<PAGE>

                                                                   Exhibit 10.26

                                    SUBLEASE
                                    (BREWERY)

     THIS SUBLEASE is effective August 1, 2004, by and between PBC ACQUISITION,
LLC, a Delaware limited liability company ("Landlord") and PORTLAND BREWING
COMPANY, an Oregon corporation ("Tenant").

     1. BASIC LEASE PROVISIONS.

          1.1 Premises Address: 2730 NW 31st Avenue, Portland, Oregon 97210.

          1.2 Tenant's Address: 11416 SW Lynnridge Avenue, Portland, Oregon
97225.

          1.3 Landlord's Address (for notices): c/o Pyramid Breweries Inc.,
Attn: Chief Financial Officer, 91 South Royal Brougham Way, Seattle, Washington
98134.

          1.4 Prime Landlord: MacTarnahan Limited Partnership, an Oregon limited
partnership.

          1.5 Prime Landlord's Address (for notices): Attn: Scott MacTarnahan,
11416 SW Lynnridge Avenue, Portland, Oregon 97225.

          1.6 Identification of Prime Lease and all amendments thereto:
Indenture of Lease (Brewery) dated July 31, 2004, by and between Prime Landlord
and Landlord, as evidenced by Memorandum of Lease dated July 31, 2004 by and
between Prime Landlord and Landlord and recorded in the Official Records of
Multnomah County, Oregon.

          1.7 Sublease Term: From the Commencement Date (defined below) through
July 31, 2006, subject to three (3) successive options to extend the term of the
Sublease for five (5) years each as described more particularly in Section 21
hereunder.

          1.8 Commencement Date: August 1, 2004.

          1.9 Expiration Date: July 31, 2006, with extension options described
in Section 1.7 above; provided that this Sublease shall terminate automatically
upon termination or expiration of the Prime Lease.

          1.10 Base Rent: $70,000 per annum; provided that Base Rent shall
increase proportionally with any increase in Landlord's Base Rent to Prime
Landlord pursuant to Section III of the Prime Lease.

          1.11 Payee of Rent: PBC Acquisition, LLC.

          1.12 Address for Payment of Rent: c/o Pyramid Breweries Inc., Attn:
Chief Financial Officer, 91 South Royal Brougham Way, Seattle, Washington 98134.

          1.13 Guarantor of Landlord's obligations, as tenant, under the Prime
Lease: Pyramid Breweries, Inc., a Washington corporation ("Guarantor").

<PAGE>

          1.14 Description of Premises: As defined in Article I of Prime Lease,
excepting (1) those portions used in the production of soft drinks; and (2)
warehouse locations outside the bonded premises used for finished goods
transferred to Guarantor.

          1.15 Security Deposit: None.

          1.16 Tenant's Use: As set forth in Article IV, Section 2 of Prime
Lease.

          1.17 Broker: None.

     2. PRIME LEASE. Landlord is the tenant under a Prime Lease (the "Prime
Lease") with the Prime Landlord identified in Section 1.4, bearing the date
specified in Section 1.6. Landlord represents and warrants to Tenant that (a)
Landlord has delivered to Tenant a full and complete copy of the Prime Lease and
all other agreements between Prime Landlord and Landlord relating to the
leasing, use or occupancy of the Premises, (b) the Prime Lease is, as of the
date hereof, in full force and effect, and (c) no event of default has occurred
under the Prime Lease and, to Landlord's knowledge, no event has occurred and is
continuing which would constitute an event of default but for the requirement of
the giving of notice and/or the expiration of the period of time to cure.
Capitalized terms used without definition herein shall have the meanings
ascribed to them in the Prime Lease.

     3. ALE HOUSE LEASE; RELATED AGREEMENTS. Tenant and Landlord have entered
into that certain Production Agreement dated effective August 1, 2004 (the
"Production Agreement") which establishes a contractual relationship between
Landlord and Tenant for the operation of the Premises. Pursuant to that
Indenture of Lease (Ale House) dated July 31, 2004 between Prime Landlord and
Landlord (the "Ale House Lease"), Prime Landlord also leases to Landlord certain
space in the Building which is presently being operated as an ale house (the
"Ale House Premises"). Of even date herewith, Landlord and Tenant have also
entered into: (a) a separate sublease (the "Ale House Sublease") pursuant to
which Landlord subleases to Tenant the Ale House Premises; and (b) that certain
Restaurant Management Agreement (the "Management Agreement") which establishes a
contractual relationship between Landlord and Tenant for the management and
operation of an ale house on the Ale House Premises.

