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                                                                   Exhibit 10.34

                               INDENTURE OF LEASE
                                    (BREWERY)

          THIS INDENTURE OF LEASE, made this 31 day of July, 2004, by and
between MACTARNAHAN LIMITED PARTNERSHIP dba HARMER COMPANY, an Oregon limited
partnership ("Landlord"), and PBC ACQUISITION, LLC, a Delaware limited liability
company ("Tenant").

                                    RECITALS

          The parties acknowledge the following facts to exist:

          (1) Landlord owns a certain tract of improved property located in
Multnomah County, Oregon, described as (the "Land"):

          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 12, 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.

          (2) Landlord has easement rights appurtenant to the foregoing property
in a tract of real property located in Multnomah County, Oregon, described as
set forth in Exhibit A, which is incorporated in this Lease by this reference
(the "Parking Easement Area").


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          Landlord's rights to the Parking Easement Area are set forth in that
certain Easement Agreement dated June 16, 2001 between Portland Brewing Company,
as grantor, and Portland Brewing Building LLC, as grantee, which was recorded in
Multnomah County, Oregon on August 17, 2001 under Recording Number 2001-129876,
the grantee's rights in which are appurtenant to and were acquired by the
Landlord in connection with the Landlord's acquisition of, the premises
(collectively, the "Easement Agreement").

          (3) Tenant desires to occupy a portion of the building located on the
Land (in its entirety, the "Building") as the tenant in such premises, and to
obtain from Landlord the right to use the Parking Easement Area, subject to the
terms of the Easement Agreement, for the term of this Lease, pursuant to the
terms and conditions stated herein.

          NOW, THEREFORE, in consideration of the covenants, agreements and
stipulations contained herein, it is agreed between Landlord and Tenant as
follows:

                                       I.

                                DEMISED PREMISES

          Landlord hereby leases to Tenant and Tenant hereby leases from
Landlord, upon the terms and subject to the conditions set forth in this Lease,
the Premises described below, located in the City of Portland, Multnomah County,
Oregon, SUBJECT, HOWEVER, to any and all existing and non-delinquent real estate
tax liens of record, the mortgage lien (including any related security interests
and assignments for security) described in Paragraph X; a sewer easement in
favor of the City of Portland recorded October 14, 1953 as document #44101, book
1626, page 337; Administrative Findings and Decision on an Adjustment No. LUR
9200240, including the terms and provisions thereof, recorded July 1, 1992, as
document #072284, book 2560, page 336; and the terms of this Lease.

          The premises leased to Tenant (the "Premises") consist of all portions
of the Building excepting that portion of the first floor of the Building more
particularly identified as "Alehouse" or "common area" on the Building floor
plan attached as Exhibit B, which is incorporated in this Lease by this
reference (the "Building Plan"). The Premises also include the appurtenant right
to use, in common with others, the public portions of the Building, including
public hallways, lobbies, and restrooms, depicted as "common area" on the
Building Plan (the "Common Area"); parking facilities on the Land; the right for
Tenant and its employees and invitees to enjoy all rights, benefits and use of
the Parking Easement Area (to the extent allocated to Tenant in this Lease and
subject to the terms of the Easement Agreement); and sidewalks, ramps, landscape
areas, and driveways. The Premises shall be delivered to Tenant in its "AS IS"
condition without any obligations on the part of Landlord to perform any
improvements or alterations, or to provide any allowances.

          As of the Commencement Date (defined in Paragraph II, below), Tenant
has leased from Landlord, under a separate lease agreement of even date herewith
(the "Alehouse Lease"), the portion of the first floor of the Building more
particularly identified as "Alehouse" on the Building Plan (the "Alehouse
Premises"). The Premises hereunder includes, without


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limitation, the first-floor "AREA TO BE ADDED TO ALEHOUSE IF BREWERY LEASE
TERMINATED," as designated on the Building Plan (such AREA TO BE ADDED, all
basement space in the Building, and the second-floor space located above the
copper brewing tanks that are included in such "AREA TO BE ADDED," are together
herein referred to as the "Alehouse Expansion Space"). If the Alehouse Lease
expires or terminates before expiration of the Term (defined at Paragraph II,
below), or if this Lease expires or terminates before expiration of the term of
the Alehouse Lease, then in either such event, prior to the date of such
expiration or termination, Tenant shall, at Tenant's sole cost and expense and
subject to the terms and conditions, including approval by Landlord, that are
specified in Paragraph IV(7), effect such improvements and alterations to the
Building including, without limitation, constructing (and/or demolishing) such
demising walls, constructing such entrances, and effecting such alterations to
the utility systems serving the Building (including, without limitation, wiring
and electrical systems, plumbing and drain pipes, sprinkler systems and sewer
lines, and heating, ventilating and air conditioning (HVAC) systems), as may be
reasonably necessary to operate the Alehouse premises, including the Alehouse
Expansion Space, as a separate and distinct premises, and the remaining portions
of the Building as a separate and distinct premises, each with dedicated and
separately-metered and controlled utility services. All of the improvements
required by the preceding sentence are together herein referred to as the
"Demising Improvements."

                                       II.

                                  TERM OF LEASE

          The term of this Lease shall commence on the date of this Lease (the
"Commencement Date"), and shall thereafter continue for a period of two (2)
years (the "Term"), unless extended as hereinafter provided.

          Provided that Tenant renews this Lease beyond the initial term stated
above, as elsewhere herein provided, Landlord shall take all necessary steps to
timely renew the term of the Easement Agreement pursuant to Section 2.2 thereof,
and shall use commercially reasonable efforts to procure the right to extend the
Easement Agreement beyond such renewal term as necessary to provide to Tenant
the rights and benefits of the Easement Agreement for the entire Term of this
Lease (as the same may be renewed by Tenant); provided, however, in no event
shall Landlord be required to pay consideration to procure such extension
unless, and then only to the extent, that Tenant shall have agreed in writing to
pay the entire amount thereof as and when due to the grantor under the Easement
Agreement.


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                                      III.

                                      RENT

          Tenant shall pay to Landlord, by check to be received at the business
address of Landlord designated herein, on or before the first day of each month
during the Term of this Lease, the following Base Rent: $5,833.00 per month for
the two-year initial term of the Lease, which amount shall be adjusted effective
as of the first day of any renewal term in the manner provided in Paragraph VI
below.

          In addition thereto, as an integral portion of the rent and as more
particularly set forth as a covenant herein, Tenant shall pay Additional Rent,
consisting of all insurances required herein, all taxes that may be assessed
upon the Premises as provided herein, and the cost of all maintenance on the
Premises as provided herein. Base Rent and Additional Rent, along with all other
sums that become payable by Tenant to Landlord under this Lease, whether paid to
Landlord directly, or paid to a third party for the benefit of Landlord and the
Premises, are referred to herein as "Rent."

Tenant shall pay all Rent promptly when due without notice or demand therefor
and without any abatement, deduction or off set, for any reason whatsoever,
except as may be expressly provided in this Lease. If the Tenant's obligation to
pay Base Rent does not commence on the first day of a calendar month, or does
not expire on the last day of a calendar month, the Base Rent payable by Tenant
on the first fractional month, or the last fractional month, as the case may be,
shall be prorated for said month. Base Rent for any partial month at the
beginning of the Term, and Base Rent for the first full calendar month of the
Term, shall be paid upon execution of this Lease. Tenant acknowledges that
Tenant's late payment of Rent due Landlord will cause Landlord to incur costs
not contemplated by this Lease, the exact amount of such cost being extremely
difficult and impractical to ascertain. Therefore, if Landlord does not receive
any portion of the Rent due from Tenant within five (5) business days after
notice to Tenant that such payment is overdue, Tenant shall pay to Landlord an
additional sum equal to five percent (5%) of the overdue amount, which late
charge (a) shall be due and payable on demand, (b) constitutes liquidated
damages for each delinquent payment under applicable law, and (c) the payment of
late charges and the payment of interest are distinct and separate from one
another in that the payment of interest is to compensate Landlord for the use of
Landlord's money by Tenant, while the payment of late charges is to compensate
Landlord for the additional administrative expenses incurred by Landlord in
handling and processing delinquent payments. By their execution of this Lease,
Landlord and Tenant confirm that such late charge represents a fair and
reasonable estimate of the costs that Landlord will incur by reason of any such
late payment, that the late charge is in addition to any and all remedies
available to Landlord and that the assessment and/or collection of the late
charge shall not be deemed a waiver by Landlord of such failure or to any other
default under this Lease. Additionally, all such delinquent Rent, plus any late
charge, shall bear interest at the rate of fourteen percent (14%) per annum, or,
if lower, the maximum interest rate permitted by law (as applicable, the
"Default Rate"), from the date due until paid. If any payment of Rent is
returned for insufficient funds, Landlord may require Tenant to pay all future
payments by cashier's check.


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                                       IV.

