<PAGE>

                                                                   EXHIBIT 10.16
                                COMMERCIAL LEASE


Date:            _______________________

Between:         NORTH COUNTRY BREWERY, INC.
                 a Delaware corporation,
                 66 SE Morrison Street
                 Portland, OR 97214
                 Attn:  James W. Bernau, President

And:             STEWART'S ICE CREAM COMPANY, INC.
                 PO Box 435
                 Saratoga Springs, NY 12866
                 Attn:  William Dake, President

   Landlord leases to Tenant and Tenant leases from Landlord the following
described property (the "Premises") on the terms and conditions stated below:

   A building space of approximately 21,750 square feet on approximately 3.65
   acres, more or less, more particularly described as follows:

   Building 3, Saratoga Dairy, Excelsior Ave., Saratoga Springs, New York. [The
   exact legal description to be provided after survey].

   Tenant to exclusively occupy approximately 16,750 square feet including cold
   storage, existing coolers, warehouse, loading dock, and ground floor west
   office space.  Tenant to share common areas with print shop and laboratory
   which shall remain until February 1997 and thereafter Tenant shall occupy
   the entire space unless otherwise agreed.

   The Premises shall also include the unlimited right to use springwater form
   the natural spring located on the premises.  Tenant to bear all expense to
   plumb the spring to allow its use.

SECTION 1.  OCCUPANCY

   1.1   ORIGINAL TERM.  This lease shall commence on the "Term Commencement
Date" as provided herein.  The Term Commencement Date shall be the later of
February 15, 1996 or the date Tenant is provided access for commencement of
the construction necessary to adapt the building to Tenant's use.  On and
after the Term Commencement Date, Landlord shall permit Tenant and Tenant's
employees, agents, suppliers, contractors and workers to enter the Premises
to enable Tenant to do such things as may be required by Tenant to make the
Premises ready for Tenant's occupancy.  Tenant and its employees, agents,
contractors, workers, and suppliers and their activities at the Premises
shall not interfere with or delay the performance of any activities by
Landlord or its agents or contractors.  Any such entry into the Premises
shall be at Tenant's risk and Tenant shall indemnify, defend and hold
Landlord harmless from any claims arising from the activities of Tenant, or
its employees, agents, suppliers, contractors and workers on the Premises.


PAGE 1 - COMMERCIAL LEASE

                      DONALDSON, ALBERT, TWEET, CONNOLLY,
                                 HANNA & MUNIZ
                                   PO BOX 968
                                SALEM, OR 97308
                                 (503) 585-2055
<PAGE>

The Term Commencement Date of this lease shall be subject to change in the
event that all approvals for use and occupancy required by Tenant are not
obtained and all securities sold necessary to fund the operation of the
business prior to February 15, 1996. The Term Commencement Date shall be
postponed one day for each day after February 15, 1996 that all approvals are
not obtained, provided, however, that if all approvals are not obtained by
June 15, 1996, Landlord may elect to terminate this lease by written notice
to Tenant, and shall promptly refund to Tenant all sums paid by Tenant to
Landlord pursuant to the terms of this Lease, except those sums Tenant shall
pay for extensions of the Lease Commencement Date as set forth in paragraph
2.4, below.

   1.2   Possession.  Tenant's right to possession and obligations under the
lease shall commence on February 15, 1996 or on such later date as the
Premises are available for possession by Tenant if possession is not given on
the opening day of the term.  Landlord shall have no liability for delays in
delivery of possession and Tenant will not have the right to terminate this
lease because of delay in delivery of possession except as hereinafter
provided.  If Landlord is not able to give Tenant possession of the Premises
ready for immediate occupancy on or before April 1, 1996 subject only to
delays caused by matters not within Landlord's reasonable control, Tenant
shall have the right to terminate this Lease upon fifteen (15) days written
notice to Landlord, whereupon Landlord, if the premises are not substantially
completed within such notice period, shall promptly refund to Tenant all sums
paid by Tenant to Landlord pursuant to the terms of this Lease.

   1.3   RENEWAL OPTION.  If the lease is not in default at the time each
option is exercised or at the time the renewal term is to commence, Tenant
shall have the option to renew this lease for three (3) successive terms of
five (5) years each, as follows:

   (1)   Each of the renewal terms shall commence on the day following
expiration of the preceding term.

   (2)   The option may be exercised by written notice to Landlord given not
less than 180 days prior to the last day of the expiring term.  The giving of
such notice shall be sufficient to make the lease binding for the renewal
term without further act of the parties. Landlord and Tenant shall then be
bound to take the steps required in connection with the determination of rent
as specified below.  If Tenant shall fail to give any such notice within such
one hundred eighty (180) day time limit, Tenant's right to exercise its
option shall nevertheless continue until thirty (30) days after Landlord
shall have given Tenant notice of Landlord's election to terminate such
option, and Tenant may exercise such option at any time until the expiration
of said thirty (30) day period.  It is the intention of the parties to avoid
forfeiture of Tenant's rights to extend the term of this Lease under any of
the options set forth in this Section 1.3 through inadvertent failure to give
notice thereof within the time limits prescribed. During any extension of the
term all Sections of this Lease will be effective, and references to term
will incorporate the extensions.

   (3)   The terms and conditions of the lease for each renewal term shall be
identical with the original term except for rent and except that Tenant will
no longer have any option to renew this lease that has been exercised.  Rent
for a renewal term shall be the rental during the last year of the preceding
original or renewal term adjusted as provided herein.


PAGE 2 - COMMERCIAL LEASE

                      DONALDSON, ALBERT, TWEET, CONNOLLY,
                                 HANNA & MUNIZ
                                   PO BOX 968
                                SALEM, OR 97308
                                 (503) 585-2055
<PAGE>

SECTION 2.  RENT

   2.1   BASE RENT.  During the original term, Tenant shall pay to Landlord
as base rent the sum of $8,333.33 per month.  Rent shall commence on the Term
Commencement Date.  Rent shall be payable on the fifteenth day of each month
in advance at such place as may be designated by Landlord except that rent
for the first month has been paid upon the execution of this lease, and
Landlord acknowledges receipt of this sum.

