Secured Purchase Money Promissory Note
(Secured by Deed of Trust)
$942,503.00 Napa, California
July 1, 1996
For value received, The Chalone Wine Group, Ltd., a California corporation
("Chalone"), promises to pay to Richard H. Graff, Trustee, Graff 1993 Trust
Dated June 10, 1993, a trust ("Graff Trust"), the principal sum of Nine Hundred
Forty-Two Thousand Five Hundred Three Dollars ($942,503.00) plus interest
thereon at the rate set forth in Section 1 (Interest) from the date set forth
above until paid on or before June 30, 2016.
1. Interest. Interest on the unpaid principal balance of this Note will
accrue from the date of this Note until paid at the rate of seven and three
one-hundredths of a percent (7.03%) per annum ("Loan Rate"). Interest is to be
calculated on the basis of a 365-day year and the actual number of days elapsed.
Interest is to accrue and compound on an annual basis.
2. Payments. Commencing on July 31, 1996 and on the last day of each
month thereafter through and including June 30, 2016, this Note will be paid in
monthly installments of principal and interest per the attached Schedule 1
(Monthly Mortgage Payments).
3. Prepayment. This Note may be prepaid in whole or in part, at any
time, without penalty or premium, on any date that a payment of interest is due
hereunder, upon ten (10) days prior written notice to the Graff Trust.
4. Right of Setoff. Chalone will have a right of setoff with respect to
the obligation owed to it by Graff under the promissory note made by Graff to
Chalone as of the above date ("Graff Note"). If Graff fails to pay the amounts
due under the Graff Note when due, Chalone will have the right to set off its
obligations to pay the amounts due under this Note against the sums due from
Graff to Chalone under the Graff Note.
5. Default Interest. If Chalone fails to make a payment of interest or
principal on this Note within five (5) days after the date the payment was due,
interest will accrue on the entire loan balance at the rate of nine percent (9%)
per annum (the "Default Rate") commencing on the date the payment was due and
continuing until the delinquent payment is received by the Graff Trust.
6. Security. This Note is secured by a Deed of Trust dated as of the
same date as this Note between Chalone and the Graff Trust (the "Deed of
Trust"), encumbering the real property located in Monterey County, California
sometimes referred to as 101 Stonewall Canyon Road, Soledad, California (the
"Property"), which is the subject of the Purchase Agreement dated as of the same
date as this Note between Chalone and the Graff Trust.
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7. Application of Payments. All payments received by the Graff Trust in
payment of this Note will be applied first to accrued interest, then to other
charges due with respect to this Note, and then to the unpaid principal balance.
8. Default and Remedies.
a. Default. Chalone will be in default under this Note if (i)
Chalone fails to make a payment of principal, interest, or other charge when due
or (ii) Chalone breaches any other covenant or agreement under this Note.
b. Remedies. Upon a default as described in subparagraph 8.a
(Default), the Graff Trust may (i) immediately accelerate the obligations under
this Note and all sums owing with respect to this Note will immediately become
due and payable and (ii) exercise any and all of the remedies provided in this
Note.
9. Waivers. Except as otherwise provided in the Deed of Trust, Chalone,
and any endorsers or guarantors of this Note, severally waive presentment and
notice of dishonor and agrees that the Graff Trust may, without notice and
without releasing the liability of any of them, grant extensions or renewals,
add or release one or more parties, acquire additional security or release any
security. No extension of time for the payment of this Note, or any installment
of this Note, made by agreement by the Graff Trust with any person, other than
Chalone, now or hereafter liable for the payment of this Note, will affect the
original liability of Chalone under this Note, even if that person is not a
party to such agreement. The Graff Trust may waive its right to require
performance of or compliance with any term, covenant or condition of this Note
only by express written waiver.
10. Maximum Legal Rate of Interest. All agreements between the Graff
Trust and Chalone whether now existing or hereafter arising, are hereby limited
so that in no event will the interest charged under this Note or agreed to be
paid to the Graff Trust exceed the maximum amount permissible under applicable
law. If interest otherwise payable to the Graff Trust would exceed the maximum
lawful amount, the interest payable will be reduced to the maximum amount
permitted under applicable law. If the Graff Trust ever received interest or
anything deemed interest in excess of the maximum lawful amount, an amount equal
to the excessive interest will be applied to the reduction of the principal, and
if it exceeds the unpaid balance of principal of this Note, the excess will be
refunded to Chalone. The Graff Trust will be entitled to amortize, prorate and
spread throughout the full term of this Note all interest paid or payable so
that the interest paid does not exceed the maximum amount permitted by law. This
paragraph will control all agreements between the Graff Trust and Chalone in
connection with the indebtedness evidenced by this Note.
11. Miscellaneous.
a. Costs. Chalone will pay all costs, including, without
limitation, reasonable attorneys' fees, costs and expert fees incurred by the
Graff Trust in collecting the sums due under this Note, enforcing the Deed of
Trust or in connection with the release of any security for this Note.
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b. Modification. This Note may be modified only by a written
agreement executed by the person against whom the change, modification or waiver
is to be enforced.
c. Law. This Note will be governed by California law.
d. Successors. The terms of this Note will inure to the
benefit of and bind the Graff Trust and Chalone and their respective heirs,
legal representatives and successors and assigns.
e. Time. Time is of the essence with respect to all matters
set forth in this Note.
f. Destroyed Note. If this Note is destroyed, lost or stolen,
Chalone will deliver a new Note to the Graff Trust on the same terms and
conditions as this Note with a notation of the unpaid principal and accrued and
unpaid interest in substitution of the prior Note. The Graff Trust will furnish
to Chalone reasonable evidence that the Note was destroyed, lost or stolen and
any security or indemnity that may be reasonably required by Chalone in
connection with the replacement of this Note.
In witness whereof, Chalone has duly executed and delivered this Note
to the Graff Trust as of the date and year first above written.
"CHALONE"
THE CHALONE WINE GROUP, LTD.,
a California corporation
By: /s/ W. PHILIP WOODWARD
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Its: President
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