                                    COVENANTS

          In consideration of the leasing of the Premises and of the mutual
agreements hereinafter contained, each party covenants and agrees to and with
the other as follows:

          (1) PAYMENTS: In addition to the Base Rent stated above, and as an
integral portion of the consideration of this Lease:

               (a) Tenant shall pay to Landlord all Real Property Taxes (defined
below) upon the Premises that are levied after the Commencement Date and during
the Term. All Real Property Taxes that are reimbursable by Tenant for the tax
years in which this Lease commences and terminates shall be adjusted and
prorated on the basis of the applicable tax year so that Landlord shall bear the
cost of its prorated share for the periods prior and subsequent to the Term, and
Tenant shall reimburse to Landlord its prorated share during the Term. Landlord
shall deliver to Tenant, with ten (10) business days following Landlord's
receipt thereof, a copy of all tax bills, assessments notices and other notices
and correspondence received from taxing authorities concerning Real Property
Taxes on the Premises (together, if applicable, with a calculation of Tenant's
Proportionate Share thereof, as contemplated below in this Paragraph IV(a)). So
Long as the Alehouse Lease remains in effect, Tenant shall pay to the taxing
authorities, no later than fifteen (15) days prior to the delinquency date, all
Real Property Taxes on the Land and Building, and shall contemporaneously
deliver proof of such payment to Landlord. If the Alehouse Lease expires or
terminates before expiration of the Term, Tenant shall pay Landlord, no later
than fifteen (15) days prior to the delinquency date, Tenant's Proportionate
Share (determined as set forth below) of all Real Property Taxes on the Land and
Building. Tenant's Proportionate Share of Real Property Taxes shall equal a
portion of the taxes calculated on the assessed value of the Building, and a
portion of the taxes calculated on the assessed value of the Land, as follows:
Tenant's Proportionate Share of Real Property Taxes calculated on the assessed
value of the Building shall equal the entire amount of such taxes multiplied by
a fraction, the numerator of which is the fair rental value of the Premises as
of the date on which such taxes are due, and the denominator of which is the
fair rental value of the Building as of the date on which such taxes are due
Tenant's Proportionate Share of Real Property Taxes calculated on the assessed
value of the Land shall equal the entire amount of such taxes multiplied by a
fraction, the numerator of which is the rentable square feet contained within
the Premises as of the date on which such taxes are due, and the denominator of
which is the total rentable square feet contained within the Building as of the
date on which such taxes are due. For purposes of this Paragraph IV(a), fair
rental value shall be reasonably determined by Landlord, and rentable square
feet shall be determined using the standard described in Paragraph I. If Real
Property Taxes payable in respect of the Building or Land are calculated on a
basis other than assessed value, then Landlord shall equitably determine
Tenant's Proportionate Share thereof taking into consideration the method of
allocation to be used when taxes are calculated based on assessed values. If the
taxing authority permits the taxpayer to take a discount if Real Property Taxes
are paid in full by a specified date, then Tenant shall be entitled to such
discount


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if Tenant pays, as applicable, all Real Property Taxes, or Tenant's
Proportionate Share of Real Property Taxes, at least three (3) business days
before the date by which payment must be made to the taxing authority in order
to qualify for such discount. Tenant may, with Landlord's consent, which consent
shall not be unreasonably withheld, contest in good faith and at Tenant's sole
cost and expense, any such Real Property Taxes as Tenant reasonably may deem
invalid, and for such purpose Tenant may prosecute such appeals, suits, actions
or other proceedings in Tenant's own name or in the name of the Landlord, or
both, or defend such suits, actions or other proceedings for the collection of
taxes and assessments in either case, as Tenant may deem appropriate. Tenant
shall save harmless and indemnify Landlord from and against all losses, costs,
expenses and damages, including Landlord's reasonable attorneys' fees incurred
as the result of the prosecution or defense of such suits, actions or other
proceedings. If it shall be determined in any such suits, actions or other
proceedings, that any such Real Property Taxes constitute valid taxes or
assessments, then and in that event, promptly after (if not before) the judgment
or decree containing such determination shall have become final (either upon
appeal or by reason of failure to appeal). Tenant shall fully pay and discharge
such judgment or decree and shall cause it to be duly satisfied of record.
Landlord shall, upon request of Tenant, cooperate with Tenant with respect to
making, filing and prosecuting any such appeals, suits, actions or other
proceedings and, if required to make the same effective, shall join therein. As
used in this Lease, the term "Real Property Taxes" shall include any form of
real estate tax or assessment, general, special, ordinary or extraordinary, and
any license fee, commercial rental tax, improvement bond or bonds, levy, or tax
(other than inheritance, personal income, or estate taxes) by any authority
having the direct or indirect power to tax, including any city, county, state,
or federal government, or any school, agricultural, sanitary, fire, street,
drainage, or other improvement district thereof, as against any legal or
equitable interest of Landlord in the Premises, or in any portion thereof, as
against Landlord's right to rental or other income therefrom (but excluding
Landlord's personal income taxes), and as against Landlord's business of leasing
the land and building.

               (b) Insurance. Subject to proration thereof as provided below,
Tenant shall pay Landlord all costs and expenses incurred by Landlord to procure
and maintain policies of insurance pursuant to this Paragraph IV(1)(a). Landlord
shall procure and maintain at all times during the Term of this Lease: a policy
or policies of insurance covering loss or damage to the Premises in the amount
of the full replacement value thereof (exclusive of Tenant's trade fixtures,
non-standard tenant improvements, equipment and personal property), providing
protection against all perils included within the classification of fire,
extended coverage, all risk of loss as it relates to the standard insuring
clause, loss of rental income, Landlord's risk liability coverage, and to the
extent any mortgagee of the Building may require, coverage against such other
hazards that are then commonly insured against for similar properties, provided
such additional coverage is available at commercially reasonable cost. Such
insurance shall provide for payment of loss thereunder to Landlord and/or the
holder of any mortgages or deeds of trust or real estate contracts on the Land
and/or Building.

          In addition to the foregoing coverage obtained by Landlord, Tenant
shall procure and maintain at Tenant's sole cost and expense:


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                    (I) Commercial general insurance in respect of the Premises
and the conduct or operation of business therein, with Landlord, Landlord's
managing agent, if any, and any mortgagee whose name and address shall
previously have been furnished to Tenant, as additional named insureds, with
limits of not less than $2,000,000 for bodily injury or death to any one person
and $3,000,000 for bodily injury or death to any number of persons in any one
occurrence, and $2,000,000 for property damage. All such insurance shall insure
the performance by Tenant of the indemnity agreement as to liability for injury
to, illness of, or death of persons and damage to property set forth in
Paragraph IV(15)(b).

                    (II) Insurance covering Tenant's furniture, fixtures,
equipment, and inventory in an amount equal to not less than one hundred percent
(100%) of the full replacement value thereof and insuring against fire and all
risk perils coverage as provided by a standard all risk coverage endorsement and
the plate glass and all other glass that is the responsibility of the Tenant in
the event of breakage from any cause.

     All liability insurance policies required to be carried by Tenant hereunder
shall name Landlord as additional insured and shall be with companies and with
loss-payable clauses satisfactory to Landlord, and certified copies or originals
of policies or certificates evidencing such insurance shall be delivered to
Landlord by Tenant prior to Tenant commencing occupancy and thereafter within
thirty (30) days prior to each renewal thereof. Such certificate shall be from a
company holding a "Best's Rating" of at least A: Class IX, shall indicate that
the insurance policy is in full force and effect, and that the policy bears an
endorsement that the same not be canceled or amended unless thirty (30) days
prior written notice by U.S. Certified Mail of the proposed cancellation or
amendment has been given to Landlord and any mortgagee of which Landlord has
given Tenant notice prior to the date of such certificate. Each of said
certificates of insurance and each such policy of insurance required to be
maintained by Tenant hereunder shall expressly evidence insurance coverage as
required by the Lease. All such policies shall be written as primary policies
not contributing with and not in excess of coverage which Landlord may carry,
and shall not have a "deductible" in excess of a commercially reasonable amount
approved in advance by Landlord.

     For so long as the Alehouse Lease remains in effect, Tenant shall pay or
reimburse Landlord, within thirty (30) days following Landlord's written request
therefor, the premium and any other cost incurred by Landlord in respect of the
coverage required to be carried by Landlord under this Paragraph IV(1)(b);
provided, however, that notwithstanding anything to the contrary contained
herein, Tenant shall have the right to obtain bids from other insurance
companies with a rating at least equal to the rating specified in the preceding
Paragraph, for the insurance required to be carried by Landlord hereunder (and
with the same scope of coverage as proposed by Landlord), and Tenant shall have
the right to purchase, or cause Landlord to purchase, such insurance if the cost
thereof will be less than the coverage proposed to be obtained by Landlord. If
the Alehouse Lease terminates or expires during the Term, from and after such
expiration Tenant shall pay or reimburse Landlord, within fifteen (15) days
following Landlord's written request therefore, Tenant's Share (defined below)
of the premium and any other cost incurred by Landlord in respect of the
coverage required to be carried by Landlord under Paragraph IV(1)(b). As used
herein, "Tenant's Share" means the share allocated to the Premises by the
insurance company issuing such coverage, if such an allocation has been made,
but otherwise means the


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total of such premium and other costs multiplied by a fraction, the numerator of
which is the total rentable square feet contained within the Premises, and the
denominator of which is the total rentable square feet contained within the
Building, subject to an equitable adjustment, as reasonably determined by
Landlord, if there is any disproportionate risk assignment to the Premises or to
the balance of the Building that affects the total premium costs for such
insurance..

     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, managers, partners, shareholders, directors, officers,
or employees, or of Tenant, or its members, managers, partners, shareholders,
directors, officers, or employees. Landlord and Tenant 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.

          (2) USE OF PREMISES: Tenant shall use the Premises for the purpose of
operating a brewery, together with associated uses for office space and storage.
Any other use shall be subject to the prior written approval of Landlord, which
shall not be unreasonably withheld, conditioned or delayed.

          (3) RESTRICTIONS ON USE:

               (a) Uses Excluded: Tenant will not make any unlawful use of the
Premises, and will not suffer any strip or waste thereof, nor permit any
objectionable noise or odor to escape or to be emitted from the Premises, or do
anything or permit to be done anything upon or about the Premises in any way
tending to create a nuisance; provided, however, that odors and noises customary
in the restaurant business shall not be considered to be in violation of this
clause, and provided, further, that it shall not be a violation of this clause
for Tenant to conduct its permitted uses in a manner similar to that conducted
by the previous occupant of the Premises, Portland Brewing Company.

               (b) Tenant Shall Not Permit Hazardous Substances Upon the
Premises. Tenant will not itself, and will not suffer or permit its employees,
agents, contractors or invitees in or about the Premises, Building or Land to
use, generate, process, store, transport, handle, or dispose of, on, under, in,
or from the Premises, the Building or the Land, any Hazardous Substances (as
that term is defined in Paragraph IV(3)(e), below) in quantities or
concentrations that exceed amounts allowed by, or in a manner that fails to
comply with, applicable law.