   2.2   ADDITIONAL RENT.  All taxes, insurance costs, utility charges and
repair costs that Tenant is required to pay by this lease.

   2.3   ESCALATION.  During the initial lease period and the option periods,
the base rent provided in Section 2.1 shall be increased on the anniversary
date of the lease by a percentage equal to 75% of the percentage change in
the Consumer Price Index published by the United States Bureau of Labor
Statistics of the United States Department of Labor.  Comparisons shall be
made using the index entitled U.S. City Average - All Items and Major Group
Figures for All Urban Consumers (1982-84=100), or on the nearest comparable
data on changes in the cost of living if such index is no longer published.
The increase will begin on the fifteenth day of the month of February 1997,
and will be based on the CPI increase during the initial year of the lease.
The first change shall be determined by comparison of the figure for December
1, 1995, with that of each succeeding year.  In no event, however, shall base
rent be reduced below that payable during the first year of this lease.  The
preceding formula shall be used for each additional renewal term as
appropriate.

   2.4   LEASE CONSIDERATION.  Tenant shall pay to Landlord the sum of
$50,000.00 on execution of this lease as consideration for holding the
Premises off the market during the due diligence period provided for herein,
and as rent from the date the lease is signed and the rent commencement date.
The $50,000.00 payment shall be non-refundable unless Tenant is unable to
secure approval from the United States Securities and Exchange Commission
("SEC") for the sale of securities to be sold by Willamette Valley Brewing
Company for commencement of this business.  Both Tenant and Willamette Valley
Brewing Company will use reasonable best efforts to secure such approval.
Landlord understands that the proposed securities sale is to be fully
underwritten and withdraw of the underwriters will result in a failure to
obtain SEC approval.  Tenant shall have until February 15, 1996 to obtain
such approval.  Tenant shall notify Landlord when such approval is obtained
and the securities sold so as to allow the lease to proceed. If SEC approval
is not obtained and the securities sold by February 15, 1996, Tenant shall
have the right to extend the Lease Commencement date until March 15, 1996
upon notice to Landlord. Thereafter, Tenant may request three additional
thirty day extensions upon payment of $4,000.00 for each additional
extension. If approvals are not obtained and the securities sold by June 15,
1996, this lease shall terminate, and Landlord shall promptly refund the
$50,000.00 deposit.

   2.5   RENT DURING THE CONSTRUCTION PERIOD.  Tenant shall pay rent of
$4,000.00 per month for the first three months after the Rent Commencement
Date or until the brewery becomes operational, whichever first occurs.  The
brewery shall be deemed operational at the completion of its first successful
pilot brew.

SECTION 3.  USE OF THE PREMISES


PAGE 3 - COMMERCIAL LEASE

                      DONALDSON, ALBERT, TWEET, CONNOLLY,
                                 HANNA & MUNIZ
                                   PO BOX 968
                                SALEM, OR 97308
                                 (503) 585-2055
<PAGE>

   3.1   PERMITTED USE.  The Premises shall be used as an facility for
brewery, winery, warehouse, office, on premises sales and storage purposes
and for no other purpose without the consent of Landlord, which consent shall
not be withheld unreasonably.

   3.2   RESTRICTIONS ON USE.  In connection with the use of the Premises,
Tenant shall:

   (1)   Conform to all applicable laws and regulations of any public
authority affecting the premises and the use, and correct at Tenant's own
expense any failure of compliance created through Tenant's fault or by reason
of Tenant's use, but Tenant shall not be required to make any structural
changes to effect such compliance, unless created by Tenant's structural
changes to the building.

   (2)   Refrain from any use that would be reasonably offensive to other
tenants or owners or users of neighboring premises or that would tend to
create a nuisance or damage the reputation of the premises.  Notwithstanding
this provision, Landlord acknowledges that Tenant's use will occasion certain
odors related to brewery and winery uses, and such odors shall not violate
this provision.

   (3)   Refrain from loading the electrical system or floors beyond the
point considered safe according to a competent engineer or architect chosen
by Tenant from a list of three (3) provided by Landlord.  Tenant shall choose
within ten (10) days after Landlord submits the list to it or Landlord may
appoint anyone on the list.

   (4)   Tenant shall not cause or permit any Hazardous Substance to be
spilled, leaked, disposed of, or otherwise released on or under the Premises
in violation of any applicable law.  Tenant may use or otherwise handle on
the Premises only those Hazardous Substances typically used or sold in the
prudent and safe operation of the business specified in Section 3.1.  Tenant
may store such Hazardous Substances on the Premises only in quantities
necessary to satisfy Tenant's reasonably anticipated needs.  Tenant shall
comply with all Environmental Laws and exercise the highest degree of care in
the use, handling, and storage of Hazardous Substances and shall take all
practicable measures to minimize the quantity and toxicity of Hazardous
Substances used, handled, or stored on the Premises.  Upon the expiration or
termination of this Lease, Tenant shall remove all of the Hazardous
Substances from the Premises except those placed there by Landlord, or which
are otherwise the primary responsibility of Landlord.  The term Environmental
Laws shall mean any federal, state, or local statute, regulation, or
ordinance or any judicial or other governmental order pertaining to the
protection of health, safety or the environment. The term Hazardous Substance
shall mean any hazardous, toxic, infectious or radioactive substance, waste,
and material as defined or listed by any Environmental Law and shall include,
without limitation, petroleum oil and its fractions.

