political subdivision of any such state or any public
instrumentality thereof and, at the time of acquisition, having the highest
credit rating obtainable from either S&P or Moodys; (iii) commercial paper or corporate promissory notes bearing at the time
of acquisition the highest credit rating either of S&P or Moodys issued by
United States, 17




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Australian, Canadian, European or Japanese bank holding companies or
industrial or financial companies (other than an Affiliate of the Borrower or
any Guarantor); (iv) certificates of deposit issued by and bankers acceptances of and
interest bearing deposits with any Lender, or with any United States,
Australian, Canadian, European or Japanese commercial banks having capital and
surplus of at least $500,000,000 or the equivalent and which issues (or the
parent of which issues) commercial paper or other short term securities bearing
the highest credit rating obtainable from either S&P or Moodys; and (v) money market funds organized under the laws of the United States or
any state thereof that invest solely in any of the foregoing investments
permitted under clauses (i), (ii), (iii) and (iv). Permitted Liens means: (i) Liens in favor of the Lenders, or the Collateral Agent or the Agent
for the benefit of the Lenders, to secure the Obligations; (ii) the existing Liens listed in Schedule 4 or incurred in connection
with the extension, renewal or refinancing of the Indebtedness secured by such
existing Liens, provided that any extension, renewal or replacement Lien shall
be limited to the property encumbered by the existing Lien and the principal
amount of the Indebtedness being extended, renewed or refinanced does not
increase; (iii) Liens for taxes, fees, assessments or other governmental charges or
levies, either not delinquent or being contested in good faith by appropriate
proceedings and which are adequately reserved for in accordance with GAAP; (iv) Liens of materialmen, mechanics, warehousemen, artisans, carriers or
employees or other like Liens (including Growers Liens and Production Liens)
arising in the ordinary course of business and securing obligations either not
delinquent or being contested in good faith by appropriate proceedings which
are adequately reserved for in accordance with GAAP; (v) Liens consisting of deposits or pledges to secure the payment of
workers compensation, unemployment insurance or other social security benefits
or obligations, or to secure the performance of bids, trade contracts, leases
(other than Capital Leases), public or statutory obligations, surety or appeal
bonds or other obligations of a like nature incurred in the ordinary course of
business (other than for Indebtedness or any Liens arising under ERISA); (vi) easements, rights of way, servitudes or zoning or building
restrictions and other minor encumbrances on real property and irregularities
in the title to such property which do not in the aggregate materially impair
the use or value of such property or risk the loss or forfeiture of title
thereto; (vii) statutory landlords Liens under leases to which the Borrower or any
of its Subsidiaries is a party; 18




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(viii) Liens arising solely by virtue of any statutory or common law
provision relating to bankers liens, rights of set-off or similar rights and
remedies as to deposit accounts or other funds maintained with a creditor
depository institution; provided that (i) such deposit account is not a
dedicated cash collateral account and is not subject to restrictions against
access by the Borrower in excess of those set forth by regulations promulgated
by the FRB, and (ii) such deposit account is not intended by the Borrower or
any Subsidiary to provide collateral to the depository institution; (ix) Liens securing Indebtedness incurred by the Borrower or any
Subsidiary which is permitted under Section 10.04(a)(x); provided that (i) such
Liens do not at any time encumber any property other than the property financed
by such Indebtedness and (ii) the Indebtedness secured thereby does not exceed
the cost or fair market value, whichever is lower, of the property being
acquired on the date of acquisition; (x) Liens on specific tangible assets of Persons which become
Subsidiaries after the date of this Agreement; provided, however, that (A) such
Liens existed at the time the respective Persons became Subsidiaries and were
not created in anticipation thereof, (B) any such Lien does not by its terms
cover any assets after the time such Person becomes a Subsidiary which were not
covered immediately prior thereto, (C) any such Lien does not by its terms
secure any Indebtedness other than Indebtedness existing immediately prior to
the time such Person becomes a Subsidiary, and (D) such Indebtedness is
permitted by Section 10.04(a)(x); and (xi) Liens securing the Senior Secured Notes and Senior Secured Notes
Guaranties, subject to the Intercreditor and Collateral Agency Agreement. Permitted Preferred Stock means preferred stock of the Borrower, subject
to the following: such preferred stock shall not (a) have mandatory redemption
rights, or redemption at the option of the holder, sinking fund payments,
guaranteed return or exchange ability or conversions into debt instruments or
any other debt-like features other than any mandatory rights of redemption
effective not earlier than six months after the Final Maturity Date, and (b)
require the payment of any dividends thereon while any Event of Default exists
hereunder. Person means an individual, corporation, partnership, limited liability
company, joint venture, trust, unincorporated organization or any other entity
of whatever nature or any Governmental Authority. Plan means any employee pension benefit plan as defined in Section 3(2)
of ERISA (including any Multiemployer Plan) and any employee welfare benefit
plan, as defined in Section 3(1) of ERISA (including any plan providing
benefits to former employees or their survivors). Premises means any and all real property, including all buildings and
improvements now or hereafter located thereon and all appurtenances thereto,
now or hereafter owned, leased, occupied or used by the Borrower or any of its
Subsidiaries. Primary Trademarks means the following trademarks: ACACIA, CHALONE
VINEYARD, GAVILAN, SAGELANDS, STATON HILLS, MISTY RIDGE and PHOENIX. 19




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Principal Payment Date means a day on which the Borrower is required to
make a payment of principal pursuant to Section 5.02(b). Production Liens means statutory Liens securing the right of Persons who
have rendered services for the storage, protection, improvement, safekeeping,
carriage, alteration, repair, harvest or crushing of any grapes or Inventory,
including without limitation, artisans and service liens under California Civil
Code Section 3051, threshers liens under California Civil Code Section 3061,
and harvesters liens under California Civil Code Section 3061.5. Pro Rata Share means, as to any Lender at any time, the percentage
equivalent (expressed as a decimal, rounded to the ninth decimal place) at such
time of (a) in the case of the Revolving Commitments or the Revolving Loans,
such Lenders Revolving Commitment divided by the combined Revolving
Commitments of all Lenders (or, if all Revolving Commitments have been
terminated, the aggregate principal amount of such Lenders Revolving Loans
plus the its participations in the L/C Obligations and Swingline Loans divided
by the aggregate principal amount of the Revolving Loans and the participations
in L/C Obligations and Swingline Loans then held by all Lenders), (b) in the
case of the Term Commitments or the Term Loans, such Lenders Term Commitment
divided by the combined Term Commitments of all Lenders (or, if all Term
Commitments have been terminated, the aggregate principal amount of such
Lenders Term Loans divided by the aggregate principal amount of Term Loans
then held by all Lenders), and (c) in all other cases, such Lenders unused
Commitment plus its outstanding Loans and participations in the L/C Obligations
and Swingline Loans divided by the combined unused Commitments and the
outstanding Loans and participations in L/C Obligations and Swingline Loans of
all Lenders (or, if all Commitments have been terminated, the aggregate
principal amount of such Lenders Loans and participations in L/C Obligations
and Swingline Loans divided by the aggregate principal amount of Loans and
participations in L/C Obligations and Swingline Loans then held by all
Lenders). The initial Pro Rata Shares of each Lender are set forth opposite
such Lenders name in Schedule 1 under the heading Pro Rata Share or in the
Assignment and Assumption pursuant to which such Lender becomes a party hereto,
as applicable. Provenance Property means that certain real property in Napa County,
California, subject to the Deed of Trust executed by the Borrower on the
Amendment Closing Date. Rabobank has the meaning set forth in the introduction to this
Agreement. Rate Contracts means interest rate swaps, caps, floors and collars,
currency swaps, or other similar financial products designed to provide
protection against fluctuations in interest, currency or exchange rates. Receivable Debtor means any Person obligated on a Receivable. Receivables means all rights to payment arising out of the sale or lease
of goods or the performance of services in the ordinary and usual course of
business, however evidenced. Regulation D means Regulation D of the FRB. 20




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##### 



Regulatory Change has the meaning set forth in Section 6.03. Related Party has the meaning set forth in Section 10.04(k). Related Person has the meaning set forth in Section 13.04(b). Replacement Lender has the meaning set forth in Section 6.07. Required Notice Date has the meaning set forth in Section 2.07. Requirement of Law means, as to any Person, any law (statutory or
common), treaty, code, decree, order, rule or regulation or determination of an
arbitrator or of a Governmental Authority, in each case applicable to or
binding upon the Person or any of its property or to which the Person or any of
its property is subject. Responsible Officer means, with respect to any Person, the chief
executive officer, the president, the chief financial officer or the treasurer
of such Person, or any other senior officer of such Person having substantially
the same authority and responsibility; or, with respect to compliance with
financial covenants, the chief executive officer, the chief financial officer
or the treasurer of any such Person, or any other senior officer of such Person
involved principally in the financial administration or controllership function
of such Person and having substantially the same authority and responsibility.
Any document delivered hereunder that is signed by a Responsible Officer of a
Person shall be conclusively presumed to have been authorized by all necessary
corporate, partnership and/or other action on the part of such Person and such
Responsible Officer shall be conclusively presumed to have acted on behalf of
such Person. Revolving Commitment means, when used with reference to any Lender at
the time any determination thereof is to be made, the amount set forth opposite
the name of such Lender as its Revolving Commitment on Schedule 1, as from
time to time reduced pursuant to Section 5.01, or, where the context so
requires, the obligation of such Lender to make Revolving Loans up to such
amount on the terms and conditions set forth in this Agreement. The initial
aggregate Revolving Commitments of all the Lenders shall be $55,000,000, as the
same may from time to time be reduced pursuant to Section 5.01. Revolving Expiry Date means May 11, 2007. Revolving Loan has the meaning set forth in Section 2.01(a). Revolving Note means a Promissory Note of the Borrower payable to the
order of a Lender, in substantially the form of Exhibit G. SEC means the Securities and Exchange Commission, or any successor
thereto. Security Agreements means the Borrower and Subsidiary Guarantor Security
Agreement and the Edna Valley Security Agreement. 21




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Senior Noteholders means the noteholders from time to time holding one
or more of the Senior Secured Notes and in whose name such Senior Secured
Note(s) are registered in the register maintained by the Borrower pursuant to
the Senior Secured Note Documents. Senior Secured Note Documents means the note purchase agreement,
documents and agreements evidencing the Senior Secured Notes, including all
deeds of trust, mortgages, security agreements and other documents and
agreements purporting to grant a Lien on the assets of the Borrower or any
Subsidiary or any other Person to secure the obligations owing by the Borrower
or any other Person under the Senior Secured Notes and Senior Secured Notes
Guaranties. Senior Secured Notes means (a) the Borrowers $5,000,000 Adjustable Rate
Senior Guaranteed Notes, Series A, Due September 15, 2010; (b) the Borrowers
$10,000,000 Adjustable Rate Senior Guaranteed Notes, Series B, Due September
15, 2010; and (c) the Borrowers $15,000,000 Adjustable Rate Senior Guaranteed
Notes, Series C, Due September 15, 2010, as amended and restated on the
Original Closing Date, the Amendment Closing Date and from time to time
hereafter. Senior Secured Notes Guaranties means the Subsidiary Guarantee
Agreements entered into by the Subsidiary Guarantors in favor of the Senior
Noteholders to guaranty the Borrowers obligations under the Senior Secured
Notes and the other Senior Secured Note Documents. Shareholder Subordinated Debt means the Indebtedness of the Borrower
evidenced by (i) that certain Convertible Subordinated Promissory Note dated
August 27, 2002, made by the Borrower in favor of Les Domaines Baron de
Rothschild (Lafite) (DBR), in the original principal amount of $8,250,000 and
(ii) that certain Convertible Subordinated Promissory Note dated August 27,
2002, made by the Borrower in favor of SFI Intermediate Limited (SFI), in the
original principal amount of $2,750,000, which convertible subordinated
promissory notes were issued by the Borrower pursuant to that certain
Convertible Note Purchase Agreement dated as of August 27, 2002, among the
Borrower, DBR and SFI. SHW Intercompany Loan Amount means the sum of (i) $8,000,000 plus (ii)
on each anniversary of the Original Closing Date, 10% of the SHW Intercompany
Loan Amount in effect immediately prior to such anniversary. Solvent means, as to any Person at any time, that (i) the fair value of
the property of such Person is greater than the amount of such Persons
liabilities (including disputed, contingent and unliquidated liabilities) as
such value is established and liabilities evaluated for purposes of Section
101(32) of the Bankruptcy Code; (ii) the present fair saleable value of the
property of such Person is not less than the amount that will be required to
pay the probable liability of such Person on its debts as they become absolute
and matured; (iii) such Person is able to realize upon its property and pay its
debts and other liabilities (including disputed, contingent and unliquidated
liabilities) as they mature in the normal course of business; (iv) such Person
does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Persons ability to pay as such debts and liabilities
mature; and (v) such Person is 22




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not engaged in business or a transaction, and is not about to engage in
business or a transaction, for which such Persons property would constitute
unreasonably small capital. Specified Swap Contract means any Rate Contract made or entered into at
any time, or in effect at any time (whether heretofore or hereafter), whether
directly or indirectly, and whether as a result of assignment or transfer or
otherwise, between the Borrower and any Swap Provider which Rate Contract is or
was intended by the Borrower to have been entered into, in part or entirely,
for purposes of mitigating interest rate or currency exchange risk relating to
any Loan (which intent shall conclusively be deemed to exist if the Borrower so
represents to the Swap Provider in writing). Subordinated Debt means any Indebtedness of the Borrower or any
Subsidiary incurred after the Original Closing Date in accordance with Section
10.04(a)(xi). Subsidiary means any corporation, association, partnership, joint
venture or other business entity of which more than 50% of the voting stock or
other equity interest is owned directly or indirectly by any Person or one or
more of the other Subsidiaries of such Person or a combination thereof. Subsidiary Guarantor means each of Edna Valley Vineyard, Canoe Ridge
Vineyard L.L.C., Canoe Ridge Winery, Inc., SHW Equity Co., Staton Hills Winery
Company Limited and each other Subsidiary that becomes party to a Guaranty. Swap Provider means any Lender, or any Affiliate of any Lender, that is
at the time of determination party to a Rate Contract with the Borrower. Swap Termination Value means, in respect of any one or more Rate
Contracts, after taking into account the effect of any legally enforceable
netting agreement relating to such Rate Contracts, (i) for any date on or after
the date such Rate Contracts have been closed out and termination value(s)
determined in accordance therewith, such termination value(s), and (ii) for any
date prior to the date referenced in clause (a) the amount(s) determined as the
mark-to-market value(s) for such Rate Contracts, as determined by the Borrower
based upon one or more mid-market or other readily available quotations
provided by any recognized dealer in such Rate Contracts (which may include any
Lender). Swingline Commitment has the meaning specified in subsection 2.01(c). Swingline Lender has the meaning specified in the introduction to this
Agreement. Swingline Loan has the meaning specified in subsection 2.01(c). Swingline Note means a Promissory Note of the Borrower payable to the
order of the Swingline Lender, in substantially the form of Exhibit I. Synthetic Lease Obligation means the monetary obligation of a Person
under (a) a so-called synthetic, off-balance sheet or tax retention lease, or
(b) an agreement for the use or possession of property creating obligations
that do not appear on the balance sheet of such 23




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Person but which, upon the insolvency or bankruptcy of such Person, would
be characterized as the indebtedness of such Person (without regard to
accounting treatment). Taxes has the meaning set forth in Section 7.03(a). Term Commitment means, when used with reference to any Lender at the
time any determination thereof is to be made, the amount set forth opposite the
name of such Lender as its Term Commitment on Schedule 1 or, where the
context so requires, the obligation of such Lender to make a Term Loan up to
such amount on the terms and conditions set forth in this Agreement. The
aggregate Term Commitments of all the Lenders shall be $14,700,000. Termination Event means any of the following: (i) with respect to a Pension Plan, a reportable event described in
Section 4043 of ERISA and the regulations issued thereunder (other than a
reportable event not subject to the provisions for 30-day notice to the PBGC
under such regulations); (ii) the withdrawal of the Borrower, any Guarantor or an ERISA Affiliate
from a Pension Plan during a plan year in which the withdrawing employer was a
substantial employer as defined in Section 4001(a)(2) or 4062(e) of ERISA; (iii) the taking of any actions (including the filing of a notice of
intent to terminate) by the Borrower, any Guarantor, an ERISA Affiliate, the
PBGC, a Plan Administrator, or any other Person to terminate a Pension Plan or
the treatment of a Plan amendment as a termination of a Pension Plan under
Section 4041 of ERISA; (iv) any other event or condition which might constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee
to administer, any Pension Plan; or (v) the complete or partial withdrawal of the Borrower, any Guarantor or
an ERISA Affiliate from a Multiemployer Plan. Term Loan has the meaning set forth in Section 2.01(b). Term Note means a Promissory Note of the Borrower payable to the order
of a Lender, in substantially the form of Exhibit J. UCC means the Uniform Commercial Code of the jurisdiction the law of
which governs the Loan Document in which such term is used or the attachment,
perfection or priority of the Lien on any Collateral. Unfunded Accrued Benefits means the excess of a Pension Plans accrued
benefits, as defined in Section 3(23) of ERISA, over the current value of that
Plans assets, as defined in Section 3(26) of ERISA. 24




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Update Certificate means a certificate of a Responsible Officer of the
Borrower in substantially the form of Exhibit N, with such changes thereto as
the Agent or any Lender may from time to time reasonably request. Wine Bottling Inventory means Borrowers bottles, capsules, corks and
other supplies used in its wine production, bottling and packaging. Wine Dividend Credits means annual credits provided by the Borrower to
shareholders owning 100 or more shares of the Borrowers common stock, which
credits may be applied by each such shareholder, for a period not to exceed one
year following such shareholders receipt of such credits, towards up to 50% of
the purchase price of mail-order or other direct purchases of wine from the
Borrower. SECTION 1.02 Accounting Principles. (a) Accounting Terms. Unless otherwise defined or the context otherwise
requires, all accounting terms not expressly defined herein shall be construed,
and all accounting determinations and computations required under the Loan
Documents shall be made, in accordance with GAAP, consistently applied. (b) GAAP Changes. If GAAP shall have been modified after the Amendment
Closing Date and the application of such modified GAAP shall have a material
effect on any financial computations hereunder (including the computations
required for the purpose of determining compliance with the covenants set forth
in Section 10.02), then, at the request of the Agent or the Majority Lenders,
such computations shall be made and the financial statements, certificates and
reports due hereunder shall be prepared, and all accounting terms not otherwise
defined herein shall be construed, in accordance with GAAP as in effect prior
to such modification, unless and until the Majority Lenders and the Borrower
shall have agreed upon the terms of the application of such modified GAAP. (c) Fiscal Year and Fiscal Quarter. References herein to fiscal
year and fiscal quarter refer to such fiscal periods of the Borrower. SECTION 1.03 Interpretation. In the Loan Documents, except to the extent
the context otherwise requires: (i) Any reference to an Article, a Section, a Schedule or an Exhibit is a
reference to an article or section thereof, or a schedule or an exhibit
thereto, respectively, and to a subsection or a clause is, unless otherwise
stated, a reference to a subsection or a clause of the Section or subsection in
which the reference appears. (ii) The words hereof, herein, hereto, hereunder and the like mean
and refer to this Agreement or any other Loan Document as a whole and not
merely to the specific Article, Section, subsection, paragraph or clause in
which the respective word appears. (iii) The meaning of defined terms shall be equally applicable to both the
singular and plural forms of the terms defined. 25




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(iv) The words including, includes and include shall be deemed to be
followed by the words without limitation. (v) References to agreements and other contractual instruments shall be
deemed to include all subsequent amendments and other modifications thereto,
but only to the extent such amendments and other modifications are not
prohibited by the terms of the Loan Documents. (vi) References to statutes or regulations are to be construed as
including all statutory and regulatory provisions consolidating, amending or
replacing the statute or regulation referred to. (vii) Any table of contents, captions and headings are for convenience of
reference only and shall not affect the construction of this Agreement or any
other Loan Document. (viii) In the computation of periods of time from a specified date to a
later specified date, the word from means from and including; the words
to and until each mean to but excluding; and the word through means to
and including. (ix) The use of a word of any gender shall include each of the masculine,
feminine and neuter genders. (x) This Agreement and the other Loan Documents are the result of
negotiations among the Agent, the Borrower and the other parties, have been
reviewed by counsel to the Agent, the Borrower and such other parties, and are
the products of all parties. Accordingly, they shall not be construed against
the Lenders or the Agent merely because of the Agents or Lenders involvement
in their preparation. ARTICLE II
THE LOANS SECTION 2.01 The Loans. (a) Revolving Loans. Each Lender severally agrees, on the terms and
conditions set forth in this Agreement, to make revolving loans (each a
Revolving Loan and, collectively, the Revolving Loans) to the Borrower from
time to time on any Business Day during the period from the Amendment Closing
Date until the Revolving Expiry Date, in an aggregate principal amount up
to but not exceeding at any time outstanding such Lenders Revolving
Commitment; provided, that (i) the Effective Amount of all Revolving Loans plus
the Effective Amount of all Swingline Loans plus the Effective Amount of all
L/C Obligations shall not exceed the aggregate Revolving Commitments and (ii)
the Effective Amount of all Revolving Loans plus the Effective Amount of all
Swingline Loans plus the Effective Amount of all L/C Obligations shall not
exceed the Borrowing Base then in effect; and provided further, that the
Effective Amount of the Revolving Loans of any Lender plus the participation of
such Lender in the Effective Amount of all Swingline Loans and L/C Obligations
shall not exceed such Lenders Revolving Commitment. Within the foregoing
limits and subject to the other 26




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terms and conditions hereof, during such period
the Borrower may borrow, repay the Revolving Loans in whole or in part, and
reborrow, all in accordance with the terms and conditions hereof. (b) Term Loans. Each Lender severally agrees, on the terms and conditions
set forth in this Agreement, to make a term loan (each a Term Loan and,
collectively, the Term Loans) to the Borrower on the Amendment Closing Date,
in a principal amount up to but not exceeding such Lenders Term Commitment.
Any amount of the Term Loans repaid may not be reborrowed. (c) Swingline Loans. The Swingline Lender agrees, on the terms and
conditions set forth in this Agreement, to make a portion of the Revolving
Commitment available to the Borrower by making swingline loans denominated in
Dollars (individually, a Swingline Loan, and, collectively, the Swingline
Loans) to the Borrower on any Business Day during the period from the
Amendment Closing Date to the Revolving Expiry Date in an aggregate principal
amount at any one time outstanding not to exceed $5,000,000, notwithstanding
the fact that such Swingline Loans, when aggregated with any other Credit
Extensions made by or participated in by the Swingline Lender, may exceed the
Swingline Lenders Revolving Commitment (the amount of such commitment of the
Swingline Lender to make Swingline Loans to the Company pursuant to this
subsection 2.01(c), as the same shall be reduced pursuant to Section 5.01, the
Swingline Lenders Swingline Commitment); provided that at no time shall (i)
the sum of the Effective Amount of all Swingline Loans plus the Effective
Amount of all Revolving Loans plus the Effective Amount of all L/C Obligations
exceed the combined Revolving Commitments, or (ii) the Effective Amount of all
Swingline Loans exceed the Swingline Commitment. Additionally, no more than
one Swingline Loan may be outstanding at any one time, and all Swingline Loans
shall at all times be Base Rate Loans or accrue interest at such other rate as
may be agreed to by the Swingline Lender and the Borrower. Within the
foregoing limits, and subject to the other terms and conditions hereof, the
Borrower may borrow, repay the Swingline Loans in whole or in part, and
reborrow, all in accordance with the terms and conditions hereof. SECTION 2.02 Borrowing Procedure  Revolving Loans and Term Loans. (a) Notice to the Agent. Each Borrowing of Revolving Loans or Term Loans shall be made on a
Business Day upon written or telephonic notice (in the latter case to be
confirmed promptly in writing) from the Borrower to the Agent, which notice
shall be received by the Agent not later than 1:00 p.m. (New York time) on the
Required Notice Date. Each such notice, except as provided in Sections 6.01
and 6.04, shall be irrevocable and binding on the Borrower, shall be in
substantially the form of Exhibit K (a Notice of Borrowing) and shall specify
whether the Borrowing consists of Base Rate Loans or Eurodollar Rate Loans and
the other information required thereby. Notwithstanding the foregoing, the
Borrower may give the Agent standing instructions in writing to make a
Swingline Loan on the date any interest is due hereunder, in the amount of such
interest, provided that the making of the Swingline Loan would otherwise be
permissible under Section 2.01(c) and Section 8.02, and prior to the rescission
in writing by the Borrower of such standing instructions, no further notice
shall be necessary under this Section 2.02 with respect to Borrowings of
Swingline Loans to pay accrued and unpaid interest owing hereunder. 27




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(b) Notice to the Lenders. The Agent shall give each Lender prompt notice
by telephone (confirmed promptly in writing) or by facsimile of each Borrowing
of Revolving Loans or Term Loans, specifying the information contained in the
Borrowers Notice and such Lenders Pro Rata Share of the Borrowing. On the
date of each such Borrowing, each Lender shall make available such Lenders Pro
Rata Share of such Borrowing, in same day or immediately available funds, to
the Agent for the Agents Account, not later than 3:00 p.m. (New York time);
provided, however, that in lieu of the Lenders making such funds available to
the Borrower for the Borrowing of the Term Loans on the Amendment Closing Date,
such funds may be retained by the Lenders and applied to the repayment of the
principal amount of the Term Loans outstanding under the Existing Credit
Agreement on the Amendment Closing Date, whereupon such prior Term Loans shall
be deemed to be repaid and refinanced from the proceeds of the Borrowing of the
Term Loans on the Amendment Closing Date. Upon fulfillment of the applicable
conditions set forth in Article VIII and after receipt by the Agent of any such
funds, and unless other payment instructions are provided by the Borrower, the
Agent shall make such funds available to the Borrower by crediting the
Borrowers Account with same day or immediately available funds on such
Borrowing date. (c) Non-Receipt of Funds. Unless the Agent shall have received notice
from a Lender prior to the date of any Borrowing of Revolving Loans or Term
Loans that such Lender shall not make available to the Agent such Lenders Pro
Rata Share of such Borrowing, the Agent may assume that such Lender has made
such portion available to the Agent on the date of such Borrowing in accordance
with Section 2.02(b) and the Agent may, in reliance upon such assumption, make
available to the Borrower on such date a corresponding amount. If and to the
extent such Lender shall not have so made such Pro Rata Share available to the
Agent, and the Agent in such circumstances shall have made available to the
Borrower such amount, such Lender agrees to repay to the Agent forthwith on
demand such corresponding amount together with interest thereon, for each day
from the date such amount is made available to the Borrower until the date such
amount is repaid to the Agent, at the Federal Funds Rate. If such Lender shall
repay to the Agent such corresponding amount, such amount so repaid shall constitute
such Lenders Loan as part of such Borrowing for purposes of this Agreement.
If such amount is not made available by such Lender to the Agent on the
Business Day following the Borrowing date, the Agent shall notify the Borrower
of such failure to fund and, upon demand by the Agent, the Borrower shall pay
such amount to the Agent for the Agents Account, together with interest
thereon for each day elapsed since the date of such Borrowing, at a rate per
annum equal to the interest rate applicable at the time to the Loans comprising
such Borrowing. SECTION 2.03 Borrowing ProcedureSwingline Loans. (a) Notice to the Agent. The Borrower shall provide the Agent irrevocable
written notice (including notice via facsimile confirmed immediately by a
telephone call) in the form of a Notice of Borrowing of any Swingline Loan
requested hereunder (which notice must be received by the Agent prior to 1:00
p.m. (New York time) on the requested Borrowing date) specifying (i) the amount
to be borrowed, which shall be in a Minimum Amount (unless otherwise agreed by
the Swingline Lender), and (ii) the requested Borrowing date, which shall be a
Business Day. Unless the Swingline Lender has received notice prior to 2:00
p.m. (New York time) on such Borrowing date from the Agent (including at the
request of any Lender) (A) directing the Swingline Lender not to make the
requested Swingline Loan as a result of the 28




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limitations set forth in the
proviso set forth in the first sentence of subsection 2.01(a); or (B) that one
or more conditions specified in Article VIII are not then satisfied; then,
subject to the terms and conditions hereof, the Swingline Lender will, not
later than 3:00 p.m. (New York time) on the Borrowing date specified in such
Notice of Borrowing, make the amount of its Swingline Loan available to the
Borrower by crediting the Borrowers Account with same day or immediately
available funds on such Borrowing date. (b) Participations in Swingline Loans. If: (1) any Swingline Loan shall remain outstanding at 4:00 p.m. (New York
time) on the Business Day immediately prior to the date on which such Swingline
Loan is due and by such time on such Business Day the Agent shall have received
neither: (A) a Notice of Borrowing delivered pursuant to Section 2.02
requesting that Revolving Loans be made pursuant to subsection 2.01 on such due
date in an amount at least equal to the aggregate principal amount of such
Swingline Loan; nor (B) any other notice indicating the Borrowers intent to
repay such Swingline Loan with funds obtained from other sources; or (2) any Swingline Loans shall remain outstanding during the existence of a
Default or Event of Default and the Swingline Lender shall in its sole
discretion notify the Agent that the Swingline Lender desires that such
Swingline Loans be converted into Revolving Loans; then the Agent shall be deemed to have received a Notice of Borrowing from the
Borrower pursuant to Section 2.02 requesting that Base Rate Loans be made
pursuant to subsection 2.01(a) on such due date (in the case of the
circumstances described in clause (1) above) or on the first Business Day
subsequent to the date of such notice from the Swingline Lender (in the case of
the circumstances described in clause (2) above) in an amount equal to the
aggregate amount of such Swingline Loans, and the procedures set forth in
subsections 2.02(b) shall be followed in making such Base Rate Loans; provided,
that such Base Rate Loans shall be made notwithstanding the Borrowers failure
to comply with Section 8.02; and provided, further, that if a Borrowing of
Revolving Loans becomes legally impracticable and if so required by the
Swingline Lender at the time such Revolving Loans are required to be made by
the Lenders in accordance with this subsection 2.03(c), each Lender agrees that
in lieu of making Revolving Loans as described in this subsection 2.03(c), such
Lender shall purchase a participation from the Swingline Lender in the
applicable Swingline Loans in an amount equal to such Lenders Pro Rata Share
of such Swingline Loans, and the procedures set forth in subsections 2.02(b)
shall be followed in connection with the purchases of such participations.
Upon such purchases of participations the prepayment requirements of this
subsection 2.03(c) shall be deemed waived with respect to such Swingline Loans.
If any Swingline Loan shall remain outstanding in lieu of a Borrowing of
Revolving Loans as provided above, interest on such Swingline Loan shall be due
and payable on demand and shall accrue at the rate then applicable to Base Rate
Loans. The proceeds of such Base Rate Loans, or participations purchased,
shall be applied to repay such Swingline Loans. A copy of each notice given by
the Agent to the Lenders pursuant to this subsection 2.03(c) with respect to
the making of Revolving Loans, or the purchases of participations, shall be
promptly delivered by the Agent to the Borrower. Each Lenders obligation in
accordance with this Agreement to make the Revolving Loans, or purchase the
participations, as contemplated by this subsection 2.03(c), shall be absolute
and unconditional and shall not be affected by any 29




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circumstance, including (1)
any set-off, counterclaim, recoupment, defense or other right which such Lender
may have against the Swingline Lender, the Borrower or any other Person for any
reason whatsoever; (2) the occurrence or continuance of a Default, an Event of
Default or a Material Adverse Effect; or (3) any other circumstance, happening
or event whatsoever, whether or not similar to any of the foregoing. SECTION 2.04 Lending Offices. The Loans made by each Lender may be made
from and maintained at such offices of such Lender (each a Lending Office) as
such Lender may from time to time designate (whether or not such office is
specified on Schedule 2). A Lender shall not elect a Lending Office (other
than that set forth on Schedule 2) that, at the time of making such election,
increases the amounts which would have been payable by the Borrower to such
Lender under this Agreement in the absence of such election. With respect to
Eurodollar Rate Loans made from and maintained at any Lenders non-U.S.
offices, the obligation of the Borrower to repay such Eurodollar Rate Loans
shall nevertheless be to such Lender and shall, for all purposes of this
Agreement (including for purposes of the definition of the term Majority
Lenders) be deemed made or maintained by it, for the account of any such
office; provided that Borrower shall not be required to pay any increased
amounts that would not have been payable to any such Lender absent such
election. SECTION 2.05 Evidence of Indebtedness. The Loans made by each Lender shall be evidenced by
one or more loan accounts maintained by such Lender in accordance with its usual practices. The
loan accounts maintained by the Agent and each such Lender shall be rebuttable presumptive
evidence of the amount of the Loans made by such Lender to the Borrower and the interest and
payments thereon. Any failure so to record or any error in doing so shall not, however, limit
or otherwise affect the obligation of the Borrower hereunder to pay any amount owing with
respect to the Loans. At the request of any Lender, (i) as additional evidence of the
Indebtedness of the Borrower to such Lender resulting from the Revolving Loans made by such
Lender, the Borrower shall execute and deliver for account of such Lender pursuant to
Article VIII a Revolving Note, dated the Amendment Closing Date, setting forth such Lenders
Revolving Commitment as the maximum principal amount thereof, and (ii) as additional evidence of
the Indebtedness of the Borrower to such Lender resulting from the Term Loan made by such
Lender, the Borrower shall execute and deliver for account of such Lender pursuant to
Article VIII a Term Note, dated the Amendment Closing Date, in the principal amount of the Term
Loan made by such Lender on the Amendment Closing Date. At the request of the Swingline Lender,
as additional evidence of the Indebtedness of the Borrower to the Swingline Lender resulting
from the Swingline Loans made by the Swingline Lender, the Borrower shall execute and deliver
for the account of the Swingline Lender pursuant to Article VIII a Swingline Note, dated the
Amendment Closing Date, setting forth the Swingline Lenders Swingline Commitment as the maximum
principal amount thereof. SECTION 2.06 Minimum Amounts. Any Borrowing, conversion, continuation, Commitment reduction
or prepayment of Revolving Loans or Term Loans hereunder shall be in an aggregate amount
determined as follows (each such specified amount a Minimum Amount): (i) any Borrowing or
partial prepayment of Base Rate Loans (other than Swingline Loans) shall be in the amount of
$1,000,000 or a greater amount which is an integral multiple of $100,000; (ii) any Borrowing,
continuation or partial prepayment of, or conversion into, Eurodollar Rate Loans shall be in the
amount of $1,000,000 or a greater amount which is an 30