     4. SUBLEASE. Landlord, for and in consideration of the rents herein
reserved and of the covenants and agreements herein contained on the part of
Tenant to be performed, hereby subleases to Tenant, and Tenant accepts from the
Landlord, certain space described in Section 1.14 (the "Premises") and located
in the building (the "Building"), situated on and a part of the property (the
"Property") legally described in Exhibit A attached hereto and made a part
hereof, together with all appurtenant rights thereto as set forth in the Prime
Lease or otherwise.

     5. TERM. The term of this Sublease (hereinafter "Term") shall commence on
the date specified in Section 1.8 (hereinafter "Commencement Date"). The Term
shall expire on the date ("Expiration Date") specified in Section 1.9, unless
sooner terminated as otherwise provided elsewhere in this Sublease or extended
pursuant to an available extension option. This Sublease shall immediately
terminate upon the termination of the Production Agreement.


                                      -2-

<PAGE>

     6. POSSESSION. Landlord agrees to deliver possession of the Premises on or
before the Commencement Date in their condition as of the execution and delivery
hereof, reasonable and usual wear and tear excepted.

     7. TENANT'S USE. The Premises shall be used and occupied only for the
Tenant's Use set forth in Section 1.16.

     8. RENT. Beginning on the Commencement Date, Tenant agrees to pay the Base
Rent set forth in Section 1.10 to the Payee specified in Section 1.11, at the
address specified in Section 1.12, or to such other payee or at such other
address as may be designated by advanced notice in writing from Landlord to
Tenant, without prior demand therefor and without any deduction whatsoever. Base
Rent shall be paid in equal monthly installments in advance on the first day of
each month of the Term, except that the first installment of Base Rent shall be
paid by Tenant to Landlord upon execution of this Sublease by Tenant. Base Rent
shall be prorated for partial months, if any, at the beginning and end of the
Term. Base Rent may also be referred to herein as "Rent". Tenant's covenant to
pay Rent shall be independent of every other covenant in this Lease. If Rent is
not paid when due, Tenant shall pay, relative to the delinquent payment, an
amount equal to the sum which would be payable by Landlord to Prime Landlord for
an equivalent default under the Prime Lease.

     9. ADDITIONAL RENT. Landlord shall be solely liable for any and all
Additional Rent (as defined in the Prime Lease) under the Prime Lease, whether
such Additional Rent is to reimburse Prime Landlord for taxes, operating
expenses, common area maintenance charges or any other expenses incurred by the
Prime Landlord in connection with the Property. Tenant shall not be liable to
Landlord hereunder or otherwise for any cost or expense which constitutes or is
treated as Additional Rent under the Prime Lease.

     10. UTILITY AND MAINTENANCE OBLIGATIONS. Landlord shall be solely
responsible for the following at Landlord's sole expense:

          10.1 All utility consumption costs, including without limitation,
electric and other charges incurred in connection with lighting, and providing
electrical power to the Premises, to the extent Landlord is obligated to pay for
the same under the Prime Lease. Landlord shall hold Tenant harmless from all
costs or expenses Tenant may incur from Landlord's failure to pay such utility
bills or to perform any of Landlord's obligations with respect to the purchase
of utilities.

          10.2 All maintenance, repairs and replacements as to the Premises and
the Building, including without limitation all Common Maintenance Obligations
(as defined in the Prime Lease), to the extent Landlord, as tenant, is obligated
to pay for or perform the same under the Prime Lease.

     11. QUIET ENJOYMENT. Landlord represents that it has full power and
authority to enter into this Sublease. So long as Tenant is not in default in
the performance of its covenants and agreements in this Sublease, Tenant's quiet
and peaceable enjoyment of the Premises shall not be disturbed or interfered
with by Landlord, or by any person claiming by, through, or under Landlord.


                                      -3-

<PAGE>

     12. INSURANCE. Landlord shall procure and maintain, at its own cost and
expense, such liability insurance and property insurance as is required to be
carried by Landlord, as tenant, under the Prime Lease. Landlord and Tenant
release each other, and their respective members, managers, partners,
shareholders, directors, officers, and employees, from, and waive their entire
claim of recovery for, any claims for damage to the Premises and the Building
and to Tenant's alterations, trade fixtures and personal property that are
caused by or result from fire, lightning or any other perils normally included
in an "all risk" or "special causes of loss" property insurance policy whether
or not such loss or damage is due to the negligence of Landlord, or its members,
mangers, partners, shareholders, directors, officers, or employees, or of
Tenant, or its members, managers, partners, shareholders, directors, officers,
or employees. Landlord shall cause each insurance policy obtained by it to
provide that the insurance company waives all right of recovery by way of
subrogation against either party in connection with any damage covered by such
insurance policy.