               (c) Notification. Tenant shall immediately notify Landlord should
Tenant (a) become aware of the existence of any Hazardous Substance on, in or
under the Premises, the Building or Land, (b) receive any notice of, or become
aware of, any actual or alleged violation with respect to the Premises, Building
or Land, of any federal, state, or local statute, ordinance, rule, regulation,
or other law pertaining to Hazardous Substances, or (c)


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become aware of any lien or action with respect to any of the foregoing. Tenant
shall deliver to Landlord, promptly upon receipt, (i) copies of any documents
received from the United States Environmental Protection Agency ("EPA") and/or
any state, county, or municipal environmental or health agency concerning
Tenant's ownership, use, or operations upon or in connection with the Premises;
and (ii) copies of any documents submitted by Tenant to the EPA and/or any
state, county, or municipal environmental or health agency concerning the
Premises.

               (d) Inspection and Remedial Action. Landlord is hereby authorized
to enter the Premises at reasonable times, and after reasonable notice, for the
purpose of inspecting the Premises, to ascertain Tenant's compliance with all
covenants made in this Paragraph IV(3). Upon Landlord's written request: (i)
Tenant, through professional engineers approved by Landlord and at Tenant's
cost, shall thoroughly investigate suspected Hazardous Substances contamination
of the Premises, Building or Land, occurring after the Commencement Date, and
caused by a breach of Tenant's covenant at Paragraph IV(3)(b), and (ii) Tenant
shall forthwith take such remedial action with respect to any such contamination
described in clause (i) as may be necessary to ensure that no such Hazardous
Substances are present on the Premises or in the groundwater of the Premises,
Building or Land in quantities or concentrations that exceed amounts allowed by
applicable law. Tenant's obligations under this Paragraph shall arise upon
Landlord's demand as provided herein, regardless of whether the EPA or any other
federal, state, or local agency or governmental authority has taken or
threatened any action in connection with the presence of any Hazardous Substance
on, or release of any Hazardous Substance from, the Premises, Building or the
Land. If Tenant shall fail promptly to discharge its obligations under this
Paragraph, Landlord may, at its election, but without the obligation to do so,
cause such investigation to be made or remedial action to be taken and/or take
any and all other actions that Landlord may deem necessary or advisable to
protect its interests or to avoid or minimize its liability for the existence of
Hazardous Substances on the Premises, Building or the Land, or for a release
thereof from the Premises, Building or Land. All amounts expended by Landlord
under this Paragraph shall be payable by Tenant to Landlord upon demand.

               (e) Definition of Hazardous Substance(s). The term "Hazardous
Substance" shall mean:

                              (i) "Hazardous substances", as defined by 40 CFR
Part 302;

                              (ii) "Extremely hazardous substance", as defined
by 40 CFR Part 355;

                              (iii) "Toxic chemicals", as defined by 40 CFR Part
372;

                              (iv) "Hazardous chemical" as defined by 29 CFR
Section 1910.120, to the extent it is included in the employer's written Hazard
Communication Program or in Material Safety Data Sheets that are located on
site;

                              (v) "Hazardous Waste" as defined by applicable


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administrative rules; and

                              (vi) Petroleum, including crude oil and any
fraction thereof.

               (f) Survival. Tenant's covenants set forth in this Paragraph
IV(3) shall survive the termination of the Lease or any transfer by Tenant, by
assignment or otherwise, of any or all right, title, or interest of Tenant in
the Premises.

          (4) REPAIR AND MAINTENANCE:

               As used herein, the term "Common Maintenance Obligations" shall
mean maintenance, repair and replacement of or to the following items in order
to keep the Building and Land in at least as good condition as delivered to
Tenant on the Commencement Date:

               (a) The roof structure, foundation and the other structural
portions and/or elements of the Building.

               (b) All utility and building systems that do not serve the
Premises exclusively or that extend beyond the exterior walls of the Premises,
including, if applicable, any wiring and electrical systems; plumbing and drain
pipes; heating, ventilating and air conditioning (HVAC) system; sprinkler
systems; and sewer lines.

               (c) All driveways and parking areas, maintenance and repair of
which shall include, without limitation, striping of parking lot spaces,
maintenance of parking lot lighting, and resurfacing and repaving of paved areas
as necessary to keep the same free of all settling, clear of standing water and
in a safe, sightly and serviceable condition, free of chuck holes, fissures and
cracks; and

               (d) The landscaped areas of the Land.

For so long as the Alehouse Lease remains in effect, during the Term Landlord
shall have no repair, replacement or maintenance obligations whatsoever, and
Tenant shall perform all Common Maintenance Obligations and, in addition, Tenant
shall maintain, repair and replace all nonstructural portions and/or elements of
the Premises, as well as all non-structural portions and/or elements of the
Building that are appurtenant to the Premises (including the exterior portions,
of that part of the Building where the Premises is located) in at least as good
condition as delivered to Tenant on the Commencement Date, including floors,
ceilings, window glass, interior and exterior walls, roof (other than complete
replacement thereof, which shall be a Common Maintenance Obligation) downspouts
and gutters, doors, plumbing and electrical fixtures, all utility and building
systems that are within and exclusively serve the Premises (including, as
applicable, wiring and electrical systems, plumbing and drain pipes, and any
sprinkler systems and sewer lines), any heating, ventilating and air
conditioning (HVAC) system exclusively serving the Premises, and all sidewalks,
railings and other exterior amenities abutting or exclusively serving the
Premises. If the Alehouse Lease expires or terminates during the Term, from and
after such expiration, Landlord shall perform at its cost, but subject to


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reimbursement for a portion of the costs thereof from Tenant as hereafter
provided, all Common Maintenance Obligations, but Tenant shall remain
responsible for all other repair and maintenance obligations specified herein.
The costs of maintenance, repair and replacement borne by Tenant under the
preceding sentence shall equal the total of such costs (including a reasonable
management fee) multiplied by a fraction, the numerator of which is the total
rentable square feet contained within the Premises, and the denominator of which
is the total rentable square feet contained within the Building, subject to an
equitable adjustment, as reasonably determined by Landlord, if there is any
disproportionate usage or consumption by Tenant or by any other tenant in the
Building.

          (5) LOCAL LAW AND REGULATIONS: Tenant shall comply at Tenant's own
expense with all ordinances, laws and regulations of any municipal, county,
state, federal and other public authority respecting the use and operation of
the Premises.

          (6) UTILITIES: Tenant shall pay for all heat, light, water, natural
gas, power, trash collection and other services or utilities utilized on the
Premises, and for all exterior lighting, including any lighting in the Parking
Easement Area, during the Term. So long as Tenant is the only tenant in the
Building, on the Land or in the Parking Easement Area, Tenant shall procure
directly from each service provider all such utilities, and Tenant shall pay all
costs thereof as and when due to the providers thereof. If the Alehouse Lease
expires or is terminated, Tenant shall arrange, before the effective date of
such expiration or termination, and at Tenant's sole cost and expense, to have
all utilities used in the Premises, on the Land or in the Parking Easement Area,
separately metered to the Premises, and Tenant shall thereafter pay all costs of
such utilities, as and when due directly to the providers thereof.

          (7) ALTERATIONS OR IMPROVEMENTS: Tenant shall make no alterations,
additions, or improvements in or to the Premises, the Building or the Land
(herein, "Tenant Improvements") without Landlord's prior written consent, to be
granted or withheld pursuant to this Paragraph (IV)(7), and, if such consent is
granted, then only contractors or mechanics that are approved by Landlord shall
effect such Tenant Improvements. If Tenant is required by Section I to make the
Demising Improvements, then Tenant shall obtain Landlord's approval of such
Demising Improvements, and shall construct the same, in accordance with the
procedure set forth in, and the requirements of, this Section IV(7).

               (a) Procedure for Approval. If Tenant is obligated to make the
Demising Improvements, or wishes to make any Tenant Improvements to the Building
or Land, or any Tenant Improvements to the Premises that either (a) are of a
structural nature, or (b) involve a cost greater than $25,000.00, or (c) involve
the roof, foundation, exterior walls, interior load-bearing walls or party walls
of the Building (all of the foregoing are "Major Work"), Tenant shall submit to
Landlord, for Landlord's written approval, a written description of the Major
Work that Tenant proposes to perform together with detailed plans and
specifications for such Major Work. If Tenant wishes to make any alterations,
additions, or improvements to the Premises that do not constitute Major Work,
Tenant shall submit to Landlord, for Landlord's written approval, a written
description of such work. Reference herein to "structural work" or "work of a
structural nature" shall have the meaning that such terms normally connote in
the construction industry. By way of example, alteration of interior non-load
bearing walls and partitions (except party walls shared by the Premises and
another premises in the Building), alteration of ceilings, installation of wall
coverings,


                                       11

<PAGE>

painting, installation of rugs, and similar work shall not be deemed to
constitute structural work; alteration to any exterior wall, load bearing wall,
wall shared by the Premises and another premises in the Building, roof, plumbing
system, heating, ventilation, and air conditioning system or similar work shall
be deemed to be of a structural nature.

               (b) Standard for Approval. Landlord's approval of proposed work
shall not be unreasonably withheld or delayed if such work (i) does not
adversely affect, in Landlord's reasonable judgment, the appearance of the
Premises and/or Building or the value of the Premises and/or Building, (ii) does
not adversely affect, in Landlord's reasonable judgment, Landlord's ability to
release the Premises, (iii) does not affect the structural integrity of the
Building or its systems, (iv) conforms to the requirements of all building codes
and any other applicable laws and regulations, (v) can be performed and
completed without materially disrupting the business or operation of the
Building or of any other tenant of the Building, and (vi) with respect to the
Demising Improvements only, is consistent with the requirements of Paragraph I
hereof. Tenant's failure to obtain Landlord's prior written consent to any
proposed work shall constitute an Event of Default hereunder.