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integral multiple of
$100,000; (iii) any Borrowing or partial prepayment of Swingline Loans shall be
in the minimum amount of $100,000 or a greater amount which is an integral
multiple of $10,000; and (iv) any partial Commitment reduction under Section
5.01(a) shall be in the amount of $1,000,000 or a greater amount which is an
integral multiple of $100,000. SECTION 2.07 Required Notice. Any Notice hereunder shall be given not
later than the date determined as follows (each such specified date a Required
Notice Date): (i) any Notice with respect to a Borrowing of, or conversion
into, Base Rate Loans (other than Swingline Loans) shall be given at least one
Business Day prior to the date of the proposed Borrowing or conversion; (ii)
any Notice with respect to any Borrowing or continuation of, or conversion
into, Eurodollar Rate Loans shall be given at least three Business Days prior
to the date of the proposed Borrowing, conversion or continuation; (iii) any
Notice with respect to a Borrowing or full or partial prepayment of Swingline
Loans shall be given not later than the date of the proposed Borrowing or
prepayment; (iv) any Notice with respect to any prepayment under Section
5.03(a) (other than with respect to Swingline Loans) or Commitment reduction
under Section 5.01(a) shall, except as otherwise provided in Section 5.03(b),
be given at least three Business Days prior to the proposed prepayment or
reduction date; (v) any notice with respect to the issuance of any Letter of
Credit shall, except to the extent the Issuing Lender may agree in a particular
instance to a shorter notice period in its sole and absolute discretion, be
given at least two Business Days prior to the proposed issuance date; and (vi)
any notice with respect to the amendment or renewal of any Letter of Credit
shall, except to the extent the Issuing Lender may agree in a particular
instance to a shorter notice period in its sole and absolute discretion, be
given at least two Business Days prior to the proposed amendment or renewal
date. ARTICLE III
THE LETTERS OF CREDIT SECTION 3.01 The Letter of Credit Subfacility. (a) Letters of Credit. On the terms and conditions hereinafter set forth,
(i) the Issuing Lender hereby agrees (A) from time to time on any Business Day
during the period from the Amendment Closing Date to the Revolving Expiry Date
to issue Letters of Credit for the account of the Borrower in accordance with
Section 3.02(a), and to amend or renew Letters of Credit previously issued by
it, in accordance with subsections 3.02(c) and 3.02(d), in an aggregate amount
not to exceed at any time $5,000,000 (the L/C Commitment), and (B) to honor
drafts under the Letters of Credit; and (ii) the Lenders severally agree to participate in
Letters of Credit issued for the account of the Borrower; provided, that the
Issuing Lender shall not be obligated to issue any Letter of Credit if (1) the
Effective Amount of all L/C Obligations plus the Effective Amount of all
Revolving Loans plus the Effective Amount of all Swingline Loans shall exceed
the aggregate Revolving Commitments, (2) the participation of any Lender in the
Effective Amount of all L/C Obligations plus the participation of such Lender
in the Effective Amount of all Swingline Loans plus the Effective Amount of the
Revolving Loans of such Lender shall exceed such Lenders Revolving Commitment,
(3) the Effective Amount of L/C Obligations shall exceed the L/C Commitment or
(4) the Effective Amount of all L/C Obligations plus the Effective Amount of
all Revolving Loans plus the Effective Amount of all Swingline Loans shall
exceed the Borrowing Base then in effect. Within the foregoing limits, 31




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and subject to the other terms and conditions hereof, the Borrowers ability to
obtain Letters of Credit shall be fully revolving, and, accordingly, the
Borrower may, during the foregoing period, obtain Letters of Credit to replace
Letters of Credit which have expired or which have been drawn upon and
reimbursed. (b) Conditions to Issuance. The Issuing Lender shall be under no
obligation to issue, amend or reinstate any Letter of Credit if: (i) any order, judgment or decree of any Governmental Authority or
arbitrator shall by its terms purport to enjoin or restrain the Issuing Lender
from issuing, amending or reinstating such Letter of Credit, or any law, rule
or regulation applicable to the Issuing Lender or any request, guideline or
directive (whether or not having the force of law) from any Governmental
Authority with jurisdiction over the Issuing Lender shall prohibit, or request
that the Issuing Lender refrain from, the issuance, amendment or reinstatement
of letters of credit generally or such Letter of Credit in particular or shall
impose upon the Issuing Lender with respect to such Letter of Credit any
restriction, reserve or capital requirement (for which the Issuing Lender is
not otherwise compensated) not in effect on the Amendment Closing Date, or
shall impose upon the Issuing Lender any unreimbursed loss, cost or expense
which was not applicable on the Amendment Closing Date and which the Issuing
Lender in good faith deems material to it; (ii) the Issuing Lender has received written notice from any Lender, the
Agent or the Borrower, at least one Business Day prior to the requested date of
issuance, amendment or reinstatement of such Letter of Credit, that one or more
of the applicable conditions contained in Article VIII is not then satisfied; (iii) the expiry date of any requested Letter of Credit is (A) more than
one year after the date of issuance, unless the Majority Lenders have approved
such expiry date in writing, provided that a Letter of Credit may state that
the expiry date thereof may be extended for an additional term as shall be
satisfactory to the Issuing Lender (either upon prior notice or automatically)
so long as the next succeeding additional term at any time is not more than one
year; or (B) after the Revolving Expiry Date, unless all of the Lenders have
approved such expiry date in writing and such Letter of Credit is fully cash
collateralized; (iv) any requested Letter of Credit does not provide for drafts, or is not
otherwise in form and substance acceptable to the Issuing Lender, or the
issuance, amendment or renewal of a Letter of Credit shall violate any
applicable policies of the Issuing Lender; or (v) such Letter of Credit is denominated in a currency other than dollars. SECTION 3.02 Issuance, Amendment and Renewal of Letters of Credit. (a) Notice to Issuing Lender of Issuance Request. Each Letter of Credit
shall be issued upon the irrevocable written request of the Borrower received
by the Issuing Lender (with a copy sent by the Borrower to the Agent) not later
than the Required Notice Date. Each such request for issuance of a Letter of
Credit shall be in writing, in the form of an L/C Application, and shall
specify in form and detail satisfactory to the Issuing Lender: (i) the
proposed date of issuance of the Letter of Credit (which shall be a Business
Day); (ii) the face 32




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amount of the Letter of Credit; (iii) the expiry date of
the Letter of Credit; (iv) the name and address of the beneficiary thereof; (v)
the documents to be presented by the beneficiary of the Letter of Credit in
case of any drawing thereunder; (vi) the full text of any certificate to be
presented by the beneficiary in case of any drawing thereunder; and (vii) such
other matters as the Issuing Lender may require. (b) Issuance of Letters of Credit. At least two Business Days prior to
the issuance of any Letter of Credit or any amendment or renewal of any Letter
of Credit, the Issuing Lender shall confirm with the Agent (by telephone or in
writing) that the Agent has received a copy of the L/C Application or L/C
Amendment Application from the Borrower and, if not, the Issuing Lender will
provide the Agent with a copy thereof. Unless the Issuing Lender has received
notice on or before the Business Day immediately preceding the date the Issuing
Lender is to issue, amend or renew a requested Letter of Credit from the Agent
(i) directing the Issuing Lender not to issue, amend or renew such Letter of
Credit because such issuance, amendment or renewal is not then permitted under
Section 3.01(a) as a result of the limitations set forth in clauses (1) through
(4) thereof or Section 3.01(b); or (ii) that one or more conditions specified
in Article VIII are not then satisfied; then, subject to the terms and
conditions hereof, the Issuing Lender shall, on the requested date, issue a
Letter of Credit for the account of the Borrower or amend or renew a Letter of
Credit, as the case may be, in accordance with the Issuing Lenders usual and
customary business practices. (c) Notice to Issuing Lender of Amendment Request. From time to time
while a Letter of Credit is outstanding and prior to the Revolving Expiry Date,
the Issuing Lender shall, upon the written request of the Borrower received by
the Issuing Lender (with a copy sent by the Borrower to the Agent) not later
than the Required Notice Date, amend any Letter of Credit issued by it. Each
such request for amendment of a Letter of Credit shall be made in writing, in
the form of an L/C Amendment Application, and shall specify in form and detail
satisfactory to the Issuing Lender: (i) the Letter of Credit to be amended;
(ii) the proposed date of amendment of the Letter of Credit (which shall be a
Business Day); (iii) the nature of the proposed amendment; and (iv) such other
matters as the Issuing Lender may require. The Issuing Lender shall be under
no obligation to amend any
Letter of Credit, and shall not permit the amendment of a Letter of
Credit, if: (A) the Issuing Lender would have no obligation at such time to
issue such Letter of Credit in its amended form under the terms of this
Agreement; or (B) the beneficiary of any such Letter of Credit does not accept
the proposed amendment to the Letter of Credit. (d) Notice to Issuing Lender of Renewal Request. The Issuing Lender and
the Lenders agree that, while a Letter of Credit is outstanding and prior to
the Revolving Expiry Date, at the option of the Borrower and upon the written
request of the Borrower received by the Issuing Lender (with a copy sent by the
Borrower to the Agent) not later than the Required Notice Date, the Issuing
Lender shall be entitled to authorize the automatic renewal of any Letter of
Credit issued by it. Each such request for renewal of a Letter of Credit shall
be made in writing, in the form of an L/C Amendment Application, and shall
specify in form and detail satisfactory to the Issuing Lender: (i) the Letter
of Credit to be renewed; (ii) the proposed date of notification of renewal of
the Letter of Credit (which shall be a Business Day); (iii) the revised expiry
date of the Letter of Credit; and (iv) such other matters as the Issuing Lender
may require. The Issuing Lender shall be under no obligation so to renew any
Letter of Credit, and shall not 33




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permit any renewal (including any automatic
renewal of a Letter of Credit), if: (A) the Issuing Lender would have no
obligation at such time to issue or amend such Letter of Credit in its renewed
form under the terms of this Agreement; or (B) the beneficiary of any such
Letter of Credit does not accept the proposed renewal of the Letter of Credit.
If any outstanding Letter of Credit shall provide that it shall be
automatically renewed unless the beneficiary thereof receives notice from the
Issuing Lender that such Letter of Credit shall not be renewed, and if at the
time of renewal the Issuing Lender would be entitled to authorize the automatic
renewal of such Letter of Credit in accordance with this subsection (d) upon
the request of the Borrower but the Issuing Lender shall not have received any
L/C Amendment Application from the Borrower with respect to such renewal or
other written direction by the Borrower with respect thereto, the Issuing
Lender shall nonetheless be permitted to allow such Letter of Credit to renew,
and the Borrower and the Lenders hereby authorize such renewal, and,
accordingly, the Issuing Lender shall be deemed to have received an L/C
Amendment Application from the Borrower requesting such renewal. (e) Expiry of Letters of Credit. The Issuing Lender may, at its election
(or shall, when required by the Agent at the direction of the Majority
Lenders), deliver any notices of termination or other communications to any
Letter of Credit beneficiary or transferee, or take any other action as
necessary or appropriate, at any time and from time to time, in order to cause
the expiry date of such Letter of Credit to be a date not later than the
Revolving Expiry Date, unless such later date has been previously approved by
the Agent and all the Lenders in writing and such Letter of Credit is fully
cash collateralized. (f) Conflicts with L/C-Related Documents. This Agreement shall control in
the event of any conflict with any L/C-Related Document (other than any Letter
of Credit). (g) Delivery of Copies of Letters of Credit. The Issuing Lender shall
also deliver to the Agent, concurrently with or promptly following its delivery
of a Letter of Credit, or amendment to or renewal of a Letter of Credit, to an
advising bank or a beneficiary, a true and complete copy of each such Letter of
Credit or amendment to or renewal of a Letter of Credit. (h) Notices to Lenders. The Agent shall promptly notify the Lenders of
the issuance, amendment or renewal of a Letter of Credit hereunder (including
the date thereof and the amount, expiry and reference number of such Letter of
Credit). SECTION 3.03 Participations, Drawings and Reimbursements. (a) Participations of Lenders in Additional Letters of Credit.
Immediately upon the issuance of each Letter of Credit, the Issuing Lender
shall be deemed irrevocably to have sold and transferred to each Lender without
recourse or warranty, and each Lender shall be deemed to, and hereby
irrevocably and unconditionally agrees to, purchase and accept from the Issuing
Lender, for such Lenders own account and risk, an undivided interest and a
participation in such Letter of Credit and each drawing thereunder in an amount
equal to the product of (i) the Pro Rata Share of such Lender, times (ii) the
maximum amount available to be drawn under such Letter of Credit and the amount
of such drawing, respectively. For purposes of Section 3.01(a), each issuance
of a Letter of Credit shall be deemed to utilize the Revolving Commitment of
each Lender by an amount equal to the amount of such participation. 34




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(b) Drawing and Reimbursement. In the event of any request for a drawing
under a Letter of Credit by the beneficiary thereof, the Issuing Lender shall
immediately notify the Borrower and the Agent. The Borrower shall reimburse
the Issuing Lender prior to 1:00 p.m. (New York time), on each date that any
amount is paid by the Issuing Lender under any Letter of Credit, in an amount
equal to the amount paid by the Issuing Lender on such date under such Letter
of Credit. In the event the Borrower shall fail to reimburse the Issuing
Lender for the full amount of any drawing under any Letter of Credit by 1:00
p.m. (New York time) on the same date such drawing is honored by the Issuing
Lender, the Issuing Lender shall promptly notify the Agent and the Agent shall
promptly notify each Lender thereof (including the amount of the drawing and
such Lenders Pro Rata Share thereof), and the Borrower shall be deemed to have
requested that Base Rate Loans be made by the Lenders to be disbursed on the
date of payment by the Issuing Lender under such Letter of Credit, subject to
the amount of the unutilized portion of the Revolving Commitment of each Lender
and subject to the conditions set forth in clauses (b) and (c) of Section 8.02.
The Borrower hereby directs that the proceeds of any such Loans deemed to be
made by it shall be used to pay its reimbursement obligations in respect of any
such drawing. Solely for the purposes of making such Loans, the Minimum Amount
limitations set forth in Section 2.06 shall not be applicable. Any notice
given by the Issuing Lender or the Agent pursuant hereto may be telephonic if
immediately confirmed in writing; provided that the lack of
such an immediate confirmation shall not affect the conclusiveness or
binding effect of such notice. (c) Funding by Lenders. Each Lender shall upon receipt of any notice
pursuant to subsection (b) make available to the Agent for the account of the
Issuing Lender an amount in Dollars and in same day or immediately available
funds equal to its Pro Rata Share of the amount of the drawing, whereupon the
participating Lenders shall (subject to subsection(b)) each be deemed to have
made a Revolving Loan consisting of a Base Rate Loan to the Borrower in that
amount. If any Lender so notified shall fail to make available to the Agent
for the account of the Issuing Lender the amount of such Lenders Pro Rata
Share of the amount of the drawing by no later than 3:00 p.m. (New York time)
on the date such drawing was honored by the Issuing Lender (the Participation
Date), then interest shall accrue on such Lenders obligation to make such
payment, from the Participation Date to the date such Lender makes such
payment, at a rate per annum equal to (i) the Federal Funds Rate in effect from
time to time during the period commencing on the Participation Date and ending
on the date three Business Days thereafter, and (ii) thereafter at the Base
Rate as in effect from time to time. The Agent shall promptly give notice of
the occurrence of the Participation Date, but failure of the Agent to give any
such notice on the Participation Date or in sufficient time to enable any
Lender to effect such payment on such date shall not relieve such Lender from
its obligations under this Section 3.03. (d) L/C Unreimbursed Drawings.With respect to any unreimbursed drawing
that is not converted into Revolving Loans consisting of Base Rate Loans to the
Borrower in whole or in part, because of the Borrowers failure to satisfy the
conditions set forth in clauses (b) and (c) of Section 8.02 or for any other
reason, the Borrower shall be obligated to the Issuing Lender for an L/C
Unreimbursed Draw in the amount of such drawing, which L/C Unreimbursed Draw
shall be due and payable on demand, together with interest, and shall bear
interest at a rate per annum equal to the Base Rate plus the Applicable Margin
plus 2% per annum, and each Lenders payment to the Issuing Lender pursuant to
subsection (c) shall be deemed payment in 35




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respect of its participation in such
L/C Unreimbursed Draw and shall constitute an L/C Advance from such Lender in
satisfaction of its participation obligation under this Section 3.03. (e) Obligation of Lenders Absolute. Each Lenders obligation in
accordance with this Agreement to make the Revolving Loans or L/C Advances, as
contemplated by this Section 3.03, as a result of a drawing under a Letter of
Credit shall be absolute and unconditional and shall not be affected by any
circumstance, including (i) any set-off, counterclaim, recoupment, defense or
other right which such Lender may have against the Issuing Lender, the Borrower
or any other Person for any reason whatsoever; (ii) the occurrence or
continuance of a Default, an Event of Default or a Material Adverse Effect; or
(iii) any other circumstance, happening or event whatsoever, whether or not
similar to any of the foregoing. SECTION 3.04 Repayment of Participations.
Upon (and only upon) receipt by the Agent for the account of the Issuing
Lender of funds from the Borrower (i) in reimbursement of any payment made by
the Issuing Lender under the Letter of Credit with respect to which any Lender
has theretofore paid the Agent for the account of the Issuing Lender for such
Lenders participation in the Letter of Credit pursuant to Section 3.03, or
(ii) in payment of interest thereon, the Agent shall pay to each Lender, in the
same funds as those received by the Agent for the account of the Issuing
Lender, the amount of such Lenders Pro Rata Share of such funds, and the
Issuing Lender shall receive the amount of the Pro Rata Share of such funds of
any Lender that did not so pay the Agent for the account of the Issuing Lender.
If the Agent or the Issuing Lender is required at any time to return to the
Borrower or to a trustee, receiver, liquidator, custodian, or any official in
any Insolvency Proceeding, any portion of the payments made by the Borrower to
the Agent for the account of the Issuing Lender in reimbursement of a payment
made under the Letter of Credit or interest thereon, each Lender shall, on
demand of the Agent, forthwith return to the Agent or the Issuing Lender the
amount of its Pro Rata Share of any amounts so returned by the Agent or the
Issuing Lender plus interest thereon from the date such demand is made to the
date such amounts are returned by such Lender to the Agent or the Issuing
Lender, at a rate per annum equal to the Federal Funds Rate in effect from time
to time. SECTION 3.05 Role of the Issuing Lender. (a) No Responsibility of Issuing Lender. Each Lender and the Borrower
agrees that, in paying any drawing under a Letter of Credit, the Issuing Lender
shall not have any responsibility to obtain any document (other than any sight
draft and certificates expressly required by the Letter of Credit) or to
ascertain or inquire as to the validity or accuracy of any such document or the
authority of the Person executing or delivering any such document. The
Borrower hereby assumes all risks of the acts or omissions of any beneficiary
or transferee with respect to its use of any Letter of Credit; provided,
however, that this assumption is not intended to, and shall not, preclude the
Borrowers pursuing such rights and remedies as it may have against the
beneficiary or transferee at law or under any other agreement. No
Agent/IB-Related Person, nor any of the respective correspondents, participants
or assignees of the Issuing Lender, shall be liable or responsible for any of
the matters described in clauses (i) through (vii) of Section 3.06; provided,
however, anything in such clauses to the contrary notwithstanding, that the
Borrower may have a claim against the Issuing Lender, and the Issuing Lender
may be liable to the Borrower, to the extent, but only to the extent, of any
direct, as opposed to consequential 36




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or exemplary, damages suffered by the
Borrower which the Borrower proves were caused by the Issuing Lenders willful
misconduct or gross negligence or the Issuing Lenders willful failure to pay
under any Letter of Credit after the presentation to it by the beneficiary of a
sight draft and certificate(s) strictly complying with the terms and conditions
of a Letter of Credit. In furtherance and not in limitation of the foregoing:
(i) the Issuing Lender may accept documents that appear on their face to be in
order, without responsibility for further investigation, regardless of any
notice or information to the contrary; and (ii) the Issuing Lender shall not be
responsible for the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign a Letter of Credit or the rights
or benefits thereunder or proceeds thereof, in whole or in part, which may
prove to be invalid or ineffective for any reason. (b) No Liability of Agent/IB-Related Persons. No Agent/IB-Related Person
nor any of the respective correspondents, participants or assignees of the
Issuing Lender shall be liable to any Lender for: (i) any action taken or
omitted in connection herewith at the request or with the approval of the
Lenders (including the Majority Lenders, as applicable); (ii) any action taken
or omitted in the absence of gross negligence or willful misconduct; or (iii)
the due execution, effectiveness, validity or enforceability of any L/C-Related
Document. SECTION 3.06 Obligations of Borrower Absolute. The obligations of the
Borrower under this Agreement and any L/C-Related Document to reimburse the
Issuing Lender for a drawing under a Letter of Credit, and to repay any L/C
Unreimbursed Draw and any drawing under a Letter of Credit converted into
Revolving Loans, shall be unconditional and irrevocable, and shall be paid
strictly in accordance with the terms of this Agreement and each such other
L/C-Related Document under all circumstances, including the following: (i) any lack of validity or enforceability of this Agreement or any
L/C-Related Document; (ii) any change in the time, manner or place of payment of, or in any
other term of, all or any of the obligations of the Borrower in respect of any
Letter of Credit or any other amendment or waiver of or any consent to
departure from all or any of the L/C-Related Documents; (iii) the existence of any claim, set-off, defense or other right that the
Borrower may have at any time against any beneficiary or any transferee of any
Letter of Credit (or any Person for whom any such beneficiary or any such
transferee may be acting), the Issuing Lender or any other Person, whether in
connection with this Agreement, the transactions contemplated hereby or by the
L/C-Related Documents or any unrelated transaction; (iv) any draft, demand, certificate or other document presented under any
Letter of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any respect; (v) any payment by the Issuing Lender under any Letter of Credit against
presentation of a draft or certificate that does not strictly comply with the
terms of any Letter of Credit; or any payment made by the Issuing Lender under
any Letter of Credit to any Person purporting to be a trustee in bankruptcy,
debtor-in-possession, assignee for the benefit of 37




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creditors, liquidator,
receiver or other representative of or successor to any beneficiary or any
transferee of any Letter of Credit, including any arising in connection with
any bankruptcy, reorganization or other insolvency proceeding; (vi) any exchange, release or non-perfection of any collateral, or any
release or amendment or waiver of or consent to departure from any other
guarantee, for all or any of the obligations of the Borrower in respect of any
Letter of Credit; or (vii) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing, including any other circumstance that might
otherwise constitute a defense available to, or a discharge of, the Borrower or
a guarantor. SECTION 3.07 Cash Collateral Pledge. Upon (i) the request of the Agent,
(A) if the Issuing Lender has honored any full or partial drawing request on
any Letter of Credit and such drawing has resulted in an L/C Unreimbursed Draw
hereunder, or (B) if, as of the Revolving Expiry Date, any Letters of Credit
may for any reason remain outstanding and partially or wholly undrawn, or (ii)
the occurrence of the circumstances described in Sections 5.03(b) or 11.02
requiring the Borrower to cash collateralize Letters of Credit, the Borrower
shall immediately pay over cash in an amount equal to the L/C Obligations to
the Collateral Agent for the benefit of the Lenders, to be held by the
Collateral Agent as cash collateral subject to the terms of this Section 3.07.
Such amount, together with any amount received by the Collateral Agent in
respect of outstanding Letters of Credit pursuant to Section 11.02, when
received by the Collateral Agent, shall be held by the Collateral Agent as part
of the Collateral pursuant to the terms of the Borrower and Subsidiary
Guarantor Security Agreement as cash collateral for the reimbursement
obligations of the Borrower under this Agreement in respect of the L/C
Obligations and for the other Obligations. Such cash collateral shall bear
interest for the benefit of the Borrower, provided that all such accrued
interest shall be held as additional cash collateral hereunder and under the
Borrower and Subsidiary Guarantor Security Agreement. All cash collateral
shall be held by the Collateral Agent until the release thereof shall be
permitted pursuant to the terms of the Borrower and Subsidiary Guarantor
Security Agreement. SECTION 3.08 Letter of Credit Fees. (a) Certain Letter of Credit Fees. The Borrower shall pay (i) to the
Agent for the account of each of the Lenders a letter of credit fee with
respect to the Letters of Credit equal to the Applicable Fee Amount multiplied
by the average daily maximum amount available to be drawn on the outstanding
Letters of Credit, and (ii) to the Issuing Lender a letter of credit fronting
fee with respect to the Letters of Credit equal to 0.125% per annum of the
average daily maximum amount available to be drawn of the outstanding Letters
of Credit, computed in each case on a quarterly basis in arrears on the last
Business Day of each calendar quarter based upon Letters of Credit outstanding
for that quarter as calculated by the Agent. Such letter of credit fees shall
be due and payable quarterly in arrears on the last Business Day of each
calendar quarter during which Letters of Credit are outstanding, commencing on
the first such quarterly date to occur after the Amendment Closing Date,
through the Revolving Expiry Date (or such later date upon which the
outstanding Letters of Credit shall expire), with the final payment to be made
on the Revolving Expiry Date (or such expiration date). 38




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(b) Certain Additional Fees and Charges. The Borrower shall pay to the
Issuing Lender from time to time on demand the normal issuance, presentation,
amendment and other processing fees, and other standard costs
and charges, of the Issuing Lender relating to standby letters of credit
as from time to time in effect. (c) Fees Nonrefundable. All fees and charges payable under this Section
3.08 shall be nonrefundable. SECTION 3.09 Applicability of ISP98. Unless otherwise expressly agreed by
the Issuing Lender and the Borrower when a Letter of Credit is issued and
subject to applicable laws, performance under Letters of Credit by the Issuing
Lender, its correspondents, and beneficiaries will be governed by the rules of
the ISP. SECTION 3.10 Letter of Credit Amounts. Unless otherwise specified, all
references herein to the amount of a Letter of Credit at any time shall be
deemed to mean the maximum face amount of such Letter of Credit at such time
after giving effect to all increases and decreases thereof (including decreases
as a result of partial draws, which, under the terms thereof, permanently
reduce availability under the related Letter of Credit or L/C Related Document)
contemplated by such Letter of Credit or the L/C-Related Documents related
thereto, whether or not such maximum face amount is in effect at such time. ARTICLE IV
INTEREST AND FEES; CONVERSION OR CONTINUATION SECTION 4.01 Interest. (a) Interest Rate. The Borrower shall pay interest on the unpaid
principal amount of each Loan from the date of such Loan until such principal
amount shall be paid in full, at the following rates: (i) during such periods as such Loan is a Base Rate Loan (other than a
Swingline Loan), at a rate per annum equal at all times to the Base Rate plus
the Applicable Margin; (ii) during such periods as such Loan is a Eurodollar Rate Loan, at a rate
per annum equal at all times during each Interest Period for such Eurodollar
Rate Loan to the Eurodollar Rate for such Interest Period plus the Applicable
Margin. (iii) during such periods as such Loan is a Swingline Loan, at a rate per
annum equal to a quoted rate as shall from time to time be mutually agreed upon
by the Borrower and the Swingline Lender. (b) Interest Periods. The initial and each subsequent Interest Period for
the Eurodollar Rate Loans shall be a period of one, two, three or six months,
or such other period as requested by the Borrower and acceptable to all the
Lenders. The determination of Interest Periods shall be subject to the
following provisions: 39




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(A) in the case of immediately successive Interest Periods, each
successive Interest Period shall commence on the day on which the next
preceding Interest Period expires; (B) if any Interest Period would otherwise end on a day which is not a
Business Day, that Interest Period shall be extended to the next succeeding
Business Day unless the result of such extension would be to carry such
Interest Period into another calendar month, in which event such Interest
Period shall end on the immediately preceding Business Day; (C) the Borrower may select Interest Periods with respect to Term Loans
which commence before and end after a Principal Payment Date only to the extent
that the Base Rate Loans to be outstanding on such Principal Payment Date plus
the Eurodollar Rate Loans with Interest Periods ending on such Principal
Payment Date at least equal in principal amount the required principal payment
on such Principal Payment Date; (D) no Interest Period shall extend beyond (1) the Revolving Expiry Date
with respect to any Revolving Loan, and (2) the Final Maturity Date with
respect to any Term Loan; (E) any Interest Period that begins on the last Eurodollar Business Day of
a calendar month (or on a day for which there is no numerically corresponding
day in the ending calendar month of such Interest Period) shall end on the last
Eurodollar Business Day of the ending calendar month of such Interest Period; (F) there shall be no more than five Interest Periods in effect at any one
time. (c) Interest Payment Dates. Subject to Section 4.02, interest on the
Loans shall be payable in arrears at the following times: (i) interest on each Base Rate Loan (other than Swingline Loans) shall be
payable quarterly on the last Business Day in each calendar quarter, on the
date of any prepayment or conversion of any such Base Rate Loan, and at
maturity; (ii) interest on each Eurodollar Rate Loan shall be payable on the last
day of each Interest Period for such Eurodollar Rate Loan and at maturity,
provided that (A) in the case of any such Interest Period which is greater than
three months, interest on such Eurodollar Rate Loan shall be payable on each
date that is three months, or any integral multiple thereof, after the
beginning of such Interest Period, and on the last day of such Interest Period,
and (B) if any prepayment, conversion, or continuation is effected other than
on the last day of such Interest Period, accrued interest on such Eurodollar
Rate Loan shall be due on such prepayment,
conversion or continuation date as to the principal amount of such
Eurodollar Rate Loan prepaid, converted or continued; and (iii) interest on each Swingline Loan shall be payable monthly on the last
Business Day in each calendar month and at maturity. (d) Notice to the Borrower and the Lenders. Each determination by the
Agent hereunder of a rate of interest and of any change therein, including any
changes in (i) the Applicable Margin, (ii) the Base Rate during any periods in
which Base Rate Loans shall be outstanding, and (iii) the Federal Funds Rate
during any periods in which Swingline Loans are 40




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outstanding, in the absence of
manifest error shall be conclusive and binding on the parties hereto and shall
be promptly notified by the Agent to the Borrower and the Lenders (or to the
Swingline Lender, as applicable). Such notice shall set forth in reasonable
detail the basis for any such determination or change. The failure of the
Agent to give any such notice specified in this subsection shall not affect the
Borrowers obligation to pay such interest or fees. SECTION 4.02 Default Rate of Interest. During the existence of any Event of
Default under 11.01(a) arising from a nonpayment of any Obligations (whether at
stated maturity, by acceleration or otherwise), the Borrower shall pay interest
(after as well as before any entry of judgment to the extent permitted by law)
on the unpaid principal amount of all Obligations, (i) in the case of any
Loans, at a rate per annum equal to the applicable Base Rate or Eurodollar
Rate, as the case may be, plus the Applicable Margin for such Loans, plus 2%
per annum, and (ii) in the case of any other Obligations, at a rate per annum
equal at all times to the Base Rate plus the Applicable Margin for Base Rate
Loans plus 2% per annum; provided, however, that, on and after the expiration
of any Interest Period applicable to any Eurodollar Rate Loan outstanding on
the date of occurrence of such Event of Default or acceleration, the Borrower
shall pay interest on the principal amount of such Loan, during the
continuation of such Event of Default or after acceleration, at a rate per
annum equal at all times to the Base Rate plus the Applicable Margin for Base
Rate Loans plus 2% per annum. Accrued and unpaid interest on past due amounts
(including interest on past due interest) shall be due and payable upon demand. SECTION 4.03 Fees. (a) Commitment Fee. The Borrower agrees to pay to the Agent for the
account of each Lender a commitment fee on the average daily unused portion of
such Lenders Revolving Commitment as in effect from time to time from the
Amendment Closing Date until the Revolving Expiry Date at a rate per annum
equal to the Applicable Fee Amount, payable quarterly in arrears on the last
Business Day of each calendar quarter in each year, commencing on the first
such date after the Amendment Closing Date, and on the earlier of the date such
Revolving Commitment is terminated hereunder or the Revolving Expiry Date. For
purposes of calculation of such unused portion of a Lenders Revolving
Commitment, each Lenders Revolving Commitment shall be
considered used on any date to the extent of its participation on such
date in any Letter of Credit or Swingline Loan and any L/C Advance made by it. (b) Upfront Fee. The Borrower agrees to pay to the Agent for the account
of each Lender an upfront fee payable on the Amendment Closing Date as
specified in the Fee Letter. (c) Annual Agency Fee. The Borrower agrees to pay to the Agent for its
own account on the Amendment Closing Date and on each anniversary of the
Amendment Closing Date such fee for agency services as specified in the Fee
Letter. (d) Fees Nonrefundable. All fees payable under this Section 4.03 shall be
nonrefundable. 41




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SECTION 4.04 Computations. All computations of interest, commitment fees
and letter of credit fees hereunder shall be made on the basis of a year of 360
days for the actual number of days occurring in the period for which such fee
or interest is payable, which results in more interest being paid than if
computed on the basis of a 365-day year. Notwithstanding the foregoing, if any
Loan is repaid on the same day on which it is made, such day shall be included
in computing interest on such Loan. SECTION 4.05 Conversion or Continuation. (a) Election. The Borrower may elect (i) to convert all or any part of
(A) outstanding Base Rate Loans into Eurodollar Rate Loans, or (B) outstanding
Eurodollar Rate Loans into Base Rate Loans; or (ii) to continue all or any part
of a Loan with one type of interest rate as such; provided, however, that if
the aggregate amount of Eurodollar Rate Loans in respect of any Borrowing shall
have been reduced, by payment, prepayment, or conversion of part thereof to be
less than $1,000,000, such Eurodollar Rate Loans shall automatically convert
into Base Rate Loans, and on and after such date the right of the Borrower to
continue such Loans as, and convert such Loans into, Eurodollar Rate Loans
shall terminate. The continued or converted Base Rate and Eurodollar Rate
Loans shall be allocated to the Lenders ratably in accordance with their Pro
Rata Shares. Any conversion or continuation of Eurodollar Rate Loans shall be
made on the last day of the current Interest Period for such Eurodollar Rate
Loans. No outstanding Loan may be converted into or continued as a Eurodollar
Rate Loan if any Event of Default has occurred and is continuing. (b) Automatic Conversion.
On the last day of any Interest Period for any Eurodollar Rate Loans, such
Eurodollar Rate Loans shall, if not repaid, automatically convert into Base
Rate Loans unless the Borrower shall have made a timely election to continue
such Eurodollar Rate Loans as such for an additional Interest Period or to
convert such Eurodollar Rate Loans, in each case as provided in subsection (a)
        . (c) Notice to the Agent. The conversion or continuation of any Loans
contemplated by subsection (a) shall be made upon written or telephonic notice
(in the latter case to be confirmed promptly in writing) from the Borrower to
the Agent, which notice shall be received by the Agent not later than 1:00 p.m.
(New York time) on the Required Notice Date. Each such notice (a Notice of
Conversion or Continuation) shall, except as provided in Sections 6.01 and
6.04, be irrevocable and binding on the Borrower, shall refer to this Agreement
and shall specify: (i) the proposed date of the conversion or continuation,
which shall be a Business Day (or a Eurodollar Business Day, for conversions
into or continuations of Eurodollar Rate Loans); (ii) the outstanding Loans (or
parts thereof) to be converted into or continued as Base Rate or Eurodollar
Rate Loans; (iii) the aggregate amount of the Loans which are the subject of
such continuation or conversion, which shall be in a Minimum Amount; (iv) if
the conversion or continuation consists of any Eurodollar Rate Loans, the
duration of the Interest Period with respect thereto; and (v) that no Event of
Default exists hereunder. (d) Notice to the Lenders. The Agent shall give each Lender prompt notice
by telephone (confirmed promptly in writing) or by facsimile of (i) the
proposed conversion or continuation of any Loans, specifying the information
contained in the Borrowers Notice and 42