     13. FIRE OR CASUALTY OR EMINENT DOMAIN. In the event of a fire or other
casualty affecting the Building or the Premises, or of a taking of all or a part
of the Building or Premises under the power of eminent domain, Landlord shall
not exercise any right which may have the effect of terminating the Prime Lease
without first obtaining the prior written consent of Tenant. In the event
Landlord is entitled, under the Prime Lease, to a rent abatement as a result of
a fire or other casualty or as a result of a taking under the power of eminent
domain, then Tenant shall be entitled to abatement of Rent hereunder. If the
Prime Lease imposes on Landlord the obligation to repair or restore the Building
or any portion of the Premises, Tenant shall permit Landlord to enter the
Premises to perform the same, subject to such conditions as Tenant may
reasonably impose.

     14. SURRENDER. Upon the expiration of this Sublease, or upon the
termination of the Sublease or of the Tenant's right to possession of the
Premises, Tenant will at once surrender and deliver up the Premises, together
with all improvements thereon, to Landlord.

     15. INDEMNITY

          15.1 Landlord's Indemnity. As between Landlord and Tenant, and except
to the extent otherwise provided in this Section 15.1, Tenant shall not be
liable for injury to any person, or for the loss of or damage to any property
(including property of Landlord or Tenant) occurring in or about the Premises
from any cause whatsoever. Landlord hereby assumes all risk of damage to
property or injury to persons in, upon or about the Premises, from any cause
whatsoever except that which is caused by the negligence or willful misconduct
of Tenant. Landlord hereby indemnifies and holds Tenant harmless, and shall
defend Tenant, from and against any and all claims, charges, liabilities,
obligations, penalties, causes of action, liens, damages, costs and expenses
(including attorney fees) arising, claimed, charged or incurred against or by
Tenant and arising from or in connection with: (a) Tenant's use or occupancy of,
or any activity, work or other thing done, permitted or suffered by Tenant on or
about, the Premises, whether before, after or during the term, or (b) any act or
omission of Landlord, or any officer, contractor, agent, employee, guest,
licensee, or invitee of Landlord, on or about the Premises, Building or Land.
Such indemnification obligation shall extend to all costs, attorney fees, and
liabilities incurred in connection with the defense of any such claim (including
appeals and petitions for review) or any action or proceeding brought thereon.


                                      -4-

<PAGE>

          15.2 Limit on Tenant's Liability. Tenant and its agents shall not be
liable for any loss or damage to persons or property resulting from fire,
exposure, falling plaster or other material, steam, gas, electricity, or from
bursting, overflowing, or leaking of water, water or rain which may leak from or
into any part of the Premises or from pipes, appliances or plumbing works
therein or from the roof, street or subsurface or from any other place, from
dampness, from electrical wiring, circuitry, power surges, overloads, spiking or
interruption of any kind, from air conditioning equipment, or from gas or odors,
sprinkler leakage, or from any other cause whatsoever, unless caused by or due
to the negligence or willful misconduct of Landlord, its agents, invitees,
servants or employees. Tenant and its agents shall not be liable for
interference with the light, air, or other incorporeal hereditaments or for any
latent defect in or on the Premises or the Building.

          15.3 Defense of Claims. In case any action or proceeding shall be
brought against Tenant by reason of a claim covered by the provisions of Section
15, Landlord, upon notice from Tenant, shall defend the same at Landlord's
expense, by counsel approved in writing by Tenant.

     16. DEFAULTS. Landlord and Tenant agree that any one or more of the
following events shall be considered a Default hereunder:

          16.1 Any Event of Default (as defined in the Prime Lease) shall occur
under the Prime Lease and continue beyond any applicable cure period thereunder;
or

          16.2 Any Event of Default (as defined in the Ale House Lease) shall
occur under the Ale House Lease and continue beyond any applicable cure period
thereunder; or

          16.3 Tenant shall fail to make any payment of Rent hereunder for five
(5) business days after Tenant's receipt of written notice thereof; or

          16.4 Any default shall occur under the Production Agreement and
continue beyond any applicable cure period thereunder; or

          16.5 Any default shall occur under the Ale House Sublease or the
Operating Agreement and continue beyond any applicable cure period thereunder.