   (5)   Landlord warrants that it has no knowledge of the presence of any
regulated or environmentally hazardous substances in, on or within reasonable
proximity to the demised premises, nor of any existing violations of any
laws, rules, regulations or ordinances, including without limitation, any
environmental laws against or upon the demised premises.

   (6)   Tenant shall indemnify, defend and hold Landlord harmless from all
claims, demands, liabilities, costs, expenses, damages, and fines of any
nature arising directly or indirectly from or as a result of the presence or
existence of contamination upon the Premises as a result of


PAGE 4 - COMMERCIAL LEASE

                      DONALDSON, ALBERT, TWEET, CONNOLLY,
                                 HANNA & MUNIZ
                                   PO BOX 968
                                SALEM, OR 97308
                                 (503) 585-2055
<PAGE>

the activities of Tenant or its sublessees or assignees, or by the failure of
Tenant or its sublessees or assignees to comply with any and all
Environmental Laws.  The forgoing indemnification shall survive the
termination or expiration of this Lease.

   (7)   Landlord shall indemnify, defend and hold Tenant harmless from all
claims, demands, liabilities, costs, expenses, damages, and fines of any
nature arising directly or indirectly from or as a result of the presence or
existence of contamination upon the Premises as a result of the activities of
Landlord, or by the failure of Landlord to comply with any and all
Environmental Laws, except those caused or created by Tenant.  The forgoing
indemnification shall survive the termination or expiration of this Lease.

SECTION 4.  REPAIRS AND MAINTENANCE

   4.1   LANDLORD'S OBLIGATIONS.  The following shall be the responsibility
of Landlord:

   (1)   Except as provided herein, Landlord shall keep the following in good
order, condition and repair: the foundations, exterior walls and roof of the
Property, all components of electrical, other utilities, mechanical,
plumbing, heating and air conditioning systems and facilities located in the
Property which are used in common by tenants of the Project.  It is
anticipated that there will be no systems or facilities in common use after
February 1997.  Systems or facilities used in common with Tenant's subtenant
shall not be the responsibility of Landlord.  Landlord shall not be obligated
to maintain or repair windows, doors, plate glass or the interior surfaces of
exterior walls.  Landlord shall commence to make repairs within ten (10) days
after receipt of written notice from Tenant of the need for such repairs, and
thereafter pursue such repairs to completion.  Landlord shall diligently
pursue to completion the performance of all repairs or maintenance that are
the responsibility of Landlord under the Lease.

   (2)   Landlord is providing the building in its current condition "As Is"
except for latent defects which require repair as provided above.  Landlord
shall not be required to correct structural defects caused by Tenant's
remodel of the structure for Tenant's uses.

   4.2   TENANT'S OBLIGATIONS.  The following shall be the responsibility of
Tenant:

   (1)   All other repairs to the premises which Landlord is not required to
make under Section 4.1.

   (2)   Tenant shall have no obligation to maintain any portion of the
premises it does not occupy or for which the occupant does not pay Tenant
rent.  Tenant shall have no maintenance obligations until the rent
commencement date.

   4.3   LANDLORD'S INTERFERENCE WITH TENANT.  In performing any repairs,
replacements, alterations, or other work performed on or around the Premises,
Landlord shall not cause unreasonable interference with use of the Premises
by Tenant.  In determining whether Landlord has unreasonably interfered, the
court shall consider, among other factors, the nature of the repair, other
alternatives for completing the repair, the cost of the other repair
alternatives, and what caused the need for repairs.  If Landlord unreasonably
interferes with Tenant's use of the Premises while performing repairs,
replacements, alterations, or other work around the Premises, the Tenant may
abate rent for that period, after delivering to Landlord five (5) days
written notice citing the


PAGE 5 - COMMERCIAL LEASE

                      DONALDSON, ALBERT, TWEET, CONNOLLY,
                                 HANNA & MUNIZ
                                   PO BOX 968
                                SALEM, OR 97308
                                 (503) 585-2055
<PAGE>

condition which Tenant claims unreasonably interferes with its use of the
premises.  Tenant may not abate rent if Landlord remedies the condition
within the five (5) day period.  Nothing shall prevent Landlord from
declaring Tenant in default if Landlord does not, in fact, unreasonably
interfere with the Tenant's use and occupancy of the Premises.

   4.4   REIMBURSEMENT FOR REPAIRS ASSUMED.  If either party fails or refuses
to make repairs that are required by this Section 4, the other party may make
the repairs and charge the actual costs of repairs to the first party.  Such
expenditures by Landlord shall be reimbursed by Tenant on demand together
with interest at the rate of 8% per annum from the date of expenditure by
Landlord.  Such expenditures by Tenant may be deducted from rent and other
payments subsequently becoming due or, at Tenant's election, collected
directly from Landlord with interest at a rate of 8% per annum until paid.
Except in an emergency creating an immediate risk of personal injury or
property damage, neither party may perform repairs which are the obligation
of the other party and charge the other party for the resulting expense
unless at least ten (10) days before work is commenced, the defaulting party
is given notice in writing outlining with reasonable particularity the
repairs required, and such party fails within that time to initiate such
repairs in good faith.

   4.5   INSPECTION OF PREMISES.  Landlord shall have the right to inspect
the Premises at any reasonable time or times to determine the necessity of
repair.  Whether or not such inspection is made, the duty of Landlord to make
repairs shall not mature until a reasonable time after Landlord has received
from Tenant written notice of the repairs that are required.  Landlord may
not inspect such portion of the premises as are subject to "bond room"
requirements without a representative of Tenant present.

SECTION 5.  ALTERATIONS

   5.1   ALTERATIONS PROHIBITED.  Tenant shall make no improvements or
alterations on the Premises of any kind without first obtaining Landlord's
written consent, which consent shall not be unreasonably withheld.  All
alterations shall be made in a good and workmanlike manner, and in compliance
with applicable laws and building codes.  As used herein, "alterations"
includes the installation of computer and telecommunications wiring, cables,
and conduit which requires structural changes to the building.