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such Lenders Pro Rata Share thereof or
(ii), if timely notice was not received from the Borrower, the details of any
automatic conversion under subsection 4.05(b). SECTION 4.06 Highest Lawful Rate. Anything herein to the contrary
notwithstanding, if during any period for which interest is computed hereunder,
the applicable interest rate, together with all fees, charges and other
payments which are treated as interest under applicable law, as provided for
herein or in any other Loan Document, would exceed the maximum rate of interest
which may be charged, contracted for, reserved, received or collected by any
Lender in connection with this Agreement under applicable law (the Maximum
Rate), the Borrower shall not be obligated to pay, and such Lender shall not
be entitled to charge, collect, receive, reserve or take, interest in excess of
the Maximum Rate, and during any such period the interest payable hereunder
shall be limited to the Maximum Rate. ARTICLE V
REDUCTION OF COMMITMENTS;
REPAYMENT; PREPAYMENT SECTION 5.01 Reduction or Termination of the Commitments. (a) Optional Reduction or Termination. The Borrower may, upon prior
notice to the Agent as provided herein, terminate in whole or reduce ratably in
part, as of the date specified by the Borrower in such notice, any then unused
portion of the Revolving Commitments (including the L/C Commitment); provided,
however, that each partial reduction shall be in a Minimum Amount; and provided
further, however, that no such reduction or termination shall be permitted if
the Effective Amount of Revolving Loans, Swingline Loans and L/C Obligations
would exceed the amount of the aggregate Revolving Commitments thereafter in
effect; and provided further, however, that once reduced in accordance with
this Section 5.01, the Revolving Commitment of any Lender may not be increased.
The amount of any such Revolving Commitment reductions shall not be applied to
the L/C Commitment unless otherwise specified by the Borrower or unless the
Revolving Commitments as so reduced would be less than the L/C Commitment. All
accrued commitment fees to, but not including, the effective date of any
termination of the Revolving Commitments shall be payable on the effective date
of such termination. (b) Mandatory Termination. (i) If on the Amendment Closing Date the Term Commitments of the Lenders
shall exceed the aggregate outstanding principal amount of the Term Loans, such
unused portion of the Term Commitments shall terminate on the Amendment Closing
Date. (ii) The Revolving Commitments shall terminate on the Revolving Expiry
Date. (c) Other Mandatory Reductions. (i) Upon the making of any mandatory prepayment under clause (ii), (iii)
or (iv) of Section 5.03(b) on or prior to the Revolving Expiry Date, the
Revolving Commitment of 43




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each Lender shall automatically reduce by an amount
equal to such Lenders Pro Rata Share of the aggregate amount of principal of
Revolving Loans, Swingline Loans and L/C Advances prepaid and Letters of Credit
cash collateralized, effective as of the date of receipt by the Borrower or its
Subsidiary of the Net Proceeds or Net Issuance Proceeds, as the case may be,
arising from the applicable disposition of assets, incurrence of debt for
borrowed money or Event of Loss. (ii) If prior to the Revolving Expiry Date the amount required to be paid
on account of the Revolving Loans, Swingline Loans or L/C Advances, or applied
to cash collateralize the Letters of Credit, pursuant to clause (ii), (iii) or
(iv) of Section 5.03(b) shall exceed the outstanding principal amount of the
Revolving Loans, Swingline Loans and L/C Advances or the amount of the L/C
Obligations then outstanding, such automatic reduction shall nonetheless occur
and shall be determined on the basis of the amount of Revolving Loans,
Swingline Loans and L/C Advances that would be required to be prepaid and
Letters of Credit that would be required to be cash collateralized assuming the
Revolving Commitments were fully utilized. (d) Notice.
The Agent shall give each Lender prompt notice of any termination or
reduction of its Revolving Commitment under this Section 5.01. (e) Adjustment of Commitment Fee; No Reinstatement. From the effective
date of any reduction or termination prior to the Revolving Expiry Date, the
commitment fee payable under Section 4.03(a) shall be computed on the basis of
the Revolving Commitments as so reduced or terminated. Once reduced or
terminated, the Revolving Commitments may not be increased or otherwise
reinstated. SECTION 5.02 Repayment of the Loans. (a) Revolving Loans. The Borrower shall repay to the Lenders in full on
the Revolving Expiry Date the aggregate principal amount of the Revolving Loans
outstanding on such date. (b) Term Loans. The Borrower shall repay to the Lenders the aggregate
principal amount of the Term Loans (i) in the amount of $700,000 on June 30,
2004; and (ii) in substantially equal consecutive quarterly installments,
commencing March 31, 2006, with subsequent installments payable on the last day
of each calendar quarter thereafter, to and including the Final Maturity Date;
provided, however, that the last such installment shall be in the amount
necessary to repay in full the aggregate unpaid principal amount of the Term
Loans. (c) Swingline Loans. The Borrower shall repay to the Swingline Lender on
each date as shall from time to time be mutually agreed upon by the Swingline
Lender and the Borrower the aggregate principal amount of the Swingline Loans
outstanding on such date; provided, however, the aggregate principal amount of
the Swingline Loans outstanding on the Revolving Expiry Date shall be due and
payable on such date. SECTION 5.03 Prepayments. 44




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(a) Optional Prepayments. Subject to Section 6.02, the Borrower may, upon
prior notice to the Agent not later than the Required Notice Date, prepay the
outstanding amount of the Loans in whole or ratably in part, without premium or
penalty. Partial prepayments shall be in Minimum Amounts. (b) Mandatory Prepayments. (i) Subject to Section 6.02, if on any date the Effective Amount of all
Revolving Loans plus the Effective Amount of all Swingline Loans plus the
Effective Amount of all L/C Obligations shall exceed the lesser of (A) the
aggregate Revolving Commitments then in effect and (B) the Borrowing Base then
in effect, the Borrower shall immediately, and without
notice or demand, prepay the outstanding principal amount of the Revolving
Loans, L/C Advances and Swingline Loans and/or cash collateralize the Letters
of Credit by an amount equal to the applicable excess. Additionally, if on any
date the aggregate outstanding amount of L/C Obligations shall exceed the L/C
Commitment, the Borrower shall cash collateralize on such date the outstanding
Letters of Credit in an amount equal to the excess of the maximum amount then
available to be drawn under the Letters of Credit over the L/C Commitment. (ii) Upon the sale, transfer or other disposition of any assets (or group
of related assets) by the Borrower or any Subsidiary under subsection
10.04(e)(iii) (to the extent the Net Proceeds from the sale, transfer or other
disposition of worn out or obsolete assets are not promptly applied to replace
such assets) or 10.04(e)(v), the Borrower shall, within one Business Day of the
Borrowers or such Subsidiarys receipt of the proceeds thereof, prepay the
outstanding principal amount of the Loans, in an amount equal to 100% of the
Net Proceeds therefrom by depositing such amount with the Collateral Agent for
application by the Collateral Agent under and pursuant to Section 6.10 of the
Intercreditor Agreement to the Secured Obligations; provided, however, that in
the case of prepayments of any Revolving Loans, Swingline Loans and L/C
Advances, the required prepayment shall be in an amount equal to the excess, if
any (after giving effect to the related mandatory Commitment reduction under
Section 5.01(c)), of the Effective Amount of the Revolving Loans, Swingline
Loans and L/C Obligations over the aggregate Revolving Commitments. If on the
date of the foregoing required prepayment the amount of any such required
prepayment (after giving effect to the related mandatory Commitment reduction
under Section 5.01(c)) shall exceed the outstanding principal amount of the
Loans and there shall be any Letters of Credit outstanding, then the Borrower
shall apply such funds to cash collateralize any such outstanding Letters of
Credit. (iii) Upon the incurrence of Indebtedness for borrowed money other than
Subordinated Debt by the Borrower or any Subsidiary, the Borrower shall, within
one Business Day of the Borrowers or such Subsidiarys receipt of the proceeds
thereof, prepay the outstanding principal amount of the Loans in an amount
equal to 100% of the Net Issuance Proceeds therefrom by depositing such amount
with the Collateral Agent for application by the Collateral Agent under and
pursuant to Section 6.10 of the Intercreditor Agreement to the Secured
Obligations; provided that in the case of prepayments of any Revolving Loans,
Swingline Loans and L/C Advances, the required prepayment shall be in an amount
equal to the excess (after giving effect to the related mandatory Commitment
reduction under Section 5.01(c)) of the Effective Amount of the Revolving
Loans, Swingline Loans and L/C Obligations over the aggregate Revolving
Commitments. If on the date of the foregoing required 45




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prepayment the amount of
any such required prepayment (after giving effect to the related mandatory
Commitment reduction under Section 5.01(c)) shall exceed the outstanding
principal amount of the Loans and there shall be any Letters of Credit
outstanding, then the Borrower shall apply such funds to cash collateralize any
such outstanding Letters of Credit. (iv) If any Event of Loss shall occur with respect to any assets of the
Borrower or any Subsidiary, the Borrower shall prepay the outstanding principal
amount of the Loans in an amount equal to the Net Proceeds (after giving effect
to repair or replacement as provided in the definition of Net Proceeds)
therefrom by depositing such amount with the Collateral Agent for application
by the Collateral Agent under and pursuant to Section 6.10 of the Intercreditor
Agreement to the Secured Obligations, provided, however, that, (A) such
prepayment shall not
be required if such amount is less than $1,500,000 and (B) in the case of
prepayments of any Revolving Loans, Swingline Loans and L/C Advances, the
required prepayment (subject to sub-clause (A) of this proviso) shall be in an
amount equal to the excess (after giving effect to the related mandatory
Commitment reduction under Section 5.01(c)) of the Effective Amount of the
Revolving Loans, Swingline Loans and L/C Obligations over the aggregate
Revolving Commitments. If on the date of the foregoing required prepayment the
amount of any such required prepayment (after giving effect to the related
mandatory Commitment reduction under Section 5.01(c)) shall exceed the
outstanding principal amount of the Loans and there shall be any Letters of
Credit outstanding, then the Borrower shall apply such funds to cash
collateralize any such outstanding Letters of Credit. (c) Order of Application. (i) Any prepayments pursuant to clause (i) of subsection 5.03(b) above
shall be applied, first, to any Swingline Loans then outstanding, second, to

any L/C Advances then outstanding, third, to any Revolving Loans then
outstanding and, fourth, to cash collateralize any L/C Obligations then
outstanding; (ii) Any prepayments pursuant to clauses (ii), (iii), (iv) and (v) of
subsection 5.03(b) above shall be applied, first, to any Term Loans then
outstanding, second, to any Swingline Loans then outstanding, third, to any L/C
Advances then outstanding, fourth, to any Revolving Loans then outstanding and,
fifth, to cash collateralize any L/C Obligations then outstanding; provided,
however, that to the extent the Net Proceeds to be applied to prepay the Loans
pursuant to clauses (ii) and (iv) of subsection 5.03(b) above arise as a result
of the sale, transfer or other disposition of Inventory or as a result of an
Event of Loss with respect to Inventory, then such Net Proceeds shall be
applied, first, to any Swingline Loans then outstanding, second, to any L/C
Advances then outstanding, third, to any Revolving Loans then outstanding,
fourth, to cash collateralize any L/C Obligations then outstanding and, fifth,
to any Term Loans then outstanding. (iii) Subject to clauses (i) and (ii) of this subsection 5.03(c), any
prepayments pursuant to subsection 5.03(b) above shall be applied, first, to
any Base Rate Loans then outstanding and, second, to Eurodollar Rate Loans with
the shortest Interest Periods remaining; provided, however, that if the amount
of Base Rate Loans then outstanding is not sufficient to satisfy the entire
prepayment requirement, the Borrower may, at its option so long as no Default
or Event of Default has occurred and is continuing, place any amounts which it
would otherwise 46




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be required to use to prepay Eurodollar Rate Loans on a day
other than the last day of the Interest Period therefor in an interest-bearing
account pledged to the Collateral Agent for the benefit of the Lenders under
the Security Agreements until the end of such Interest Period, at which time
such pledged amounts will be applied to prepay such Eurodollar Rate Loans. The
Borrower shall pay, together with each prepayment under subsections 5.03(a) or
5.03(b), accrued interest on the amount of any Loans prepaid and any amounts
required pursuant to Section 6.02. Any voluntary prepayments of Term Loans
pursuant to subsection 5.03(a) shall be applied pro rata across each remaining
installment of principal. Any mandatory prepayments of Term Loans pursuant to
subsection 5.03(b) shall be applied to the remaining principal installments in
inverse order of maturity. (d) Notice; Application. The notice given of any prepayment (a Notice of
Prepayment) shall specify the date and amount of the prepayment and whether
the prepayment is of Base Rate Loans, Eurodollar Rate Loans or Swingline Loans
or a combination thereof, and if of a combination thereof the amount of the
prepayment allocable to each. Such Notice of Prepayment shall also specify
whether the prepayment is of L/C Advances, Revolving Loans, Term Loans,
Swingline Loans or a combination thereof. Upon receipt of the Notice of
Prepayment of L/C Advances, Revolving Loans or Term Loans, the Agent shall
promptly notify each Lender thereof. Upon receipt of the Notice of Prepayment
of Swingline Loans, the Agent shall promptly notify the Swingline Lender
thereof. If a Notice of Prepayment is given, the Borrower shall make such
prepayment and the prepayment amount specified in such Notice shall be due and
payable on the date specified therein, with accrued interest to such date on
the amount prepaid. ARTICLE VI
YIELD PROTECTION AND ILLEGALITY SECTION 6.01 Inability to Determine Rates. If the Agent shall determine
that adequate and reasonable means do not exist to ascertain the Eurodollar
Rate, or the Majority Lenders shall determine that the Eurodollar Rate does not
accurately reflect the cost to the Lenders of making or maintaining Eurodollar
Rate Loans, then the Agent shall give telephonic notice (promptly confirmed in
writing) to the Borrower and each Lender of such determination. Such notice
shall specify the basis for such determination and shall, in the absence of
manifest error, be conclusive and binding for all purposes. Thereafter, the
obligation of the Lenders to make or maintain Eurodollar Rate Loans hereunder
shall be suspended until the Agent (upon the instructions of the Majority
Lenders) revokes such notice. Upon receipt of such notice, the Borrower may
revoke any Notice then submitted by it. If the Borrower does not revoke such
Notice, the Lenders shall make, convert or continue Loans, as proposed by the
Borrower, in the amount specified in the Notice submitted by the Borrower, but
such Loans shall be made, converted or continued as Base Rate Loans instead of
Eurodollar Rate Loans. SECTION 6.02 Funding Losses. In addition to such amounts as are required
to be paid by the Borrower pursuant to Section 6.03, the Borrower shall
compensate each Lender, promptly upon receipt of such Lenders written request
made to the Borrower (with a copy to the Agent), for all losses, costs and
expenses (including any loss or expense incurred by such Lender in obtaining,
liquidating or re-employing deposits or other funds to fund or 47




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maintain its
Eurodollar Rate Loans), if any, which such Lender sustains: (i) if the
Borrower repays, converts or prepays any Eurodollar Rate Loan on a date other
than the last day of an Interest Period for such Eurodollar Rate Loan (whether
as a result of an optional prepayment, mandatory prepayment, a payment as a
result of acceleration or otherwise); (ii) if the Borrower fails to borrow a
Eurodollar Rate Loan after giving its Notice (other than as a result of the
operation of Section 6.01 or 6.04); (iii) if the Borrower fails to convert into
or continue a Eurodollar Rate Loan after giving its Notice (other
than as a result of the operation of Section 6.01 or 6.04); or (iv) if the
Borrower fails to prepay a Eurodollar Rate Loan after giving its Notice. Any
such request for compensation shall set forth the basis for requesting such
compensation in reasonable detail and shall, in the absence of manifest error,
be conclusive and binding for all purposes. SECTION 6.03 Regulatory Changes. (a) Increased Costs. If after the date hereof, the adoption of, or any
change in, any applicable law, rule or regulation, or any change therein, or
any change in the interpretation or administration thereof by any Governmental
Authority charged with the interpretation or administration thereof (a
Regulatory Change), or compliance by any Lender (or its Lending Office) with
any request, guideline or directive (whether or not having the force of law) of
any Governmental Authority, shall impose, modify or deem applicable any
reserve, special deposit or similar requirement (including any such requirement
imposed by the FRB, but excluding with respect to any Eurodollar Rate Loan any
such requirement included in the calculation of the Eurodollar Rate) against
assets of, deposits with or for the account of, or credit extended by, any
Lenders Lending Office or shall impose on any Lender (or its Lending Office)
or on the interbank eurodollar market any other condition affecting any
Lenders Eurodollar Rate Loans or its obligation to make Eurodollar Rate Loans
or its other obligations hereunder, and the result of any of the foregoing is
to increase the cost to such Lender (or its Lending Office) of agreeing to make
or making, funding or maintaining any Loan or participating in any L/C
Obligations, or increase the cost to the Issuing Lender of agreeing to issue or
issuing or maintaining any Letter of Credit or of agreeing to make or making,
funding or maintaining any unpaid drawing under any Letter of Credit, or to
reduce the amount of any sum received or receivable by such Lender (or its
Lending Office) or the Issuing Lender under this Agreement with respect
thereto, by an amount deemed by such Lender to be material, then from time to
time, within 15 days after demand by such Lender (with a copy to the Agent),
the Borrower shall pay to such Lender such additional amounts as shall
compensate such Lender for such increased cost or reduction. (b) Capital Requirements. If any Lender shall have determined that any
Regulatory Change regarding capital adequacy, or compliance by such Lender (or
any corporation controlling such Lender) with any request, guideline or
directive regarding capital adequacy (whether or not having the force of law)
of any Governmental Authority issued or taking effect after the Amendment
Closing Date, has or shall have the effect of reducing the rate of return on
such Lenders, the Issuing Lenders or such corporations capital as a
consequence of such Lenders obligations hereunder to a level below that which
such Lender, the Issuing Lender or such corporation would have achieved but for
such adoption, change or compliance (taking into consideration such Lenders,
the Issuing Lenders or corporations policies with respect to capital
adequacy), by an amount deemed by such Lender to be material, then from time to
time, within 15 days after demand by such Lender (with a copy to the Agent),
the 48




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Borrower shall pay to such Lender such additional amounts as shall
compensate such Lender for such reduction. (c) Requests.
Any such request for compensation by a Lender under this Section 6.03
shall set forth the basis of calculation thereof and shall, in the absence of
manifest error, be conclusive and binding for all purposes. SECTION 6.04 Illegality. If any Lender shall determine that it has become
unlawful, as a result of any Regulatory Change, for such Lender to make,
convert into or maintain Eurodollar Rate Loans as contemplated by this
Agreement, such Lender shall promptly give notice of such determination to the
Borrower (through the Agent), and (i) the obligation of such Lender to make or
convert into Eurodollar Rate Loans, as the case may be, shall be suspended
until such Lender gives notice that the circumstances causing such suspension
no longer exist; and (ii) each of such Lenders outstanding Eurodollar Rate
Loans, as the case may be, shall, if requested by such Lender, be converted
into a Base Rate Loan not later than upon expiration of the Interest Period
related to such Eurodollar Rate Loan, or, if earlier, on such date as may be
required by the applicable Regulatory Change, as shall be specified in such
request. Any such determination shall, in the absence of manifest error, be
conclusive and binding for all purposes. SECTION 6.05 Funding Assumptions. Solely for purposes of calculating
amounts payable by the Borrower to the Lenders under this Article VI, each
Eurodollar Rate Loan made by a Lender (and any related reserve, special deposit
or similar requirement) shall be conclusively deemed to have been funded at the
Eurodollar Rate by a matching deposit or other borrowing in the interbank
eurodollar market for a comparable amount and for a comparable period, whether
or not such Eurodollar Rate Loan is in fact so funded. SECTION 6.06 Obligation to Mitigate. Each Lender agrees that as promptly
as practicable after it becomes aware of the occurrence of an event that would
entitle it to give notice pursuant to Section 6.03(a) or 6.04, and in any event
if so requested by the Borrower, each Lender shall use reasonable efforts to
make, fund or maintain its affected Eurodollar Rate Loans through another
Lending Office if as a result thereof the increased costs would be avoided or
materially reduced or the illegality would thereby cease to exist and if, in
the reasonable opinion of such Lender, the making, funding or maintaining of
such Eurodollar Rate Loans through such other Lending Office would not in any
material respect be disadvantageous to such Lender or contrary in any material
respect to such Lenders normal banking practices. SECTION 6.07 Substitution of Lenders. Without limiting the Borrowers
obligations under Sections 6.03 and 7.03, upon the receipt by the Borrower from
any Lender (an Affected Lender) of a request for compensation under Section
6.03 or under Section 7.03, the Borrower may (i) request one or more of the
other Lenders to acquire and assume all or part of such Affected Lenders Loans
and Commitment; or (ii) designate a replacement commercial bank (which shall be

an Eligible Assignee) satisfactory to the Borrower to acquire and assume all or
a ratable part of such Affected Lenders Loans and Commitment (a Replacement
Lender); provided, however, that the Borrower shall be liable for
the payment upon demand of all costs and other amounts arising under Section
6.02 that result from the acquisition of any Affected 49




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Lenders Loan and/or
Commitment (or any portion thereof) by a Lender or Replacement Lender, as the
case may be, on a date other than the last day of the applicable Interest
Period with respect to any Eurodollar Rate Loan then outstanding. Any such
designation of a Replacement Lender under clause (ii) shall be effected in
accordance with, and subject to the terms and conditions of, the assignment
provisions contained in Section 13.09, and shall in any event be subject to the
prior written consent of the Agent (which consent shall not be unreasonably
withheld). SECTION 6.08 Reserves on Eurodollar Rate Loans. The Borrower shall pay to
each Lender, as long as such Lender shall be required under regulations of the
FRB to maintain reserves with respect to liabilities or assets consisting of or
including Eurocurrency funds or deposits (currently known as Eurocurrency
liabilities), additional interest on the unpaid principal amount of each
Eurodollar Rate Loan equal to the actual costs of such reserves allocated to
such Eurodollar Rate Loan by such Lender (as determined by such Lender in good
faith based upon applicable regulatory standards, which determination shall be
conclusive, as set forth in a certificate from such Lender specifying in
reasonable detail the basis and calculations for such determination), payable
on each date on which interest is payable on such Eurodollar Rate Loan,
provided the Borrower shall have received at least 15 days prior written
notice (with a copy to the Agent) of such additional interest from the Lender.
If a Lender fails to give notice 15 days prior to the relevant Interest Payment
Date, such additional interest shall be payable 15 days from receipt of such
notice. ARTICLE VII
PAYMENTS SECTION 7.01 Pro Rata Treatment. Except as otherwise provided in this
Agreement, each Borrowing hereunder, each Commitment reduction, each payment
(including each prepayment) by the Borrower on account of the principal,
interest, drawings under Letters of Credit, fees and other amounts required
hereunder shall be made without set-off or counterclaim and, except as
otherwise expressly provided with respect to drawings under Letters of Credit,
shall be made ratably in accordance with the Pro Rata Shares. Each conversion
or continuation of Loans shall also be made ratably in accordance with the
respective Pro Rata Shares of the Lenders. SECTION 7.02 Payments. (a) Payments. The Borrower shall make each payment under the Loan
Documents, unconditionally in full without set-off, counterclaim or other
defense, not later than 3:00 p.m. (New York time) on the day when due to the
Agent in Dollars and in same day or immediately available funds, to the Agents
Account. The Agent shall promptly thereafter distribute like funds relating to
the payment on account of principal, interest, drawings under Letters of
Credit,
commitment fee or any other amounts payable to the Lenders or to the
Issuing Lender, as the case may be, ratably (except as a result of the
operation of Article V) to the Lenders in accordance with their Pro Rata
Shares, or to the Issuing Lender, as the case may be. (b) Application. Unless the Agent shall receive a timely election by the
Borrower with respect to the application of any principal payments or as
otherwise provided 50




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herein, each payment of principal by the Borrower shall be
applied (A) first, to the Base Rate Loans then outstanding, and (B) second, to
the Eurodollar Rate Loans then outstanding (in such manner as the Agent shall
determine in its sole discretion). (c) Extension. Whenever any payment hereunder shall be stated to be due,
or whenever any Interest Payment Date or any other date specified hereunder
would otherwise occur, on a day other than a Business Day, then, except as
otherwise provided herein, such payment shall be made, and such Interest
Payment Date or other date shall occur, on the next succeeding Business Day,
and such extension of time shall in such case be included in the computation of
payment of interest, commitment fee or letter of credit fee hereunder. SECTION 7.03 Taxes. (a) No Reduction of Payments. The Borrower shall pay all amounts of
principal, interest, fees and other amounts due under the Loan Documents free
and clear of, and without reduction for or on account of, any present and
future taxes, levies, imposts, duties, fees, assessments, charges, deductions
or withholdings and all liabilities with respect thereto excluding, in the case
of each Lender and the Agent, income and franchise taxes imposed on it by the
jurisdiction under the laws of which such Lender or the Agent is organized or
in which its principal executive offices may be located or any political
subdivision or taxing authority thereof or therein, and by the jurisdiction of
such Lenders Lending Office and any political subdivision or taxing authority
thereof or therein (all such nonexcluded taxes, levies, imposts, duties, fees,
assessments, charges, deductions, withholdings and liabilities being
hereinafter referred to as Taxes). If any Taxes shall be required by law to
be deducted or withheld from any payment, the Borrower shall increase the
amount paid so that the respective Lender or the Agent receives when due (and
is entitled to retain), after deduction or withholding for or on account of
such Taxes (including deductions or withholdings applicable to additional sums
payable under this Section 7.03), the full amount of the payment provided for
in the Loan Documents. (b) Deduction or Withholding; Tax Receipts. If the Borrower makes any
payment hereunder in respect of which it is required by law to make any
deduction or withholding, it shall pay the full amount to be deducted or
withheld to the relevant taxation or other authority within the time allowed
for such payment under applicable law and promptly thereafter shall furnish to
the Agent (for itself or for redelivery to the Lender to or for the account of
which such payment was made) an original or
certified copy of a receipt evidencing payment thereof, together with such
other information and documents as the Agent or any Lender (through the Agent)
may reasonably request. (c) Indemnity. If any Lender or the Agent is required by law to make any
payment on account of Taxes, or any liability in respect of any Tax is imposed,
levied or assessed against any Lender or the Agent, the Borrower shall
indemnify the Agent and the Lenders for and against such payment or liability,
together with any incremental taxes, interest or penalties, and all costs and
expenses, payable or incurred in connection therewith, including Taxes imposed
on amounts payable under this Section 7.03, whether or not such payment or
liability was correctly or legally asserted. A certificate of the Agent or any
Lender as to the amount of any such payment shall, in the absence of manifest
error, be conclusive and binding for all purposes. 51




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(d) Forms. (i) Each Lender that is not a United States person within
the meaning of Section 7701(a)(30) of the Internal Revenue Code (a Foreign
Lender) agrees to deliver to the Agent and the Borrower on or prior to the
Closing Date, and in a timely fashion thereafter, two duly signed completed
copies of IRS Form W-8BEN, IRS Form W-8ECI or such other documents and forms of
the IRS, as are required under United States law to confirm such Foreign
Lenders entitlement to exemption from, or reduction of, applicable withholding
taxes under the Internal Revenue Code in respect of payments to be made to such
Foreign Lender under or in connection with this Agreement or otherwise to
establish such Foreign Lenders status for United States withholding tax
purposes. (ii) Each Foreign Lender, to the extent it does not act or ceases to
act for its own account with respect to any portion of any sums paid or payable
to such Foreign Lender under any of the Loan Documents (for example, in the
case of a typical participation by such Foreign Lender), shall deliver to the
Agent on the date when such Foreign Lender ceases to act for its own account
with respect to any portion of any such sums paid or payable, and at such other
times as may be necessary in the determination of the Agent (in the reasonable
exercise of its discretion), (A) two duly signed completed copies of the forms
or statements required to be provided by such Foreign Lender as set forth
above, to establish the portion of any such sums paid or payable with respect
to which such Lender acts for its own account that is not subject to U.S.
withholding tax, and (B) two duly signed completed copies of IRS Form W-8IMY
(or any successor thereto), together with any information such Foreign Lender
chooses to transmit with such form, and any other certificate or statement of
exemption required under the Internal Revenue Code, to establish that such
Foreign Lender is not acting for its own account with respect to a portion of
any such sums payable to such Foreign Lender. (iii) Upon the request of the
Agent, each Lender that is a United States person within the meaning of
Section 7701(a)(30) of the Internal Revenue Code shall deliver to the Agent two
duly signed completed copies of IRS Form W-9. If such Lender fails to deliver
such forms, then the Agent may withhold from any interest payment to such
Lender an amount equivalent to the applicable back-up withholding tax imposed
by the Internal Revenue Code, without reduction. (iv) If any Governmental
Authority asserts that the Agent did not properly withhold or backup withhold,
as the case may be, any tax or other amount from payments made to or for the
account of any Lender, such Lender shall indemnify the Agent therefor,
including all penalties and interest, any taxes imposed by any jurisdiction on
the amounts payable to the Agent under this Section, any
costs and expenses and the reasonable fees and disbursements of counsel
(including allocated costs of internal counsel), of the Agent. (e) Mitigation. Each Lender agrees that as promptly as practicable after
it becomes aware of the occurrence of an event that would cause the Borrower to
make any payment in respect of Taxes to such Lender or a payment in
indemnification with respect to any Taxes, and in any event if so requested by
the Borrower following such occurrence, such Lender shall promptly notify the
Borrower in writing and use reasonable efforts to make, fund or maintain its
affected Loan (or relevant part thereof) through another Lending Office if as a
result thereof the additional amounts so payable by the Borrower would be
avoided or materially reduced and if, in the reasonable opinion of such Lender,
the making, funding or maintaining of such Loan (or relevant part thereof)
through such other Lending Office would not in any material respect be
disadvantageous to such Lender or contrary to such Lenders normal banking
practices. Upon receipt by the Borrower from any Lender of such notice,
Borrower may request a Replacement Lender pursuant to Section 6.07. 52




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(f) Specified Swap Contracts. Nothing contained in this Section 7.03 shall
override any term or provision of any Specified Swap Contract regarding
withholding taxes relating to Rate Contracts. SECTION 7.04 Non-Receipt of Funds. Unless the Agent shall have received
notice from the Borrower prior to the date on which any payment is due to any
of the Lenders hereunder that the Borrower shall not make such payment in full,
the Agent may assume that the Borrower has made such payment in full to the
Agent on such date and the Agent may, in reliance upon such assumption, cause
to be distributed to each Lender on such due date an amount equal to the amount
then due such Lender. If and to the extent the Borrower shall not have so made
such payment in full to the Agent, each Lender shall repay to the Agent
forthwith on demand such amount distributed to such Lender together with
interest thereon, for each day from the date such amount is distributed to such
Lender until the date such Lender repays such amount to the Agent, at the
Federal Funds Rate. SECTION 7.05 Sharing of Payments. If any Lender shall obtain any payment
(whether voluntary, involuntary, through the exercise of any right of set-off,
or otherwise) on account of the Loans made by it (other than pursuant to a
provision hereof providing for non-pro rata treatment) in excess of its Pro
Rata Share of payments on account of the Loans obtained by all the Lenders,
such Lender shall forthwith advise the Agent of the receipt of such payment,
and within five Business Days of such receipt purchase from the other Lenders
(through the Agent), without recourse, such participations in the Loans made by
them as shall be necessary to cause such purchasing Lender to share the excess
payment ratably with each of them in accordance with the respective Pro Rata
Shares of the Lenders; provided, however, that if all or any portion of such
excess payment is thereafter recovered by or on behalf of the Borrower from
such purchasing Lender, the purchase
shall be rescinded and the purchase price restored to the extent of such
recovery, but without interest. The Borrower agrees that any Lender so
purchasing a participation from another Lender pursuant to this Section 7.05
may exercise all its rights of payment (including the right of set-off) with
respect to such participation as fully as if such Lender were the direct
creditor of the Borrower in the amount of such participation. No documentation
other than notices and the like referred to in this Section 7.05 shall be
required to implement the terms of this Section 7.05. The Agent shall keep
records (which shall be conclusive and binding in the absence of manifest
error) of participations purchased pursuant to this Section 7.05 and shall in
each case notify the Lenders following any such purchases. 53