               (c) Compliance with Laws. All work done by Tenant shall be
performed in full compliance with all laws, rules, orders and ordinances.
Without limiting the generality of the foregoing: (i) Tenant, at its expense,
shall obtain all necessary governmental permits and certificates for the
commencement and prosecution of Tenant Improvements and for final approval
thereof upon completion, and shall cause the Tenant Improvements work to be
performed in compliance with all such permits and certificates, applicable laws
and requirements of public authorities and with all applicable requirements of
insurance, and (ii) Tenant shall be responsible for assuring that the Premises
complies with any and all requirements of the Americans with Disabilities Act
and any other Federal, State or local governmental agency requirements relating
to Tenant's specific use of the Premises or Tenant's business operation.
Landlord's approval or consent to any proposed work shall not be deemed a waiver
of, or an opinion respecting, the compliance of the proposed work with the
requirements of this Paragraph IV(7)(c).

               (d) Title to Improvements. All Tenant Improvements upon the
Premises, including (without limiting the generality of the foregoing) all wall
covering, built-in cabinet work, paneling, and the like shall, unless Landlord
elects otherwise in writing, be the property of Landlord, and shall remain upon
and be surrendered with the Premises as a part thereof at expiration or earlier
termination of this Lease, except that Landlord may, by written notice to Tenant
given at the time Landlord approves the same, require Tenant, at Tenant's cost,
(i) to remove any or all Tenant Improvements, and (ii) to repair all damage
resulting from such removal. If Tenant fails to perform the foregoing, Tenant
shall pay to Landlord all costs arising from Landlord's performance of the same,
which shall be due and payable upon Landlord's demand.

               (e) Schedule/Manner of Work. All of Tenant's contractors,
suppliers, workmen, and mechanics for any Tenant Improvements shall comply with
such rules and conditions as Landlord may reasonably impose from time to time,
which rules and conditions shall be enforced by Tenant at the discretion of
Landlord. At any time any contractor, supplier, workman, or mechanic performing
construction of any Tenant Improvements performs any work that may or does
impair the quality, integrity, or performance of any portion of the Building,
Tenant shall cause


                                       12

<PAGE>

such contractor, supplier, workman, or mechanic to leave the Building and remove
all his tools, equipment, and materials immediately upon written notice
delivered to Tenant and Tenant shall reimburse Landlord for any repairs or
corrections of any portion of the building caused by or resulting from the work
of any contractor, supplier, workman, or mechanic performing any Tenant
Improvements work. The quality of all Tenant Improvements to or involving
structural, electrical, mechanical, life/safety, energy management, or plumbing
systems in the Premises shall be at least equal to the quality of such systems
as on the Commencement Date. In the event of any labor disturbance caused by
persons employed by Tenant or Tenant's contractor, Tenant shall immediately take
all actions necessary to eliminate such disturbance in connection with the
construction of the Tenant Improvements.

               (f) Debris. Tenant will cause construction of any Tenant
Improvements to be accomplished in a neat, clean, and workmanlike manner. Tenant
shall not permit any trash, rubbish, or debris to accumulate in the Premises or
the Building, and Tenant shall remove or cause to be removed all such trash,
rubbish, and debris from the Premises and the Building and on a timely basis.
Tenant shall be responsible for any additional costs incurred by Landlord for
cleaning the Building or any portion thereof, and for removing any trash,
rubbish, or debris therefrom to the extent caused by Tenant's construction of
the Tenant Improvements.

               (g) Right of Entry/Inspection. At all times during the period of
construction of any portion of any Tenant Improvements, Landlord and Landlord's
architects and engineers shall have the right to enter upon the Premises to
inspect the work of construction and the progress thereof. Tenant shall not
close any work affecting any portion of the life safety, heating, ventilation,
and air conditioning, plumbing, or electrical systems in the Premises or
Building until the same has been inspected and approved by Landlord's engineers.
No inspection or approval by Landlord's engineers of any such work shall
constitute an endorsement thereof or any representation as to the adequacy
thereof for any purpose or the conformance thereof with any governmental
ordinances, codes, or regulations, and Tenant shall be fully responsible and
liable therefor.

               (h) Insurance. In addition to the insurance requirements set
forth in Section IV(b), during the period of construction of any Tenant
Improvements, Tenant and Tenant's general contractor shall maintain worker's
compensation, builder's all-risk and public liability insurance, and such other
insurance as Landlord may reasonably require in commercially reasonable amounts.
All policies shall have such coverage limits, and be underwritten by such
companies, as Landlord shall approve, and shall name Landlord as an additional
insured thereunder. Before the commencement of construction of any Tenant
Improvements, Tenant and Tenant's general contractor must deliver certificates
of all such insurance policies and such insurance policies must be approved by
Landlord.

               (i) Non-Responsibility of Landlord; Indemnification. Tenant
hereby acknowledges that Landlord shall have no responsibility whatsoever for
the construction of any Tenant Improvements or for any defects therein. Tenant
shall notify Landlord in writing no less than ten (10) days before the
commencement of construction of any Tenant Improvements in order to afford
Landlord an opportunity to post and record appropriate notices of
non-responsibility. Tenant, at its expense, shall procure the cancellation or
discharge of all notices of violation arising from or otherwise connected with
Tenant Improvements work, or any other work, labor, services or


                                       13

<PAGE>

materials done for or supplied to Tenant, or any other person claiming through
or under Tenant, in or about the Premises or Building. Tenant shall defend,
indemnify and save harmless Landlord and any mortgagee from and against any and
all mechanics and other liens and encumbrances filed in connection with, and any
other claims, charges, liabilities, obligations, penalties, causes of action,
liens, damages, cost and expense (including attorneys fees) arising or incurred
by or against Landlord and arising in connection with, the Tenant Improvements
work, or any other work, labor, services or materials done for or supplied to
Tenant, or any person claiming through or under Tenant, in or about the
Premises, Land or Building. Tenant, at its expense, shall procure the
satisfaction or discharge of record of all such liens and encumbrances of record
within fifteen (15) days after the filing thereof; provided, Tenant may contest,
in good faith and at its own expense, any notice of violation, or lien, provided
Tenant posts for the protection of Landlord security in an amount and form
acceptable to Landlord. Such indemnification obligation shall extend to all
reasonable costs, attorneys' 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.

          (8) LANDLORD'S RIGHT OF ENTRY: It shall be lawful for Landlord, its
agents and representatives, at any reasonable time during normal business hours,
to enter into or upon the Premises for the purpose of examining the condition
thereof, or any other lawful purpose pertinent to the administration of this
Lease, provided that Landlord shall not unduly interfere with or prevent the
operation of Tenant's permitted uses in the Premises by reason of any such
entry.

          (9) NO ASSIGNMENT OR SUBLEASE: Tenant shall not sublease, assign,
transfer, pledge, hypothecate, surrender or dispose of this Lease, or any
interest herein, or permit any other person or persons whomsoever to occupy the
Premises without the written consent of Landlord first being obtained in
writing, which consent shall not be unreasonably withheld, conditioned or
delayed. Permitted Assignees shall become directly liable to Landlord for all
obligations of Tenant hereunder, but Tenant shall remain liable for the
performance of all obligations owed to Landlord under this Lease. The instrument
by which any permitted assignment or subletting consented to by Landlord is
accomplished shall expressly provide that, in the case of an assignment, the
assignee will perform and observe all the agreements, covenants, conditions and
provisions to be performed and observed by Tenant under this Lease and that
Landlord will have the right to enforce such agreements, covenants and
conditions directly against such assignee. Tenant's interests, in whole or in
part, cannot be sold, assigned, transferred, seized or taken by operation of
law, or under or by virtue of any execution or legal process, attachment or
proceedings instituted against Tenant, or under or by virtue of any bankruptcy
or insolvency proceedings had in regard to Tenant, or in any other manner,
except as mentioned herein.

     Anything contained in this Paragraph 9 or elsewhere in this Lease to the
contrary notwithstanding, Landlord hereby consents to an assignment of this
Lease, or a subletting of all or part of the Premises, to (a) the parent of
Tenant or to a wholly-owned subsidiary of Tenant or of such parent, (b) any
limited liability company, corporation or other entity into which or with which
Tenant may be merged or consolidated, provided that the net worth of the
resulting entity is at least equal to the net worth of Tenant on the date
hereof, or (c) any entity to which Tenant


                                       14

<PAGE>

sells all or substantially all of its assets as a going concern, provided that
such entity expressly assumes all of Tenant's obligations hereunder. Transfer of
all or any portion of the ownership of stock in Tenant shall not be deemed an
assignment of this Lease if such transfer is made (x) pursuant to or in
connection with an initial public offering or any subsequent offering of the
stock of Tenant, or (y) once the stock of Tenant is publicly traded on a
recognized public stock exchange.

          (10) LIENS: Tenant will not suffer or permit any lien of any kind,
type or description to be placed or imposed upon the Building or Land, or any
part thereof, but Tenant shall have the right to grant to its lenders security
interests and liens on Tenant's personal property and inventory located in the
Premises.

          (11) USE OF EXTERNAL WALLS: Tenant will not use the outside walls of
the Premises, or allow signs or devices of any kind to be attached thereto or
suspended therefrom, for advertising or displaying the name or business of
Tenant or for any purpose whatsoever, without the written consent of Landlord,
which consent shall not be unreasonably withheld. Signs and displays in place on
the Commencement Date shall be deemed approved by Landlord.

          (12) FIXTURES AND ATTACHMENTS: All additions to or improvements upon
the Premises, whether installed by Landlord or Tenant, shall be and become a
part of the Building as soon as installed and shall be the property of Landlord,
except for Tenant's trade fixtures and unless otherwise herein provided. Upon
expiration or earlier termination of this Lease, Tenant shall, subject to any
right of landlord's lien on the part of Landlord, be entitled to remove its
movable trade fixtures, provided that in so doing Tenant shall promptly and at
its own expense repair any injury to the Premises or Building resulting from the
installation of or removal of the same so as to restore the Premises and
Building as nearly as possible to their original condition at the time of
Tenant's occupancy hereunder, subject only to reasonable wear and tear and
damage by casualty.

          (13) DAMAGE OR DESTRUCTION.

               (a) Rights and Obligations.