   5.2   OWNERSHIP AND REMOVAL OF ALTERATIONS.  Except as provided in
Section 15.2 or otherwise all improvements and alterations performed on the
Premises by either Landlord or Tenant shall be the property of Landlord when
installed.  Improvements and alterations installed by Tenant shall, at
Landlord's option, be removed by Tenant and the premises restored, provided,
however, that Tenant need not remove the structural alterations related
agreed to by Landlord unless Landlord specifically conditions its approval of
the alteration upon its removal at the end of the lease term.  Landlord
agrees that the roof height need to be restored at surrender of the premises.

SECTION 6.  INSURANCE

   6.1   LIABILITY INSURANCE.  During the Lease Term, Tenant shall
maintain a policy of commercial general liability insurance (sometimes known as
broad form comprehensive general liability insurance) insuring Tenant against
liability for bodily injury, property damage (including


PAGE 6 - COMMERCIAL LEASE

                      DONALDSON, ALBERT, TWEET, CONNOLLY,
                                 HANNA & MUNIZ
                                   PO BOX 968
                                SALEM, OR 97308
                                 (503) 585-2055
<PAGE>

loss of use of property) and personal injury arising out of the operation,
use or occupancy of the Property.  Tenant shall name Landlord as an
additional insured under such policy.  The initial amount of such insurance
shall be One Million Dollars ($1,000,000) per occurrence and shall be subject
to periodic increase by Landlord based upon inflation, increased liability
awards, recommendation of Landlord's professional insurance advisers and
other relevant factors.  The liability insurance obtained by Tenant under
this Paragraph 6.1 shall (i) be primary and non-contributing; (ii) contain
cross-liability endorsements; and (iii) insure Landlord against Tenant's
performance of its indemnity obligations herein, if the matters giving rise
to the indemnity result from the negligence of the Tenant. The amount and
coverage of such insurance shall not limit Tenant's liability nor relieve
Tenant of any other obligation under this Lease. Landlord shall also obtain
comprehensive public liability insurance in an amount and with coverage
determined by Landlord insuring Landlord against liability arising out of
ownership, operation, use or occupancy of the Property but in no event less
than $1,000,000.00 per occurrence. The policy obtained by Landlord shall not
be contributory and shall not provide primary insurance.

   6.2   PROPERTY INSURANCE.  During the Lease Term, Landlord shall maintain
policies of insurance covering loss of or damage to the Property in the full
amount of its replacement value.  Such policy shall contain an Inflation
Guard Endorsement and shall provide protection against all perils included
within the classification of fire, extended coverage, vandalism, malicious
mischief, special extended perils (all risk), sprinkler leakage and any other
perils which Landlord deems reasonably necessary.  Landlord shall have the
right to obtain flood and earthquake insurance, if reasonably necessary in
his judgment.  Landlord shall not obtain insurance for Tenant's fixtures or
equipment or building improvements installed by Tenant on the Property.
During the Lease Term, Landlord shall also maintain a rental income insurance
policy, with loss payable to Landlord, in an amount equal to one year's Base
Rent, plus estimated real property taxes and insurance premiums.  Tenant
shall not do or permit anything to be done which invalidates any insurance
policies.

   6.3   PAYMENT OF PREMIUMS.  Tenant shall pay all premiums for the
insurance policies described in Paragraphs 6.1 and 6.2 (whether obtained by
Landlord or Tenant) within fifteen (15) days after Tenant's receipt of a copy
of the premium statement or other evidence of the amount due, except Landlord
shall pay all premiums for non-primary comprehensive public liability
insurance which Landlord elects to obtain as provided in Paragraph 6.1.  If
insurance policies maintained by Landlord cover improvements on real property
other than the Project, Landlord shall deliver to Tenant a statement of the
premium applicable to the Property showing in reasonable detail how Tenant's
share of the premium was computed.  If the Lease Term expires before the
expiration of an insurance policy maintained by Landlord, Tenant shall be
liable for Tenant's prorated share of the insurance premiums.  Before the
Commencement Date, Tenant shall deliver to Landlord a copy of any policy of
insurance which Tenant is required to maintain under this Section 6. At least
thirty (30) days prior to the expiration of any such policy, Tenant shall
deliver to Landlord a renewal of such policy. As an alternative to providing
a policy of insurance, Tenant shall have the right to provide Landlord a
certificate of insurance, executed by an authorized officer of the insurance
company, showing that the insurance which Tenant is required to maintain
under this Section 6 is in full force and effect and containing such other
information which Landlord reasonably requires. During the first year of the
lease, Tenant shall pay only eighty-two percent (82%) of such premium with
the balance to be paid by the other tenants in the building.

   6.4   GENERAL INSURANCE PROVISIONS.


PAGE 7 - COMMERCIAL LEASE

                      DONALDSON, ALBERT, TWEET, CONNOLLY,
                                 HANNA & MUNIZ
                                   PO BOX 968
                                SALEM, OR 97308
                                 (503) 585-2055
<PAGE>

           (1)  Any insurance which Tenant is required to maintain under this
Lease shall include a provision which requires the insurance carrier to give
Landlord not less than thirty (30) days written notice prior to any
cancellation or modification of such coverage.

           (2)  If Tenant fails to deliver any policy, certificate or renewal
to Landlord required under this Lease within the prescribed time period or if
any such policy is canceled or modified during the Lease Term without
Landlord's consent, Landlord, following fifteen (15) days written notice to
Tenant of such event and Tenant's failure to cure within that fifteen day
period, may obtain such insurance, in which case Tenant shall reimburse
Landlord for the cost of such insurance within fifteen (15) days after
receipt of a statement that indicates the cost of such insurance.