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ARTICLE VIII
CONDITIONS PRECEDENT SECTION 8.01 Conditions Precedent to the Effectiveness of the Amendment
and Restatement. The effectiveness of this Agreement shall be subject to the
satisfaction of each of the following conditions precedent on or before the
Amendment Closing Date: (a) Fees and Expenses. The Borrower shall have paid (i) all fees then due
in accordance with Section 4.03 and (ii) unless waived by the Agent, all
invoiced costs and expenses then due in accordance with Section 13.04(a). (b) Loan Documents. The Agent shall have received the following Loan
Documents: (i) the Notes, executed by the Borrower; (ii) (in sufficient copies
for each of the Lenders and the Borrower) counterparts of this Agreement, (iii)
the Security Agreements, executed by each of the respective parties thereto,
(iv) the consent of each Guarantor in substantially the form of Exhibit O,
executed by each Guarantor, and (v) Deed of Trust in respect of the Provenance
Property (the Provenance Deed of Trust), executed by the Borrower. (c) Documents and Actions Relating to Collateral. The Agent shall have
received the following, in form and substance satisfactory to it and the
Lenders:(i) evidence that all filings, registrations and recordations have been
made in the appropriate governmental offices, and all other action has been
taken, which shall be necessary to create, in favor of the Collateral Agent on
behalf of the Lenders, a perfected first priority Lien on the Provenance
Property (subject to Permitted Liens), including evidence of recordation of the
Provenance Deed of Trust (which may consist of a written or telephonic
confirmation from the title insurance company) in the appropriate governmental
office; (ii) a title insurance policy (or a binding commitment therefor) for the
Provenance Deed of Trust (A) issued by a title insurance company of recognized
standing satisfactory to the Agent, (B) in an amount and form satisfactory to
the Agent, (C) naming the
Collateral Agent, for the ratable benefit of the Lenders and the Senior
Noteholders, as the insured thereunder, (D) insuring that the Provenance Deed
of Trust insured thereby creates a valid first priority Lien on the Provenance
Property, subject to no other Liens, other than Permitted Liens, and to no
other exceptions, other than those satisfactory to the Agent, and (E)
containing such endorsements and affirmative coverage as the Agent or any
Lender (through the Agent) may reasonably request; (iii) form 110.5 endorsements from North American Title Company (or other
forms acceptable to the Agent) to the existing mortgagee policies of title
insurance issued by Lawyers Title Insurance Corporation in connection with the
Original Closing insuring that each of the Deeds of Trust constitutes a valid
first Lien on the property covered by each such Deed of Trust in favor of the
Collateral Agent, as beneficiary or mortgagee on behalf of the Lenders and the
Senior Noteholders, subject to no other Liens, other than Permitted Liens, and
subject only to exceptions acceptable to the Agent (it being understood and
agreed that exceptions listed in the existing mortgage policies will be
acceptable to the Agent), with such additional endorsements 54




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and affirmative
insurance as the Agent or any Lender (through the Agent) may reasonably
request; (iv) a completed Update Certificate of the Borrower, dated the Amendment
Closing Date, for the period beginning on the Original Closing Date and ending
on the Amendment Closing Date; and (v) received such appraisals, collateral audits, consents of landlords,
estoppels from landlords, tenant subordination agreements and other documents
and instruments in connection with the Collateral Documents as shall reasonably
be deemed necessary by the Agent or any Lender. (d) Additional Closing Documents and Actions. The Agent shall have
received the following, in form and substance satisfactory to it and the
Lenders: (i) confirmation that all amounts due under the Existing Credit Agreement
shall have been paid in full concurrently with the initial Credit Extension
hereunder; (ii) evidence of completion to the satisfaction of the Agent and the
Lenders of such investigations, reviews and audits with respect to the Borrower
and the Guarantors and their respective operations as the Agent or any Lender
may deem appropriate; (iii) evidence that all insurance required under this Agreement and the
Collateral Documents is in full force and effect, together with all
endorsements thereto required under this Agreement and the Collateral
Documents; (iv) an environmental site assessment or other environmental review report
and opinion with respect to the Premises subject to the Provenance Deed of
Trust, dated as of recent date prior to the Amendment Closing Date, prepared by
a qualified environmental consulting firm acceptable to the Agent; (v) evidence that all (A) authorizations or approvals of any Governmental
Authority and (B) approvals or consents of any other Person, required in
connection with the execution, delivery and performance of the Loan Documents
shall have been obtained; (vi) (in sufficient copies for the Lenders) the audited consolidated
balance sheet of the Borrower and its Subsidiaries as at December 31, 2003, and
the related consolidated statements of income, shareholders equity and cash
flows for the fiscal year then ended; (vii) a completed Borrowing Base Certificate as of the end of the
immediately preceding fiscal month, together with the related collateral
reports, also as of such date, specified in Section 10.01(a)(viii); (viii) a completed Compliance Certificate, dated the Amendment Closing
Date, demonstrating the Borrowers compliance with the financial covenants set
forth in Section 10.02 as of the end of the immediately preceding fiscal
quarter, measured on a pro forma basis after giving effect to the Borrowings to
be made hereunder on the Amendment Closing Date; 55




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(ix) a certificate of a Responsible Officer of the Borrower, dated the
Amendment Closing Date, stating that (A) the representations and warranties
contained in Section 9.01 and in the other Loan Documents are true and correct
on and as of the date of such certificate as though made on and as of such date
and (B) on and as of the Amendment Closing Date, no Default shall have occurred
and be continuing or shall result from the initial Credit Extension; and (x) a certificate of a Responsible Officer of each Guarantor, dated the
Amendment Closing Date, stating that the representations and warranties
contained in Section 9 of the Guaranties and in the other Guarantor Documents
are true and correct on and as of the date of such certificate as though made
on and as of such date. (e) Corporate Documents. The Agent shall have received the following, in
form and substance satisfactory to it and the Lenders: (i) certified copies of the Organization Documents of the Borrower,
together with certificates as to good standing and tax status from the
Secretary of State or other Governmental Authority, as applicable, of the
Borrowers state of incorporation, each dated as of a recent date prior to the
Amendment Closing Date; (ii) a certificate of the Secretary or Assistant Secretary of the
Borrower, dated the Amendment Closing Date, certifying (A) the resolutions of
the Board of Directors of the Borrower authorizing the execution, delivery and
performance of the Loan Documents and (B) the incumbency, authority and
signatures of each officer of the Borrower authorized to execute and deliver
the Loan Documents and act with respect thereto, upon which certificate the
Agent and the Lenders may conclusively rely until the Agent shall have received
a further certificate of the Secretary or an Assistant Secretary of the
Borrower canceling or amending such prior certificate; (iii) certified copies of the Organization Documents of each Guarantor,
together with certificates as to good standing and tax status from the
Secretary of State or other Governmental Authority, as applicable, of the
Guarantors state of incorporation or organization, as applicable, each dated
as of a recent date prior to the Amendment Closing Date; and (iv) a certificate of the Secretary or Assistant Secretary of each
Guarantor, dated the Amendment Closing Date, certifying (A) the resolutions of
the Board of Directors or other governing body of the Guarantor authorizing the
execution, delivery and performance of the Guarantor Documents and (B) the
incumbency, authority and signatures of each officer of the Guarantor
authorized to execute and deliver the Guarantor Documents and act with respect
thereto, upon which certificate the Agent and the Lenders may conclusively rely
until the Agent shall have received a further certificate of the Secretary or
an Assistant Secretary of the Guarantor canceling or amending such prior
certificate. (f) Legal Opinions. The Agent shall have received the opinion of Farella
Braun and Martel LLP, counsel to the Borrower and the Subsidiary Guarantors,
dated the Amendment Closing Date, in form and substance satisfactory to the
Agent. 56




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(g) Senior Secured Note Documents. The Agent shall have received executed
copies of amendments to the Senior Secured Note Documents, which shall be in
form and substance reasonably satisfactory to the Agent and the Majority
Lenders, and which shall (i) amend the financial covenants of the Senior
Secured Note Documents to conform to the corresponding amendments made herein
and (ii) consent to this Agreement and the transactions contemplated hereby. (h) Pro-Forma Debt to EBITDA Ratio. The ratio of (i) Consolidated
Indebtedness plus six times Consolidated Rent Expense (measured on a rolling
4-quarter basis) to (ii) Consolidated EBITDA plus one times Consolidated Rent
Expense (in each case, measured on a rolling 4-quarter basis), shall not be
greater than 5.50 to 1.00, measured on a pro forma basis (after giving effect
to the Borrowings to be made hereunder on the Amendment Closing Date) as of the
last day of the immediately preceding fiscal quarter. SECTION 8.02 Conditions Precedent to All Credit Extensions. The
obligation of each Lender to make any Credit Extension to be made by it
hereunder (including its initial Credit Extension) is subject to the
satisfaction of the following conditions precedent on the relevant Credit
Extension date: (a) Notice. The Agent shall have received a Notice of Borrowing or Notice
of Conversion or Continuation, as the case may be; or in the case of any
issuance, amendment or renewal of any
Letter of Credit, the Issuing Lender and the Agent shall have received an
L/C Application or L/C Amendment Application, as required under Section 3.02. (b) Material Adverse Effect. On and as of the date of such Credit
Extension, there shall have occurred no Material Adverse Effect since December
31, 2003. (c) Representations and Warranties; No Default. On the date of such
Credit Extension date, both before and after giving effect thereto and to the
application of proceeds therefrom: (i) the representations and warranties
contained in Section 9.01 and in the other Loan Documents shall be true,
correct and complete on and as of the date of such Credit Extension date as
though made on and as of such date; and (ii) no Default shall have occurred and
be continuing or shall result from such Credit Extension. For purposes of this
Section 8.02(c), clause (i) shall be deemed instead to refer to the last day of
the most recent quarter and year for which financial statements have then been
delivered in respect of the representation and warranty made in Section
9.01(p); clause (i) and shall not be deemed to refer to any other
representations and warranties which relate solely to an earlier date (provided
that such other representations and warranties shall be true, correct and
complete as of such earlier date); and clause (i) shall take into account any
amendments to the Schedules and other disclosures made in writing by the
Borrower and the Guarantors to the Agent and the Lenders after the Amendment
Closing Date and approved by the Agent and the Majority Lenders. The giving of
any Notice of Borrowing or Notice of Conversion or Continuation, as the case
may be, the submission of any L/C Application or L/C Amendment Application, and
the acceptance by the Borrower of the proceeds of each Borrowing following the
Amendment Closing Date, shall each be deemed a certification to the Agent and
the Lenders that on and as of the date of such Credit Extension such statements
are true. 57




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(d) Borrowing Base Certificate and Collateral Reports. The Borrower shall
have delivered to the Agent the completed Borrowing Base Certificate, together
with the related collateral reports, required under Section 10.01(a), and the
statements contained therein shall be true, correct and complete on and as of
the date of such Borrowing as though made on and as of such date. The giving of
any Notice of Borrowing or Notice of Conversion or Continuation, as the case
may be, the submission of any L/C Application or L/C Amendment Application, and
the acceptance by the Borrower of the proceeds of a Borrowing, shall each be
deemed a certification to the Agent and the Lenders that on and as of the date
of the Credit Extension such statements are true, correct and complete. (d) Additional Documents. The Agent shall have received, in form and
substance satisfactory to it, such additional approvals, opinions, documents
and other information as the Agent or any Lender (through the Agent) may
reasonably request. ARTICLE IX
REPRESENTATIONS AND WARRANTIES SECTION 9.01 Representations and Warranties. The Borrower represents and
warrants to each Lender and the Agent that: (a) Organization and Powers. Each of the Borrower and its Subsidiaries is
a corporation, limited liability company or partnership duly organized or
formed, as the case may be, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or formation, is qualified to do
business and is in good standing in each jurisdiction in which the failure so
to qualify or be in good standing would result in a Material Adverse Effect and
has all requisite power and authority to own its assets and carry on its
business and to execute, deliver and perform its obligations under the Loan
Documents. (b) Authorization; No Conflict. The execution, delivery and performance
by the Borrower and each Guarantor of the Loan Documents to which such Person
is a party have been duly authorized by all necessary corporate action of such
Person and do not and will not (i) contravene the terms of the Organization
Documents of such Person or result in a breach of or constitute a default under
any indenture or loan or credit agreement or any other agreement, lease or
instrument to which such Person is a party or by which it or its properties may
be bound or affected; (ii) violate any provision of any law, rule, regulation,
order, writ, judgment, injunction, decree or the like binding on or affecting
such Person; or (iii) except as contemplated by this Agreement, result in, or
require, the creation or imposition of any Lien upon or with respect to any of
the properties of such Person. (c) Binding Obligation. The Loan Documents constitute, or when delivered
under this Agreement will constitute, legal, valid and binding obligations of
the Borrower and the Guarantors, enforceable against the Borrower and the
Guarantors in accordance with their respective terms. (d) Consents. No authorization, consent, approval, license, exemption of,
or filing or registration with, any Governmental Authority, or approval or
consent of any other Person, is required for the due execution, delivery or
performance by the Borrower or the 58




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Guarantors of any of the Loan Documents,
except for recordings or filings in connection with the perfection of the Liens
on the Collateral in favor of the Collateral Agent on behalf of the Lenders. (e) No Defaults.
Neither the Borrower nor any of its Subsidiaries is in default under any
material contract, lease, agreement, judgment, decree or order to which it is a
party or by which it or its properties may be bound. (f) Title to Properties; Liens; Use. The Borrower and its Subsidiaries
have good and marketable title to, or valid and subsisting leasehold interests
in, their properties and assets, including all property forming a part of the
Collateral, there is no Lien upon or with respect to any of such properties or
assets, including any of the Collateral, except for Permitted Liens, and the
use, ownership, maintenance and operation of each Premises by the Borrower or
its Subsidiaries is in compliance in all material respects with all applicable
Requirements of Law. (g) Litigation. Except as set forth on Schedule 5 hereto, there are no
actions, suits or proceedings pending or, to the best of the Borrowers
knowledge, threatened against or affecting the Borrower or any of its
Subsidiaries or the properties of the Borrower or any of its Subsidiaries
before any Governmental Authority or arbitrator which if determined adversely
to the Borrower or any such Subsidiary would result in a Material Adverse
Effect. (h) Compliance with Environmental Laws. Each of the Borrower and its
Subsidiaries is in full compliance with all Environmental Laws, whether in
connection with the ownership, use, maintenance or operation of its Premises or
the conduct of any business thereon, or otherwise. Neither the Borrower, any
of its Subsidiaries nor to the best of the Borrowers knowledge, after due and
diligent inquiry and investigation, any previous owner, tenant, occupant, user
or operator of the Premises, or any present tenant or other present occupant,
user or operator of the Premises has used, generated, manufactured, installed,
treated, released, stored or disposed of any Hazardous Substances on, under, or
at the Premises, except in compliance with all applicable Environmental Laws.
After due and diligent inquiry and investigation the Borrower has determined
that no Hazardous Substances have at any time been spilled, leaked, dumped,
deposited, discharged, disposed of or released or migrated on, under, at or
from the Premises, nor have any of the Premises been used at any time by any
Person as a landfill or waste disposal site. There are no actions, suits,
claims, notices of violation, hearings, investigations or proceedings pending
or, to the best of the Borrowers knowledge, threatened against or affecting
the Borrower or any of its Subsidiaries or with respect to the ownership, use,
maintenance and operation of the Premises, relating to Environmental Laws or
Hazardous Substances. (i) Governmental Regulation. Neither the Borrower nor any of its
Subsidiaries is subject to regulation under the Public Utility Holding Company
Act of 1935, the Federal Power Act, the Investment Company Act of 1940, the
Interstate Commerce Act, any state public utilities code or any other federal
or state statute or regulation limiting its ability to incur Indebtedness. (j) ERISA. 59




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(i) The Borrower and all ERISA Affiliates have satisfied all applicable
contribution requirements under Section 412(c)(11) of the Internal Revenue Code
and have never sought a waiver under Section 412(d) of the Internal Revenue
Code; (ii) no Termination Event has occurred and is continuing, or is reasonably
expected to occur; (iii) the aggregate amount of Unfunded Accrued Benefits under all Pension
Plans (excluding in such computation Pension Plans with assets greater than
accrued benefits) does not exceed $1,500,000; (iv) there is no condition or event under which the Borrower, any ERISA
Affiliate, or any Plan maintained by the Borrower or any ERISA Affiliate could
be subject to any risk of material liability under ERISA or the Internal
Revenue Code, regardless of whether the Borrower or any ERISA Affiliate engaged
in a transaction giving rise to the liability; (v) neither the Borrower nor any ERISA Affiliate has unfunded, contingent
liability that exceeds $1,500,000 with respect to Plans that provide
post-retirement welfare benefits; and (vi) all Plans maintained by, or contributed to by, the Borrower or any
ERISA Affiliate comply in all material respects, and have been administered in
material compliance with, the requirements of applicable law (including, if
applicable, foreign law, ERISA and the Internal Revenue Code), and in
accordance with each Plans terms. (k) Subsidiaries. The name, capital structure and ownership of each
Subsidiary of the Borrower on the date of this Agreement are as set forth in
Schedule 6. All of the outstanding capital stock of, or other interest in,
each such Subsidiary has been validly issued, and is fully paid and
nonassessable. Except as set forth in such Schedule, on the date of this
Agreement the Borrower has no equity interest in any Person. (l) Margin Regulations. The Borrower is not engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock
(within the meaning of Regulation U of the FRB). No part of the proceeds of
the Loans will be used to purchase or carry any margin stock or to extend
credit to others for the purpose of purchasing or carrying any margin stock,
except in accordance with the provisions of Regulations T, U, and X of the FRB. (m) Taxes. Each of the Borrower and its Subsidiaries has duly filed all
tax and information returns required to be filed, and has paid all taxes, fees,
assessments and other governmental charges or levies that have become due and
payable, except to the extent such taxes or other charges are being contested
in good faith and are adequately reserved against in accordance with GAAP. (n) Patents and Other Rights. Each of the Borrower and its Subsidiaries
possesses all permits, franchises, licenses, patents, trademarks, trade names,
service marks, copyrights and all rights with respect thereto, free from
burdensome restrictions, that are necessary for the ownership, maintenance and
operation of its business and neither the Borrower nor any such Subsidiary is
in violation of any rights of others with respect to the foregoing. 60




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(o) Insurance. The properties of the Borrower and its Subsidiaries are
insured, with financially sound and reputable insurance companies, in such
amounts, with such deductibles and covering such risks as is customarily
carried by companies engaged in similar businesses and owning similar
properties in the localities where the Borrower or such Subsidiary operates. (p) Financial Statements. (i) The audited consolidated balance sheet of
the Borrower and its Subsidiaries as at December 31, 2003, and the related
consolidated statements of income, shareholders equity and cash flows for the
fiscal year then ended are complete and correct and fairly present the
financial condition of the Borrower and its Subsidiaries as at such dates and
the results of operations of the Borrower and its Subsidiaries for the periods
covered by such statements, in each case in accordance with GAAP consistently
applied. (ii) Since December 31, 2003, there has been no Material Adverse
Effect. (q) Liabilities. Neither the Borrower nor any of its Subsidiaries has any
material liabilities, fixed or contingent, that are not reflected in the
financial statements referred to in subsection (p), in the notes thereto or
otherwise disclosed in writing to the Lenders. (r) Labor Disputes, Etc. There are no strikes, lockouts or other labor
disputes against the Borrower or any of its Subsidiaries, or, to the best of
the Borrowers knowledge, threatened against or affecting the Borrower or any
of its Subsidiaries, and no Event of Loss has occurred with respect to any
assets or property of the Borrower or any of its Subsidiaries, which may result
in a Material Adverse Effect. (s) Solvency. Each of the Borrower and its Subsidiaries is Solvent. (t) Disclosure. None of the representations or warranties made by the
Borrower or any of its Subsidiaries in the Loan Documents as of the date of
such representations and warranties, and none of the statements or other
information contained in each exhibit, report, certificate or
written statement furnished by or on behalf of the Borrower or any of its
Subsidiaries to the Agent and the Lenders in connection with the Loan
Documents, contains any untrue statement of a material fact or omits any
material fact required to be stated therein or necessary to make the statements
made therein, in the light of the circumstances under which they are made, not
misleading, as of the time made or delivered; provided that to the extent any
such exhibit, report, certificate or written statement was based upon or
constitutes a forecast or projection, the Borrower represents only that it has
acted in good faith and utilized reasonable assumptions and due care in the
preparation of such exhibit, report, certificate or written statement (it being
understood that forecasts and projections by their nature involve
approximations and uncertainties). ARTICLE X
COVENANTS SECTION 10.01 Reporting Covenants. So long as any of the Obligations
shall remain unpaid, any Letter of Credit shall remain outstanding or any
Lender shall have any Commitment, the Borrower agrees that: 61




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(a) Financial Statements and Other Reports. The Borrower shall furnish to
the Agent in sufficient copies for distribution to the Lenders: (i) as soon as available and in any event within 45 days after the end of
the first three fiscal quarters of each fiscal year, a consolidated and
consolidating balance sheet of the Borrower and its Subsidiaries as of the end
of such quarter, and the related consolidated and, as to statements of income
only, consolidating statements of income, shareholders equity and cash flows
of the Borrower and its Subsidiaries for such quarter and the portion of the
fiscal year through the end of such quarter, prepared in accordance with GAAP
consistently applied, subject to changes resulting from normal, year-end audit
adjustments and except for the absence of notes, all in reasonable detail and
setting forth in comparative form the figures for the corresponding period in
the preceding fiscal year, together with a certificate of a Responsible Officer
of the Borrower stating that such financial statements fairly present the
financial condition of the Borrower and its Subsidiaries as at such date and
the results of operations of the Borrower and its Subsidiaries for the period
ended on such date and have been prepared in accordance with GAAP consistently
applied, subject to changes resulting from normal, year-end audit adjustments
and except for the absence of notes; (ii) as soon as available and in any event within 90 days after the end of
each fiscal year, a consolidated and consolidating balance sheet of the
Borrower and its Subsidiaries as of the end of such fiscal year, and the
related consolidated and, as to statements of income only, consolidating
statements of income, shareholders equity and cash flows of the Borrower and
its Subsidiaries for such fiscal year, prepared in accordance with GAAP
consistently applied, all in reasonable detail and setting forth in comparative
form the figures for the previous fiscal year, and (A) in the case of such
consolidated financial statements, accompanied by an audit report thereon of
Moss Adams LLP or another firm of independent certified public accountants
of recognized national standing acceptable to the Majority Lenders, which
report shall not be qualified as to (1) going concern, or (2) any limitation in
the scope of the audit, and (B) in the case of such consolidating financial
statements, certified by a Responsible Officer of the Borrower; (iii) together with the financial statements required pursuant to clauses
(i) and (ii), a Compliance Certificate of a Responsible Officer as of the end
of the applicable accounting period; (iv) together with the financial statements required pursuant to clause
(ii), an Update Certificate of a Responsible Officer as of the end of the
applicable fiscal year; (v) promptly upon receipt thereof, copies of all reports submitted to the
Borrower by its independent certified public accountants in connection with
each annual, interim or special audit examination of the Borrower and its
Subsidiaries made by such accountants, including the management letter
submitted by such accountants to the Borrower in connection with their annual
audit; (vi) as soon as available and in any event not less than 30 days prior to
the start of each fiscal year, a consolidated financial forecast for the
Borrower and its Subsidiaries for the following fiscal year and each fiscal
year thereafter through the Final Maturity Date, including 62




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forecasted
consolidated balance sheets, consolidated statements of income, shareholders
equity and cash flows of the Borrower and its Subsidiaries which forecast shall
(A) state the assumptions used in the preparation thereof, (B) contain such
other information as reasonably requested by the Agent or the Majority Lenders
and (C) be in form reasonably satisfactory to the Agent and the Majority
Lenders; (vii) as soon as available and in any event not less than 30 days prior to
the start of each fiscal year, budgets of the Borrower and its Subsidiaries for
each quarter of the following fiscal year, which budgets shall (A) state the
assumptions used in the preparation thereof, (B) be in form satisfactory to the
Agent and the Majority Lenders, and (C) be accompanied by a statement of a
Responsible Officer of the Borrower that, to the best of such Responsible
Officers knowledge, such budgets are a reasonable and good-faith estimate for
the period covered thereby; (viii) as soon as available and in any event not later than the last
Business Day of each fiscal month, (A) a completed Borrowing Base Certificate,
(B) full and complete reports with respect to the Receivables, including
information as to concentration, aging, identity of Receivable Debtors, letters
of credit securing Receivables, disputed Receivables and other matters, as the
Agent shall reasonably request, and (C) a detailed schedule of the Borrowers
Inventory, each as of the end of the immediately preceding fiscal month and in
form and substance reasonably satisfactory to the Agent; (ix) promptly after the same are released, copies of all press releases;
and (x) promptly after the giving, sending or filing thereof, copies of all
reports, if any, which the Borrower or any of its Subsidiaries sends to the
holders of its respective capital
stock or other securities and of all reports or filings, if any, by the
Borrower or any of its Subsidiaries with the SEC or any national securities
exchange. As to any information contained in materials furnished pursuant to clause (x),
the Borrower shall not be separately required to furnish such information under
clause (i) or (ii), but the foregoing shall not be in derogation of the
obligation of the Borrower to furnish the information and materials described
in clauses (i) and (ii) at the times specified therein. Additionally, reports
required to be delivered pursuant to clauses (i), (ii) or (x) of subsection
10.01(a) (to the extent any such financial statements, reports or proxy
statements are included in materials otherwise filed with the SEC) may be
delivered electronically and if so, shall be deemed to have been delivered on
the date on which the Borrower posts such reports, or provides a link thereto,
either: (i) on the Borrowers website on the Internet at the website address
listed on Schedule 2; or (ii) when such report is posted electronically on
IntraLinks/IntraAgency or other relevant website to which each Lender and the
Agent have access (whether a commercial, third-party website or whether
sponsored by the Agent), if any, on the Borrowers behalf; provided that: (A)
the Borrower shall deliver paper copies of such reports to the Agent or any
Lender who requests the Borrower to deliver such paper copies until written
request to cease delivering paper copies is given by the Agent or such Lender;
(B) the Borrower shall notify (which may be by facsimile or electronic mail)
the Agent and each Lender of the posting of any such reports and provide to the
Agent by email electronic versions (i.e.soft copies) of such reports; and (C)
in every instance the Borrower shall provide paper copies of the Compliance
Certificates required by clause (iii) above to the 63




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Agent and each of the
Lenders. Except for such Compliance Certificates, the Agent shall have no
obligation to request the delivery or to maintain copies of the reports
referred to above, and in any event shall have no responsibility to monitor
compliance by the Borrower with any such request for delivery, and each Lender
shall be solely responsible for requesting delivery to it or maintaining its
copies of such reports. (b) Additional Information. The Borrower will furnish to the Agent: (i) promptly after the Borrower has knowledge or becomes aware thereof,
notice of the occurrence of any Event of Loss with respect to its property or
assets aggregating $1,500,000 (or its equivalent in another currency) or more; (ii) promptly after the Borrower has knowledge or becomes aware thereof,
notice of the occurrence or existence of any Default; (iii) promptly after any Person becomes a Subsidiary of the Borrower
(whether by acquisition or otherwise), prompt written notice thereof; (iv) prompt written notice of (A) any proposed acquisition of stock,
assets or property by the Borrower or any of its Subsidiaries that could
reasonably be expected to result in environmental liability under Environmental
Laws, and (B)(1) any spillage, leakage, discharge, disposal, leaching,
migration or release of any Hazardous Substances required to be reported to any
Governmental Authority under applicable Environmental Laws, and (2) all
actions, suits, claims, notices of violation, hearings, investigations or
proceedings pending, or to the best of the
Borrowers knowledge, threatened against or affecting the Borrower or any
of its Subsidiaries or with respect to the ownership, use, maintenance and
operation of the Premises, relating to (1) Environmental Laws or Hazardous
Substances or (2) any other Requirement of Law that, in the case of this clause
(2), may have a Material Adverse Effect; (v) prompt written notice of all actions, suits and proceedings before any
Governmental Authority or arbitrator pending, or to the best of the Borrowers
knowledge, threatened against or affecting the Borrower or any of its
Subsidiaries which (A) if adversely determined would involve an aggregate
uninsured liability of $1,500,000 (or its equivalent in another currency) or
more, or (B) otherwise may have a Material Adverse Effect; (vi) promptly after the Borrower has knowledge or becomes aware thereof,
(A) notice of the occurrence of any Termination Event, together with a copy of
any notice of such Termination Event to the PBGC, and (B) the details
concerning any action taken or proposed to be taken by the IRS, PBGC,
Department of Labor or other Person with respect thereto; (vii) the information regarding insurance maintained by the Borrower and
its Subsidiaries as required under Section 10.03(c); (viii) within 30 days of the date thereof, or, if earlier, on the date of
delivery of any financial statements pursuant to subsection (a), notice of any
material change in accounting policies or financial reporting practices by the
Borrower or any of its Subsidiaries; 64




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(ix) promptly after the occurrence thereof, notice of any labor
controversy resulting in or threatening to result in any strike, work stoppage,
boycott, shutdown or other material labor disruption against or involving the
Borrower or any of its Subsidiaries which could result in a Material Adverse
Effect; (x) upon the request from time to time of the Agent or any Lender (through
the Agent), the Swap Termination Values, together with a description of the
method by which such values were determined, relating to any then-outstanding
Rate Contracts to which the Borrower or any of its Subsidiaries is party; (xi) prompt written notice of any other condition or event which has
resulted, or that could reasonably be expected to result, in a Material Adverse
Effect; and (xii) such other information respecting the operations, properties,
business or condition (financial or otherwise) of the Borrower or its
Subsidiaries (including with respect to the Collateral) as any Lender (through
the Agent) may from time to time reasonably request. Each notice pursuant to this subsection (b) shall be accompanied by a written
statement by a Responsible Officer of the Borrower setting forth details of the
occurrence referred to therein, and stating what action the Borrower proposes
to take with respect thereto. SECTION 10.02 Financial Covenants. So long as any of the Obligations
shall remain unpaid, any Letter of Credit shall remain outstanding or any
Lender shall have any Commitment, the Borrower agrees that: (a) Leverage Ratio. The Borrower shall maintain a ratio of (a)
Consolidated Indebtedness plus six times Consolidated Rent Expense (measured on
a rolling 4-quarter basis) to (b) Consolidated EBITDA plus one times
Consolidated Rent Expense (in each case, measured on a rolling 4-quarter basis)
(such ratio, the Leverage Ratio) as of the last day of each fiscal quarter of
not more than (i) 5.50 to 1.00 for the second fiscal quarter of 2004, each
fiscal quarter of 2005, and the first fiscal quarter of 2006, (ii) 5.00 to 1.00
for the second and third fiscal quarters of 2006, (iii) 4.50 to 1.00 for the
fourth fiscal quarter of 2006 and the first fiscal quarter of 2007 and (iv)
3.50 to 1.00 for the second fiscal quarter of 2007 and each fiscal quarter
ending thereafter. (b) Minimum Consolidated Tangible Net Worth. The Borrower shall maintain
Consolidated Tangible Net Worth at all times of not less than $76,000,000 plus
the Net Issuance Proceeds received by the Borrower or any Subsidiary from the
sale or issuance of equity securities to any Person other than the Borrower or
any Subsidiary plus the Net Issuance Proceeds received by the Borrower or any
Subsidiary from the sale or issuance of Subordinated Debt to any Person other
than the Borrower or any Subsidiary plus 75% of positive Consolidated Net
Income, if any, for each fiscal quarter elapsed after December 31, 2001. (c) Interest Coverage Ratio. The Borrower shall maintain a ratio of
Consolidated EBIT to Consolidated Interest Expense, for each period of four
consecutive fiscal quarters then ended, of not less than (i) 1.05 to 1.00 as
of
the last day of the second and third fiscal quarters of 2004, (ii) 1.25 to 1.00
as of the last day of the fourth fiscal quarter of 2004, each fiscal quarter of
2005, and the first and second fiscal quarters of 2006, (iii) 1.50 to 1.00 as 65




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of the last day of the third and fourth fiscal quarters of 2006, (iv) 2.00 to
1.00 as of the last day of the first and second fiscal quarters of 2007, (v)
2.50 to 1.00 as of the last day of the third fiscal quarter of 2007, (vi) 3.00
to 1.00 as of the last day of the fourth fiscal quarter of 2007 and (vii) 3.50
to 1.00 as of the last day of the first fiscal quarter of 2008 and each fiscal
quarter ending thereafter. (d) Fixed Charge Coverage Ratio. The Borrower shall maintain a ratio of
(a) Consolidated EBITDA to (b) the sum of Consolidated Interest Expense plus
regularly scheduled principal payments on Indebtedness (including such payments
attributable to Capital Leases) plus cash income taxes plus cash dividends, of
the Borrower and its Subsidiaries on a consolidated basis, as determined in
accordance with GAAP, for each period of four consecutive fiscal quarters then
ended of not less than (i) 1.10 to 1.00 as of the last day of the second fiscal
quarter of 2004 through the last day of the first fiscal quarter of 2007 and
(ii) 1.25 to 1.00 as of the last day of the second fiscal quarter of 2007 and
each fiscal quarter ending thereafter. (e) Capital Expenditures. (i) The Borrower shall not, and shall not
permit any of its Subsidiaries to, make or become legally obligated to make any
expenditure in respect of the purchase or other
acquisition of any new wine barrels where such expenditure exceeds, in the
aggregate for the Borrower and its Subsidiaries during each fiscal year set
forth below, the amount set forth opposite such fiscal year: Fiscal Year Ending
    
    Amount2004
    
    $
    5,500,0002005
    
    $
    6,000,0002006
    
    $
    6,500,0002007
    
    $
    7,000,0002008
    
    $
    7,500,0002009
    
    $
    8,000,0002010
    
    $
    8,500,000
 (ii) The Borrower shall not, and shall not permit any of its Subsidiaries
to, make or become legally obligated to make any expenditure in respect of the
purchase or other acquisition of any fixed or capital assets (excluding those
assets set out in clause (i) above), where such expenditure exceeds, in the
aggregate for the Borrower and its Subsidiaries during each fiscal year set
forth below, the amount set forth opposite such fiscal year: Fiscal Year Ending
    