                    (i) Obligation to Rebuild. If rentable area of the Building,
or any portion thereof, is damaged, destroyed, or rendered untenantable due to
fire or other casualty, and if

                         (A) the damage or destruction does not exceed
twenty-five percent (25%) of the insurable value of the Building,

                         (B) the Building and Premises are capable of being
repaired, reconstructed or restored within a period of ninety (90) days from
commencement of such work, and

                         (C) Landlord will receive insurance proceeds sufficient
to cover the cost of such repairs, reconstruction or restoration,


                                       15

<PAGE>

then Landlord shall be obligated to restore the Building to a condition
reasonably comparable to its condition prior to such casualty. In such event,
this Lease shall remain in full force and effect, Rent shall be adjusted
pursuant to Paragraph 13(b), below, Landlord will commence restoring that
portion of the Building so damaged as soon as commercially practicable, and will
diligently complete the restoration.

                    (ii) Right to Terminate. In the case of a casualty loss not
described in Paragraph 13(a)(i), then within 30 days after such a casualty
Landlord shall have the right to elect either to terminate this Lease or to
restore the Building. Landlord shall make its election by written notice to
Tenant within such 30 day period of time. If Landlord elects to terminate this
Lease, the termination shall be effective 30 days after receipt of the notice by
Tenant; provided, however, that Landlord shall not have the right to terminate
this Lease if damage occurs to the Building but does not affect the Premises or
Tenant's business operations in the Premises. If Landlord does not elect to
terminate this Lease, then Rent shall be abated in accordance with Paragraph
13(b) and Landlord shall restore the Building in accordance with the
requirements of Paragraph 13(a)(i).

                    (iii) Tenant's Property. If Landlord undertakes to repair
the Building after an event of casualty, such restoration shall not include
replacement of furniture, equipment, trade fixtures or other items of Tenant's
property.

                    (iv) Late Term Casualty. Regardless of Paragraphs 13(a)(ii),
if the casualty loss occurs within the last two (2) years of the Term, then
within 30 days after such a casualty Tenant shall have the right to elect to
terminate this Lease, exercised by notice in writing to Landlord given within
such 30-day period.

               (b) Rent Abatement. If all or part of the Premises shall be
damaged or destroyed or rendered untenantable as a result of fire or other
casualty, the Base Rent shall be abated or reduced based on the number of square
feet of space rendered untenantable, for the period from the date of the damage
or destruction to the date the damage to the Premises shall be substantially
repaired, or the date on which Tenant again uses the untenantable portion,
whichever first occurs.

               (c) Interference with Tenant's Business. Tenant shall not be
entitled to terminate this Lease and no damages, compensation or claim shall be
payable by Landlord for inconvenience, loss of business or annoyance arising
from any repair or restoration of any portion of the Premises or of the Building
pursuant to this Paragraph IV(13). The provisions of this Lease, including this
Paragraph IV(13), constitute an express agreement between Landlord and Tenant
with respect to any and all damage to, or destruction of, all or any part of the
Premises or any other portion of the Building, and any applicable State, federal
or local law or ordinance with respect to any rights or obligations concerning
damage or destruction, whether now or hereafter in effect, shall have no
application to this Lease or to any damage to or destruction of all or any part
of the Premises or any other portion of the Building.

               (d) Insurance on Tenant's Property. Landlord will not carry
insurance of any kind on Tenant's property, and, except as provided by law or by
reason of Landlord's breach of


                                       16

<PAGE>

any of its obligations under this Lease, Landlord shall not be obligated to
repair any damage to or replace any improvements paid for by Tenant, or any of
Tenant's property. If Landlord elects to restore the Premises as provided in
this Paragraph IV(13), Tenant shall use all proceeds from the insurance it
carries on Tenant's property to restore Tenant's property on the Premises.

          (14) EMINENT DOMAIN.

               (a) Total Condemnation. If the whole of the Building or the
Premises shall be taken by condemnation or in any other manner for any public or
quasi-public use or purpose (including a sale under threat of condemnation),
this Lease shall terminate as of the date of vesting of title on such taking
(herein called "Date of Taking"), and the Base Rent shall be prorated and
adjusted as Date of Taking.

               (b) Partial Condemnation. If a part of the Building or the Land
shall be so taken, this Lease shall be unaffected by such taking, except that if
twenty percent (20%) or more of the Premises shall be so taken and the remaining
area of the Premises shall not be reasonably sufficient for Tenant to continue
feasible operation of its business, Tenant may terminate this Lease by giving
Landlord notice to that effect within ninety (90) days after the Date of Taking:

               (c) Effect of Termination or Continuation. This Lease shall
terminate on the date that such notice from Tenant to Landlord shall be given,
and the Base Rent shall be prorated and adjusted as of such termination date.
Upon a partial taking this Lease shall continue in force as to the remaining
part of the Premises, and the Base Rent shall be adjusted according to the
rentable area remaining.

               (d) Award. Landlord shall be entitled to receive the entire award
or payment in connection with any taking without deduction therefrom for any
estate vested in Tenant by this Lease and Tenant shall receive no part of such
award. Tenant shall have no claim against Landlord or the condemning authority
for the unexpired portion of the Lease term. Nothing contained in this Paragraph
IV(14) shall be deemed to prevent Tenant from making a claim in any condemnation
proceeding for moving expenses or the value of any fixtures or furnishings
installed by Tenant at its sole expense and which are included in the taking.

               (e) Temporary Taking. A temporary taking (or transfer in lieu
thereof) of any portion of the Premises by any authorized authority shall not
cause a termination of this Lease, but Tenant shall be entitled to a rent
reduction or abatement during the period its possession is interfered with
because of any such taking of the Premises. Such rent reduction or abatement
shall equal the lesser of the Rent that would have been payable by Tenant during
the period of such temporary taking or an amount equal to the award paid by the
condemning authority for such taking. If the taking is for a period of longer
than one year, or for an indefinite period that extends beyond one year, either
Landlord or Tenant may elect to terminate this Lease by notice to the other
given within thirty (30) days after the event giving rise to the right of
termination. No temporary taking of the Land or of any portion of the Building
not including the Premises shall give Tenant the right to any rent abatement,
reduction, or lease termination.

          (15) LANDLORD'S SELF-HELP RIGHTS; LIABILITY AND INDEMNIFICATION.


                                       17

<PAGE>

               (a) Landlord's Right to Cure. If Tenant fails to pay or perform
any of its obligations under this Lease, Landlord may, without waiving or
releasing Tenant from its obligations hereunder, but shall not be required to,
pay or perform such obligations on Tenant's behalf upon ten (10) days notice to
Tenant (except where, in Landlord's opinion, an emergency exists, in which event
no notice shall be required), and Tenant shall reimburse or pay promptly to
Landlord the reasonable cost thereof as Additional Rent. "Reasonable cost," as
used in this Section 17, means Landlord's actual out-of-pocket costs to effect
such cure plus fifteen percent (15%) to cover overhead, administrative and
collection charges. There shall be no abatement of Rent and no liability of
Landlord by reason of any injury to or interference with Tenant's business
arising from Landlord's exercise of its rights under this Paragraph IV(15).

               (b) Tenant's Indemnity. As between Landlord and Tenant, and
except to the extent provided in Paragraph IV(1)(b) and to the limited extent
otherwise provided in this Paragraph IV(15)(b), Landlord shall not be liable for
injury to any person, or for the loss of or damage to any property (including
property of Tenant) occurring in or about the Premises from any cause
whatsoever. Tenant 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 (i) the failure of Landlord to observe any of the terms and
conditions of this Lease where such failure has persisted for an unreasonable
period of time after Tenant has given Landlord written notice of such failure,
or (ii) the negligence or willful misconduct of Landlord. Tenant hereby
indemnifies and holds Landlord harmless, and shall defend Landlord, from and
against any and all claims, charges, liabilities, obligations, penalties, causes
of action, liens, damages, costs and expenses (including attorneys' fees)
arising, claimed, charged or incurred against or by Landlord 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, (b) any breach or default in the
performance of any obligation on Tenant's part to be performed under this Lease,
or (c) any act or omission of Tenant, or any officer, contractor, agent,
employee, guest, licensee, or invitee of Tenant, on or about the Premises,
Building or Land. Such indemnification obligation shall extend to all costs,
attorneys' 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.

               (c) Limit on Landlord's Liability. Landlord and its agents shall
not be liable for any loss or damage to persons or property resulting from fire,
explosion, 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. Landlord 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. Tenant shall give prompt
notice to Landlord in case of casualty or accidents on or about the Premises.


                                       18

<PAGE>

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

          (16) DEPOSIT: Contemporaneously with Tenant's execution and delivery
of this Lease, Tenant shall deposit with Landlord an amount equal to the first
full month's Base Rent, such amount to be held by Landlord during the Term as
security for Tenant's performance of its obligations hereunder. If Tenant fails
to make any payment when due under this Lease, or otherwise defaults with
respect to any provision of this Lease, Landlord may use, apply or retain all or
any portion of said deposit for the payment of such obligation or default, or
for the payment of any other sum to which Landlord may be become obligated by
reason of Tenant's default, or to compensate Landlord for any loss or damage
that Landlord may suffer thereby. If Landlord so uses or applies all or any
portion of said deposit, Tenant shall, within ten (10) days after written demand
therefor from Landlord, deposit cash with Landlord in an amount sufficient to
restore said deposit to the full amount stated in this Paragraph IV(16), and
Tenant's failure to do so shall constitute an Event of Default under this Lease.
If Tenant performs all of Tenant's obligations hereunder, Landlord shall return
said deposit (or so much thereof as has not theretofore been applied by Landlord
as permitted under this Paragraph IV(16)) within sixty (60) days following the
date of expiration of the Term or the date on which Tenant has vacated the
Premises. Landlord shall not be required to keep said security deposit separate
from its general funds, and Tenant shall not be entitled to interest on said
deposit. Landlord shall be entitled to deliver the funds constituting the
deposit hereunder to any purchaser of Landlord's interest in the Premises,
whether by sale, foreclosure, deed in lieu of foreclosure, or otherwise, and
upon such delivery, Landlord shall be discharged from any further liability with
respect to said deposit.