           (3)  Tenant shall maintain all insurance required under this Lease
with companies holding a "General Policy Rating" of A-12 or better, as set
forth in the most current issue of "Best Key Rating Guide".  Landlord and
Tenant acknowledge the insurance markets are rapidly changing and that
insurance in the form and amounts described in this Section 4.04 may not be
available in the future.  Tenant acknowledges that the insurance described in
this Section 6 is for the primary benefit of Landlord.  If at any time during
the Lease Term, Tenant is unable to maintain the insurance required under the
Lease, Tenant shall nevertheless maintain insurance coverage which is
customary and commercially reasonable in the insurance industry for Tenant's
type of business, as that coverage may change from time to time.  Landlord
makes no representation as to the adequacy of such insurance to protect
Landlord's or Tenant's interests.  Therefore, Tenant shall obtain any such
additional property or liability insurance which Tenant deems necessary to
protect Landlord and Tenant.

            (4)  Unless prohibited under any applicable insurance policies
maintained, Landlord and Tenant each hereby waive and release any and all
rights of recovery against the other, or against the officers, employees,
agents or representative of the other, for loss of or damage to its property
or the property of others under its control, if such loss or damage is
covered by any insurance policy in force (whether or not described in this
Lease) at the time of such loss or damage.  The release and waiver contained
in this section is intended to release and waive the liability of each party
for the consequences of its negligent acts or omissions.  Upon obtaining the
required policies of insurance, Landlord and Tenant shall give notice to the
insurance carriers of this mutual waiver of subrogation.

            (5)  Landlord shall abide by conditions 1-4 with regard to any
insurance policy he is required to maintain under the terms of this Lease.

SECTION 7.  TAXES; UTILITIES

       7.1  PROPERTY TAXES.  Tenant shall pay as due all taxes on its
personal property located on the Premises.  Tenant shall pay as due all real
property taxes and special assessments levied against the Premises.  As used
herein, real property taxes includes any fee or charge relating to the
ownership, use, or rental of the Premises, other than taxes on the net income
of Landlord or Tenant and excluding estate, gift inheritance and franchise
taxes of landlord.


PAGE 8 - COMMERCIAL LEASE

                      DONALDSON, ALBERT, TWEET, CONNOLLY,
                                 HANNA & MUNIZ
                                   PO BOX 968
                                SALEM, OR 97308
                                 (503) 585-2055
<PAGE>

   7.2   CONTEST OF TAXES.  Tenant shall be permitted to contest the amount
of any tax or assessment as long as such contest is conducted in a manner
that does not cause any risk that Landlord's interest in the Premises will be
foreclosed for nonpayment.  Landlord shall cooperate in any reasonable manner
with such contest by Tenant.

   7.3   PRORATION OF TAXES.  Tenant's share of real property taxes and
assessments for the years in which this lease commences or terminates shall
be prorated based on the portion of the tax year that this lease is in
effect.  For the first year after the rent commencement date, Tenant shall
pay eighty-two percent (82%) of such taxes with the balance paid by the
remaining occupants of the building or Landlord.

   7.4   NEW CHARGES OR FEES.  If a new charge or fee relating to the
ownership or use of the Premises or the receipt of rental therefrom or in
lieu of property taxes is assessed or imposed, then, to the extent permitted
by law, Tenant shall pay such charge or fee.  Tenant, however, shall have no
obligation to pay any income, profits, or franchise tax levied on the net
income derived by Landlord from this lease.

   7.5   PAYMENT OF UTILITIES CHARGES.  Tenant shall pay when due all charges
for services and utilities incurred in connection with the use, occupancy,
operation, and maintenance of the Premises, including (but not limited to)
charges for fuel, water, gas, electricity, sewage disposal, power,
refrigeration, air conditioning, telephone, and janitorial services.  If any
utility services are provided by or through Landlord, charges to Tenant shall
be comparable with prevailing rates for comparable services.  If the charges
are not separately metered or stated, Landlord shall apportion the charges on
an equitable basis, and Tenant shall pay its apportioned share on demand.
For the first year after the rent commencement date, Tenant shall pay
eighty-two percent (82%) of such charges with the balance paid by the
remaining occupants of the building or Landlord, unless separate meters for
use shall be installed.  For the first year after the rent commencement date,
Tenant shall pay eighty-two percent (82%) of all charges for common area
maintenance.

   7.6   INTERRUPTION OF ESSENTIAL SERVICES.  In the event of an interruption
of any essential service ("essential services" shall be defined as gas,
electricity, water, or sewer), Landlord shall use reasonable diligence to
restore such service.  If there is an interruption in any essential service
to the Premises and such interruption is not the result of the negligence or
willful misconduct of Tenant, its agents, employees, invitees, visitors,
sublessees, or assigns, and such interruption continues for more than five
(5) days after receipt by Landlord of written notice from Tenant, Tenant
shall be entitled to an abatement of all rent and other sums due hereunder
with respect to that portion of the Premises rendered unusable by Tenant
until such time as such essential service is restored to an extent that such
portion is again rendered usable by Tenant.  In addition to the foregoing,
Tenant shall have the right to terminate this Lease by giving written notice
to Landlord in the event there is an interruption in any essential service
that has not been cured within thirty (30) days following the date of the
first occurence of such interruption, ten (10) days notice of termination is
given to Landlord, and the essential service has not been restored prior to
the date for termination given in the notice.

SECTION 8.  DAMAGE AND DESTRUCTION

   8.1   PARTIAL DAMAGE.  If the Premises are partly damaged and Section 8.2
does not apply, the Premises shall be repaired by Landlord at Landlord's
expense.  Repairs shall be


PAGE 9 - COMMERCIAL LEASE

                      DONALDSON, ALBERT, TWEET, CONNOLLY,
                                 HANNA & MUNIZ
                                   PO BOX 968
                                SALEM, OR 97308
                                 (503) 585-2055
<PAGE>

accomplished with all reasonable dispatch subject to interruptions and delays
from labor disputes and matters beyond the control of Landlord and shall be
performed in accordance with the provisions of Section 4.3.