    Amount2004
    
    $
    5,000,0002005
    
    $
    4,500,0002006
    
    $
    6,000,0002007
    
    $
    3,000,0002008
    
    $
    2,500,0002009
    
    $
    2,500,0002010
    
    $
    3,000,000
 66




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##### 



provided, however, that in respect of clauses (i) and (ii) above, so long as no
Default or Event of Default has occurred and is continuing or would result from
such expenditure, any portion of any such amount set forth above, if not
expended in the fiscal year for which it is permitted above, may be carried
over for expenditure in the next following fiscal year, but may not be carried
over for expenditure in any fiscal year thereafter. The financial covenants set forth in subsections 10.02(a) (captioned Leverage
Ratio), 10.02(c) (captioned Interest Coverage Ratio) and 10.02(d) (captioned
Fixed Charge Ratio) shall be calculated without giving effect to the
principal amount of the Shareholder Subordinated Debt or any interest payable
thereunder. SECTION 10.03 Additional Affirmative Covenants. So long as any of the
Obligations shall remain unpaid, any Letter of Credit shall remain outstanding
or any Lender shall have any Commitment, the Borrower agrees that: (a) Preservation of Existence, Etc. The Borrower shall, and shall cause
each of its Subsidiaries to, maintain and preserve its legal existence, its
rights to transact business and all other rights, franchises and privileges
necessary or desirable in the normal course of its business and operations and
the ownership of its properties, except in connection with transactions
permitted by Section 10.04. (b) Payment of Obligations. The Borrower shall, and shall cause each of
its Subsidiaries to, pay and discharge (i) all taxes, fees, assessments and
governmental charges or levies imposed upon it or upon its properties or assets
prior to the date on which penalties attach thereto, and all lawful claims for
labor, materials and supplies which, if unpaid, might become a Lien upon any
properties or assets of the Borrower or any Subsidiary, except to the extent
such taxes, fees, assessments or governmental charges or levies, or such
claims, are being contested in good faith by appropriate proceedings and are
adequately reserved against in accordance with GAAP; (ii) all lawful claims
which, if unpaid, would by law become a Lien upon its property not constituting
a Permitted Lien; and (iii) all Indebtedness, as and when due and payable, but
subject to any subordination provisions contained in any instrument or
agreement evidencing such Indebtedness. (c) Maintenance of Insurance. The Borrower shall, and shall cause each of
its Subsidiaries to, carry and maintain in full force and effect, at its own
expense and with financially sound and reputable insurance companies, insurance
in such amounts, with such deductibles and covering such risks as is
customarily carried by companies engaged in the same or similar businesses and
owning similar properties in the localities where the Borrower or such
Subsidiary operates, including fire, extended coverage, business interruption,
public liability, property damage and workers compensation. Insurance on the
Collateral shall name the Collateral Agent, for the ratable benefit of the
Lenders as their interests may appear, as additional insured and as loss payee.
Upon the request of the Agent or any Lender, the Borrower shall furnish the
Agent from time to time with full information as to the insurance carried by it
and, if so requested, copies of all such insurance policies. The Borrower
shall also furnish to the Agent from time to time upon the request of the Agent
or any Lender a certificate of the Borrowers insurance broker or other
insurance specialist stating that all premiums then due on the policies
relating to insurance on the Collateral have been paid, that such policies are
in full 67




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force and effect and that such insurance coverage and such policies
comply with all the requirements of this subsection. All insurance policies
required under this subsection shall provide that they shall not be terminated
or cancelled nor shall any such policy be materially changed without at least
30 days prior written notice to the Borrower and the Agent. Receipt of notice
of termination or cancellation of any such insurance policies or reduction of
coverages or amounts thereunder shall entitle the Agent to renew any such
policies, cause the coverages and amounts thereof to be maintained at levels
required pursuant to the first sentence of this subsection (c) or otherwise to
obtain similar insurance in place of such policies, in each case at the expense
of the Borrower. (d) Keeping of Records and Books of Account.
The Borrower shall, and shall cause each of its Subsidiaries to, keep
adequate records and books of account, in which complete entries shall be made
in accordance with GAAP, reflecting all financial transactions of the Borrower
and its Subsidiaries. (e) Inspection Rights. The Borrower shall upon reasonable notice at any
reasonable time during normal business hours and from time to time (i) permit
the Agent and the Lenders or any of their respective agents or representatives
to visit and inspect any of the properties of the Borrower and its Subsidiaries
and to examine and make copies of and abstracts from the records and books of
account of the Borrower and its Subsidiaries, and to discuss the business
affairs, finances and accounts of the Borrower and any such Subsidiary with any
of the officers, employees or accountants of the Borrower or such Subsidiary,
and (ii) permit the Agent or any of its agents or representatives to conduct
periodic audits of the Collateral at such frequencies as the Agent or the
Majority Lenders shall deem appropriate, in each case, at the expense of the
Borrower; provided, however, that other than during the occurrence and
continuation of an Event of Default, the Borrower shall not be required to pay
for more than one such inspection or audit during any 12-month period. (f) Compliance with Laws, Etc. The Borrower shall, and shall cause each
of its Subsidiaries to, comply in all material respects with the requirements
of all applicable laws, rules, regulations and orders of any Governmental
Authority (including all Environmental Laws) and the terms of any indenture,
contract or other instrument to which it may be a party or under which it or
its properties may be bound. (g) Maintenance of Properties, Etc. The Borrower shall, and shall cause
each of its Subsidiaries to, maintain and preserve all of its properties
necessary or useful in the proper conduct of its business in good working order
and condition in accordance with the general practice of other corporations or
companies in similar businesses and of similar character and size, ordinary
wear and tear excepted. (h) Licenses. The Borrower shall, and shall cause each of its
Subsidiaries to, obtain and maintain all licenses, authorizations, consents,
filings, exemptions, registrations and other governmental approvals necessary
in connection with the execution, delivery and performance of the Loan
Documents, the consummation of the transactions therein contemplated or the
operation and conduct of its business and ownership of its properties. 68




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(i) Action Under Environmental Laws. The Borrower shall, and shall cause
each of its Subsidiaries to, upon becoming aware of the presence of any
Hazardous Substance other than Hazardous Substances customarily used in
businesses such as Borrowers, which Hazardous Substances are used in strict
compliance with all applicable Environmental Laws, or the existence of any
environmental liability under applicable Environmental Laws with respect to the
Premises, take all actions, at their cost and expense, as shall be necessary or
reasonably advisable to investigate and clean up the condition of the Premises,
including all removal, containment and remedial actions, and restore the
Premises to a condition in compliance with applicable Environmental Laws.
Nothing in this Section 10.03(i) is intended to limit, derogate or otherwise
reduce the rights of the Collateral Agent and the Lenders under the Deeds of
Trust with respect to Environmental Laws. (j) Use of Proceeds. The Borrower shall use the proceeds of the Loans
solely for general corporate purposes not in contravention of any Requirement
of Law and to repay amounts owing under the Existing Credit Agreement. (k) Additional Subsidiaries. (i) Promptly after the date the Borrower
incorporates, creates or acquires any additional Subsidiary and, in any event,
within ten Business Days of such incorporation, creation or acquisition, the
Borrower shall cause such Subsidiary to execute and deliver to the Agent (i) an
accession agreement, as provided for in Section 22 of the Security Agreement,
(ii) an accession agreement, as provided for in Section 26 of the Guaranty of
the Subsidiary Guarantors other than Edna Valley Vineyard, (iii) any UCC-1
financing statements which are required by the Collateral Agent or the Agent
for filing in each jurisdiction in which such filing is necessary to perfect
the security interest of the Collateral Agent in the Collateral of such
Subsidiary and (iv) such other items as reasonably requested by the Agent in
connection with the foregoing, including resolutions, incumbency and officers
certificates, opinions of counsel, search reports and other certificates and
documents. (l) Proceeds of Events of Loss. All proceeds paid to the Borrower or any
Subsidiary on account of any Event of Loss in excess of $1,500,000 shall be
deposited or otherwise held in a deposit account or securities account in
respect of which the Collateral Agent holds a perfected first priority Lien
(subject only to Permitted Liens), for the ratable benefit of the Lenders as
their interests may appear, pending the application of such proceeds to repay
the Loans as provided in Section 5.03(b) or to repair, replace or reconstruct
the property affected by the Event of Loss. (m) Conversion of Shareholder Subordinated Debt to Equity. Not later than
August 27, 2004, the Borrower shall cause the outstanding principal amount of
the Shareholder Subordinated Debt and all interest accrued thereon to be
converted into common stock of the Borrower pursuant to a non-cash transaction
permitted under subsection 10.04(j). (n) Further Assurances and Additional Acts. The Borrower shall execute,
acknowledge, deliver, file, notarize and register at its own expense all such
further agreements, instruments, certificates, documents and assurances
and perform such acts as the Agent or the Majority Lenders shall deem
necessary or appropriate to effectuate the purposes of the Loan Documents, and
promptly provide the Agent with evidence of the foregoing satisfactory in form
and substance to the Agent or the Majority Lenders. 69




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##### 



SECTION 10.04 Negative Covenants. So long as any of the Obligations shall
remain unpaid, any Letter of Credit shall remain outstanding or any Lender
shall have any Commitment, the Borrower agrees that: (a) Indebtedness. The Borrower shall not, and shall not permit any of its
Subsidiaries to, create, incur, assume or otherwise become liable for or suffer
to exist any Indebtedness, other than: (i) Indebtedness of the Borrower and its Subsidiaries to the Lenders
hereunder; (ii) Indebtedness of the Borrower and its Subsidiaries existing on the
Amendment Closing Date and set forth in Schedule 3 or extensions, renewals and
refinancings of such Indebtedness, provided that the principal amount of such
Indebtedness being extended, renewed or refinanced does not increase; (iii) 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 Borrowers or such Subsidiarys 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 consisting of guarantees resulting from endorsement of
negotiable instruments for collection by the Borrower or any such Subsidiary in
the ordinary course of business; (v) Indebtedness under the Senior Secured Notes and any renewal, extension
or refinancing of the Senior Secured Notes; provided that any such renewal,
extension or refinancing shall be at (or less than) then prevailing interest
rates and be on terms substantially similar to the terms which govern the
Senior Secured Notes on the Original Closing Date or on terms which are more
favorable to the Borrower than such governing terms existing on the Original
Closing Date; and provided further that the aggregate principal amount thereof
shall not exceed $30,000,000 at any time outstanding; (vi) Indebtedness under the Senior Secured Note Guaranties; (vii) Guaranty Obligations not to exceed $1,000,000 in the aggregate at
any time outstanding; (viii) Rate Contracts entered into in the ordinary course of business; (ix) unsecured Indebtedness of the Borrower and its Subsidiaries in an
aggregate principal amount not to exceed $3,000,000 at any time outstanding; (x) Indebtedness in respect of Capital Leases, Synthetic Lease Obligations
and purchase money obligations for fixed or capital assets within the
limitations set forth in clause (ix) of the definition of Permitted Liens set
forth in Section 1.01 and other Indebtedness secured by Liens within the
limitations set forth in clause (x) of the definition of Permitted Liens set
forth 70




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in Section 1.01, or, in each case, extensions, renewals and refinancings
of such Indebtedness, provided that the principal amount of such Indebtedness
being extended, renewed or refinanced does not increase, and provided further
that the aggregate principal amount of all such Indebtedness does not exceed
$16,000,000 at any time outstanding; (xi) (A) until August 27, 2004, Indebtedness under the Shareholder
Subordinated Debt in an aggregate principal amount not to exceed $11,000,000;
and (B) other Indebtedness subordinated to the Obligations on terms
satisfactory to the Majority Lenders in an aggregate principal amount not to
exceed $2,000,000 at any time outstanding; (xii) Indebtedness of the Borrower to any of its wholly owned Subsidiaries
or of any of its wholly owned Subsidiaries to another of its wholly owned
Subsidiaries. (b) Liens; Negative Pledges. (i) The Borrower shall not, and shall not permit any of its Subsidiaries
to, create, incur, assume or suffer to exist any Lien upon or with respect to
any of its properties, revenues or assets, whether now owned or hereafter
acquired, other than Permitted Liens. (ii) The Borrower shall not, and shall not permit any of its Subsidiaries
to, enter into or suffer to exist any negative pledge or similar agreement
(other than pursuant to this Agreement, any other Loan Document and the Senior
Secured Note Documents) prohibiting or conditioning the creation or assumption
of any Lien upon any of its properties, revenues or assets, whether now owned
or hereafter acquired; provided, however, that this subsection shall not
prohibit any negative pledge incurred or provided in favor of any holder of
Indebtedness permitted under subsection 10.04(a)(x) solely to the extent any
such negative pledge relates to the property financed by or the subject of such
Indebtedness. (c) Change in Nature of Business. The Borrower shall not, and shall not
permit any of its Subsidiaries to, engage in any material line of business
substantially different from those lines of business carried on by it at the
date hereof. (d) Restrictions on Fundamental Changes. The Borrower shall not, and
shall not permit any of its Subsidiaries to, merge with or consolidate into, or
acquire all or substantially all of the assets of, any Person, or sell,
transfer, lease or otherwise dispose of (whether in one transaction or in a
series of transactions) all or substantially all of its assets, except that: (i) any of the Borrowers wholly owned Subsidiaries may merge with,
consolidate into or transfer all or substantially all of its assets to another
of the Borrowers wholly owned Subsidiaries that is a Guarantor or to the
Borrower and in connection therewith such Subsidiary may be liquidated or
dissolved; (ii) the Borrower or any of its Subsidiaries may sell or dispose of assets
in accordance with the provisions of subsection (e); and (iii) the Borrower or any of its Subsidiaries may make any investment
permitted by subsection (f). 71




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(e) Sales of Assets. The Borrower shall not, and shall not permit any of
its Subsidiaries to, sell, lease, transfer, or otherwise dispose of, or part
with control of (whether in one transaction or a series of transactions) any
assets (including any shares of stock in any Subsidiary or other Person),
except sales or other dispositions of any of the following: (i) any inventory in the ordinary course of business; (ii) any Permitted Investments; (iii) any assets which have become worn out or obsolete or which are
promptly being replaced, in the ordinary course of business; (iv) any assets by any of its wholly owned Subsidiaries to another of its
wholly owned Subsidiaries or to the Borrower; and (v) any other assets to the extent not otherwise permitted under this
subsection (e); provided that such assets do not constitute the Primary
Trademarks or Substantial Assets and such sale or disposition is made for fair
market value; and provided further that (A) at the time of any such sale or
disposition, no Event of Default shall exist or shall result therefrom, (B) the
aggregate sales price from such sale or disposition shall be paid in cash, and
(C) no dispositions of accounts or notes receivable shall be permitted
hereunder. For purposes of clause (v) a sale, lease, transfer or other disposition of
assets shall be deemed to be of Substantial Assets if such assets, when added
to all other assets sold, leased, transferred or otherwise disposed of during
the same fiscal year (other than assets sold in the ordinary course of
business), shall exceed 5% of the Borrowers Consolidated Total Assets
determined as of the end of the most recently completed fiscal year. (f) Loans and Investments. The Borrower shall not, and shall not permit
any of its Subsidiaries to, purchase or otherwise acquire the capital stock,
assets, obligations or other securities of or any interest in any Person, or
otherwise extend any credit to, guarantee the obligations of or make any
additional investments in any Person, other than: (i) extensions of credit in the nature of accounts receivable or notes
receivable arising from the sales of goods or services in the ordinary course
of business; (ii) investments by the Borrower in the capital stock of wholly-owned
Subsidiaries, and extensions of credit by the Borrower to any of its wholly
owned Subsidiaries or by any of its wholly owned Subsidiaries to another of its
wholly owned Subsidiaries or the Borrower, in each case in the ordinary course
of business; (iii) Permitted Investments; (iv) purchases of assets in the ordinary course of business; (v) additional purchases of or investments in joint ventures or the
capital stock, assets, obligations or other securities of or interest in other
Persons, provided that (A) immediately prior to and after giving effect to
such purchase or investment, no Event of 72




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Default shall have occurred and be
continuing, (B) the aggregate cash and non-cash consideration for any such
purchase or investment (or series of related purchases or investments) shall
not exceed $5,000,000 without the prior written consent of the Majority
Lenders, (C) after giving effect to such purchase or investment, the Borrower
shall be in full pro forma compliance with each of the financial covenants set
forth in subsections 10.02(a) through (f), measured as of the last day of the
fiscal quarter then most recently ended, and (D) in the case of any
Acquisition, the prior, effective written consent or approval to such
Acquisition of the board of directors or equivalent governing body of the
acquiree is obtained; (vi) employee loans and guarantees in accordance with the Borrowers usual
and customary practices with respect thereto; (vii) Guaranty Obligations permitted under subsection (a); or (viii) extensions of credit by the Borrower to its Subsidiary Canoe Ridge
Vineyard L.L.C., its Subsidiary SHW Equity Co. and/or its Subsidiary Edna
Valley Vineyard outstanding on or after the Original Closing Date in an
aggregate amount for all such extensions of credit not to exceed, without the
prior written consent of the Majority Lenders in their sole discretion, the
Maximum Intercompany Loan Amount at any time outstanding; provided that all
such extensions of credit by the Borrower (i) to Canoe Ridge Vineyard L.L.C.
shall not at any time outstanding exceed the Canoe Ridge Intercompany Loan
Amount, (ii) to Edna Valley Vineyard shall not at any time outstanding exceed
the Edna Valley Intercompany Loan Amount, and (iii) to SHW Equity Co. shall not
at any time outstanding exceed the SHW Intercompany Loan Amount; and provided
further that no Event of Default shall exist at the time of making any such
credit extension or would result therefrom. (g) Sales and Leasebacks. The Borrower shall not, and shall not permit
any of its Subsidiaries to, become liable, directly or indirectly, with respect
to any lease, whether an Operating Lease or a Capital Lease, of any property
(whether real, personal or mixed), whether now owned or hereafter acquired, (i)
which the Borrower or such Subsidiary has sold or transferred or is to sell or
transfer to any other Person or (ii) which the Borrower or such Subsidiary
intends to use for
substantially the same purposes as any other property which has been or is
to be sold or transferred by the Borrower or such Subsidiary to any other
Person in connection with such lease, unless such sale or transfer is permitted
under subsection (e)(vi). (h) Distributions. (i) (i) The Borrower shall not declare or pay any
dividends in respect of the Borrowers capital stock, or purchase, redeem,
retire or otherwise acquire for value any of its capital stock now or hereafter
outstanding, return any capital to its shareholders as such, or make any
distribution of assets to its shareholders as such, or permit any of its
Subsidiaries to purchase, redeem, retire, or otherwise acquire for value any
stock of the Borrower, except that the Borrower may: (A) declare and deliver dividends and distributions payable only in common
stock of the Borrower; (B) purchase, redeem, retire, or otherwise acquire shares of its capital
stock with the proceeds received from a substantially concurrent issue of new
shares of its capital stock; 73




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(C) declare and pay cash dividends to its stockholders and purchase,
redeem, retire or otherwise acquire shares of its own outstanding capital stock
for cash during any fiscal year if (1) after giving effect thereto the
aggregate amount of such dividends, purchases, redemptions, retirements and
acquisitions paid or made during any fiscal year is not in excess of 25% of
Consolidated Net Income of the Borrower for the fiscal year immediately
preceding the year in which such dividend, purchase, redemption, retirement or
acquisition is paid or made and (2) immediately prior to and after giving
effect thereto, no Default shall have occurred and be continuing; and (D) declare and pay the Wine Dividend Credits, provided that immediately
prior to and after giving effect thereto, no Default shall have occurred and be
continuing. (ii) The Borrower shall not permit any Subsidiary of the Borrower to grant
or otherwise agree to or suffer to exist any consensual restrictions on the
ability of such Subsidiary to pay dividends and make other distributions to the
Borrower, or to pay any Indebtedness owed to the Borrower or transfer
properties and assets to the Borrower. (i) Amendments of Certain Documents. The Borrower shall not, and shall
not permit any of its Subsidiaries to, agree to or permit any amendment,
modification or waiver of: (i) any provision of any agreement related to any Subordinated Debt
(including any amendment, modification or waiver pursuant to an exchange of
other securities or instruments for outstanding Subordinated Debt) if the
effect of such amendment, modification or waiver is to (A) increase the
interest rate on such Subordinated Debt or change (to earlier dates) the dates
upon which principal and interest are due thereon; (B) alter the redemption,
prepayment or subordination provisions thereof; (C) alter the covenants and
events of default in a manner which would make such provisions more onerous or
restrictive to the Borrower or such
Subsidiary; or (D) otherwise increase the obligations of the Borrower or
such Subsidiary in respect of such Subordinated Debt or confer additional
rights upon the holders thereof which individually or in the aggregate would be
adverse to the Borrower, its Subsidiaries or the Lenders; and (ii) any provision of any of the Senior Secured Note Documents (including
any amendment, modification or waiver pursuant to an exchange of other
securities or instruments for outstanding Senior Secured Notes) if the effect
of such amendment, modification or waiver would be to (A) change to earlier
dates the dates upon which principal and interest are due thereunder, (B) alter
the redemption or prepayment provisions thereof, or (C) alter the provisions
thereof relating to dispositions of collateral. (j) Redemption of Subordinated Debt. The Borrower shall not, and shall
not permit any of its Subsidiaries to, make any voluntary or optional payment
or repayment on, redemption, exchange or acquisition for value of, or any
sinking fund or similar payment with respect to, any Subordinated Debt.
Notwithstanding the foregoing, the Borrower may from time to time satisfy all
or any portion of the outstanding principal and accrued and unpaid interest in
respect of any Subordinated Debt by exchanging common stock or Permitted
Preferred Stock of the Borrower in satisfaction of such outstanding principal
and accrued and unpaid interest 74




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pursuant to a non-cash transaction approved in
good faith by the Board of Directors of the Borrower. The Borrower shall
promptly notify the Agent of any such exchange. (k) Transactions with Related Parties. Except as set forth in Schedule 9
hereto, the Borrower shall not, and shall not permit any of its Subsidiaries
to, enter into any transaction, including the purchase, sale or exchange of
property or the rendering of any services, with any Affiliate, any officer or
director thereof or any Person which beneficially owns or holds 5% or more of
the equity securities, or 5% or more of the equity interest, thereof (a
Related Party), or enter into, assume or suffer to exist, or permit any
Subsidiary to enter into, assume or suffer to exist, any employment or
consulting contract with any Related Party, except a transaction or contract
which is in the ordinary course of the Borrowers or such Subsidiarys business
and which is upon fair and reasonable terms not less favorable to the Borrower
or such Subsidiary than it would obtain in a comparable arms length
transaction with a Person not a Related Party. (l) Hazardous Substances. The Borrower shall not, and shall not permit
any of its Subsidiaries to, use, generate, manufacture, install, treat,
release, store or dispose of any Hazardous Substances, except in compliance
with all applicable Environmental Laws. (m) Accounting Changes. The Borrower shall not, and shall not suffer or
permit any of its Subsidiaries to, make any significant change in accounting
treatment or reporting practices, except as required or permitted by GAAP, or
change its fiscal year or that of any of its consolidated Subsidiaries,
except to change the fiscal year of a Subsidiary acquired in connection
with a permitted acquisition to conform its fiscal year to the Borrowers. (n) Foreign Subsidiaries. The Borrower shall not directly or indirectly
create or acquire any Foreign Subsidiary without the prior written consent of
the Agent and the Majority Lenders. ARTICLE XI
EVENTS OF DEFAULT SECTION 11.01 Events of Default. Any of the following events which shall
occur shall constitute an Event of Default: (a) Payments. The Borrower shall fail to pay (i) any amount of principal
of, or interest on, any Loan or Note or any amount of any L/C Obligation when
due or (ii) any fee or other amount payable hereunder or under any of the other
Loan Documents within three (3) Business Days after the same shall have become
due. (b) Representations and Warranties. Any representation or warranty by the
Borrower under or in connection with the Loan Documents shall prove to have
been incorrect in any material respect when made or deemed made. (c) Failure by Borrower to Perform Certain Covenants. The Borrower shall
fail to perform or observe any term, covenant or agreement contained in Section
10.01, Section 10.02, subsections (a), (c), (e), and (m) of Section 10.03 or
Section 10.04. 75




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(d) Failure by Borrower to Perform Other Covenants. The Borrower shall
fail to perform or observe any other term, covenant or agreement contained in
this Agreement or any other Loan Document on its part to be performed or
observed and any such failure shall remain unremedied for a period of 20 days
from the occurrence thereof (unless the Majority Lenders determine that such
failure is not capable of remedy). (e) Insolvency; Voluntary Proceedings. The Borrower or any Subsidiary (i)
ceases or fails to be Solvent, or generally fails to pay, or admits in writing
its inability to pay, its debts as they become due, subject to applicable grace
periods, if any, whether at stated maturity or otherwise; (ii) voluntarily
ceases to
conduct its business in the ordinary course; (iii) commences any
Insolvency Proceeding with respect to itself; or (iv) takes any action to
effectuate or authorize any of the foregoing; or (f) Involuntary Proceedings. (i) Any involuntary Insolvency Proceeding is
commenced or filed against the Borrower or any Subsidiary, or any writ,
judgment, warrant of attachment, execution or similar process, is issued or
levied against a substantial part of the Borrowers or any Subsidiarys
properties, and any such proceeding or petition shall not be dismissed, or such
writ, judgment, warrant of attachment, execution or similar process shall not
be released, vacated or fully bonded within 60 days after commencement, filing
or levy; (ii) the Borrower or any Subsidiary admits the material allegations of
a petition against it in any Insolvency Proceeding, or an order for relief (or
similar order under non-U.S. law) is ordered in any Insolvency Proceeding; or
(iii) the Borrower or any Subsidiary acquiesces in the appointment of a
receiver, trustee, custodian, conservator, liquidator, mortgagee in possession
(or agent therefor), or other similar Person for itself or a substantial
portion of its property or business; or (g) Default Under Other Indebtedness. (i) The Borrower or any of its
Subsidiaries shall fail (A) to make any payment of any principal of, or
interest or premium on, any Indebtedness (other than in respect of the Loans or
any Rate Contract) having an aggregate principal amount (including undrawn
committed or available amounts and including amounts owing to all creditors
under any combined or syndicated credit arrangement) of more than $1,500,000
(or its equivalent in another currency) when due (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise) and such
failure shall continue after the applicable grace period, if any, specified in
the agreement or instrument relating to such Indebtedness as of the date of
such failure; or (B) to perform or observe any term, covenant or condition on
its part to be performed or observed under any agreement or instrument relating
to any such Indebtedness, when required to be performed or observed, and such
failure shall continue after the applicable grace period, if any, specified in
such agreement or instrument, if the effect of such failure to perform or
observe is to accelerate, or to permit the acceleration of, the maturity of
such Indebtedness; or (ii) any such Indebtedness shall be declared to be due
and payable, or required to be prepaid (other than by a regularly scheduled
required prepayment), prior to the stated maturity thereof; (iii) any facility
or commitment available to the Borrower or any Subsidiary relating to
Indebtedness in an aggregate amount at any one time of not less than $1,500,000
(or its equivalent in any other currency) is withdrawn, suspended or cancelled
by reason of any default (however described) of the Borrower or such
Subsidiary; or (iv) there occurs under any Rate Contract an Early Termination
Date (as defined in such Rate Contract) resulting from (A) any event of default
under such Rate Contract as to which the Borrower or 76




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any Subsidiary is the
Defaulting Party (as defined in such Rate Contract) or (B) any Termination
Event (as so defined) as to which the Borrower or any Subsidiary is an Affected
Party (as so defined), and, in either event, the Swap Termination Value owed by
the Borrower or such Subsidiary as a result thereof is greater than $1,500,000
(or its equivalent in another currency). (h) Judgments.
(i) A final judgment or order for the payment of money in excess of
$1,500,000 (or its equivalent in another currency) over the amount covered by
third-party insurance shall be rendered against the Borrower or any of its
Subsidiaries; or (ii) any non-monetary judgment or order shall be rendered
against the Borrower or any such Subsidiary which has or would reasonably be
expected to have a Material Adverse Effect; and in each case there shall be any
period of 20 consecutive days during which such judgment continues unsatisfied
or during which a stay of enforcement of such judgment or order, by reason of a
pending appeal or otherwise, shall not be in effect. (i) ERISA. (i) The Borrower or an ERISA Affiliate shall fail to satisfy its
contribution requirements in an amount in excess of $1,500,000 under Section
412(c)(11) of the Internal Revenue Code, whether or not it has sought a waiver
under Section 412(d) of the Internal Revenue Code; (ii) in the case of a
Termination Event involving the withdrawal from a Pension Plan of a
substantial employer (as defined in Section 4001(a)(2) or Section 4062(e) of
ERISA), the Borrowers or an ERISA Affiliates proportionate share of that
Pension Plans Unfunded Accrued Benefits is more than $1,500,000; (iii) in the
case of a Termination Event involving the complete or partial withdrawal from a
Multiemployer Plan, the Borrower or an ERISA Affiliate has incurred a
withdrawal liability in an aggregate amount exceeding $1,500,000; (iv) in the
case of a Termination Event not described in clause (ii) or (iii), the Unfunded
Accrued Benefits of the relevant Pension Plan or Plans exceed $1,500,000; (v) a
Plan of the Borrower or an ERISA Affiliate that is intended to be qualified
under Section 401(a) of the Internal Revenue Code shall lose its qualification,
and the loss can reasonably be expected to impose on the Borrower or an ERISA
Affiliate liability (for additional taxes, to Plan participants, or otherwise)
in the aggregate amount of $1,500,000 or more; (vi) the commencement or
increase of contributions to, the adoption of, or the amendment of a Plan by,
the Borrower or an ERISA Affiliate shall result in a net increase in unfunded
liabilities to the Borrower or an ERISA Affiliate in excess of $1,500,000; or
(vii) the occurrence of any combination of events listed in clauses (ii)
through (vi) that involves a net increase in aggregate Unfunded Accrued
Benefits and unfunded liabilities in excess of $1,500,000. (j) Dissolution, Etc. The Borrower or any of its Subsidiaries shall (i)
liquidate, wind up or dissolve (or suffer any liquidation, wind-up or
dissolution), except to the extent expressly permitted by Section 10.04, (ii)
suspend its operations other than in the ordinary course of business, or (iii)
take any corporate action to authorize any of the actions or events set forth
above in this subsection (j). (k) Material Adverse Effect. A Material Adverse Effect shall occur. (l) Change in Ownership or Control. A Change of Control shall occur. 77




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(m) Failure by Guarantor to Perform Covenants; Invalidity of Guaranties.
Any Guarantor shall fail in any material respect to perform or observe any
term, covenant or agreement contained in its Guaranty or any other Guarantor
Document on its part to be performed or observed and any such failure shall
remain unremedied for a period of 20 days from the occurrence thereof (unless
the Majority Lenders determine that such failure is not capable of remedy), or
any Event of Default as defined in any Guaranty shall have occurred; or any
Guaranty or any other Guarantor Document shall for any reason be revoked or
invalidated, or otherwise cease to be in full force and effect, or any
Guarantor or any other Person shall contest in any manner the validity or
enforceability thereof or deny that it has any further liability or obligation
thereunder. (n) Environmental Indemnity. The Environmental Indemnity after delivery
thereof shall for any reason be revoked or invalidated, or otherwise cease to
be in full force and effect, or the Borrower or any other Person shall contest
in any manner the validity or enforceability thereof, or the Borrower or any
other Person shall deny that it has any further liability or obligation
thereunder. (o) Subordination Provisions. The subordination or intercreditor
provisions of the Intercreditor and Collateral Agency Agreement or of any
agreement or instrument governing any Subordinated Debt shall for any reason be
revoked or invalidated, or otherwise cease to be in full force and effect, any
Person shall contest in any manner the validity or enforceability thereof or
deny that it has any further liability or obligation thereunder, or the
Indebtedness hereunder shall for any reason be subordinated or shall not have
the priority contemplated by this Agreement or such subordination or
intercreditor provisions. (p) Collateral Documents. The Borrower or any other Person shall fail to
perform or observe any term, covenant or agreement contained in the Collateral
Documents on its part to be performed or observed and any such failure shall
remain unremedied for a period of 20 days from the occurrence thereof (unless
the Majority Lenders determine that such failure is not capable of remedy), or
any Event of Default as defined in any Collateral Document shall have
occurred; or any of the Collateral Documents after delivery thereof shall for
any reason be revoked or invalidated, or otherwise cease to be in full force
and effect, or the Borrower or any other Person shall contest in any manner the
validity or enforceability thereof, or the Borrower or any other Person shall
deny that it has any further liability or obligation thereunder; or any of the
Collateral Documents for any reason, except to the extent permitted by the
terms thereof, shall cease to create a valid and perfected first priority Lien
subject only to Permitted Liens in any of the Collateral purported to be
covered thereby; or any title insurance coverage in respect of any material
portion of the Collateral is disavowed or becomes ineffective. SECTION 11.02 Effect of Event of Default.
If any Event of Default shall occur and be continuing, the Agent shall, at
the request of, or may, with the consent of, the Majority Lenders, (i) by
notice to the Borrower, (A) require that the Borrower cash collateralize the
L/C Obligations (in an amount equal to the then outstanding amount thereof),
(B) declare the Commitments of the Lenders (other than their respective share
of the L/C Commitment with respect to outstanding Letters of Credit) and any
obligations of the Issuing Lender to issue, amend or renew Letters of Credit,
to be terminated, whereupon the same shall forthwith terminate, and (C) declare
an amount equal to the maximum aggregate amount that is or at any 78




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time
thereafter may become available for drawing under any outstanding Letters of
Credit (whether or not any beneficiary shall have presented, or shall be
entitled at such time to present, the drafts or other documents required to
draw under such Letters of Credit) to be immediately due and payable, and
declare the entire unpaid principal amount of the Loans and the Notes, all
interest accrued and unpaid thereon and all other Obligations to be forthwith
due and payable, whereupon such amount with respect to Letters of Credit, the
Loans and the Notes, all such accrued interest and all such other Obligations
shall become and be forthwith due and payable, without presentment, demand,
protest or further notice of any kind, all of which are hereby expressly waived
by the Borrower; provided that if an event described in Sections 11.01(e) or
11.01(f) shall occur, the result which would otherwise occur only upon giving
of notice by the Agent to the Borrower as specified in this clause (i) shall
occur automatically, without the giving of any such notice; and (ii) whether or
not the actions referred to in clause (i) have been taken, (A) instruct the
Collateral Agent to exercise any or all of the Collateral Agents rights and
remedies under the Collateral Documents and applicable law (subject to the
Intercreditor and Collateral Agency Agreement), and (B) proceed to enforce all
other rights and remedies available to the Agent and the Lenders under the Loan
Documents and applicable law. SECTION 11.03 Application of Funds. After the exercise of remedies
provided for in Section 11.02 (or after the Loans have automatically become
immediately due and payable and the L/C Obligations have automatically been
required to be cash collateralized as set forth in Section 11.02), and except
to the extent otherwise provided in the Intercreditor and Collateral Agency
Agreement, any amounts received on account of the Obligations shall, unless a
specific determination is made by the Agent and the Majority Lenders with
respect thereto, be applied in the following order: (A) first, to any fees,
costs, expenses and other amounts due the Agent (including interest thereon);
(B) second, to any fees, costs, expenses and other amounts due the Lenders
(excluding principal and interest); (C) third, to accrued and unpaid interest
on any principal and other Obligations due the Lenders; (D) fourth, to
principal due the Lenders; (E) fifth, to any cash collateral required
hereunder; and (F) the balance, if any, after all of the Obligations have been
indefeasibly paid in full, to the Borrower or as otherwise required by law. ARTICLE XII
THE AGENT SECTION 12.01 Authorization and Action.
Each Lender hereby appoints Rabobank as Agent and authorizes the Agent to
execute the Loan Documents and to take such action as agent on its behalf and
to exercise such powers and perform such duties under this Agreement and the
other Loan Documents as are delegated to the Agent by the terms hereof or
thereof, together with such powers as are reasonably incidental thereto. The
duties and obligations of the Agent are strictly limited to those expressly
provided for herein, and no implied covenants, functions, responsibilities,
duties, obligations or liabilities shall be read into this Agreement or
otherwise exist against the Agent. As to any matters not expressly provided
for by the Loan Documents (including enforcement of the Loan Documents or
collection of any amounts due thereunder), the Agent shall not be required to
exercise any discretion or take any action, but shall be required to act or to
refrain from acting (and shall be fully protected in so acting or refraining
from acting) upon the instructions of the Majority Lenders, and such
instructions shall be binding upon all Lenders; provided, however, that except
for action 79