     17. REMEDIES. Upon the continuance of any one or more Defaults beyond any
applicable cure period, the nondefaulting Party (defined below) may terminate
this Lease by providing ten (10) business days' notice to the other party.
Landlord and Tenant expressly agree that this termination right is an adequate
and fair remedy hereunder, and that this termination right shall therefore be
the sole and exclusive remedy available to both parties. For purposes of this
Section 17 only, an Event of Default by Prime Landlord on the Prime Lease shall
be considered a Default by Tenant hereunder, and a default by either Party under
the Operating Agreement shall be considered a Default by such Party hereunder.

     18. SECURITY DEPOSIT. No security deposit shall be required hereunder.

     19. NOTICES AND CONSENTS. Any notices, demands, or other communications to
be given under this Sublease shall be in writing and personally delivered or
sent by certified


                                      -5-

<PAGE>

mail, return receipt requested, postage prepaid, addressed to the parties at the
addresses listed below, or at such other addresses as the parties may from time
to time designate in writing. All notices shall be deemed received on the date
delivered, if personally delivered, or the date delivery is officially recorded
on the return receipt, if sent by certified mail.

          Tenant: The address specified in Section 1.2.

          Landlord: The address specified in Section 1.3.

     20. PROVISIONS REGARDING SUBLEASE. In the event of any conflict between
this Sublease and the Prime Lease, the conflicting provision of the Prime Lease
shall control. Nothing contained herein shall modify or supersede any provision
of the Prime Lease. Tenant's obligations shall be solely those set forth herein;
no implied obligations shall be attributed to Tenant by virtue of the Prime
Lease or otherwise.

     21. RENEWAL TERMS. Landlord acknowledges that Landlord has three options to
extend the term of the Prime Lease for five (5) years per option, and agrees
that Landlord shall provide Tenant with a copy of any notice provided to Prime
Landlord in connection with the exercise or waiver of such options concurrently
with delivery thereof to Prime Landlord. Landlord further agrees that Tenant
shall have three options to extend the term of this Sublease concurrently with
the Renewal Terms (as defined in the Prime Lease) available to Landlord under
the Prime Lease, and that Tenant shall have a period of thirty (30) days
following Tenant's receipt of a copy of the notice from Landlord pursuant to the
preceding sentence in which to exercise or waive Tenant's extension option. Base
Rent hereunder during any such extension period shall be increased
proportionally to any increase in Landlord's Base Rent owing to Prime Landlord
pursuant to the Prime Lease during the applicable Renewal Term.

     22. PRIME LANDLORD'S CONSENT. This Sublease and the obligations of Landlord
and Tenant (each singly a "Party" and together the "Parties") hereunder are
expressly conditioned upon Landlord's obtaining prior written consent hereto by
Prime Landlord and Guarantor. Landlord and Tenant hereby agree, for the benefit
of Prime Landlord, that this Sublease and Prime Landlord's consent hereto shall
not: (a) create privity of contract between Prime Landlord and Tenant; (b) be
deemed to have amended the Prime Lease in any regard (unless Prime Landlord
shall have expressly agreed in writing to such amendment); or (c) be construed
as a waiver of Prime Landlord's right to consent to any assignment of the Prime
Lease by Landlord or any further subletting of premises leased pursuant to the
Prime Lease, or as a waiver of Prime Landlord's right to consent to any
assignment by Tenant of this Sublease or any sub-subletting of the Premises or
any part thereof. Prime Landlord's consent shall, however, be deemed to evidence
Prime Landlord's agreement that Tenant may use the Premises for the purpose set
forth in Section 1.16.

     23. BROKERAGE. Each party warrants to the other that it has had no dealings
with any broker or agent in connection with this Sublease, and covenants to pay,
hold harmless and indemnify the other party from and against any and all costs
(including reasonable attorneys, fees), expense or liability for any
compensation, commissions and charges claimed by any other broker or other agent
with respect to this Sublease or the negotiation thereof on behalf of such
party.


                                      -6-

<PAGE>

     24. GUARANTOR'S RIGHT TO ACCESS. Guarantor shall have the right to access
the Premises in the following circumstances:

          24.1 At any time to consult records maintained in a designated
location, and to use the areas designated for record-keeping in the parties'
brewers' letters;

          24.2 Upon 24-hour prior notice to Tenant, Guarantor may take
possession and control of the Premises for production pursuant to an Alternating
Proprietorship Agreement between Guarantor and Tenant (the "APA") to be
negotiated by the parties in good faith and executed prior to September 1, 2006,
but Guarantor's right to produce beer under the APA will only extend to the
barrelage required to service on-premises consumption at the Ale House Premises.
Tenant agrees to make raw materials in inventory available to Guarantor at
Tenant's cost in connection with Guarantor's brewing activities set forth in the
APA; and

     24.3 Upon reasonable notice to inspect the Premises.

Executed February 14, 2006.