   8.2   DESTRUCTION.  If the Premises are destroyed or damaged such that the
cost of repair exceeds 50% of the value of the structure before the damage or
such that the damages renders a substantial section of the structure
untenantable, either party may elect to terminate the lease as of the date of
the damage or destruction by notice given to the other in writing not more
than 45 days following the date of damage.  In such event all rights and
obligations of the parties shall cease as of the date of termination, and
Tenant shall be entitled to the reimbursement of any prepaid amounts paid by
Tenant and attributable to the anticipated term.  If neither party elects to
terminate, Landlord shall proceed to restore the Premises to substantially
the same form as prior to the damage or destruction.  Work shall be commenced
as soon as reasonably possible and thereafter shall proceed without
interruption except for work stoppages on account of labor disputes and
matters beyond Landlord's reasonable control, and be completed within ninety
(90) days therafter. If the Landlord fails to complete repairs within the
time provided, Tenant may elect to terminate this Lease after thirty (30)
days after Tenant's notice to terminate is delivered to Landlord.
Nevertheless, this Lease shall not terminate if Landlord substantially
completes the repairs and delivers occupancy to Tenant within the thirty
(30) day notice period.

   8.3   RENT ABATEMENT.  Rent shall be abated during the repair of any damage
to the extent the premises are untenantable.

   8.4   DAMAGE LATE IN TERM.  If damage or destruction to which Section 8.2
would apply occurs within one year before the end of the then-current lease
term, Tenant may elect to terminate the lease by written notice to Landlord
given within 30 days after the date of the damage.  Such termination shall
have the same effect as termination by Landlord under Section 9.1(1).

SECTION 9.  EMINENT DOMAIN

   9.1   PARTIAL TAKING.  If a portion of the Premises is condemned and
Section 9.2 does not apply, the lease shall continue on the following terms:

   (1)   Except as otherwise provided, Landlord shall be entitled to all of
the proceeds of condemnation, and Tenant shall have no claim against Landlord
as a result of the condemnation.

   (2)   Landlord shall proceed as soon as reasonably possible to make such
repairs and alterations to the Premises as are necessary to restore the
remaining Premises to a condition as comparable as reasonably practicable to
that existing at the time of the condemnation.  If condemnation occurs and
this Lease is not terminated, restoration work shall be commenced as soon as
reasonably possible and thereafter shall proceed without interruption except
for work stoppages on account of labor disputes and matters beyond Landlord's
reasonable control, and be completed within ninety (90) days thereafter.  If
the Landlord fails to complete restoration within the time provided, Tenant
may elect to terminate this Lease after thirty (30) days after Tenant's
notice to terminate is delivered to Landlord.  Nevertheless, this Lease shall
not terminate if Landlord substantially completes the restoration and
delivers occupancy to Tenant within the thirty (30) day notice period.


PAGE 10 - COMMERCIAL LEASE

                      DONALDSON, ALBERT, TWEET, CONNOLLY,
                                 HANNA & MUNIZ
                                   PO BOX 968
                                SALEM, OR 97308
                                 (503) 585-2055

<PAGE>

    (3)  After the date on which title vests in the condemning authority or an
earlier date on which alterations or repairs are commenced by Landlord to
restore the balance of the Premises in anticipation of taking, the rent shall
be reduced in proportion to the reduction in value of the Premises as an
economic unit on account of the partial taking.  If the parties are unable to
agree on the amount of the reduction of rent, each shall appoint one appraiser,
and each appraiser shall appoint a third appraiser, and the appraisers shall
determine the rental value.

    (4)  If a portion of Landlord's property not included in the Premises is
taken, and severance damages are awarded on account of the Premises, or an
award is made for detriment to the Premises as a result of activity by a
public body not involving a physical taking of any portion of the Premises,
this shall be regarded as a partial condemnation to which Sections 9.1(1) and
9.1(3) apply, and the rent shall be reduced to the extent of reduction in
rental value, if any, of the Premises as though a portion had been physically
taken.

    9.2  TOTAL TAKING.  If a condemning authority takes all of the Premises or
a portion sufficient to render the remaining premises reasonably unsuitable for
the use that Tenant was then making of the premises (including access and
parking), the lease shall terminate as of the date the title vests in the
condemning authorities.  Such termination shall have the same effect as a
termination under Section 9.1(1).

    9.3  COMPENSATION.  Any compensation awarded due to any condemnation
whether for the whole or a part of the Premises, shall be apportioned between
the parties according to applicable law.  Nothing contained herein shall
preclude Tenant from prosecuting any claim against the condemning authority in
any such condemnation proceedings for the cost of its moving expenses, loss of
business, or depreciation to, damage to, cost of removal of, or the value of
its trade fixtures, equipment, furniture and other personal property included
in such taking.  If this Lease is terminated in such taking, Tenant shall have
no claim against Landlord on account of the termination.

    9.4  SALE IN LIEU OF CONDEMNATION.  Sale of all or part of the premises to
a purchaser with the power of eminent domain in the face of a threat or
probability of the exercise of the power shall be treated for the purposes of
this Section 9 as a taking by condemnation.

SECTION 10.  LIABILITY AND INDEMNITY

    10.1 LIENS

    (1)  Except with respect to activities for which Landlord is responsible,
Tenant shall pay as due all claims for work done on and for services rendered
or material furnished to the Premises, and shall keep the Premises free from
any liens.  If Tenant fails to pay any such claims or to discharge any lien,
Landlord may do so and collect the cost as additional rent.  Any amount so
added shall bear interest at the rate of 8% per annum from the date expended by
Landlord and shall be payable on demand.  Such action by Landlord shall not
constitute a waiver of any right or remedy which Landlord may have on account
of Tenant's default.