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expressly required of the Agent hereunder, the Agent shall in all
cases be fully justified in failing or refusing to act under any Loan Document
unless it shall be indemnified to its satisfaction by the Lenders against any
and all liability and expense which may be incurred by reason of taking or
continuing to take any such action, and that the Agent shall not in any event
be required to take any action which exposes the Agent to liability or which is
contrary to any Loan Document or applicable law. Nothing in any Loan Document
shall, or shall be construed to, constitute the Agent a trustee or fiduciary
for any Lender or the Issuing Lender. In performing its functions and duties
hereunder, the Agent shall act solely as the agent of the Lenders and does not
assume and shall not be deemed to have assumed any obligation towards or
relationship of agency or trust with or for the Borrower or any Guarantor.
Each Lender agrees that the Borrower shall be entitled to rely on any action
purportedly taken by the Agent on behalf of the Lenders. Each Lender agrees
that the Borrower shall have no liability for the Agents failure to properly
distribute to the Lenders, as their interests may appear, any funds received by
the Agent on behalf of the Lenders. SECTION 12.02 Limitation on Liability of Agent; Notices; Closing. (a) Limitation on Liability of Agent and Issuing Lender. None of the
Agent/IB-Related Persons shall be liable for any action taken or omitted to be
taken by it or them under or in connection with any Loan Document, except for
its or their own gross negligence or willful misconduct. Without limitation of
the generality of the foregoing, the Agent (i) may treat a Lender as the
holder of its Loans for all purposes hereof unless and until such Lender and
its assignee shall have delivered to the Agent and the Borrower an Assignment
and Assumption and the other conditions to assignment set forth in Section
13.09 shall have been satisfied; (ii) may consult with legal counsel (including
counsel to the Borrower), independent public accountants and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; and (iii) shall incur no liability to any Lender under
or in respect of any Loan Document by acting upon any notice, consent,
certificate, telegram, facsimile, electronic mail, telex or teletype message,
statement or other instrument or writing believed by it to be genuine and
signed or sent by the proper party or parties or by acting upon any
representation or warranty made or deemed to be made hereunder or under any
other Loan Document. Further, the Agent (A) makes no warranty or
representation to any Lender and shall not be responsible to any Lender for the
accuracy or completeness of any information, exhibit or
report furnished under any Loan Document, for any statements, warranties
or representations (whether written or oral) made or deemed made in or in

connection with any Loan Documents; (B) shall have no duty to ascertain or to
inquire as to the performance or observance of any of the terms, covenants or
conditions of this Agreement or any other Loan Document on the part of the
Borrower, the Guarantors or any other Person or to inspect the property, books
or records of the Borrower, the Guarantors or any other Person; and (C) shall
not be responsible to any Lender for the due execution, legality, validity,
enforceability, genuineness, sufficiency, value or collectibility of this
Agreement or any other Loan Document or any of the Collateral. (b) Notices. Promptly upon receipt thereof, the Agent shall forward to
each Lender originals or copies, as specified in this Agreement or any other
Loan Document, of all agreements, instruments, opinions, financial statements,
notices and other documents delivered by the Borrower, the Guarantors or any
other Person to the Agent pursuant to any Loan 80




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Document for distribution to the
Lenders. Except for any of the foregoing expressly required to be furnished to
the Lenders by the Agent hereunder, the Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of the Borrower which may come into
the possession of the Agent or any of its officers, directors, employees,
agents, attorneys-in-fact or Affiliates. (c) Closing. For purposes of determining compliance with the conditions
specified in Section 8.01, each Lender that has executed this Agreement shall
be deemed to have consented to, approved or accepted or to be satisfied with,
each document or other matter either sent (or made available) by the Agent to
such Lender for consent, approval, acceptance or satisfaction, or required
thereunder to be consented to or approved by or acceptable or satisfactory to
such Lender, unless an officer of the Agent responsible for the transactions
contemplated by the Loan Documents shall have received notice from such Lender
prior to the Amendment Closing Date specifying its objection thereto and either
such objection shall not have been withdrawn by notice to the Agent to that
effect on or prior to the Amendment Closing Date or, if any Borrowing on the
Amendment Closing Date has been requested, the Lender shall not have made
available to the Agent on or prior to the Amendment Closing Date the Lenders
Pro Rata Share of any Borrowing. SECTION 12.03 Agent and Affiliates. With respect to its Commitment, the
Loans made by it, the Notes issued to it, Letters of Credit issued by it, and
all other Obligations owing to it as a Lender, the Agent shall have the same
rights and powers under the Loan Documents as any other Lender and may exercise
the same as though it were not the Agent; and the term Lender or Lenders
shall, unless otherwise expressly indicated, include the Agent in its
individual capacity. The Agent and its Affiliates may accept deposits from,
lend money to, issue letters of credit for the account of, act as trustee under
indentures of and generally engage in any kind of business with the
Borrower, the Guarantors and any Affiliate thereof, all as if the Agent
were not the Agent hereunder and without any duty to account therefor to the
Lenders. SECTION 12.04 Notice of Defaults. The Agent shall not be deemed to have
knowledge or notice of the occurrence of a Default hereunder (other than
nonpayment of principal of or interest on the Loans or of any fees or any of
its costs and expenses) unless the Agent has actual knowledge thereof or has
received notice in writing from a Lender or the Borrower referring to this
Agreement, describing such event or condition and expressly stating that such
notice is a notice of default. Should the Agent receive such notice of the
occurrence of a Default, the Agent shall promptly give notice thereof to the
Lenders. The Agent thereupon shall take such action with respect to such
Default as shall be reasonably directed by the Majority Lenders; provided that,
unless and until the Agent shall have received such directions, the Agent may
(but shall not be obligated to) take such action, or refrain from taking such
action, with respect to such Default as it shall deem advisable in the best
interests of the Lenders. SECTION 12.05 Non-Reliance on Agent and Issuing Lender. Each Lender has
itself been, and will continue to be, based on such documents and information
as it has deemed appropriate, solely responsible for making its own independent
appraisal of and investigations into the financial condition, creditworthiness,
condition, affairs, status and nature of the Borrower or any of its
Subsidiaries and the nature and value of any of the Collateral. 81




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Accordingly,
each Lender confirms to the Agent and the Issuing Lender that it has not
relied, and will not hereafter rely, on the Agent or the Issuing Lender (i) to
check or inquire on such Lenders behalf into the adequacy, accuracy or
completeness of any information provided by the Borrower or any other Person
under or in connection with the Loan Documents or the transactions herein
contemplated (whether or not such information has been or is hereafter
distributed to such Lender by the Agent or the Issuing Lender), or (ii) to
assess or keep under review on such Lenders behalf the financial condition,
creditworthiness, condition, affairs, status or nature of the Borrower, any
Subsidiary or the nature or value of any of the Collateral. SECTION 12.06 Indemnification. The Lenders agree to indemnify each
Agent/IB Related Person (to the extent not reimbursed by the Borrower), ratably
in accordance with the respective Pro Rata Shares of the Lenders, against and
hold each of them harmless from any and all liabilities, obligations, losses,
claims, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever, including the reasonable fees
and disbursements of counsel to such Agent/IB Related Person (including
allocated costs of internal counsel), which may be imposed on, incurred by, or
asserted against such Agent/IB Related Person, in any way relating to or
arising out of the Loan Documents, the use or intended use of the proceeds of
the Loans or the transactions contemplated hereby or thereby or any action
taken or omitted by such Agent/IB Related Person in connection with any of the
foregoing; provided that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements to the extent they are found by a final
decision of a court of competent jurisdiction to have resulted from the gross
negligence or willful misconduct of
such Agent/IB Related Person. Without limitation of the foregoing, each
Lender agrees to reimburse each Agent/IB Related Person promptly upon demand
for such Lenders Pro Rata Share of any costs and expenses or other charges
incurred by such Agent/IB Related Person and payable by the Borrower pursuant
to Section 13.04(a) or any other Loan Document to the extent that such Agent/IB
Related Person is not reimbursed for such expenses or charges by the Borrower
(without prejudice to the Borrowers obligation to so reimburse such Agent/IB
Related Person). SECTION 12.07 Delegation of Duties. The Agent may, in its discretion,
employ from time to time one or more agents or attorneys-in-fact (including any
of the Agents Affiliates) to perform any of the Agents duties under the Loan
Documents. The Agent shall not be responsible for the negligence or misconduct
of any agents or attorneys-in-fact selected by it with reasonable care. SECTION 12.08 Successor Agent. Subject to the appointment and acceptance
of a successor Agent as provided below, the Agent may resign at any time by
giving 30 days written notice thereof to the Lenders and the Borrower. Upon
any such resignation, the Majority Lenders shall have the right to appoint a
successor Agent from among the Lenders, and the Lenders shall use their best
efforts so to appoint a successor Agent. If no successor Agent shall have been
so appointed by the Majority Lenders, and shall have accepted such appointment,
prior to the effective date of the retiring Agents resignation, the retiring
Agent may, on behalf of the Lenders, appoint a successor Agent from among the
Lenders. Upon the effectiveness of the acceptance of any appointment as Agent
hereunder by a successor Agent, (i) the Borrower shall be promptly notified and
(ii) such successor Agent shall thereupon succeed to and become vested with all
the rights, powers, privileges, duties and obligations of the retiring Agent,
and the 82




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retiring Agent shall be discharged from its duties and obligations
under the Loan Documents. After any retiring Agents resignation hereunder as
Agent, the provisions of this Article XII shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under the Loan
Documents. The appointment of a successor Agent (other than a successor by
operation of law) shall be subject to the consent of the Borrower (such consent
not to be unreasonably withheld or delayed), unless an Event of Default shall
have occurred and be continuing, in which case no consent of the Borrower to
the appointment of a successor Agent shall be required. SECTION 12.09 Collateral Matters. (a) Authorization. The Collateral Agent is authorized on behalf of all
the Lenders, without the necessity of any notice to or further consent from the
Lenders, from time to time to take any action with respect to any Collateral or
the Collateral Documents which may be necessary to perfect and maintain
perfected the Liens on the Collateral granted pursuant to the Collateral
Documents or protect and preserve the Collateral Agents ability to enforce the
Liens or realize upon the Collateral. (b) Collateral Releases.
The Lenders irrevocably authorize the Collateral Agent, at its option and
in its discretion, to release any Lien granted to or held by the Collateral
Agent upon any Collateral (i) upon termination of the Commitments and payment
in full of all Loans and all other Obligations known to the Collateral Agent
and payable under this Agreement or any other Loan Document; (ii) constituting
property sold or to be sold or disposed of as part of or in connection with any
sale or other disposition permitted hereunder or under any Collateral Document;
(iii) constituting property in which the Borrower or its Subsidiaries owned no
interest at the time the Lien was granted or at any time thereafter; (iv)
constituting property leased to the Borrower or any Subsidiary under a lease
permitted hereunder; (v) consisting of an instrument evidencing Indebtedness or
other debt instrument, if the Indebtedness evidenced thereby has been paid in
full; or (vi) if approved, authorized or ratified in writing by the Majority
Lenders or all the Lenders, as the case may be, as provided in Section 13.01.
Upon request by the Collateral Agent at any time, the Lenders shall confirm in
writing the Collateral Agents authority to release particular types or items
of Collateral pursuant to this Section 12.09, provided that the absence of any
such confirmation for whatever reason shall not affect the Collateral Agents
rights under this Section 12.09. SECTION 12.10 Agent May File Proofs of Claim. In case of the pendency of
any Insolvency Proceeding relative to the Borrower or any Guarantor, the Agent
(irrespective of whether the principal of any Obligation shall then be due and
payable as herein expressed or by declaration or otherwise and irrespective of
whether the Agent shall have made any demand on the Borrower or any Guarantor)
shall be entitled and empowered, by intervention in such Insolvency Proceeding
or otherwise (i) to file and prove a claim for the whole amount of the
principal and interest owing and unpaid in respect of the Obligations that are
owing and unpaid and to file such other documents as may be necessary or
advisable in order to have the claims of the Lenders and the Agent (including
any claim for the reasonable compensation, expenses, disbursements and advances
of the Lenders and the Agent and their respective agents and counsel and all
other amounts due the Lenders and the Agent under Sections 3.08, 4.03 and
13.04) allowed in such judicial proceeding; and (ii) to collect and receive any
monies or other 83




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property payable or deliverable on any such claims and to
distribute the same; and any custodian, receiver, assignee, trustee,
liquidator, sequestrator or other similar official in any such Insolvency
Proceeding is hereby authorized by each Lender to make such payments to the
Agent and, in the event that the Agent shall consent to the making of such
payments directly to the Lenders, to pay to the Agent any amount due for the
reasonable compensation, expenses, disbursements and advances of the Agent and
its agents and counsel, and any other amounts due the Agent under Sections 4.03
and 13.04. Nothing contained herein shall be deemed to authorize the Agent to
authorize or consent to or accept or adopt on behalf of any Lender any plan of
reorganization, arrangement, adjustment or composition affecting the
Obligations or the rights of any Lender or to authorize the Agent to vote in
respect of the claim of any Lender in any such proceeding. SECTION 12.11 Lead Arranger. The Lender identified on the facing page or
signature pages of this Agreement as a lead arranger shall not have any
right, power, obligation, liability, responsibility or duty under this
Agreement other than, in the case of such Lenders, those applicable to all
Lenders as
such. Without limiting the foregoing, such Lender shall not have or be
deemed to have any fiduciary relationship with any Lender. Each Lender
acknowledges that it has not relied, and will not rely, on such Lender in
deciding to enter into this Agreement or in taking or not taking action
hereunder. ARTICLE XIII
MISCELLANEOUS SECTION 13.01 Amendments and Waivers. Except as otherwise provided herein
or in any other Loan Document, (i) no amendment to any provision of this
Agreement or any of the other Loan Documents shall in any event be effective
unless the same shall be in writing and signed by the Borrower (and/or any
other party thereto, as applicable), the Agent and the Majority Lenders (or the
Agent with the written consent of the Majority Lenders); and (ii) no waiver of
any provision of this Agreement or any other Loan Document, or consent to any
departure by the Borrower or other party therefrom, shall in any event be
effective unless the same shall be in writing and signed by the Agent and the
Majority Lenders (or the Agent with the consent of the Majority Lenders). Any
such amendment, waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given. Notwithstanding the
foregoing provisions of this Section 13.01, any term or provision of any such
other Loan Document may be amended without the agreement or consent of, or
prior notice to, the Borrower or other party thereto, to the extent such Loan
Document provides for amendments without the agreement or consent of, or notice
to, the Borrower or such other party, and any term or provision of Article XII
may be amended without the agreement or consent of, or prior notice to, the
Borrower; and, unless in writing and signed by all of the Lenders (or by the
Agent with the written consent of all the Lenders), no amendment, waiver or
consent shall do any of the following: (A) increase the amount, or extend the stated expiration or termination
date, of the Commitments of the Lenders; (B) reduce the principal of, or interest on, the Loans or any fee or other
amount payable to the Lenders hereunder, or change the manner of computation of
any financial 84




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covenant or related definition used in determining the Applicable
Fee Amount or Applicable Margin that would result in a reduction of any
interest rate on any Loan; provided, however, that only the consent of the
Majority Lenders shall be necessary to amend the default rate of interest as
determined under Section 4.02 or to waive any obligation of the Borrower to pay
interest at the default rate of interest; (C) postpone any date fixed for any payment in respect of principal of, or
interest on, the Loans or any fee or other amount payable to the Lenders
hereunder; (D) change the definition of Majority Lenders or any definition or
provision of this Agreement requiring the approval of Majority Lenders or some
other specified amount of Lenders; (E) consent to the assignment or transfer by the Borrower of any of its
rights and obligations under the Loan Documents; (F) release any Guaranty or any material portion of the Collateral except
as contemplated herein and in the Collateral Documents relating thereto; (G) amend, modify or waive the provisions of Section 7.01, 7.05 or 13.07;
or (H) amend, modify or waive the provisions of this Section 13.01; and provided further, however, that no amendment, waiver or consent (1) shall,
unless in writing and signed by the Agent in addition to the Lenders required
hereinabove to take such action, affect the rights, obligations or duties of
the Agent under any Loan Document; (2) shall, unless in writing and signed by
the Collateral Agent in addition to the Lenders required hereinabove to take
such action, affect the rights, obligations or duties of the Collateral Agent
under any Loan Document; (3) shall, unless in writing and signed by the Issuing
Lender in addition to the Lenders required hereinabove to take such action,
affect the rights or duties of the Issuing Lender under this Agreement or any
L/C-Related Document to which it is a party; or (4) shall, unless in writing
and signed by the Swingline Lender in addition to the Lenders required
hereinabove to take such action, affect the rights, obligations or duties of
the Swingline Lender under any Loan Document; provided further, that the Fee
Letter and documents evidencing Specified Swap Contracts may be amended, or
rights or privileges thereunder waived, in a writing executed by the parties
thereto; and provided further, however, that, for the avoidance of doubt, it is
agreed and acknowledged by and among the Agent, the Borrower and the Lenders
that, subject to the immediately preceding proviso, the provisions of
subsection 5.03(b) may be amended or waived with the written consent of the
Agent, the Borrower and the Majority Lenders. SECTION 13.02 Notices. (a) Notices. All notices and other communications provided for hereunder
and under the other Loan Documents shall, unless otherwise stated herein, be in
writing (including, unless the context expressly otherwise provides, by
facsimile transmission and, subject to subsection (c), by electronic mail) and
mailed, sent or delivered to the respective parties hereto at or to their
respective addresses, facsimile numbers or email addresses set forth in
Schedule 2 or in any Administrative Questionnaire, or at or to such other
address, facsimile 85




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number or email address as shall be designated by any party
in a written notice to the other parties hereto. All such notices and
communications shall be effective (i) if delivered by hand, when delivered;
(ii) if sent by mail, upon the earlier of the date of receipt or five Business
Days after deposit in the mail, first class (or air mail, with respect to
communications to be sent to or from the United States), postage prepaid; and
(iii) if sent by facsimile transmission or electronic mail, when sent;
provided, however, that notices and communications to the Agent shall not be
effective until actually received by the Agent, and notices to the Issuing
Lender pursuant to Article III shall not be effective until actually received
by the Issuing Lender. (b) Facsimile and Telephonic Notice.
The Borrower acknowledges and agrees that the agreement of the Agent and
the Lenders herein and in any other Loan Document to receive certain notices by
telephone and facsimile is solely for the convenience and at the request of the
Borrower. The Agent and the Lenders shall be entitled to rely on the
authority of any Person purporting to be a Person authorized by the Borrower to
give such notice and the Agent and the Lenders shall not have any liability to
the Borrower or other Person on account of any action taken or not taken by the
Agent and the Lenders in reliance upon such telephonic or facsimile notice.
The obligation of the Borrower to repay the Loans, the drawings under Letters
of Credit and the other Obligations shall not be affected in any way or to any
extent by any failure by the Agent and the Lenders to receive written
confirmation of any telephonic or facsimile notice or the receipt by the Agent
and the Lenders of a confirmation which is at variance with the terms
understood by the Agent and the Lenders to be contained in the telephonic or
facsimile notice. (c) Electronic Mail. Electronic mail and internet and intranet websites
may be used only to distribute routine communications, such as financial
statements and other information, and to distribute Loan Documents for
execution by the parties thereto, and may not be used for any other purpose. SECTION 13.03 No Waiver; Cumulative Remedies. No failure on the part of
the Agent, any Lender or the Collateral Agent to exercise, and no delay in
exercising, any right, remedy, power or privilege under any Loan Document shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right, remedy, power or privilege preclude any other or further exercise
thereof or the exercise of any other right, remedy, power or privilege. The
rights and remedies under the Loan Documents are cumulative and not exclusive
of any rights, remedies, powers and privileges that may otherwise be available
to the Agent, any Lender or the Collateral Agent. SECTION 13.04 Costs and Expenses; Indemnification. (a) Costs and Expenses. The Borrower agrees to pay on demand, whether or
not the transactions contemplated hereby shall be consummated: (i) the reasonable out-of-pocket costs and expenses of the Agent, the
Issuing Lender and any of their respective Affiliates, and the reasonable fees
and disbursements of counsel to the Agent and the Issuing Lender (including
allocated costs of internal counsel), in connection with the negotiation,
preparation, execution, delivery, syndication (including out-of- 86




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pocket expenses
in connection with the use of IntraLinks) and administration of the Loan
Documents, and any amendments, modifications or waivers of the terms thereof; (ii) all title, appraisal (including the allocated cost of internal
appraisal services), survey, audit, environmental inspection, consulting,
search, recording, filing and similar costs, fees and expenses incurred or
sustained by the Agent or any of its Affiliates in connection with the Loan
Documents or the Collateral; and (iii) all costs and expenses of the Agent, the Issuing Lender, their
respective Affiliates and the Lenders, and fees and disbursements of counsel
(including allocated costs of internal counsel), in connection with (A) any
Default, (B) the enforcement or attempted enforcement of, and preservation of
any rights or interests under, the Loan Documents, (C) any out-of-court workout
or other refinancing or restructuring or any Insolvency Proceeding, and (D) the
preservation of and realization upon any of the Collateral, including any
losses, costs and expenses sustained by the Agent, the Issuing Lender and any
Lender as a result of any failure by the Borrower or any Guarantor to perform
or observe its respective obligations contained in the Loan Documents. (b) Indemnification. Whether or not the transactions contemplated hereby
shall be consummated, the Borrower hereby agrees to indemnify each Agent/IB
Related Person, each Lender and any Affiliates, directors, officers, employees,
agents, counsel and other advisors (collectively, the Related Persons) of any
Lender (each an Indemnified Person) against, and hold each of them harmless
from, any and all liabilities, obligations, losses, claims, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever, including the reasonable fees and disbursements of counsel
to an Indemnified Person (including allocated costs of internal counsel), which
may be imposed on, incurred by, or asserted against any Indemnified Person, (i)
by any Governmental Authority or other third party in any way relating to or
arising out of any of the Loan Documents, the Letters of Credit, the use or
intended use of the proceeds of the Loans or the transactions contemplated
hereby or thereby, (ii) with respect to any investigation, litigation or other
proceeding relating to any of the foregoing, irrespective of whether the
Indemnified Person shall be designated a party thereto, or (iii) in any way
relating to or arising out of the use, generation, manufacture, installation,
treatment, storage or presence, or the spillage, leakage, leaching, migration,
dumping, deposit, discharge, disposal or release, at any time, of any Hazardous
Substances on, under, at or from any Premises, including any personal injury or
property damage suffered by any Person, and any investigation, site assessment,
environmental audit, feasibility study, monitoring, clean-up, removal,
containment, restoration, remedial response or remedial work undertaken by or
on behalf of the any Indemnified Person at any time, voluntarily or
involuntarily, with respect to the Premises (the Indemnified Liabilities);
provided that the Borrower shall not be liable to any Indemnified Person for
any portion of such Indemnified Liabilities to the extent they are found by a
final decision of a court of competent jurisdiction to have resulted from such
Indemnified Persons gross negligence or willful misconduct. If and to the
extent that the foregoing indemnification is for any reason held unenforceable,
the Borrower agrees to make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is permissible under
applicable law. 87




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(c) Other Charges. The Borrower agrees to indemnify the Agent and each of
the Lenders against and hold each of them harmless from any and all present and
future stamp, transfer, documentary and other such taxes, levies, fees,
assessments and other charges made by any jurisdiction by reason of the
execution, delivery, performance and enforcement of the Loan Documents. (d) Obligations Under Existing Credit Agreement.
All rights of the Agent and the Lenders in respect of any indemnification
and otherwise for reimbursement or payment of any losses, costs, charges,
expenses or disbursements (including fees and disbursements of counsel) under
or in respect of the Existing Credit Agreement shall survive the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby. SECTION 13.05 Right of Set-Off. Upon the occurrence and during the
continuance of any Event in Default, each Lender hereby is authorized at any
time and from time to time, without notice to the Borrower (any such notice
being expressly waived by the Borrower), to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by such Lender to or for the
credit or the account of the Borrower against any and all of the Obligations of
the Borrower now or hereafter existing under this Agreement and the other Loan
Documents, irrespective of whether or not such Lender shall have made any
demand under this Agreement or any such other Loan Document and although such
Obligations may be unmatured. Each Lender agrees promptly to notify the
Borrower (through the Agent) after any such set-off and application made by
such Lender; provided that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of each Lender under this
Section 13.05 are in addition to other rights and remedies (including other
rights of set-off) which such Lender may have. NOTWITHSTANDING THE FOREGOING,
NO LENDER SHALL EXERCISE, OR ATTEMPT TO EXERCISE, ANY RIGHT OF SET-OFF,
BANKERS LIEN, OR THE LIKE, AGAINST ANY DEPOSIT ACCOUNT OR PROPERTY OF THE
BORROWER OR ANY SUBSIDIARY GUARANTOR HELD OR MAINTAINED BY THE LENDER WITHOUT
THE PRIOR WRITTEN CONSENT OF THE AGENT AND THE MAJORITY LENDERS. SECTION 13.06 Survival. All covenants, agreements, representations and
warranties made in any Loan Document shall, except to the extent otherwise
provided therein, survive the execution and delivery of this Agreement, the
making of the Credit Extensions and the execution and delivery of the Notes,
and shall continue in full force and effect so long as the Lenders have any
Commitments, any Loans or Letters of Credit remain outstanding or any other
Obligations remain unpaid or any obligation to perform any other act under any
Loan Document remains unsatisfied. Without limiting the generality of the
foregoing, the obligations of the Borrower under Sections 6.02, 6.03, 7.03 and
13.04, and of the Lenders under Sections 7.03 and 12.06, and all similar
obligations under the other Loan Documents (including all obligations to pay
costs and expenses and all indemnity obligations), shall survive the repayment
of the Loans, the termination of the Letters of Credit and the termination of
the Commitments. SECTION 13.07 Obligations Several. The obligations of the Lenders under
the Loan Documents are several. The failure of any Lender or the Agent to
carry out its obligations thereunder shall not relieve any other Lender or the
Agent of any obligation thereunder, nor shall any Lender or the Agent be
responsible for the obligations of, or any action 88




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taken or omitted by, any other Person hereunder
or thereunder. Nothing contained in any Loan Document shall be deemed to
cause any Lender or the Agent to be considered a partner of or joint venturer
with any other Lender or Lenders, the Agent, the Guarantors or the Borrower. SECTION 13.08 Benefits of Agreement. The Loan Documents are entered into
for the sole protection and benefit of the parties hereto and their successors
and assigns, and no other Person (other than any Agent/IB Related Persons and
any Related Persons of the Lenders) shall be a direct or indirect beneficiary
of, or shall have any direct or indirect cause of action or claim in connection
with, any Loan Document. SECTION 13.09 Binding Effect; Assignment. (a) Binding Effect. This Agreement shall become effective when it shall
have been executed by the Borrower, the Issuing Lender and the Agent and when
the Agent shall have been notified by each Lender that such Lender has executed
it and thereafter shall be binding upon, inure to the benefit of and be
enforceable by the Borrower, the Issuing Lender, the Agent and each Lender and
their respective successors and assigns. (b) Assignment. The Borrower may not assign or otherwise transfer any of
its rights or obligations hereunder without the prior written consent of each
Lender, and no Lender may assign or otherwise transfer any of its rights or
obligations hereunder, except (i) to an Eligible Assignee in accordance with
the provisions of subsection (b)(i), (ii) by way of participation in accordance
with the provisions of subsection (b)(iii) or (iii) by way of pledge or
assignment of a security interest subject to the restrictions of subsection
(b)(v) (and any other attempted assignment or transfer by any party hereto
shall be null and void). (i) Any Lender may at any time assign to one or more Eligible Assignees
all or a portion of its rights and obligations under this Agreement (including
all or a portion of its Commitments and the Loans (including for purposes of
this subsection (b)(i), participations in L/C Obligations) at the time owing to
it); provided that (A) except in the case of an assignment of the entire
remaining amount of the assigning Lenders Commitments and the Loans at the
time owing to it or in the case of an assignment to a Lender or an Affiliate of
a Lender or an Approved Fund (as defined in subsection (b)(vi)) with respect to
a Lender, the aggregate amount of the Commitments (which for this purpose
includes Loans outstanding thereunder) or, if the applicable Commitments are
not then in effect, the principal outstanding balance of the Loans of the
assigning Lender subject to each such assignment (determined as of the date the
Assignment and Assumption with respect to such assignment is delivered to the
Agent or, if Trade Date is specified in the Assignment and Assumption, as of
the Trade Date) shall not be less than $3,500,000, unless each of the Agent
and, so long as no Event of Default has occurred and is continuing, the
Borrower otherwise consents (each such consent not to be unreasonably withheld
or delayed); (B) each partial assignment shall be made as an assignment of a
proportionate part of all the assigning Lenders rights and obligations under
this Agreement with respect to the
Loans or the Commitments assigned, except that this sub-clause (B) shall
prohibit any Lender from assigning all or a portion of its rights and
obligations among separate tranches on a non-pro ratabasis; (C) any assignment
of any Commitments must be approved by the Agent and the Issuing Lender unless
the Person that is the proposed assignee is itself a Lender (whether or not the
proposed assignee would otherwise qualify as an Eligible Assignee); and (D) the
parties to 89




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each assignment shall execute and deliver to the Agent an Assignment
and Assumption, together with a processing and recordation fee of $3,500, and
the Eligible Assignee, if it shall not be a Lender, shall deliver to the Agent
an Administrative Questionnaire. Subject to acceptance and recording thereof
by the Agent pursuant to subsection (b)(ii), from and after the effective date
specified in each Assignment and Assumption, the Eligible Assignee thereunder
shall be a party to this Agreement and, to the extent of the interest assigned
by such Assignment and Assumption, have the rights and obligations of a Lender
under this Agreement, and the assigning Lender thereunder shall, to the extent
of the interest assigned by such Assignment and Assumption, be released from
its obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lenders rights and obligations under

this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Article VI and Sections 7.03 and 13.04 with
respect to facts and circumstances occurring prior to the effective date of
such assignment). Upon request, the Borrower (at its expense) shall execute
and deliver a Note to the assignee Lender. Any assignment or transfer by a
Lender of rights or obligations under this Agreement that does not comply with
this subsection (b)(i) shall be treated for purposes of this Agreement as a
sale by such Lender of a participation in such rights and obligations in
accordance with subsection (b)(iii). (ii) The Agent, acting solely for this purpose as an agent of the
Borrower, shall maintain at one of its offices in New York, New York a copy of
each Assignment and Assumption delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitments of,
and principal amounts of the Loans and L/C Obligations owing to, each Lender
pursuant to the terms hereof from time to time (the Register). The entries
in the Register shall be conclusive, and the Borrower, the Agent and the
Lenders may treat each Person whose name is recorded in the Register pursuant
to the terms hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. The Register shall be available for
inspection by the Borrower, at any reasonable time and from time to time upon
reasonable prior notice. In addition, at any time that a request for a consent
for a material or other substantive change to the Loan Documents is pending,
any Lender wishing to consult with other Lenders in connection therewith may
request and receive from the Agent a copy of the Register. (iii) Any Lender may at any time, without the consent of, or notice to,
the Borrower or the Agent, sell participations to any Person (other than a
natural person or the Borrower or any of the Borrowers Affiliates or
Subsidiaries) (each, a Participant) in all or a portion of such Lenders
rights and/or obligations under this Agreement (including all or a portion of
its Commitments and/or the Loans (including such Lenders participations in L/C
Obligations) owing to it); provided that (i) such Lenders obligations under
this Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations
and (iii) the Borrower, the Agent and the other Lenders shall continue to deal
solely and directly with such Lender in connection with such Lenders rights
and obligations under this Agreement. Any agreement or instrument pursuant to
which a Lender
sells such a participation shall provide that such Lender shall retain the
sole right to enforce this Agreement and to approve any amendment, modification
or waiver of any provision of this Agreement; provided that such agreement or
instrument may provide that such Lender will not, without the consent of the
Participant, agree to any amendment, waiver or other modification which would
require unanimous consent as described in the second proviso to Section 13.01
that 90




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directly affects such Participant. Subject to subsection (b)(iv), the
Borrower agrees that each Participant shall be entitled to the benefits of
Sections 6.02, 6.03, 7.03 and 13.04 to the same extent as if it were a Lender
and had acquired its interest by assignment pursuant to subsection (b)(i). To
the extent permitted by law, each Participant also shall be entitled to the
benefits of Section 13.05 as though it were a Lender, provided such Participant
agrees to be subject to Section 7.05 as though it were a Lender. (iv) A Participant shall not be entitled to receive any greater payment
under Section 6.02, 6.03 or 7.03 than the applicable Lender would have been
entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with the
Borrowers prior written consent. A Participant that would be a Foreign Lender
if it were a Lender shall not be entitled to the benefits of Section 7.03
unless the Borrower is notified of the participation sold to such Participant
and such Participant agrees, for the benefit of the Borrower, to comply with
Section 7.03(d) as though it were a Lender. (v) Any Lender may at any time pledge or assign a security interest in all
or any portion of its rights under this Agreement (including under its Note, if
any) to secure obligations of such Lender, including any pledge or assignment
to secure obligations to a Federal Reserve Lender; provided that no such pledge
or assignment shall release such Lender from any of its obligations hereunder
or substitute any such pledgee or assignee for such Lender as a party hereto. (vi) As used herein, the following terms have the following meanings: Approved Fund means any Fund that is administered or managed by (a) a
Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an
entity that administers or manages a Lender. Eligible Assignee means (a) a Lender; (b) an Affiliate of a Lender; (c)
an Approved Fund; and (d) any other Person (other than a natural person)
approved by (i) the Agent and the Issuing Lender, and (ii) unless an Event of
Default has occurred and is continuing, the Borrower (each such approval not to
be unreasonably withheld or delayed); provided that notwithstanding the
foregoing, Eligible Assignee shall not include the Borrower or any of the
Borrowers Affiliates or Subsidiaries. Fund means any Person (other than a natural person) that is (or will be)
engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of its business. SECTION 13.10 Governing Law.
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAW OF THE STATE OF NEW YORK. SECTION 13.11 Submission to Jurisdiction. The Borrower hereby (i) submits
to the non-exclusive jurisdiction of the courts of the State of New York and
the Federal courts of the United States sitting in the State of New York for
the purpose of any action or proceeding arising out of or relating to the Loan
Documents, (ii) agrees that all claims in 91