          (17) TRANSFER BY LANDLORD: The term "Landlord," as used in this Lease,
so far as covenants or obligations on the part of Landlord are concerned, shall
be limited to mean and include only the owner or owners, at the time in
question, of the fee title of the Premises or the tenants under any ground
lease, if any. In the event of any transfer, assignment, or other conveyance or
transfers of any such title, Landlord herein named (and in case of any
subsequent transfers or conveyances, the then grantor) shall, provided it also
transfers the security deposit to the transferee, be automatically freed and
relieved from and after the date of such transfer, assignment, or conveyance of
all liability as respects the performance of any covenants or obligations on the
part of Landlord contained in this Lease thereafter to be performed. Without
further agreement, the transferee of such title shall be deemed to have assumed
and agreed to observe and perform any and all obligations of Landlord hereunder,
during its ownership of the Premises. Landlord may transfer its interest in the
Premises without the consent of Tenant and such transfer or subsequent transfer
shall not be deemed a violation on Landlord's part of any of the terms and
conditions of this Lease.

          (18) DELIVERY ON TERMINATION: At the expiration of said term or upon
any sooner termination hereof, Tenant will quit and deliver up the Premises and
all future erections and additions to or upon the same, to Landlord, peaceably,
quietly, broom clean and in at least as good order and condition, reasonable use
and wear thereof, damage by fire and the elements alone excepted, as existing at
the Commencement Date.


                                       19

<PAGE>

          (19) PARKING: For so long as the Alehouse Lease is in effect, Tenant
shall have the right to use all parking areas on the Land and in the Parking
Easement Area. If the Alehouse Lease expires, or is terminated before expiration
of the Term, then Landlord may thereafter equitably allocate such parking areas
between Tenant and any other tenant in the Building, and Tenant's use of such
areas shall be restricted in accordance with such allocation.

                                       V.

                              DEFAULTS AND REMEDIES

          (1) EVENTS OF DEFAULT: In addition to events described elsewhere in
this Lease as constituting a "default" or an "Event of Default," the occurrence
of any one or more of the following events shall constitute an Event of Default
hereunder by Tenant:

               (a) Tenant's failure to make any payment of Rent hereunder as and
when due, where such failure shall continue for a period of five (5) business
days after Tenant's receipt of written notice thereof; provided, that no such
notice shall be required more frequently than twice in any consecutive 12-month
period and, where no notice is required, an Event of Default shall arise
automatically upon the due date for the payment of Rent if Rent is not timely
paid;

               (b) Tenant's failure at any time to carry insurance, with the
coverage and in the amounts, required to be carried pursuant to this Lease;

               (c) Tenant's failure to observe or perform any of the other
covenants or provisions of this Lease to be observed or performed by Tenant,
where such failure shall continue for a period of thirty (30) days after written
notice thereof from Landlord to Tenant (unless this Lease elsewhere provides
that such failure alone constitutes an Event of Default hereunder upon its
occurrence). If the nature of Tenant's default is such that more than 30 days
are reasonably required for its cure, then an Event of Default shall not be
deemed to occur if Tenant shall commence such cure within said 30-day period and
shall thereafter diligently prosecute such cure to completion, but in no event
shall such default extend beyond ninety (90) days. Once notice of default has
been given, no additional notice shall be required in order for Landlord to
exercise remedies under Paragraph V(2) by reason of a recurrence or continuation
of such default; or

               (d) If (i) Tenant or any guarantor of Tenant's obligations
hereunder shall make any general assignment for the benefit of creditors; (ii) a
petition to have Tenant adjudged a bankrupt or a petition for reorganization or
arrangement under any law relating to bankruptcy shall be filed by or against
Tenant or any such guarantor (unless the same is dismissed within 30 days);
(iii) a trustee or receiver is appointed to take possession of substantially all
of Tenant's assets located at the Premises or of Tenant's interest in this
Lease, where possession is not restored to Tenant within 30 days; or (iv)
substantially all of Tenant's assets located at the Premises, or of Tenant's
interest in this Lease, is attached, executed upon, or otherwise judicially
seized, where such seizure is not discharged within 30 days.


                                       20

<PAGE>

          (2) REMEDIES: Upon the occurrence of an Event of Default, Landlord may
exercise any one or more of the remedies set forth in this Paragraph V, or any
other remedy available under applicable law or contained in this Lease.

               (a) Re-Entry. Landlord or Landlord's agents and employees may
immediately or at any time thereafter re-enter the Premises, or any part
thereof, peaceably but using such reasonable force as may be required, and
without judicial process, or by any suitable action or proceeding at law, and
may repossess the Premises, and may remove any persons, fixtures or chattels
therefrom, to the end that Landlord may have, hold and enjoy the Premises. In
the event of any such retaking of possession of Premises by Landlord, Tenant
shall remove all personal property located thereon and upon failure to do so
upon demand of Landlord, Landlord may in addition to any other remedies allowed
by law, remove and store the same in any place selected by Landlord, including
but not limited to a public warehouse, at the expense and risk of Tenant. If
Tenant shall fail to pay all sums due hereunder together with the cost of
storing any such property within thirty (30) days after it has been stored,
Landlord may sell any or all of such property at public or private sale and
shall apply the proceeds of such sale first, to the cost of such sale; second,
to the payment of the charges and expenses for reentry, removal and storage;
third, to the payment of any other sums of money that may be due from Tenant to
Landlord under the terms of this Lease; and the balance, if any, to Tenant.
Tenant hereby waives all claims for damages that may be caused by Landlord's
re-entering and taking possession of Premises or removing and storing or selling
the property of Tenant as herein provided, and will indemnify, defend and save
Landlord harmless from loss, costs or damages to Tenant occasioned thereby, and
no such re-entry shall be considered or construed to be a forcible entry.
RE-ENTRY OR TAKING POSSESSION OF SAID PREMISES BY LANDLORD SHALL NOT BE
CONSTRUED AS AN ELECTION ON ITS PART TO TERMINATE THIS LEASE UNLESS A WRITTEN
NOTICE OF SUCH INTENTION IS GIVEN TO TENANT.

               (b) Continue the Lease. Landlord may elect to continue this Lease
in effect, whether or not Tenant shall have abandoned or Landlord shall have
re-entered the Premises. In such event Landlord shall be entitled to enforce all
Landlord's rights and remedies under this Lease, including the right to recover
the Rent as the same may become due hereunder and to recover damages from Tenant
in accordance with the provisions of this Paragraph V.

               (c) Terminate Lease. Terminate Tenant's right to possession and
use of the Premises by any lawful means, in which case this Lease shall
terminate and Tenant shall immediately surrender possession of the Premises to
Landlord and shall pay Landlord damages as provided at this Paragraph V.

               (d) Monetary Damages and Recovery. Tenant shall have full
liability for payment of all damages directly or indirectly suffered by Landlord
which are proximately caused by any default or breach under this Lease, whether
or not such default or breach is declared by Landlord, and such elements of
damage and recovery by Landlord from Tenant shall specifically include, but not
be limited to:

                    (i) the worth at the time of award of any unpaid Rent which
had been earned at the time of such termination of the Lease or possession; plus


                                       21

<PAGE>

                    (ii) the worth at the time of award of the amount by which
the unpaid Rent which would have been earned after termination of the Lease or
possession until the time of award exceeds the amount of such Rent loss that
Tenant proves could have been reasonably avoided; plus

                    (iii) the worth at the time of award of the amount by which
the unpaid Rent for the balance of the Term after the time of award exceeds the
amount of such Rent loss that Tenant proves could be reasonably avoided; plus

                    (iv) any other amount necessary to compensate Landlord for
all the detriment proximately caused by Tenant's failure to perform its
obligations under this Lease or that in the ordinary course of things would be
likely to result therefrom, including but not limited to, all legal expenses and
other related costs incurred by Landlord following Tenant's default; that
portion of any leasing commission paid by Landlord as a result of this Lease
which is attributable to the unexpired portion of this Lease; all costs incurred
by Landlord in restoring the Premises to the order and condition delivered to
Tenant at the Commencement Date, or in ordinary and customary repairs in
preparing the Premises for reletting; all other ordinary, customary and
reasonable costs incurred by Landlord in reletting the Premises, including,
without limitation, any brokerage commissions, legal fees and the value of
Landlord's time, and Default Interest and late charges as elsewhere herein
provided. Landlord shall mitigate its damages as required by law, and shall not
be entitled to duplicative recovery of costs from both the new tenant and
Tenant, but Landlord shall not be obligated to relet the Premises to a
particular tenant, or, in the event of any such reletting, for refusal or
failure to collect any rent due upon such reletting; and no such refusal or
failure shall operate to relieve Tenant of any liability under this Lease or
otherwise affect any such liability. Landlord at its option and at its own cost
may make such physical changes to the Premises as Landlord, in its sole
discretion, considers advisable or necessary in connection with any such
reletting or proposed reletting, without relieving Tenant of any liability under
this Lease or otherwise affecting Tenant's liability. If there is other unleased
space in the Building, Landlord shall have no obligation to attempt to relet the
Premises prior to leasing such other space in the Building.

               (e) Form of Action for Damages. To the extent permitted under
state law, Landlord may sue periodically for damages as they accrue without
barring a later action for further damages. If the Lease or possession is
terminated and the Premises are subsequently re-let, no portion of the rents
from such new Lease that is in excess of the contracted rent hereunder shall be
treated as an offset to monies owed by defaulting Tenant. All unpaid Rent after
its due date shall bear interest from the date due at the Default Rate in
addition to any late charges and administration costs related to such
delinquency, whether or not a default is declared.

               (f) Deposit. Landlord may apply any deposit held pursuant to
Paragraph IV(16), or pursuant to or in connection with any guarantee of Tenant's
obligations under this Lease, in payment of any sums due from Tenant hereunder.

          (3) CUMULATIVE REMEDIES: The remedies provided for in this Lease are
cumulative and in addition to any other remedy available to Landlord at law or
in equity. In the


                                       22

<PAGE>

event of a breach by Tenant, of any of its obligations under this Lease,
Landlord shall also have the right to obtain an injunction and any other
appropriate equitable relief.