    (2)  Tenant may withhold payment of any claim in connection with a
good-faith dispute over the obligation to pay, as long as Landlord's property
interests are not jeopardized.  If a lien is filed as a result of nonpayment,
Tenant shall, within 10 days after knowledge of the filing, secure the
discharge of the lien or deposit with Landlord cash or sufficient corporate
surety bond or other


PAGE 11 - COMMERCIAL LEASE

                      DONALDSON, ALBERT, TWEET, CONNOLLY,
                                 HANNA & MUNIZ
                                   PO BOX 968
                                SALEM, OR 97308
                                 (503) 585-2055
<PAGE>

surety satisfactory to Landlord in an amount sufficient to discharge the lien
plus any costs, attorney fees, and other charges that could accrue as a result
of a foreclosure or sale under the lien.

    10.2  TENANT'S INDEMNITY  Tenant shall indemnify Landlord against and hold
Landlord harmless from any and all costs, claims or liability arising from:
(a)  Tenant's use of the Property; (b)  the conduct of Tenant's business or
anything else done or permitted by Tenant, its agents, employees or invitees to
be done in or about the Property, including any contamination of the Property
or any other property resulting from the presence or use of Hazardous Material
caused or permitted by Tenant; (c) any breach or default in the performance of
Tenant's obligations under the Lease; (d) any misrepresentation of breach of
warranty by Tenant under this Lease; or (e) other acts or omissions of Tenant,
its agents, employees or invitees.  Tenant shall defend Landlord against any
such cost, claim or liability at Tenant's expense with counsel reasonably
acceptable to Landlord.  As a material part of the consideration to Landlord,
Tenant assumes all risk of damage to property or injury to persons in or about
the Property arising from any cause, and Tenant hereby waives all claims in
respect thereof against Landlord, except for any claim arising out of
Landlord's negligence or willful misconduct.  As used in this section, the term
"Tenant" shall include Tenant's employees, agents, contractors, invitees,
subleases, and assigns if applicable.

   10.3  LANDLORD'S INDEMNITY  Landlord shall defend Tenant against any
uninsured cost, claim or liability at Landlord's expense with counsel
reasonably acceptable to Tenant, or at Tenant's election and if allowed by
Landlord's insurer, Landlord shall reimburse Tenant for any legal fees or costs
incurred by Tenant arising out of Landlord's gross negligence or willful
misconduct related to the Property or this Lease.  As used in this section, the
term "Landlord" shall included Landlord's employees, agents, contractors,
invitees, sublessees and assigns if applicable.

SECTION 11.  QUIET ENJOYMENT; MORTGAGE PRIORITY

    11.1  LANDLORD'S WARRANTY.  Landlord warrants that it is the owner of the
Premises and has the right to lease them free of all encumbrances except those
set forth on the attached schedule entitled "Exceptions to Title".  Subject to
these exceptions Landlord will defend Tenant's right to quiet enjoyment of the
Premises from the lawful claims of all persons during the lease term.

    11.2  MORTGAGE PRIORITY.  Intentionally deleted.

    11.3  SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT.  This Lease shall be
subject and subordinate to the lien and security interest of any mortgage or
deed of trust now or hereafter placed so as to encumber the Leased Premises;
provided, however, that as an express condition to any such subordination by
Tenant, the mortgagee or beneficiary under such mortgage or deed of trust must
agree in writing with Tenant that, in the event of a foreclosure sale or a deed
in lieu of foreclosure (i) Tenant's rights under the Lease will be recognized
and (ii) Tenant's possession of the Leased Premises will not be disturbed
provided Tenant is not then in default under this Lease.  Subject to the
foregoing, Tenant shall upon request attorn to any person or entity succeeding
to the interest of Landlord by foreclosure or otherwise.  With respect to any
mortgage or deed of trust currently encumbering the Leased Premises as of the
commencement of this Lease, Landlord must secure from the mortgagee or
beneficiary thereunder an agreement in favor of Tenant in a form and substance
acceptable to Tenant and containing those terms set out in (i) and (ii) of this
section above.


PAGE 12 - COMMERCIAL LEASE

                       DONALDSON, ALBERT, TWEET, CONNOLLY,
                                 HANNA & MUNIZ
                                   PO BOX 968
                                SALEM, OR 97308
                                 (503) 585-2055
<PAGE>

    11.4 ESTOPPEL CERTIFICATE.  Either party will, within 20 days after notice
from the other, execute and deliver to the other party a certificate stating
whether or not this lease has been modified and is in full force and effect and
specifying any modifications or alleged breaches by the other party.  The
certificate shall also state the amount of monthly base rent, the dates to
which rent has been paid in advance, and the amount of any security deposit or
prepaid rent.  Failure to deliver the certificate within the specified time
shall be conclusive upon the party from whom the certificate was requested that
the lease is in full force and effect and has not been modified except as
represented in the notice requesting the certificate.

    11.5  WAIVER OF LANDLORD'S LIEN.  From time to time, some or all of
Tenant's Property may be financed by or owned by someone other than Tenant.  To
the extent that any of Tenant's property is financed or owned by someone other
than Tenant or Tenant's Affiliate, Landlord agrees that such property is not
Landlord's property no matter how the same is affixed to the Premises or used
by Tenant and agrees to recognize the rights of the lender, owner, secured
creditor or lessor ("Secured Party") of Tenant's property.  Landlord hereby
waives any claim arising by way of any Landlord's lien (whether created by
statute or by contract or otherwise) with respect to the interest of any
Secured Party in Tenant's property and agrees, if confirmation of such waiver
is requested by Tenant or Secured Party, to promptly sign and deliver to such
Secured Party a waiver of any lien Landlord may have on the interest of any
Secured Party in Tenant's property ("Landlord's Lien Waiver").  If such
confirmation is requested by Tenant or Secured Party, Landlord agrees to execute
and deliver Landlord's Lien Waiver within fifteen days from Tenant's or Secured
Party's request therefor or Landlord will have conclusively been deemed to have
granted confirmation of Landlord's Lien Waiver thereafter and Landlord agrees
that Tenant and Secured Party may thereafter rely thereon and Landlord shall be
estopped from raising any claim on lien on Tenant's property for which the
Landlord's Lien Waiver was requested.