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respect of any such action or
proceeding may be heard and determined in such courts, (iii) irrevocably waives
(to the extent permitted by applicable law) any objection which it now or
hereafter may have to the laying of venue of any such action or proceeding
brought in any of the foregoing courts, and any objection on the ground that
any such action or proceeding in any such court has been brought in an
inconvenient forum and (iv) agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner permitted by law. Nothing in this Section 13.11 shall limit the right of the Agent, the
Lenders or the Collateral Agent to bring any action or proceeding against the
Borrower or its property in the courts of other jurisdictions. SECTION 13.12 Waiver of Jury Trial. THE BORROWER, THE LENDERS AND THE
AGENT HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY
ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER WITH RESPECT TO
CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE BORROWER, THE LENDERS AND THE
AGENT HEREBY AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A
COURT TRIAL WITHOUT A JURY. WITHOUT IN ANY WAY LIMITING THE FOREGOING, THE
PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED
BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM, OR OTHER
PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR
ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION
HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS. A COPY OF THIS SECTION 13.12 MAY BE FILED WITH ANY COURT AS WRITTEN
EVIDENCE OF THE WAIVER OF THE RIGHT TO TRIAL BY JURY AND CONSENT TO TRIAL BY
COURT. THIS SECTION 13.12 MAY NOT BE AMENDED, MODIFIED, TERMINATED OR WAIVED
EXCEPT BY A WRITING WHICH MAKES SPECIFIC REFERENCE TO THIS SECTION 13.12. SECTION 13.13 Limitation on Liability. No claim shall be made by the
Borrower or its Affiliates against any Agent/IB Related Person, or the Lenders
or any of their respective Related Persons, for any special, indirect,
exemplary, consequential or punitive damages in respect of any breach or
wrongful conduct (whether or not the claim therefor is based on contract, tort
or duty imposed by law), in connection with, arising out of or in any way
related to the transactions contemplated by the Loan Documents or any act or
omission or event occurring in connection therewith; and the Borrower hereby
waives, releases and agrees not to sue upon any such claim for any such
damages, whether or not accrued and whether or not known or suspected to exist
in its favor. 92




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SECTION 13.14 Confidentiality. Each Lender, the Issuing Lender and the
Agent shall hold all non-public information relating to the Borrower and its
Subsidiaries obtained by it under this Agreement in accordance with its
customary procedures for handling confidential information of this nature,
which in no event shall be less protective than the procedures such Lender,
Issuing Lender or Agent employs with respect to its own confidential
information of a like kind and no less protective than is required by
applicable laws, including U.S. federal securities laws and regulations
governing the disclosure and use of material non-public information, except
for: (i) disclosure to its Affiliates or to its counsel or to any agent or
advisor acting on its behalf in connection with the negotiation, execution or
performance of the Loan Documents; (ii) disclosure as reasonably required in
connection with a transfer to a prospective assignee or participant of all or
part of its Loans or any participation therein, as provided in Section
13.09(b), subject to an agreement containing provisions substantially the same
as those in this section; (iii) disclosure as may be required or requested by
any Governmental Authority or representative thereof or pursuant to legal
process; (iv) disclosure to any Person and in any proceeding necessary in such
Lenders, the Issuing Lenders or the Agents judgment to protect its interests
in connection with any claim or dispute involving such Lender, the Issuing
Lender or the Agent; (v) disclosure to any direct or indirect contractual
counterparty or prospective counterparty (or such contractual counterpartys or
prospective counterpartys professional advisor) to any credit derivative
transaction relating to any Obligations; (vi) disclosure to the National
Association of Insurance Commissioners or any other similar organization or any
nationally recognized rating agency that requires access to information about a
Lenders or its Affiliates investment portfolio in connection with ratings
issued with respect to such Lender or its Affiliates; and (vii) any other
disclosure with the prior written consent of the Borrower. In addition, the
Agent and the Lenders may disclose the existence of this Agreement and
information about this Agreement to market data collectors, similar service
providers to the lending industry, and service providers to the Agent and the
Lenders in connection with the administration and management of this Agreement
and the other Loan Documents. Prior to any disclosure by any Lender, the
Issuing Lender or the Agent of such non-public information permitted under
clause (iii) (other than in connection with an examination of the financial
condition of such Lender, the Agent or any of their Affiliates by any
Governmental Authority), it shall, if permitted by applicable laws or judicial
order, notify the Borrower of such pending disclosure. In no event shall any
Lender, the Issuing Lender or the Agent be obligated or required to return any
materials furnished by the Borrower or its Subsidiaries. Notwithstanding the
foregoing, such obligation of confidentiality shall not apply if the
information or substantially similar information (A) is rightfully received by
any Lender, the
Issuing Lender or the Agent from a Person other than the Borrower or any
of its Affiliates without such Lender, the Issuing Lender or the Agent being
under an obligation to such Person not to disclose such information, or (B) is
or becomes part of the public domain. SECTION 13.15 Entire Agreement. The Loan Documents reflect the entire
agreement among the Borrower, the Lenders and the Agent with respect to the
matters set forth herein and therein and supersede any prior agreements,
commitments, drafts, communications, discussions and understandings, oral or
written, with respect thereto. SECTION 13.16 Payments Set Aside. To the extent that any payment by or on
behalf of the Borrower is made to the Agent or any Lender, or the Agent or any
Lender exercises its right of set-off, and such payment or the proceeds of such
set-off or any part thereof 93




---



##### 



is subsequently invalidated, declared to be
fraudulent or preferential, set aside or required (including pursuant to any
settlement entered into by the Agent or such Lender in its discretion) to be
repaid to a trustee, receiver or any other party, in connection with any
proceeding under the Bankruptcy Code or other U.S. Federal, state or foreign
liquidation, conservatorship, bankruptcy, assignment for the benefit of
creditors, moratorium, rearrangement, receivership, insolvency, reorganization,
or similar debtor relief laws, or otherwise, then (a) to the extent of such
recovery, the obligation or part thereof originally intended to be satisfied
shall be revived and continued in full force and effect as if such payment had
not been made or such set-off had not occurred, and (b) each Lender severally
agrees to pay to the Agent upon demand its applicable share of any amount so
recovered from or repaid by the Agent, plus interest thereon from the date of
such demand to the date such payment is made at a rate per annum equal to the
Federal Funds Rate from time to time in effect. SECTION 13.17 Severability. Whenever possible, each provision of the Loan
Documents shall be interpreted in such manner as to be effective and valid
under all applicable laws and regulations. If, however, any provision of any
of the Loan Documents shall be prohibited by or invalid under any such law or
regulation in any jurisdiction, it shall, as to such jurisdiction, be deemed
modified to conform to the minimum requirements of such law or regulation, or,
if for any reason it is not deemed so modified, it shall be ineffective and
invalid only to the extent of such prohibition or invalidity without affecting
the remaining provisions of such Loan Document, or the validity or
effectiveness of such provision in any other jurisdiction. SECTION 13.18 Counterparts. This Agreement may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute but one and the same agreement. SECTION 13.19 Acknowledgments
This Agreement is intended to amend the Existing Credit Agreement,
without novation, and, solely for the convenience of reference, to restate it.
All Loans and Letters of Credit outstanding under the Existing Credit Agreement
shall be Loans and Letters of Credit outstanding hereunder, and the Borrower
ratifies, affirms and acknowledges all of its Obligations in respect of the
Existing Credit Agreement and the other Loan Documents. The Borrower
acknowledges and agrees that any reference to the Credit Agreement in the
other Loan Documents shall mean and be references to the Existing Credit
Agreement as amended and restated by this Agreement. The Borrower hereby
ratifies and reaffirms the validity and enforceability of all of the liens and
security interests heretofore granted to the Collateral Agent and the Lenders
party to the Existing Credit Agreement as collateral security for the
Obligations, and acknowledges that all of such liens and security interests and
all collateral heretofore pledged as security for the Obligations under the
Existing Credit Agreement and the Collateral Documents continue to be and
remains collateral for the Obligations from and after the date hereof. SECTION 13.20 USA Patriot Act Notice. Each Lender and the Agent (for
itself and not on behalf of any Lender) hereby notifies the Borrower that
pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L.
107-56 (signed into law October 26, 2001)) (the Act), it is required to
obtain, verify and record information that identifies the Borrower, which
information includes the name and address of the Borrower and other 94




---



##### 



information
that will allow such Lender or the Agent, as applicable, to identify the
Borrower in accordance with the Act. [Signature pages follow.] 95




---



##### 



IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement,
as of the date first above written. THE BORROWERTHE CHALONE WINE GROUP, LTD.By: /s/ Thomas B. SelfridgeName: Thomas B. SelfridgeTitle: President and CEOTHE AGENTCOOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., RABOBANK INTERNATIONAL,NEW YORK BRANCH, as AgentBy: /s/ John McHughName: John McHughTitle: Vice PresidentBy: /s/ Rebecca MorrowName: /s/ Rebecca MorrowTitle: Executive Director
 S-1




---



##### 



THE LENDERSCOOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., RABOBANK INTERNATIONAL,NEW YORK BRANCH, as Issuing Lender, asSwingline Lender and as a LenderBy: /s/ John McHughName: John McHughTitle: Vice PresidentBy: /s/ Rebecca MorrowName: Rebecca MorrowTitle: Executive Director
 S-2




---



##### 



FARM CREDIT WEST FLCABy: /s/ Mark LittlefieldName: Mark LittlefieldTitle: Vice President
 S-3




---



##### 



U.S. BANK NATIONAL ASSOCIATIONBy: /s/ Albert V. ShulerName: Albert V. ShulerTitle: Vice President
 S-4




---



##### 



COMERICA BANKBy: /s/ Misako NodaName: Misako NodaTitle: Vice President
 S-5




---



##### 



ANNEX I PRICING GRID From the Amendment Closing Date until the date on which the Borrower
delivers a Compliance Certificate pursuant to Section 10.01(a)(iii) of the
Credit Agreement for the fiscal quarter ending March 31, 2004 (the Initial
Period), the Applicable Margin and the Applicable Fee Amount shall be fixed at
Level 2. From and after the last day of the Initial Period, the Applicable
Margin and the Applicable Fee Amount for any day shall be the amount per annum
set forth below based on the Leverage Ratio set forth in the most recently
delivered Compliance Certificate delivered by the Borrower pursuant to Section
10.01(a)(iii) of the Credit Agreement. Changes in the Applicable Margin and
the Applicable Fee Amount resulting from a change in the Leverage Ratio shall
become effective on the date of delivery by the Borrower to the Agent of a new
Compliance Certificate pursuant to Section 10.01(a)(iii), except that no such
change shall take effect until the end of the Initial Period. If the Borrower
shall fail to deliver a Compliance Certificate and accompanying financial
statements within the number of days after the end of any fiscal quarter or
fiscal year as required pursuant to Section 10.01(a), the parties agree that
the Applicable Margin and the Applicable Fee Amount shall be fixed at Level 1
until such time as the Borrower delivers such new Compliance Certificate and
accompanying financial statements pursuant to Section 10.01(a). Revolving
    
    
    
    
    
    
    
    
    
    TermLoan
    
    
    
    
    
    
    
    
    
    Loan
    
    TermEurodollar
    
    Revolving
    
    
    
    
    
    Eurodollar
    
    Loan BaseRate
    
    Loan Base
    
    Commitment
    
    Rate
    
    Rate
    
    Letter ofLevel
    
    Leverage Ratio
    
    Spread
    
    Rate Spread
    
    Fee
    
    Spread
    
    Spread
    
    Credit FeeLevel 1
    
    greater  than or equal to 5.50 to 1.00
    
    
    2.50
    %
    
    
    1.25
    %
    
    
    0.50
    %
    
    
    3.00
    %
    
    
    1.75
    %
    
    
    2.50
    %Level 2
    
    greater  than or equal to 5.00  to  1.00  and  less than 5.50 to 1.00
    
    
    2.25
    %
    
    
    1.00
    %
    
    
    0.45
    %
    
    
    2.75
    %
    
    
    1.50
    %
    
    
    2.25
    %Level 3
    
    greater  than or equal to 4.50  to  1.00  and  less than 5.00 to 1.00
    
    
    2.00
    %
    
    
    0.75
    %
    
    
    0.375
    %
    
    
    2.50
    %
    
    
    1.25
    %
    
    
    2.00
    %Level 4
    
    greater  than or equal to 3.50  to  1.00  and  less than 4.50 to 1.00
    
    
    1.75
    %
    
    
    0.50
    %
    
    
    0.375
    %
    
    
    2.25
    %
    
    
    1.00
    %
    
    
    1.75
    %Level 5
    
    less than 3.50 to 1.00
    
    
    1.25
    %
    
    
    0.00
    %
    
    
    0.25
    %
    
    
    1.75
    %
    
    
    0.50
    %
    
    
    1.25
    %
 For purposes of this pricing grid, the Leverage Ratio shall be calculated
without giving effect to the principal amount of the Shareholder Subordinated
Debt or any interest payable thereunder. A-1




---



##### 



SCHEDULE 1
to the Credit Agreement COMMITMENTS AND PRO RATA SHARES 1. REVOLVING LOANS Lender
    
    Revolving Commitment
    
    Pro Rata ShareCooperatieve Centrale
Raiffeisen-Boerenleenbank B.A.
    
    $
    25,000,000.00
    
    
    
    45.454545454
    %U.S. Bank National Association
    
    $
    15,000,000.00
    
    
    
    27.272727273
    %Comerica Bank
    
    $
    15,000,000.00
    
    
    
    27.272727273
    %TOTAL
    
    $
    55,000,000.00
    
    
    
    100
    %
 2. TERM LOANS Lender
    
    Term Commitment
    
    Pro Rata ShareFarm Credit West FLCA
    
    $
    14,700,000.00
    
    
    
    100
    %TOTAL
    
    $
    14,700,000.00
    
    
    
    100
    %
 S-1-1.




---



##### 



LENDING OFFICES; ADDRESSES FOR NOTICESSchedule 2 Notices to Borrower: The Chalone Wine Group, Ltd.
621 Airpark Road
Napa, CA 94558
Attention: Shawn Conroy Blom, Chief Financial Officer
Facsimile: (707) 254-4202
Email: sblom@chalonewinegroup.com
Website: www.chalonewinegroup.com Agent Office: Lending Office and Address for Payments, Notices of Borrowing and Notices of
Conversion or Continuation: Rabobank International
10 Exchange Place, 16th Floor
Jersey City, NJ 07302
Attention: Rabobank Support Services
Telephone (207) 499-5200
Facsimile: (207) 499-5326
Email: ann.mcdonough@nyc.rabobank.com Notices (other than Notices of Borrowing and Notices of Conversion or
Continuation): Rabobank International
Four Embarcadero Center, Suite 3200
San Francisco, CA 94111-4057
Attention: John McHugh
Telephone: (415) 782-9810
Facsimile: (415) 986-8349
Email: john.mchugh@sfo.rabobank.com SCHEDULE 2
(to Credit Agreement)




---



##### 



With a copy to: Rabobank International, 38th Floor
245 Park Avenue
New York, NY 10167
Attention: Legal Department
Telephone (212) 916-3773
Facsimile: (212) 916-7880
Email: rebecca.morrow@rabobank.com Other Lenders: Comerica Bank
275 Battery Street, Suite 1100
San Francisco, CA 94111-3305
Attention: Misako Noda
Telephone: (415) 954-5089
Facsimile: (415) 954-5020 Farm Credit West
1178 Tama Lane
PO Box 1640
Santa Monica, CA 93456
Attention: Mark Littlefield
Telephone: (805) 922-7991
Facsimile: (805) 922-5121 U.S. Bank National Association
DN-CO-TSCS
950 17th Street, Suite 350
Denver, CO 80202
Attention: Al Schuler
Telephone: (303) 585-4903
Facsimile: (303) 585-4732 SCHEDULE 2
(to Credit Agreement)




---



##### 



EXISTING INDEBTEDNESSSchedule 3  1.
    
    Amounts owed pursuant to that Promissory Note and Loan Agreement
Variable Rate dated July 17, 1996 in favor of Central Coast Federal
Land Bank Association, FLCA by Edna Valley Vineyard, in an original
principal amount of $1,839,275.2.
    
    Other accounts payable, accrued liabilities and general office
equipment leases in the ordinary course of business and barrel leases
with De Lage Landen. SCHEDULE 3
(to Credit Agreement)




---



##### 



EXISTING LIENSSchedule 4 Liens in connection with the Existing Indebtedness listed as items 1 and 2 on
Schedule 3. Schedule 4
(to Credit Agreement)




---



##### 



LITIGATIONSchedule 5 none SCHEDULE 5
(to Credit Agreement)




---



##### 



SCHEDULE 5
(to Credit Agreement) SUBSIDIARIESSchedule 6 Name and Capital Structure
    
    Ownership InterestSHW Equity Co., a Washington
corporation
    
    100%Staton Hills Winery Company
Limited, a Washington corporation
    
    100% owned by SHW Equity Co.Canoe Ridge Winery, Inc., a
Washington corporation
    
    100%Canoe Ridge Vineyard, LLC, a
Washington limited liability company
    
    100% (50.5% owned through Canoe Ridge Winery, Inc.)




---



##### 



Schedule 7 [Reserved] SCHEDULE 7
(to Credit Agreement)




---



##### 



Schedule 8 [Reserved] SCHEDULE 8
(to Credit Agreement)




---



##### 



AFFILIATE TRANSACTIONSSchedule 9 The Edna Valley Vineyard Joint Venture (the EVV Joint Venture). James H.
Niven, a director of the Company, is the President and a substantial
shareholder of Paragon Vineyard Co., Inc. (Paragon), the Companys partner in
the EVV Joint Venture. In December 1996, the Company and Paragon entered into
an agreement (the Joint Venture Amendment) which amended and restated the
terms of the EVV Joint Venture. Under the terms of the Joint Venture Amendment,
the Company was obligated to make substantial payments in order to maintain its
50% ownership interest in the EVV Joint Venture and to extend its term
indefinitely. Specifically, the Company previously paid Paragon $1,070,000 (the
Deposit) as a deposit toward future payments due for the foregoing purposes
and the sum of $5,390,000 in four installments, the most recent of which was
paid in January 2002. The Company fulfilled its option to purchase 50% of the
EDNA VALLEY brand-name for $200,000 in January 2002. Additionally, the
Company makes payments in respect of the Joint Venture Amendment and ground
lease. Under the terms of a grape purchase agreement, Paragon sells fixed quantities
of Chardonnay grapes to the Edna Valley Joint Venture at prices calculated by
reference to the average prices paid for Chardonnay grapes in Santa Barbara
County and Napa County during the preceding year, with certain adjustments
depending on the grapes sugar content. During 2003, the value of the grapes
sold by Paragon to the Edna Valley Joint Venture pursuant to the foregoing
contracts was approximately $5,947,000. Les Domaines Barons de Rothschild (Lafite) (DBR). Certain directors of the
Company have a relationship with DBR, an affiliate of the Company. Baron Eric
de Rothschild and Christophe Salin, both directors of the Company, are,
respectively, a Managing Partner and President of DBR, and Yves-Andre Istel,
another director of the Company, is a director of certain affiliates of DBR. Pursuant to DBRs investment in the Company, the Company receives an allocation
of the wines of DBR, including the wines of Château Lafite-Rothschild and
Duhart-Milon. During 2003, the Company paid approximately $712,320 to DBR, of
which approximately $0 represents deposits for wine which will be delivered in
future years (i.e., wine futures). Myers Family. The Company has a grape purchase agreement, expiring as late as
2012 with respect to some varietals, with Snows Lake Vineyard at prices
negotiated yearly with reference to existing market conditions. George E.
Myers, a director of the Company, is President of Ojai Ranch & Investments,
which controls Snows Lake Vineyard. During 2003, the Company paid
approximately $1,480,000 under the grape purchase contract. SCHEDULE 9
(to Credit Agreement)




---



##### 



EXHIBIT A
to the Amended and Restated Credit Agreement FORM OF BORROWING BASE CERTIFICATE Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A.,
Rabobank International, New York Branch, as Agent
10 Exchange Place, 16th Floor
Jersey City, NJ 07302
Attention: Rabobank Support Services Re: The Chalone Wine Group, Ltd. Ladies and Gentlemen: This Borrowing Base Certificate is
made and delivered pursuant to the
Amended and Restated Credit Agreement dated as of May 11, 2004 (as amended,
modified, supplemented, renewed or extended from time to time, the Credit
Agreement) among The Chalone Wine Group, Ltd. (the Borrower), the Lenders
party thereto, and Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A.,
Rabobank International, New York Branch, as Agent, and reference is made
thereto for full particulars of the matters described herein. All capitalized
terms used in this Borrowing Base Certificate and not otherwise defined herein
shall have the meanings assigned to them in the Credit Agreement. I am the [chief financial
officer] of the Borrower and hereby certify that
the information set forth on Schedule 1 hereto is true, accurate and complete
as of . IN WITNESS WHEREOF, the
undersigned officer has signed this Borrowing Base
Certificate this  day of . Name:Title:
 A-1




---



##### 



SCHEDULE 1
to the Borrowing Base Certificate Date of Calculation
    
    ,
 A.
    
    Eligible Inventory.1.
    
    
    Inventory consisting of bulk wine to be sold in the bulk wine
marketA. Gross dollar value of Borrowers and each Subsidiary
Guarantors Inventory consisting of bulk wine which is of
marketable quality and to be sold in the bulk wine market,
valued at fair market value (as reported in the most recently
published quarterly Turrentine Collateral Value Report or, if
not available, an equivalent compilation selected in the
Agents reasonable discretion)
    
    $B. Grower Payables, if any, incurred in connection with such
bulk wine
    
    $C. Less ineligible Inventory (without duplication):(i)
    
    Inventory (other than bulk wine and Wine Bottling
Inventory) consisting of raw materials, supplies, or
work in process
    
    $(ii)
    
    Inventory not owned by the Borrower or a Subsidiary
Guarantor free and clear of all Liens and rights of
others (other than Liens in favor of the Agent on
behalf of the Lenders or Growers Liens or Production
Liens)
    
    $(iii)
    
    Inventory in which the Agent on behalf of the Lenders
shall not have a valid and perfected first priority
Lien, other than Growers Liens or Production Liens
    
    $(iv)
    
    Inventory located anywhere other than California,
Washington, the locations listed on Schedule 1 to
either Security Agreement, or such other
jurisdictions as shall have been approved by the
Agent in writing
    
    $
 Schedule 1-1




---



##### 



(v)
    
    Inventory which is not in the direct possession of
the Borrower or a Subsidiary Guarantor (except for
Inventory at one of the locations set forth in Part 1
of Schedule 1 to either Security Agreement, or at a
location set forth in a notice from the Borrower or a
Subsidiary Guarantor to the Agent pursuant to Section
5(e) of either Security Agreement, which shall be
considered eligible if the Agent has received a
collateral access agreement, in form and substance
reasonably satisfactory to it, with respect to any
Inventory located at leased locations)
    
    $(vi)
    
    Inventory on lease or consignment or subject to
warehousing arrangements, except for Inventory
subject to warehousing arrangements (1) in form and
substance acceptable to the Agent and approved in
writing by the Agent and (2) which contain, or as to
which the Agent has received, a subordination and/or
waiver by the warehouseman in form and substance
reasonably satisfactory to the Agent
    
    $(vii)
    
    Inventory which is used or intended to be used in
research and development
    
    $(viii)
    
    Inventory which is obsolete, unmerchantable, spoiled,
damaged or unfit for sale or further processing
    
    $(ix)
    
    Inventory which is packaging, shipping, or
advertising materials (other than Wine Bottling
Inventory)
    
    $(x)
    
    Inventory which is in the exercise of the Agents
reasonable credit judgement, exercised in good faith,
unacceptable to the Agent due to age, type, category
or quantity, or is otherwise ineligible
    
    $D. 60% of (A minus B minus C)
    
    $2
    
    
    Inventory consisting of other bulk wineA. Gross dollar value of Borrowers and each Subsidiary
Guarantors Inventory consisting of bulk wine (not included as
part of the bulk wine inventory to
    
    $
 Schedule 1-2




---



##### 



be sold in the bulk wine
market in 1 above) which is of marketable quality and held for
sale or use in the ordinary and usual course of business,
valued at book value at the date of determinationB. Grower Payables, if any, incurred in connection with such
bulk wine
    
    $C. Less ineligible Inventory (without
duplication):(i)
    
    Inventory (other than bulk wine and Wine Bottling
Inventory) consisting of raw materials, supplies, or
work in process
    
    $(ii)
    
    Inventory not owned by the Borrower or a Subsidiary
Guarantor free and clear of all Liens and rights of
others (other than Liens in favor of the Agent on
behalf of the Lenders or Growers Liens or Production
Liens)
    
    $(iii)
    
    Inventory in which the Agent on behalf of the Lenders
shall not have a valid and perfected first priority
Lien, other than Growers Liens or Production Liens
    
    $(iv)
    
    Inventory located anywhere other than California,
Washington, the locations listed on Schedule 1 to
either Security Agreement, or such other
jurisdictions as shall have been approved by the
Agent in writing
    
    $(v)
    
    Inventory which is not in the direct possession of
the Borrower or a Subsidiary Guarantor (except for
Inventory at one of the locations set forth in Part 1
of Schedule 1 to either Security Agreement, or at a
location set forth in a notice from the Borrower or a
Subsidiary Guarantor to the Agent pursuant to Section
5(e) of either Security Agreement, which shall be
considered eligible if the Agent has received a
collateral access agreement, in form and substance
reasonably satisfactory to it, with respect to any
Inventory located at leased locations)
    
    $
 Schedule 1-3




---



##### 



(vi)
    
    Inventory on lease or consignment or subject to
warehousing arrangements, except for Inventory
subject to warehousing arrangements (1) in form and
substance acceptable to the Agent and approved in
writing by the Agent and (2) which contain, or as to
which the Agent has received, a subordination and/or
waiver by the warehouseman in form and substance
reasonably satisfactory to the Agent
    
    $(vii)
    
    Inventory which is used or intended to be used in
research and development
    
    $(viii)
    
    Inventory which is obsolete, unmerchantable, spoiled,
damaged or unfit for sale or further processing
    
    $(ix)
    
    Inventory which is packaging, shipping, or
advertising materials (other than Wine Bottling
Inventory)
    
    $(x)
    
    Inventory which is in the exercise of the Agents
reasonable credit judgement, exercised in good faith,
unacceptable to the Agent due to age, type, category
or quantity, or is otherwise ineligible
    
    $D. 70% of (A minus B minus C)
    
    $3.
    
    
    Inventory consisting of cased wine or separately bottled wineA. Gross dollar value of Borrowers and each Subsidiary
Guarantors Inventory consisting of cased wine or separately
bottled wine which is of marketable quality and held for sale
or use in the ordinary and usual course of business of the
posted F.O.B. selling price at the date of determination for
the immediately preceding calendar month
    
    $B. Less ineligible Inventory (without duplication):(i)
    
    Inventory (other than bulk wine and Wine Bottling
Inventory) consisting of raw materials, supplies, or
work in process
    
    $
 Schedule 1-4




---



##### 



(ii)
    
    Inventory not owned by the Borrower or a Subsidiary
Guarantor free and clear of all Liens and rights of
others (other than Liens in favor of the Agent on
behalf of the Lenders or Growers Liens or Production
Liens)
    
    $(iii)
    
    Inventory in which the Agent on behalf of the Lenders
shall not have a valid and perfected first priority
Lien, other than Growers Liens or Production Liens
    
    $(iv)
    
    Inventory located anywhere other than California,
Washington, the locations listed on Schedule 1 to
either Security Agreement, or such other
jurisdictions as shall have been approved by the
Agent in writing
    
    $(v)
    
    Inventory which is not in the direct possession of
the Borrower or a Subsidiary Guarantor (except for
Inventory at one of the locations set forth in Part 1
of Schedule 1 to either Security Agreement, or at a
location set forth in a notice from the Borrower or a
Subsidiary Guarantor to the Agent pursuant to Section
5(e) of either Security Agreement, which shall be
considered eligible if the Agent has received a
collateral access agreement, in form and substance
reasonably satisfactory to it, with respect to any
Inventory located at leased locations)
    
    $(vi)
    
    Inventory on lease or consignment or subject to
warehousing arrangements, except for Inventory
subject to warehousing arrangements (1) in form and
substance acceptable to the Agent and approved in
writing by the Agent and (2) which contain, or as to
which the Agent has received, a subordination and/or
waiver by the warehouseman in form and substance
reasonably satisfactory to the Agent
    
    $(vii)
    
    Inventory which is used or intended to be used in
research and development
    
    $(viii)
    
    Inventory which is obsolete, unmerchantable, spoiled,
damaged or unfit for sale or further processing
    
    $
 Schedule 1-5




---



##### 



(ix)
    
    Inventory which is packaging, shipping, or
advertising materials (other than Wine Bottling
Inventory)
    
    $(x)
    
    Inventory which is in the exercise of the Agents
reasonable credit judgement, exercised in good faith,
unacceptable to the Agent due to age, type, category
or quantity, or is otherwise ineligible
    
    $C. 65% of (A minus B)
    
    $4.
    
    
    Inventory consisting of Wine Bottling InventoryA. Gross dollar value of Borrowers and each Subsidiary
Guarantors Inventory consisting of Wine Bottling Inventory

which is held for use in the ordinary and usual course of
business, valued at book value at the date of determination
    
    $B. Less ineligible Inventory (without duplication):(i)
    
    Inventory (other than bulk wine and Wine Bottling
Inventory) consisting of raw materials, supplies, or
work in process
    
    $(ii)
    
    Inventory not owned by the Borrower or a Subsidiary
Guarantor free and clear of all Liens and rights of
others (other than Liens in favor of the Agent on
behalf of the Lenders or Growers Liens or Production
Liens)
    
    $(iii)
    
    Inventory in which the Agent on behalf of the Lenders
shall not have a valid and perfected first priority
Lien, other than Growers Liens or Production Liens
    
    $(iv)
    
    Inventory located anywhere other than California,
Washington, the locations listed on Schedule 1 to
either Security Agreement, or such other
jurisdictions as shall have been approved by the
Agent in writing
    
    $
 Schedule 1-6




---



##### 



(v)
    
    Inventory which is not in the direct possession of
the Borrower or a Subsidiary Guarantor (except for
Inventory at one of the locations set forth in Part 1
of Schedule 1 to either Security Agreement, or at a
location set forth in a notice from the Borrower or a
Subsidiary Guarantor to the Agent pursuant to Section
5(e) of either Security Agreement, which shall be
considered eligible if the Agent has received a
collateral access agreement, in form and substance
reasonably satisfactory to it, with respect to any
Inventory located at leased locations)
    
    $(vi)
    
    Inventory on lease or consignment or subject to
warehousing arrangements, except for Inventory
subject to warehousing arrangements (1) in form and
substance acceptable to the Agent and approved in
writing by the Agent and (2) which contain, or as to
which the Agent has received, a subordination and/or
waiver by the warehouseman in form and substance
reasonably satisfactory to the Agent
    
    $(vii)
    
    Inventory which is used or intended to be used in
research and development
    
    $(viii)
    
    Inventory which is obsolete, unmerchantable, spoiled,
damaged or unfit for sale or further processing
    
    $(ix)
    
    Inventory which is packaging, shipping, or
advertising materials (other than Wine Bottling
Inventory)
    
    $(x)
    
    Inventory which is in the exercise of the Agents
reasonable credit judgement, exercised in good faith,
unacceptable to the Agent due to age, type, category
or quantity, or is otherwise ineligible
    
    $C. 60% of (A minus B)
    
    $5.
    
    
    Total Inventory (sum of lines 1.D, 2.D, 3.C and 4.C above)
    
    $
 Schedule 1-7




---



##### 



6.
    
    
    Less applicable allowances and reserves (including depletion
allowances and allowances and reserves for shrinkage or
obsolescence) in respect of the Inventory included in 1, 2, 3
and 4 above
    
    $7.
    
    
    Eligible Inventory Borrowing Base (5 minus 6)
    
    $B.
    
    Eligible Receivables.1.
    
    
    Aggregate dollar value of the Borrowers and each Subsidiary
Guarantors rights to payment arising out of the sale or lease
of goods or the performance of services in the ordinary and
usual course of business (Receivables), payable in cash in
Dollars
    
    $2.
    
    
    Less ineligible Receivables (without duplication):(i)
    
    Receivables for which the Borrowers or a Subsidiary
Guarantors right to receive payment has not been
fully earned by performance or is contingent upon the
fulfillment of any condition whatsoever or which
otherwise do not arise from a bona fide completed
transaction
    
    $(ii)
    
    Receivables against which there are asserted any
defenses, counterclaims, discounts (other than normal
trade discounts) or offsets of any nature, whether
well-founded or otherwise (but only to the extent of
such asserted defenses, counterclaims, discounts or
offsets) to the extent not already deducted as an
allowance for doubtful accounts
    
    $(iii)

    
    Receivables that do not comply in all material
respects with all applicable legal requirements,
including all laws, rules, regulations and orders of
any Governmental Authority
    
    $(iv)
    
    Receivables which represent a prepayment or progress
payment or arising out of the placement of goods on
consignment, guaranteed sale or other arrangement by
reason of which the payment by the Receivable Debtor
may be conditional or contingent
    
    $
 Schedule 1-8




---



##### 



(v)
    
    Receivables which are not owned by the Borrower or a
Subsidiary Guarantor free and clear of all Liens and
rights of others (other than the Liens in favor of
the Collateral Agent or the Agent on behalf of the
Lenders, or Growers Liens or Production Liens)
    
    $(vi)
    
    Receivables in which the Collateral Agent or the
Agent on behalf of the Lenders, shall not have a
valid and perfected first-priority Lien (other than
Growers Liens or Production Liens)
    
    $(vii)
    
    Receivables owing (A) by the United States or any
department, agency or instrumentality thereof, or (B)
by a State or any department, agency, instrumentality
or political subdivision thereof (other than State
owned stores or other equivalent alcohol beverage
control Receivable Debtors to the extent that there
are no statutory, regulatory or other governmental
restrictions on the grant of security interests in
Receivables due from such Receivable Debtors),
unless, in the case of Receivables described in
subclause (A), the Agent has agreed to the contrary
in writing and the Borrower has complied with the
Federal Assignment of Claims Act with respect to such
Receivables
    
    $(viii)
    
    Receivables owing by any Receivable Debtor who is not
a resident of or located in the United States or the
Dominion of Canada
    
    $(ix)
    
    Receivables not paid in full within 90 days from the
date of invoice (to the extent not already deducted
as an allowance for doubtful accounts)
    
    $(x)
    
    Receivables owing by any Receivable Debtor who has
failed to make full payment within 90 days from the
date of invoice on more than 20% of the aggregate
amount of Receivables owing to the Borrower and the
Subsidiary Guarantors by such Receivable Debtor
    
    $
 Schedule 1-9




---



##### 



(xi)
    
    that portion of Receivables owing by any single
Receivable Debtor (other than Youngs Market or an
Eligible Receivable Debtor) which exceeds 20% of the
aggregate amount of Eligible Receivables owing to the
Borrower and the Subsidiary Guarantors by all
Receivable Debtors (to the extent not already
deducted as an allowance for doubtful accounts)
    
    $(xii)
    
    Receivables which constitute the proceeds of
Inventory which Inventory is at the same time
included in the Borrowing Base
    
    $(xiii)
    
    Receivables owing by any Receivable Debtor who is the
subject of an Insolvency Proceeding
    
    $(xiv)
    
    Receivables owing by an Affiliate of the Borrower or
of a Subsidiary Guarantor $(xv) Receivables with
respect to which the Agent, in its reasonable
discretion, deems the creditworthiness or financial
condition of the Receivable Debtor to be
unsatisfactory or the prospect of payment or
performance to be impaired and other Receivables
which, in the exercise of the Agents good faith
reasonable credit judgement are otherwise ineligible
    
    $(xv)
    
    Receivables with
respect to which the Agent, in its reasonable
discretion, deems the creditworthiness or financial
condition of the Receivable Debtor to be
unsatisfactory or the prospect of payment or
performance to be impaired and other Receivables
which, in the exercise of the Agents good faith
reasonable credit judgement are otherwise ineligible
    
    $3.
    