          (4) TERMINATION: Even though Tenant has breached this Lease, Tenant's
contractual obligations under this Lease shall continue in effect for so long as
Landlord does not terminate the same (and even though Landlord may have
terminated Tenant's estate and right to possession) by written notice to Tenant,
and Landlord may enforce all its rights and remedies under this Lease, including
the right to recover the Rent as it becomes due under this Lease. Acts of
maintenance or preservation or efforts to relet the Premises or the appointment
of a receiver upon initiative of Landlord to protect Landlord's interest under
this Lease shall not constitute a termination of Tenant's rights to possession
unless written notice of termination is given by Landlord to Tenant.

                                       VI.

                                 OPTION TO RENEW

          Subject to the conditions stated in this Paragraph VI, Tenant shall
have three options to extend this Lease for additional five (5) year terms
(each, a "Renewal Term"). Each such Renewal Term shall commence the day
following expiration of, as applicable, the initial Term or the preceding
Renewal Term, and shall be for a Base Rent determined pursuant to Paragraph
VI(1), below, and otherwise on and subject to all of the terms and conditions
set forth in this Agreement. Tenant may exercise the option granted hereby by
written notice to Landlord if, but only if, all of the following conditions are
satisfied:

               (a) Tenant shall have given such notice not less than one hundred
eighty (180) days before the last day of the initial Term or Renewal Term to be
extended;

               (b) At the time that Tenant gives such notice, and at the
commencement of the Renewal Term, there shall not exist hereunder any Event of
Default of Tenant.

     Subsequent references to the "Term" of this Lease shall include the Term
and the Renewal Term(s), if any, for which Tenant effectively exercises the
foregoing option. If all of the conditions stated to efficacy of the foregoing
option are not timely satisfied, then this Lease shall expire on the last day
of, as applicable, the expiring initial Term or Renewal Term. As of the date
each Renewal Term begins, this Lease shall be deemed modified in the manner set
forth above, without the necessity of any further agreement or document;
provided, however, that either party to this Lease shall, upon request of the
other party, execute, acknowledge, and deliver an instrument evidencing such
renewal and modification of this Lease.

               (1) RENEWAL TERM BASE RENT: Base Rent shall be increased,
effective on the first day of each Renewal Term (the "Adjustment Date"), by the
cumulative percentage increase, if any, of the Consumer Price Index for
Portland-Salem, All Items, All Urban consumers, as published by the United
States Department of Labor, Bureau of Labor Statistics ("CPI") (base year
1982-84 = 100) ("Index"). If the Index has changed so that the base


                                       23

<PAGE>

year differs from that used in this Paragraph, the Index shall be converted in
accordance with the conversion factor published by the United States Department
of Labor, Bureau of Labor Statistics, to the 1982-84 base. If the Index is
discounted or revised during the Term, such other government index or
computation with which it is replaced shall be used in order to obtain
substantially the same result as would be obtained if the Index had not been
discounted or revised. The Index published at least, but closest to, four months
before the Commencement Date of this Lease shall be the Beginning Index. The
Indexes published at least, but closest to, four months before the Adjustment
Date shall be the Comparison Index. On the Adjustment Date, the Base Rent shall
be adjusted if application of the following formula produces an increase
therein:

          The Base Rent in effect on the Commencement Date shall be multiplied
by a fraction, the numerator of which is the current Comparison Index and the
denominator of which is the Beginning Index;

provided, that in no event shall Base Rent be decreased on an Adjustment Date.

                                      VII.


                                       24

<PAGE>

                                      VII.

                                    HOLD OVER

          If Tenant holds over after the Expiration Date or earlier termination
of the Term without the express written consent of Landlord, Tenant shall become
a tenant at sufferance only, at a rental rate equal to two hundred percent
(200%) of the Base Rent in effect upon the date of such expiration or
termination (prorated on the basis of a thirty-day month and actual days
elapsed), and otherwise subject to the terms, covenants, and conditions herein
specified, so far as applicable. Acceptance by Landlord of rental after such
expiration or earlier termination shall not result in a renewal or extension of
this Lease. The foregoing provisions of this Paragraph VII are in addition to
and do not affect Landlord's right of re-entry or any rights of Landlord
hereunder or as otherwise provided by law.

                                      VIII.

                                  ATTORNEY FEES

          In the event of arbitration, suit or action hereon, the prevailing
party shall be entitled to recover such sums as a trial court may adjudge
reasonable as attorney fees herein, and in the event any appeal is taken from
any judgment or decree in such suit or action, the prevailing party shall be
entitled to recover such further sum as the appellate court shall adjudge
reasonable as attorney fees on such appeal. This right shall apply to any legal
proceeding, including any proceeding under the U.S. Bankruptcy Code and any
arbitration proceeding. The term "attorneys fees" shall be construed to include
the reasonable fees of attorneys, paralegals, expert witnesses including
accountants, appraisers and brokers, and all other fees, costs, and expenses
actually incurred, and reasonably necessary, in connection with the conclusion
of those proceedings, to be determined and awarded by the judge or arbitrator
actually resolving the issues pending between the parties.

                                       IX.

                                     NOTICES

          Any notices, demands, or other communications to be given under this
Agreement shall be in writing and personally delivered or sent by certified
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.


                                       25

<PAGE>

          If to Landlord: Mac Tarnahan Limited Partnership
                          11416 SW Lynnridge Ave
                          Portland, OR 97225
                          Attn: Scott MacTarnahan

          with copy to:   Parisi & Parisi, P.C.
                          Suite 100 The Annand Building
                          1630 S.W. Morrison Street
                          Portland, Oregon 97205
                          Attn: Robin B. Parisi, Esq.

          If to Tenant:   PBC Aqquisition, LLC
                          c/o Pyramid Breweries Inc.
                          91 South Royal Brougham Way
                          Seattle, WA 98134
                          Attention: Chief Financial Officer


                                       26

<PAGE>

                                       X.

                   SUBORDINATION; ATTORNMENT; QUIET ENJOYMENT

          (1) SUBORDINATION, NONDISTURBANCE: Landlord represents and warrants to
Tenant that Landlord is the fee owner of the Land and Building, and that the
only mortgage lien encumbering the Land and Building is set forth in that
certain Deed of Trust dated ___________________ and recorded in the records of
Multnomah County, Oregon under Recording No. ___________________, in which
Sterling Savings Bank is the beneficiary ("Lender"). Contemporaneously with the
execution of this Lease by Landlord and Tenant, Lender and Tenant have executed
and delivered a subordination, nondisturbance and attornment agreement (the
"Initial SNDA"). This Lease, and all rights of Tenant hereunder, are and shall
also be, upon the election of the holder thereof, but subject to the quiet
enjoyment provisions of Paragraph X(3), below, subject and subordinate to all
mortgages, trust deeds and other financing and security instruments
("Mortgages"), that may hereafter affect the Premises, and to all renewals,
modifications, replacements and extensions of any such Mortgages. This Paragraph
shall be self-operative, and no further instrument of subordination shall be
required to effect a subordination hereunder; provided, however, that in
confirmation of such subordination Tenant shall promptly execute, acknowledge or
deliver any instrument that Landlord or any such mortgagee may reasonably
request to evidence such subordination. A request that Tenant execute an
instrument substantially equivalent to the SNDA shall be deemed reasonable.

          (2) ATTORNMENT: If the interest of Landlord under this Lease is
transferred, whether through possession, foreclosure or delivery of a new lease
or deed, then at the request of such party so succeeding to Landlord's rights
(herein called "Successor Landlord"), and subject to compliance with the
subordination, nondisturbance and attornment agreement between Tenant and Lender
executed contemporaneously herewith (or with any subordination, nondisturbance
and attornment agreement hereafter entered as contemplated at Paragraph (X)(1)),
Tenant shall attorn to and recognize such Successor Landlord as Tenant's
Landlord under this Lease and shall promptly execute and deliver any instrument
that such Successor Landlord may reasonably request to evidence such attornment.
Upon such request for attornment, Tenant's rights hereunder shall continue in
full force and effect as a direct Lease between the Successor Landlord and
Tenant upon all of the terms, conditions and covenants as set forth in this
Lease so long as Tenant is not in default.

          (3) QUIET ENJOYMENT: So long as Tenant pays all Rents and complies
with all of the terms and conditions of this Lease, Tenant shall peaceably and
quietly have, hold and enjoy the Premises. This covenant shall, subject to the
provisions of this Lease, be binding upon the subsequent successors in interest
of Landlord's interest in this Lease including those to whom Tenant is
subordinate and/or to whom Tenant agreed to attorn pursuant to Paragraphs XI(1)
and (2).

          (4) ESTOPPEL CERTIFICATES: Within ten (10) days following any written
request that Landlord may make from time to time, Tenant shall execute and
deliver to Landlord and/or any prospective mortgagee or purchaser designated by
Landlord, a statement certifying: (a) the date of commencement of this Lease;
(b) the fact that this Lease is unmodified and in full force and effect


                                       27

<PAGE>

(or, if there have been modifications hereto, that this Lease is in full force
and effect, and stating the date and nature of such modifications); (c) the date
to which the rental and other sums payable under this Lease have been paid; (d)
that there are no current defaults under this Lease by Landlord except as
specified in such statement; and (e) such other factual matters concerning this
Lease as may be reasonably requested. Landlord and Tenant intend that any
statement delivered by Tenant pursuant to this Section may be relied upon by any
mortgagee, beneficiary, purchaser, or prospective purchaser of the Premises or
any interest therein. Tenant's failure to deliver such statement within such
time shall be conclusive upon Tenant (i) that this Lease is in full force and
effect, without modification except as may be represented by Landlord, (ii) that
there are no uncured defaults in the Landlord's performance, and (iii) that no
more than one month's rental has been paid in advance. If Landlord desires to
finance or refinance the Premises, or any part thereof, Tenant shall, within ten
(10) days following Landlord's request therefor, deliver to any lender
designated by Landlord such financial information of Tenant as may be requested
by such lender and as may be reasonably available, provided, that if such
financial information is confidential, Landlord and such lender, as a condition
to disclosure thereof, shall have executed and delivered to Tenant a
commercially reasonable non-disclosure agreement in form and substance
reasonably acceptable to Tenant. All such information shall be received in
confidence and shall be used only for the purpose herein set forth.