LANDLORD:                               PBC ACQUISITION, LLC, a Delaware
                                        limited liability company, by its Member

                                        PYRAMID BREWERIES, INC., a Washington
                                        corporation


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


TENANT:                                 PORTLAND BREWING COMPANY, an
                                        Oregon corporation


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                      -7-

<PAGE>

     Prime Landlord and Guarantor join in the execution of this Sublease solely
to provide their consent hereto:

PRIME LANDLORD:                         MACTARNAHAN LIMITED
                                        PARTNERSHIP, an Oregon limited
                                        partnership

                                        By: HARMER MILL & LOGGING
                                            SUPPLY CO., an Oregon corporation

                                        Its: General Partner


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


GUARANTOR:                              PYRAMID BREWERIES, INC., a Washington
                                        corporation


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                      -8-

<PAGE>

                                    EXHIBIT A

                          Legal Description of Property

          A tract of land in Section 29, Township 1 North, Range 1 East of the
          Willamette Meridian, in the County of Multnomah and State of Oregon,
          more particularly described as follows:

          Beginning at the Northwest corner of Industrial Center in Portland,
          Oregon; thence North 88 degrees 32' East of 30.04 feet to the
          intersection of the Easterly line of NW 31st Avenue with the Northerly
          line of NW Industrial Street, which point is the true point of
          beginning for this description; thence continuing North 88 degrees 32'
          East along the Northerly line of NW Industrial Street 259.0 feet to a
          point on a 277.94 foot radius curve, the tangent to which curve bears
          North 37 degrees 39' East, said point is 10.0 feet Northwesterly from
          a certain drill track when measured at right angles thereto; thence
          Northeasterly along said 277.94 foot radius curve, parallel to and
          10.0 feet Westerly from said drill track, 161.42 feet to a point on
          the Easterly prolongation of the Southerly line of that certain tract
          of land conveyed to Dan Davis by the Spokane, Portland and Seattle
          Railway Company by deed dated April l2, 1954, recorded April 21, 1954
          in Book 1655, Page 124, Deed Records; thence North 88 degrees 21' West
          along the Easterly prolongation of said Southerly line of the Dan
          Davis tract and said Southerly line of the Dan Davis tract, 317.0
          feet, to a point on the Easterly line of NW 31st Avenue; thence South
          01 degree 39' West along the Easterly line of NW 31st Avenue 162.17
          feet to the true point of beginning.

TOGETHER WITH THE FOLLOWING APPURTENANT PARKING EASEMENT:

     Beginning at the Northeast corner of Lot 12, Block 4 of the Plat of
     INDUSTRIAL CENTER, located in Township 1 North, Range 1 East of the
     Willamette Meridian, in the city of Portland, County of Multnomah and State
     of Oregon, said point at the intersection of the Southerly right-of-way of
     NW Industrial Street and the Westerly right-of-way of NW 29th Avenue;
     thence South 0 degrees 38' 03" West along Westerly right-of-way of NW 29th
     Avenue, a distance of 233.38 feet; thence North 89 degrees 20' 48" West,
     162.48 feet; thence North 0 degrees 39' 37" East 18.06 feet; thence North
     89 degrees 24' 55" West, 18.79 feet; thence South 0 degrees 49' 41" West,
     8.90 feet; thence North 89 degrees 10' 29" West, 11.23 feet; thence South 2
     degrees 23' 09" West, 4.89 feet; thence North 87 degrees 43' 31" West 10.91
     feet; thence North 0 degrees 55' 53" West, 7.99 feet; thence North 89
     degrees 10' 29" West, 21.06 feet; thence South 57 degrees 53' 33" West,
     15.41 feet; thence North 89 degrees 18' 04" West, 59.59 feet to the
     Easterly right-of-way of NW 30th Avenue; thence North 0 degrees 43' 31"
     East along said right-of-way a distance of 212.91 feet to the Southerly
     right-of-way of NW Industrial Street; thence North 87 degrees 32' 46" East
     along said right-of-way a distance of 297.50 feet to the point of
     beginning.

1 - EXHIBIT A