    
    Total ineligible Receivables (sum of (i) through (xv) of 2)
    
    $4.
    
    
    Less applicable allowances, reserves, discounts, returns,
credits or offsets (including allowances or reserves for
doubtful accounts)
    
    $5.
    
    
    Total Eligible Receivables (1 minus 3 minus 4 )
    
    $6.
    
    
    Eligible Receivables Borrowing Base (85% of 5)
    
    $C.
    
    Borrowing Base and Availability1.
    
    
    Total Borrowing Base (total of A.7 plus B.6 minus 7,000,000)
    
    $2.
    
    
    Revolving Commitments
    
    $
 Schedule 1-10




---



##### 



3.
    
    
    Lesser of C.1 and C.2
    
    $4.
    
    
    Outstanding aggregate principal amount of Revolving Loans,
Swingline Loans and L/C Obligations
    
    $5.
    
    
    Aggregate principal amount of Revolving Loans, Swingline Loans
and L/C Obligations available for borrowing or issuance (if
C.4 is less than C.3)
    
    $6.
    
    
    Aggregate principal amount of Revolving Loans, Swingline Loans
and L/C Obligations to be prepaid or cash collateralized, as
the case may be (if C.4 is greater than C.3)
    
    $
 Schedule 1-11




---



##### 



EXHIBIT B
to the Amended and Restated Credit Agreement FORM OF COMPLIANCE CERTIFICATE Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A.,
Rabobank International, New York Branch, as Agent
10 Exchange Place, 16th Floor
Jersey City, NJ 07302
Attention: Rabobank Support Services Re: The Chalone Wine Group, Ltd. Ladies and Gentlemen: This Compliance Certificate is made and delivered pursuant to the Amended
and Restated Credit Agreement dated as of May 11, 2004 (as amended, modified,
supplemented, renewed or extended from time to time, the Credit Agreement)
among The Chalone Wine Group, Ltd. (the Borrower), the financial institutions
party thereto and Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A.
Rabobank International, New York Branch, as Agent, 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 Credit Agreement. This
Compliance Certificate relates to the accounting period ending          . I am the [chief financial officer] of the Borrower. I have reviewed the
terms of the Credit Agreement and I have made, or caused to be made under my
supervision, a detailed review of the transactions and conditions of the
Borrower 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, 2003 except 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
Borrower 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:
 B-1.




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##### 



Schedule 1 Worksheet for Financial Covenants
for the accounting period ending ___________. Section 10.02(a) - Leverage Ratio*
    
    Actual
    
    RequiredA.
    
    Consolidated Indebtedness(i) total Indebtedness of the
Borrower and its Subsidiaries on a
consolidated basis
    
    $________________(ii) accounts payable to trade
creditors for goods and services (not
the result of the borrowing of money)
incurred in the ordinary course of
the Borrower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 Borrower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
Borrower to the estate of Richard
Graff in a principal amount not to
exceed $1,000,000
    
    $________________
 * To be calculated without giving effect to the principal amount of the
Shareholder Subordinated Debt or any interest payable thereunder. Schedule 1-1.




---



##### 



Actual
    
    Required(i) minus (ii) minus (iii) minus(iv)
    
    $________________B.
    
    600% of Consolidated Rent Expense
(calculated on a rolling 4-quarter
basis)
    
    $________________C.
    
    A + B
    
    $________________D.
    
    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
    
    $________________(v) amortization expense
    
    $________________(vi) other non-cash expenses
    
    $________________Sum
of
(i) + (ii) + (iii) + (iv) + (v)
+ (vi)
    
    $________________E.
    
    Consolidated Rent Expense
(calculated on a rolling 4-quarter
basis)
    
    $________________F.
    
    D + E
    
    $________________G.
    
    Ratio of C to F
    
    _________:________
    
    See Section
10.02(a) of the
Credit Agreement
 * To be calculated without giving effect to the principal amount of the
Shareholder Subordinated Debt or any interest payable thereunder. Schedule 1-2.




---



##### 



Actual
    
    RequiredSection 10.02(b)  Consolidated
Tangible Net WorthA.
    
    Minimum Consolidated Tangible Net
Worth Calculation(i) $76,000,000
    $
    76,000,000(ii) Net Issuance Proceeds
received by the Borrower or any
Subsidiary from the sale or
issuance of equity securities to
any Person other than the Borrower or any Subsidiary after
December 31, 2001
    
    $_____________(iii) Net Issuance Proceeds
received by the Borrower or any
Subsidiary from the sale or
issuance of Subordinated Debt to
any Person other the Borrower or any Subsidiary after
December 31, 2001
    
    $_____________(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)
    
    $_____________
 * To be calculated without giving effect to the principal amount of the
Shareholder Subordinated Debt or any interest payable thereunder. Schedule 1-3.




---



##### 



Actual
    
    Required(iii) Subordinated Debt
    
    $________________(iv) Consolidated Total
Liabilities
    
    $________________(i) minus (ii) plus (iii) minus (iv)
    
    $________________C.
    
    Excess (deficient) for covenant
compliance (B minus A)
    
    $________________Section 10.02(c)  Interest Coverage
Ratio*A.
    
    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
    
    $________________Sum of (i) + (ii) + (iii)
    
    $________________B.
    
    Consolidated Interest Expense
(calculated on a rolling 4-quarter
basis)
    
    $________________C.
    
    Ratio of A to B
    
    __________:________
    
    See Section
10.02(c) of the
Credit Agreement
 * To be calculated without giving effect to the principal amount of the
Shareholder Subordinated Debt or any interest payable thereunder. Schedule 1-4.




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##### 



Actual
    
    RequiredSection 10.02(d)  Fixed Charge
Coverage Ratio*A.
    
    Consolidated EBITDA (calculated on a
rolling 4-quarter basis) [see
calculation above for purposes of
Section 10.02(a)]
    
    $________________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 Borrower and its
Subsidiaries for the four
consecutive fiscal quarters then
most recently ended
    
    $________________(iii) cash income taxes of the
Borrower and its Subsidiaries for
the four consecutive fiscal
quarters then most recently ended
    
    $________________(iv) Cash dividends of the
Borrower 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
10.02(d) of the
Credit Agreement
 * To be calculated without giving effect to the principal amount of the
Shareholder Subordinated Debt or any interest payable thereunder. Schedule 1-5.




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##### 



Actual
    
    RequiredSection 10.02(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)
    
    $________________
    
    See Section
10.02(e) of the
Credit AgreementD.
    
    Excess (deficient) for covenant
compliance (C minus A)
    
    $________________Section 10.02(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)
    
    $
    
    See Section
10.02(e) of the
Credit AgreementD.
    
    Excess (deficient) for covenant
compliance (C minus A)
    
    $________________
 * To be calculated without giving effect to the principal amount of the
Shareholder Subordinated Debt or any interest payable thereunder. Schedule 1-6.




---



##### 



Actual
    
    RequiredSection 10.04(f)(viii) -
Intercompany
LoansA.
    
    Canoe Ridge(i) Actual Intercompany Loan
Amount
    
    $________________(ii) Maximum Permitted
    
    $________________Intercompany Loan Amount
    
    (adjusted annually)(iii) Covenant compliance (i £ ii)
    
    (Yes/No)B.
    
    Edna Valley(i) Actual Intercompany Loan
Amount
    
    $________________(ii) Maximum Permitted
    
    $________________Intercompany Loan Amount
    
    (adjusted annually)(iii) Covenant compliance (i £ ii)
    
    (Yes/No)C.
    
    SHW(i) Actual Intercompany Loan
Amount
    
    $________________(ii) Maximum Permitted
    
    $________________Intercompany Loan Amount
    
    (adjusted annually)(iii) Covenant compliance (i £ ii)
    
    (Yes/No)D.
    
    Covenant compliance (only if answer
to A(iii), B(iii) and C(iii) is Yes)
    
    (Yes/No)
 * To be calculated without giving effect to the principal amount of the
Shareholder Subordinated Debt or any interest payable thereunder. Schedule 1-7.




---



##### 



EXHIBIT C
to the Amended and Restated Credit Agreement FORM OF DEED OF TRUST [see attached] C-1.




---



##### 



EXHIBIT D
to the Amended and Restated Credit Agreement [Reserved] D-1.




---



##### 



EXHIBIT E-1
to the Amended and Restated Credit Agreement [Reserved] E-1.




---



##### 



EXHIBIT E-2
to the Amended and Restated Credit Agreement [Reserved] E-2.




---



##### 



EXHIBIT F
to the Amended and Restated Credit Agreement [Reserved] F-1.




---



##### 



EXHIBIT G  FORM OF REVOLVING NOTE AMENDED AND RESTATED PROMISSORY NOTE New York, New York$
    
    May 11, 2004
 FOR VALUE RECEIVED, the undersigned, THE CHALONE WINE GROUP, LTD. (the
Borrower), HEREBY UNCONDITIONALLY PROMISES TO PAY to the order of
 (the Lender) on the Revolving Expiry Date the principal
sum of  DOLLARS ($) or, if less, the aggregate
outstanding principal amount of the Revolving Loans made by the Lender to the
Borrower pursuant to the Credit Agreement referred to below. The Borrower further promises to pay interest on the Revolving Loans
outstanding hereunder from time to time at the interest rates, and payable on
the dates, set forth in the Credit Agreement. Both principal and interest are payable in lawful money of the United
States of America and in same day or immediately available funds to the Agent
under the Credit Agreement (the Agent) as provided therein. The Lender shall record the date and amount of each Revolving Loan made,
each conversion to a different interest rate, each relevant Interest Period,
the amount of principal and interest due and payable from time to time
hereunder, each payment thereof and the resulting unpaid principal balance
hereof, in the Lenders internal records, and any such recordation shall be
rebuttable presumptive evidence of the accuracy of the information so recorded;
provided, however, that the Lenders failure so to record shall not limit or
otherwise affect the obligations of the Borrower hereunder and under the Credit
Agreement to repay the principal of and interest on the Revolving Loans. This promissory note is one of the Revolving Notes referred to in, and is
subject to and entitled to the benefits of, the Amended and Restated Credit
Agreement dated as of May 11, 2004 (as the same may be hereafter amended,
modified, supplemented, renewed or extended from time to time, the Credit
Agreement) among the Borrower, certain financial institutions named therein as
Lenders (including the Lender) and Cooperatieve Centrale
Raiffeisen-Boerenleenbank B.A., Rabobank International, New York Branch, as
Agent. Capitalized terms used herein shall have the respective meanings
assigned to them in the Credit Agreement. This promissory note is secured by certain Collateral more specifically
described in the Credit Agreement and the Collateral Documents. The Credit Agreement provides, among other things, for acceleration (which
in certain cases shall be automatic) of the maturity hereof upon the occurrence
of certain stated G-1.




---



##### 



events, in each case without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived. This promissory note is subject to prepayment in whole or in part as
provided in the Credit Agreement. THIS PROMISSORY NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK. THE CHALONE WINE GROUP, LTDBy:Name:Title:
 G-2.




---



##### 



EXHIBIT H-1
to the Amended and Restated Credit Agreement FORM OF BORROWER AND SUBSIDIARY GUARANTOR SECURITY AGREEMENT [see attached] H-1.




---



##### 



EXHIBIT H-2
to the Amended and Restated Credit Agreement FORM OF SECURITY AGREEMENT OF EDNA VALLEY VINEYARD [see attached] H-2




---



##### 



EXHIBIT I
to the Amended and Restated Credit Agreement FORM OF SWINGLINE NOTE AMENDED AND RESTATED PROMISSORY NOTE FOR VALUE RECEIVED, the undersigned (the Borrower), hereby promises to
pay to the order of Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A.,
Rabobank International, New York Branch (Swingline Lender), on the date
when due in accordance with the Credit Agreement referred to below, the
aggregate principal amount of each Swingline Loan from time to time made by the
Swingline Lender to the Borrower under that certain Amended and Restated Credit
Agreement, dated as of May 11, 2004 (as the same may be hereafter amended,
restated, extended, supplemented or otherwise modified in writing from time to
time, the Agreement; the terms defined therein being used herein as therein
defined), among the Borrower, the Lenders from time to time party thereto, and
Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A., Rabobank International,
New York Branch as Agent, Issuing Lender and Swingline Lender. The Borrower promises to pay interest on the unpaid principal amount of
each Swingline Loan from the date of such Swingline Loan until such principal
amount is paid in full, at such interest rates and at such times as provided in
the Agreement. All payments of principal and interest shall be made to the Swingline
Lender in Dollars in immediately available funds at its Lending Office. If any amount is not paid in full when due hereunder, such unpaid amount
shall bear interest, to be paid upon demand, from the due date thereof until
the date of actual payment (and before as well as after judgment) computed at
the per annum rate set forth in the Agreement. This Note is the Swingline Note referred to in the Agreement, is entitled
to the benefits thereof and is subject to optional and mandatory prepayment in
whole or in part as provided therein. This Note is also entitled to the
benefits of each Guaranty. Upon the occurrence and during the continuance of
one or more of the Events of Default specified in the Agreement, all amounts
then remaining unpaid on this Note shall become, or may be declared to be,
immediately due and payable all as provided in the Agreement. Swingline Loans
made by the Swingline Lender shall be evidenced by one or more loan accounts or
records maintained by Swingline Lender in the ordinary course of business. The
Swingline Lender may also attach schedules to this Note and endorse thereon the
date, amount and maturity of the Swingline Loans and payments with respect
thereto. The Borrower, for itself, its successors and assigns, hereby waives
diligence, presentment, protest and demand and notice of protest, demand,
dishonor and non-payment of this Note. I-1.




---



##### 



THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK. THE CHALONE WINE GROUP, LTDBy:Name:Title:
 I-2




---



##### 



SWING LINE LOANS AND PAYMENTS WITH RESPECT THERETO Amount of Principal
    
    Outstandingor Interest Paid
    
    Principal BalanceDate
    
    Amount of Loan Made
    
    This Date
    
    This Date
    
    Notation Made By
 I-3




---



##### 



EXHIBIT J
to the Amended and Restated Credit Agreement FORM OF TERM NOTE AMENDED AND RESTATED PROMISSORY NOTE New York, New York$
    
    May 11, 2004
 FOR VALUE RECEIVED, the undersigned, THE CHALONE WINE GROUP, LTD. a
California corporation (the Borrower), HEREBY UNCONDITIONALLY PROMISES TO PAY
to the order of    (the Lender), the principal sum of
   DOLLARS ($   ) (i) in the amount of    
DOLLARS ($   ) [insert Lenders Pro Rata Share of the initial principal
payment after the Amendment Closing Date]on June 30, 2004; and (ii) in
substantially equal consecutive quarterly installments, commencing on March 31,
2006, with subsequent installments payable on the last Business Day of each
calendar quarter thereafter, and with the last such installment to be due and
payable on the Final Maturity Date and in the amount necessary to repay in full
the unpaid principal balance hereof. The Borrower further promises to pay interest on the Term Loan outstanding
hereunder from time to time at the interest rates, and payable on the dates,
set forth in the Credit Agreement referred to below. Both principal and interest are payable in lawful money of the United
States of America and in same day or immediately available funds to
Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A., Rabobank International,
New York Branch, as Agent under the Credit Agreement (the Agent) as provided
therein. The Lender shall record the date and amount of the Term Loan made, each
conversion to a different interest rate, each relevant Interest Period, the
amount of principal and interest due and payable from time to time hereunder,
each payment thereof and the resulting unpaid principal balance hereof, in the
Lenders internal records, and any such recordation shall be rebuttable
presumptive evidence of the accuracy of the information so recorded; provided,
however, that the Lenders failure so to record shall not limit or otherwise
affect the obligations of the Borrower hereunder and under the Credit Agreement
to repay the principal of and interest on the Term Loan. This promissory note is one of the Term Notes referred to in, and is
subject to and entitled to the benefits of, the Amended and Restated Credit
Agreement dated as of May 11, 2004 (as the same may be hereafter amended,
modified, renewed or extended from time to time, the Credit Agreement) among
the Borrower, certain financial institutions named therein as Lenders
(including the Lender) and the Agent. Capitalized terms used herein shall have
the respective meanings assigned to them in the Credit Agreement. J-1




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This promissory note is secured by certain Collateral more specifically
described in the Credit Agreement and the Collateral Documents. The Credit Agreement provides, among other things, for acceleration (which
in certain cases shall be automatic) of the maturity hereof upon the occurrence
of certain stated events, in each case without presentment, demand, protest or
further notice of any kind, all of which are hereby expressly waived. This promissory note is subject to prepayment in whole or in part as
provided in the Credit Agreement. THIS PROMISSORY NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK. THE CHALONE WINE GROUP, LTD.By:Name:Title:
 J-2




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EXHIBIT K
to the Amended and Restated Credit Agreement FORM OF NOTICE OF BORROWING Date: To:
    
    Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A.,Rabobank International, New York Branch, as Agent10 Exchange Place, 16th FloorJersey City, NJ 07302Attention: Rabobank Support Services
 Re: The Chalone Wine Group, Ltd. Ladies and Gentlemen: The undersigned, The Chalone Wine Group, Ltd. (the Borrower), refers to
the Amended and Restated Credit Agreement dated as of May 11, 2004 (as amended,
modified, supplemented, renewed or extended from time to time, the Credit
Agreement), among the Borrower, the several financial institutions party to
the Credit Agreement (the Lenders) and Cooperatieve Centrale
Raiffeisen-Boerenleenbank Rabobank International, New York Branch, as Agent
for the Lenders, the terms defined therein being used herein as therein
defined, and hereby gives you notice irrevocably, pursuant to Section 2.02 or
Section 2.03, as the case may be, of the Credit Agreement, of the Borrowing
specified herein:  1.
    
    The Business Day of the proposed Borrowing is .2.
    
    The aggregate amount of the proposed Borrowing is
$.3.
    
    The Borrowing shall be of [Term Loans] [Revolving Loans]
[Swingline Loans].4.
    
    The Borrowing is to be comprised of [Base Rate] [Eurodollar
Rate] Loans.5.
    
    [The duration of the Interest Period for the Eurodollar Rate
Loans included in the Borrowing shall be  months.]6.
    
    The payment instructions with respect to the funds to be made
available to the Borrower are as follows: . The Borrower hereby certifies that the following statements are true on
the date hereof, and will be true on the date of the proposed Borrowing, before
and after giving effect thereto and to the application of the proceeds
therefrom: (a) the representations and warranties of the Borrower contained in
Section 9.01 of the Credit Agreement and in the other Loan Documents are
true and correct as K-1




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though made on and as of each such date (except to the extent such
representations and warranties relate solely to an earlier date, in which
case they are true and correct as of such date); (b) on and as of the date of such proposed Borrowing, there shall
have occurred no Material Adverse Effect since December 31, 2003; and (c) no Default exists or would result from such proposed Borrowing. THE CHALONE WINE GROUP, LTD.By:Name:Title:
 K-2




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EXHIBIT L
to the Amended and Restated Credit Agreement [Reserved] L-1




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EXHIBIT M
to the Amended and Restated Credit Agreement FORM OF ASSIGNMENT AND ASSUMPTION [see attached] M-1




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EXHIBIT M
to the Amended and Restated Credit Agreement FORM OF ASSIGNMENT AND ASSUMPTION This Assignment and Assumption (the Assignment and Assumption) is dated
as of the Effective Date set forth below and is entered into by and between
   [insert name of Assignor] (the Assignor) and    [insert name
of Assignee] (the Assignee). Capitalized terms used but not defined herein
shall have the meanings given to them in the Credit Agreement identified below
(as amended, the Credit Agreement), receipt of a copy of which is hereby
acknowledged by the Assignee. The Standard Terms and Conditions set forth in
Annex 1 attached hereto are hereby agreed to and incorporated herein by
reference and made a part of this Assignment and Assumption as if set forth
herein in full. For an agreed consideration, the Assignor hereby irrevocably sells and
assigns to the Assignee, and the Assignee hereby irrevocably purchases and
assumes from the Assignor, subject to and in accordance with the Standard Terms
and Conditions and the Credit Agreement, as of the Effective Date inserted by
the Agent as contemplated below (i) all of the Assignors rights and
obligations in its capacity as a Lender under the Credit Agreement and any
other documents or instruments delivered pursuant thereto to the extent related
to the amount and percentage interest identified below of all of such
outstanding rights and obligations of the Assignor under the respective
facilities identified below (including without limitation any letters of
credit, any guarantees, and swingline loans included in such facilities) and
(ii) to the extent permitted to be assigned under applicable law, all claims,
suits, causes of action and any other right of the Assignor (in its capacity as
a Lender) against any Person, whether known or unknown, arising under or in
connection with the Credit Agreement, any other documents or instruments
delivered pursuant thereto or the loan transactions governed thereby or in any
way based on or related to any of the foregoing, including, but not limited to,
contract claims, tort claims, malpractice claims, statutory claims and all
other claims at law or in equity related to the rights and obligations sold and
assigned pursuant to clause (i) above (the rights and obligations sold and
assigned pursuant to clauses (i) and (ii) above being referred to herein
collectively as, the Assigned Interest). Such sale and assignment is without
recourse to the Assignor and, except as expressly provided in this Assignment
and Assumption, without representation or warranty by the Assignor. 1.
    
    Assignor:2.
    
    Assignee:[and is an Affiliate/Approved Fund of [identify Lender]1]3.
    
    Borrower(s):
    
    The Chalone Wine Group, Ltd.4.
    
    Agent:
    
    Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A., Rabobank International, New York Branch, as
Agent under the Credit Agreement.
   1 Select as applicable.




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5.
    
    Credit Agreement:
    
    The Amended and Restated Credit Agreement dated as of May 11, 2004, among The Chalone Wine Group,
Ltd., a Delaware corporation (the Borrower), the several financial institutions from time to time
party thereto and Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A., Rabobank International,
New York Branch, as letter of credit issuing lender, swingline lender and administrative agent.6.
    
    Assigned Interest:
 Aggregate Amount of
    
    Amount ofCommitment/Loans
    
    Commitment/Loans
    
    Percentage Assigned ofFacility Assigned2
    
    for all Lenders*
    
    Assigned*
    
    Commitment/Loans3$
    
    
    
    $
    
    
    
    
    %$
    
    
    
    $
    
    
    
    
    %$
    
    
    
    $
    
    
    
    
    %
 [7. Trade Date: ]4 Effective Date:    , 20   [TO BE INSERTED BY ADMINISTRATIVE
AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE
REGISTER THEREFOR.] The terms set forth in this Assignment and Assumption are hereby agreed to: ASSIGNOR[NAME OF ASSIGNOR]By:Title:ASSIGNEE[NAME OF ASSIGNEE]By:Title:
   2 Fill in the appropriate terminology for the types of facilities under the
Credit Agreement that are being assigned under this Assignment (e.g. Revolving
Commitment, Term Commitment, etc.)* Amount to be adjusted by the counterparties to take into account any payments
or prepayments made between the Trade Date and the Effective Date.3 Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of
all Lenders thereunder.4 To be completed if the Assignor and the Assignee intend that the minimum
assignment amount is to be determined as of the Trade Date.




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Consented to and Accepted: COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK B.A.,
RABOBANK INTERNATIONAL, NEW
YORK BRANCH, AS AGENT By
    
    Title:[Consented to:]5THE CHALONE WINE GROUP, LTD.ByTitle:
   5 To be added only if the consent of the Borrower and/or other parties is
required by the terms of the Credit Agreement.




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ANNEX 1 STANDARD TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION 1. Representations and Warranties. 1.1 Assignor. The Assignor (a) represents and warrants that (i) it is
the legal and beneficial owner of the Assigned Interest, (ii) the Assigned
Interest is free and clear of any lien, encumbrance or other adverse claim and
(iii) it has full power and authority, and has taken all action necessary, to
execute and deliver this Assignment and Assumption and to consummate the
transactions contemplated hereby; and (b) assumes no responsibility with
respect to (i) any statements, warranties or representations made in or in
connection with the Credit Agreement or any other Loan Document, (ii) the
execution, legality, validity, enforceability, genuineness, sufficiency or
value of the Loan Documents or any collateral thereunder, (iii) the financial
condition of the Borrower, any of its Subsidiaries or Affiliates or any other
Person obligated in respect of any Loan Document or (iv) the performance or
observance by the Borrower, any of its Subsidiaries or Affiliates or any other
Person of any of their respective obligations under any Loan Document. 1.2. Assignee. The Assignee (a) represents and warrants that (i) it has
full power and authority, and has taken all action necessary, to execute and
deliver this Assignment and Assumption and to consummate the transactions
contemplated hereby and to become a Lender under the Credit Agreement, (ii) it
meets all requirements of an Eligible Assignee under the Credit Agreement
(subject to receipt of such consents as may be required under the Credit
Agreement), (iii) from and after the Effective Date, it shall be bound by the
provisions of the Credit Agreement as a Lender thereunder and, to the extent of
the Assigned Interest, shall have the obligations of a Lender thereunder, (iv)
it has received a copy of the Credit Agreement, together with copies of the
most recent financial statements delivered pursuant to Section 10.01 thereof,
as applicable, and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Assumption and to purchase the Assigned Interest on the basis of
which it has made such analysis and decision independently and without reliance
on the Agent or any other Lender, and (v) if it is a Foreign Lender, attached
to the Assignment and Assumption is any documentation required to be delivered
by it pursuant to the terms of the Credit Agreement, duly completed and
executed by the Assignee; and (b) agrees that (i) it will, independently and
without reliance on the Agent, the Assignor or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
the Loan Documents, and (ii) it will perform in accordance with their terms all
of the obligations which by the terms of the Loan Documents are required to be
performed by it as a Lender. 2. Payments. From and after the Effective Date, the Agent shall make all
payments in respect of the Assigned Interest (including payments of principal,
interest, fees and other amounts) to the Assignor for amounts which have
accrued to but excluding the Effective Date and to the Assignee for amounts
which have accrued from and after the Effective Date. 3. General Provisions. This Assignment and Assumption shall be binding
upon, and inure to the benefit of, the parties hereto and their respective
successors and assigns. This Assignment and Assumption may be executed in any
number of counterparts, which together shall constitute one instrument.
Delivery of an executed counterpart of a signature page of this Assignment and
Assumption by telecopy shall be effective as delivery of a manually executed
counterpart of this Assignment and Assumption. This Assignment and Assumption
shall be governed by, and construed in accordance with, the law of the State of
New York.




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EXHIBIT N
to the Amended and Restated Credit Agreement FORM OF UPDATE CERTIFICATE for the Reporting Period ended _______________, 20__ Date: [  ], 20[  ] To:
    
    Cooperatieve Centrale Raiffeisen-Boerenleebank, B.A.,
Rabobank International, New York Branch (Rabobank)
 Ladies and Gentlemen: Reference is made to the Credit Agreement referred to below (as amended
from time to time, the Credit Agreement), among the Borrower identified
below, the Lenders and Rabobank as Agent, Issuing Lender and Swingline Lender.
Capitalized terms used and not defined herein shall have the meanings assigned
to such terms in the Credit Agreement, as applicable. This Update Certificate is provided pursuant to the Credit Agreement
without limiting the Borrowers or any Subsidiary Guarantors ongoing reporting
obligations under the Loan Documents with respect to the matters covered by
this Update Certificate. The undersigned hereby certifies to the Agent and the Lenders, that as to
the Borrower and each Subsidiary Guarantor (the Loan Parties) that, during
the period referred to below to the date hereof (the Reporting Period), there
has not been (i) any change in its corporate name, in its registration as an
organization (or new registration) or in its jurisdiction of organization, (ii)
any change in the location of its chief executive office, its principal place
of business, any office in which it maintains books or records relating to
Collateral owned by it or any office or facility at which Collateral owned by
it is located (including the establishment of any new such office or facility),
(iii) any securities account, bank account or other deposit account opened by a
Loan Party or any change in the names or locations of any other persons in
possession of Collateral, (iv) any new lease of real property entered into by a
Loan Party, (v) the creation or acquisition of any Subsidiary by a Loan Party,
(vi) any creation or acquisition by a Loan Party of any new patent or trademark
rights, or copyrights, owned or maintained by a Loan Party, (vii) any
acquisition of any right to payment or performance under a letter of credit, or
(viii) any new claims of any Loan Party against any third person for damages
(whether or not suit has been filed), except as follows: 1. Names; Jurisdiction of Organization. (a) During the Reporting Period, a Loan Party changed its corporate name
as follows: (b) During the Reporting Period, a Loan Party changed its jurisdiction of
organization as follows: N-1




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(c) During the Reporting Period, a Loan Party changed its registration as
an organization or obtained a new registration as follows: 2. Locations. (a) During the Reporting Period, a Loan Party changed the location of its
chief executive office as follows: (b) During the Reporting Period, a Loan Party changed the location of its
principal place of business as follows: (c) During the Reporting Period, a Loan Party changed the location of any
office in which it maintains books and records relating to the Collateral owned
by it or any office or facility at which Collateral owned by it is located
(including the establishment of any such new office or facility and any new
co-location of Collateral or other third party site) as follows, and the value
of the Collateral at any such new location is also identified: 3. New Names and Locations of Persons Possessing Collateral (including New
Deposit Accounts). During the Reporting Period, the names and locations of any
persons other than a Loan Party that have possession of any Collateral of a
Loan Party changed as follows (include the location of any new bank accounts,
securities custody accounts, or similar accounts opened by a Loan Party during
the Reporting Period): 4. Real Property Leases. During the Reporting Period, a Loan Party
entered into new real property leases as follows: 5. Subsidiaries. During the Reporting Period, a Loan Party created or
acquired the following direct or indirect Subsidiaries: 6. Intellectual Property. During the Reporting Period, a Loan Party
created or acquired, or otherwise become entitled to the benefit of,
intellectual property consisting of any patents, trademarks, or copyrights (or
any renewals, extensions or applications with regard to the foregoing), as
follows: 7. Letter-of-Credit Rights. During the Reporting Period, a Loan Party
acquired right to payment or performance under a letter of credit as follows: 8. Commercial Tort Claims. During the Reporting Period, new claims of a
Loan Party against any third person for damages (whether or not suit has been
filed) arose as follows: Consistent with the provisions of revised Article 9 of the Uniform
Commercial Code of the relevant jurisdiction(s) (as and when adopted), the Loan
Parties hereby authorize the Collateral Agent to file (with or without a Loan
Partys signature), at any time and from time to time thereafter, all financing
statements, assignments, continuation financing statements, financing statement
amendments, termination statements and other documents and instruments, in form
reasonably satisfactory to the Collateral Agent, and take all other action, as
the Collateral Agent may deem reasonable, to perfect and continue perfected,
maintain the priority of or N-2




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provide notice of any security interest of the Collateral Agent in the
Collateral and to accomplish the purposes of the Credit Agreement. IN WITNESS WHEREOF, the undersigned has executed this Update Certificate
on behalf of the Loan Parties. Name:Title:
 Amended and Restated Credit Agreement dated: May 11, 2004 with The Chalone
Wine Group, Ltd. as Borrower Start date of Reporting Period: N-3




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EXHIBIT O
to the Amended and Restated Credit Agreement FORM OF GUARANTOR CONSENT Each of the undersigned, in its capacity as a guarantor, acknowledges that
its consent to the foregoing Amended and Restated Credit Agreement (the Credit
Agreement) is not required, but each of the undersigned nevertheless does
hereby consent to the foregoing Credit Agreement. In addition, each of the
undersigned, in its capacity as a party to certain Loan Documents (as
applicable), (a) consents to the amendment and restatement of such Loan
Documents, and (b) acknowledges and agrees that any reference to the Credit
Agreement in each Loan Document shall mean and be a reference to the amended
and restated Credit Agreement. Nothing herein shall in any way limit any of
the terms or provisions of the Guaranty of the undersigned or the other Loan
Documents, in each case executed by the undersigned in favor of the Agent and
the Lenders, 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,
    
    SHW EQUITY CO.,as a guarantor
    
    as a guarantorBy: The Chalone Wine Group, Ltd.,
    
    By: /s/ Thomas B.
SelfridgeManaging Joint VenturerName: Thomas B. SelfridgeTitle: President and CEOBy:
/s/ Thomas B. SelfridgeName: Thomas B. SelfridgeTitle: President and CEOCANOE RIDGE VINEYARD L.L.C.,
    
    STATON HILLS WINERY COMPANY LIMITED,as a guarantor
    
    as a guarantorBy:
/s/ Thomas B. Selfridge
    
    By: /s/ Thomas B.
SelfridgeName: Thomas B. Selfridge
    
    Name: Thomas B. SelfridgeTitle: President and CEO
    
    Title: President and CEOCANOE RIDGE WINERY, INC.,as a guarantorBy:
/s/ Thomas B. SelfridgeName: Thomas B. SelfridgeTitle: President and CEO
 O-1