          (5) MORTGAGEE PROTECTION: If there occurs any default on the part of
Landlord, Tenant will give notice by registered or certified mail to any
beneficiary of a deed of trust or mortgage covering the Premises of whom
Landlord has notified Tenant, and shall offer such beneficiary or mortgagee a
reasonable opportunity to cure the default, including time to obtain possession
of the Premises by power of sale or a judicial foreclosure, if such should prove
necessary to effect a cure, provided the beneficiary or mortgagee commences the
cure within sixty (60) days and diligently prosecutes the cure to completion.

          (6) MODIFICATION FOR LENDER: If, in connection with obtaining
construction, interim, or permanent financing related to the Premises, a lender
shall request reasonable modifications in this Lease as a condition to such
financing, Tenant will not unreasonably withhold, delay, or defer its consent
thereto provided that such modifications do not in any way adversely increase
Tenant's obligations, or decrease Tenant's rights, hereunder.

                                       XI.

                            MISCELLANEOUS PROVISIONS

          (1) SUCCESSORS OR ASSIGNS: Except as otherwise provided herein, all
the terms, conditions, covenants and agreements of this Lease shall extend to
and be binding upon Landlord, Tenant and their respective heirs, administrators,
executors, successors, subtenants, concessionaires, assigns and marital
communities, if any, and upon any person or persons coming into ownership or
possession of any interest in the Premises by operation of law or otherwise.

          (2) INTEREST ON PAST DUE OBLIGATIONS: Any amount due from Tenant to
Landlord hereunder which is not paid within five (5) business days after the
date when due shall


                                       28

<PAGE>

bear interest at the Default Rate from the date due until paid, but the payment
of such interest shall not excuse or cure any default by Tenant, and interest
shall be compensation for the loss of Tenant's use of the past due funds, and
shall be in addition to late or delinquent charges which are reimbursements for
administrative costs associated with collecting and processing such past due
amounts. An administrative charge of $25.00 will be assessed for any check from
Tenant which is returned for any reason.

          (3) TERMS AND HEADINGS: The words "Landlord" and "Tenant" as used
herein shall include the plural as well as the singular. Words used in any
gender include other genders. The Section headings of this Lease are not a part
of this Lease and shall have no effect upon the construction or interpretation
of any part hereof.

          (4) TIME: Except as otherwise specifically provided herein, time is of
the essence with respect to the performance of every provision of this Lease in
which time of performance is a factor.

          (5) AMENDMENTS: No provision of this Lease may be amended or added to
except by an agreement in writing signed by the parties hereto or their
respective successors in interest.

          (6) PARTIAL INVALIDITY: If any term, covenant, or condition of this
Lease or the application thereof to any person or circumstance is, to any
extent, invalid or unenforceable, the remainder of this Lease, or the
application of such terms, covenant or condition to persons or circumstances
other than those as to which it is held invalid or unenforceable, shall not be
affected thereby and each term, covenant or condition of this Lease shall be
valid and be enforced to the fullest extent permitted by law.

          (7) RECORDING: Tenant shall not record or file this Lease, or any
assignment or security document pertaining to this Lease or all or any part of
Tenant's interest therein without the prior written consent of Landlord, which
consent may be subject to such conditions as Landlord shall deem appropriate.
However, upon the request of Landlord or Tenant, both parties shall execute a
memorandum or "short form" of this Lease for the purposes of recordation in a
form customarily used for such purposes. Said memorandum or short form of this
Lease shall describe the parties, the Premises and the Lease Term (including the
renewal options), shall recite Tenant's rights in and to the Parking Easement
Area and also be recorded against the Parking Easement Area, and shall
incorporate this Lease by reference.

          (8) ENTIRE AGREEMENT: This Lease embodies the entire agreement and
understanding of the parties hereto as to the subject matter contained herein.
There are no restrictions, promises, representations, warranties, covenants, or
undertakings other than those expressly set forth or referred to in such
documents. This Lease supersedes all prior agreements and understandings among
the parties with respect to the subject matter hereof.

          (9) SURVIVAL OF OBLIGATIONS: The covenants, duties, and obligations of
Tenant contained herein that by their nature do not depend upon Tenant's
possession of the Premises, shall survive the expiration or earlier termination
of this Lease and such expiration or termination shall


                                       29

<PAGE>

not excuse Tenant from the full performance thereof.

          (10) GUARANTY: This Lease shall not be effective until the Guaranty
appended to this Lease has been executed and delivered to Landlord by the
guarantor named therein.

     IN WITNESS WHEREOF, the parties have executed this Lease on the Effective
Date.

LANDLORD:                               MACTARNAHAN LIMITED PARTNERSHIP, DBA
                                        HARMER COMPANY, an Oregon limited
                                        partnership

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


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


TENANT:                                 PBC ACQUISITION, LLC, A DELAWARE LIMITED
                                        LIABILITY COMPANY


                                        By:
                                            ------------------------------------
                                        Its:
                                             -----------------------------------


                                       30

<PAGE>

                                    EXHIBIT A

                          PARKING EASEMENT DESCRIPTION

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.

<PAGE>

                                    EXHIBIT B

                                  BUILDING PLAN

<PAGE>

                                LEASE GUARANTEE

     The undersigned executes and delivers this Guarantee (this "Guarantee") in
consideration, and as an inducement for the granting, execution and delivery, of
that certain Lease covering Premises located at 2730 NW 31st Avenue, Portland,
Oregon, dated July 31, 2004 (the "Lease"), between MACTARNAHAN LIMITED
PARTNERSHIP, dba HARMER COMPANY, an Oregon limited partnership, the Landlord
therein named ("Landlord") and PORTLAND BREWING COMPANY, an Oregon corporation,
the Tenant therein named ("Tenant"), the Tenant's interest under which is being
assigned, contemporaneously herewith, to __ _______________, and in further
consideration of the sum or One Dollar ($1.00), and other good and valuable
consideration paid by Landlord to the undersigned. PBC ACQUISITION, LLC, a
Delaware limited liability company. Terms with initial capitals used in this
Guarantee shall, if not defined herein, have the meanings given them in the
Lease.

     The undersigned ("Guarantor") hereby guarantees to Landlord, its successors
and assigns,

     (a) the full and prompt payment of Rent and of any and all other sums and
charges payable by the Tenant, its successors and assigns under the Lease
including, without limitation, all sums payable by Tenant in respect of its
indemnity obligation under Paragraph IV(15)(b) of the Lease, upon an Event of
Default under Paragraph V of the Lease, and/or in respect of Landlord's costs
and attorneys fees under Paragraph VIII of the Lease; and

     (b) the full performance and observance of all of the other covenants,
terms, conditions and agreements therein provided to be performed and observed
by the Tenant, its successors and assigns;

(the obligations guaranteed under the foregoing clauses (a) and (b) are herein
referred to as the "Guaranteed Obligations"). Guarantor hereby covenants and
agrees to and with Landlord, its successors and assigns:

     1. If Tenant, its successors or assigns, shall at any time default in
payment or other performance of the Guaranteed Obligations, Guarantor shall
forthwith pay such Rent and other sums and charges to Landlord, its successors
or assigns, and any arrears thereof, and shall forthwith faithfully perform and
fulfill all of such other terms, covenants, conditions and provisions.

     2. This Guarantee is an absolute and unconditional Guarantee of payment and
of performance. It shall be enforceable against Guarantor, its successors and
assigns, without the necessity of any suit or proceedings on Landlord's part of
any kind or nature whatsoever against Tenant, its successors or assigns, and
without the necessity of any notice of non-payment, non-performance or
non-observance or of any notice of acceptance of this Guarantee, or of any other
notice or demand to which Guarantor might otherwise be entitled, all of which
Guarantor hereby expressly waives. The validity of this Guarantee and the
obligations of Guarantor hereunder shall in no way be terminated, affected or
impaired by reason of assertion or the failure to assert by Landlord against
Tenant, or Tenant's successors and assigns, of any of the rights or remedies
reserved to Landlord pursuant to the provisions of the Lease.


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<PAGE>

     3. This Guarantee shall be a continuing Guarantee, and the liability of
Guarantor hereunder shall in no way be affected, modified or diminished by
reason of any assignment, renewal, modification or extension of the Lease or by
reason of any modification or waiver of or change in any of the terms,
covenants, conditions or provisions of the Lease, or by reason of any extension
of time that may be granted by Landlord to Tenant, its successors or assigns, or
by reason of any dealings, transactions, matters or things occurring between
Landlord and Tenant, its successors or assigns, whether or not notice thereof is
given to Guarantor.

     4. Guarantor represents and warrants to Landlord, as a material inducement
to Landlord to make the Lease, that Guarantor has a financial interest in Tenant
and, if Guarantor is a corporation, that the execution and delivery of this
Guarantee is not in contravention of its charter or by-laws and has been duly
authorized by its Board of Directors.

     5. All of the Landlord's rights and remedies under the Lease or under this
Guarantee are intended to be distinct, separate and cumulative and no such right
and remedy therein or herein mentioned is intended to be in exclusion of or a
waiver of any of the others.

     6. Guarantor shall pay all costs of collection, including reasonable
attorneys' fees and all costs of suit (whether incurred before or at trial, on
appeal, or in connection with any petition for review or bankruptcy proceeding)
that Lender may incur in enforcing this Guarantee. Guarantor shall reimburse
lender for all expenses incurred in connection with the foregoing, including
reasonable attorney's fees, even though no suit or action is filed hereon, or on
the Lease. If a suit or action is filed, however, the amount of attorneys' fees
shall be fixed by the panel, court or courts in which the suit or action,
including any appeal thereof, is tried, heard or decided.

     7. If Guarantor consists of two or more persons or entities, then each of
Guarantor's obligations hereunder shall be the joint and several obligations of
each.

GUARANTOR:

PYRAMID BREWERIES, INC.,
a Washington corporation


By:
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Title:
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Date
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