    11.6  FINANCIAL INFORMATION.  Tenant shall provide financial information
reasonably required by Landlord to allow Landlord to finance or refinance the
Premises.  Tenant shall meet this requirement if it provides to Landlord its
most recently prepared annual financial report to shareholders, provided it is
not more than one year old, together with any quarterly reports which update
the annual financial report.

SECTION 12.  ASSIGNMENT AND SUBLETTING

    Tenant may assign this Lease or sublet the Leased Premises or any portion
thereof without Landlord's consent to any corporation which controls, is
controlled by, or is under common control with Tenant, or to any corporation,
joint business or joint operation resulting from a merger, consolidation or
agreement with Tenant, or to any person or entity which acquires substantially
all the assets of Tenant as a going concern (collectively, an "Affiliate");
provided, however, that the Affiliate assumes in writing all of Tenant's
obligations under the Lease and provided further that Tenant shall remain
primarily liable under this Lease.

    It is further understood that Tenant may be periodically offering for sale
shares of ownership or similar interests in its corporation or a corporation
with which it may merge or consolidate on a public or private basis for the
purposes of expanding, capitalizing and or financing Tenant's business and no
prohibitions or conditions on assignment or subletting shall apply to such
activities.


PAGE 13 - COMMERCIAL LEASE

                       DONALDSON, ALBERT, TWEET, CONNOLLY,
                                 HANNA & MUNIZ
                                   PO BOX 968
                                SALEM, OR 97308
                                 (503) 585-2055

<PAGE>

    Tenant shall also be permitted to grant subleases as to minor portions of
the Premises to consultants or others providing services to support necessary
to the development and operation of Tenant's continuing business at the
Premises.  For the purposes of this section, a minor portion of the premises
shall not exceed twenty-five percent (25%) of the premises in total sublet
space.

    Except as provided above, Tenant may not assign or sublet to another user
(the "Assignee") the Premises or this Lease except with the written consent of
Landlord, which shall not be unreasonably withheld.  The Landlord may consider,
among other factors, the following in deciding whether to grant consent:  the
financial capability of the proposed Assignee; the whether the intended use of
the proposed Assignee is consistent with this Lease and other surrounding uses
and available services; the experience and capability of the proposed Assignee
for the intended business use of the property; and whether the Landlord's
lender will allow the assignment.

    Tenant may also sublet to current occupants of the building after the first
year anniversary of the rent commencement date, on terms mutually agreed
between Tenant and the proposed subtenant.

    Landlord shall have the right to transfer, assign and convey, in whole or
in part, any or all of the right, title and interest to the Premise provided
such transferee or assignee shall be bound by the terms, covenants and
agreements herein contained, and expressly assumes and agrees in writing to
perform the covenants and agreements of landlord herein contained.

SECTION 13.  DEFAULT

    The following shall be events of default:

    13.1  DEFAULT IN RENT.  Failure of Tenant to pay any rent or other charge
within 10 days after written notice from Landlord, provided, however, that
Landlord shall not be obligated to give notice that rent is due more than twice
in any calendar year.  After the second written notice in any calendar year,
Tenant shall be in default without further written notice.

    13.2  DEFAULT IN OTHER COVENANTS.  Failure of Tenant to comply with any
term or condition or fulfill any obligation of the lease (other than the
payment of rent or other charges) within 30 days after written notice by
Landlord specifying the nature of the default with reasonable particularity.
If the default is of such a nature that it cannot be completely remedied within
the 30-day period, this provision shall be complied with if Tenant begins
correction of the default within the 30-day period and thereafter proceeds with
reasonable diligence and in good faith to effect the remedy as soon as
practicable.

    13.3  INSOLVENCY.  An assignment by Tenant for the benefit of creditors;
the filing by Tenant of a voluntary petition in bankruptcy; an adjudication
that Tenant is bankrupt or the appointment of a receiver of the properties of
Tenant; the filing of any involuntary petition of bankruptcy and failure of
Tenant to secure a dismissal of the petition within 30 days after filing;
attachment of or the levying of execution on the leasehold interest and failure
of Tenant to secure discharge of the attachment or release of the levy of
execution within 30 days shall constitute a default.  If Tenant consists of two
or more individuals or business entities, the events of default specified in
this Section 13.3 shall apply to each individual unless within 10 days after an
event of default occurs, the remaining individuals produce evidence
satisfactory to Landlord that they have unconditionally acquired the interest
of the one causing the default.  If the lease has been assigned,

PAGE 14 - COMMERCIAL LEASE

                       DONALDSON, ALBERT, TWEET, CONNOLLY,
                                 HANNA & MUNIZ
                                   PO BOX 968
                                SALEM, OR 97308
                                 (503) 585-2055
<PAGE>

the events of default so specified shall apply only with respect to the one
then exercising the rights of Tenant under the lease.

SECTION 14.  REMEDIES ON DEFAULT

    14.1  TERMINATION.  In the event of a default the lease may be terminated
at the option of Landlord by written notice to Tenant.  Whether or not the
lease is terminated by the election of Landlord or otherwise, Landlord shall be
entitled to recover damages from Tenant for the default, and Landlord may
reenter, take possession of the premises, and remove any persons or property by
legal action or by self-help with the use of reasonable force and without
liability for damages and without having accepted a surrender.

    14.2  RELETTING.  Following reentry or abandonment, Landlord may relet the
Premises and in that connection may make any suitable alterations or refurbish
the Premises, or both, or change the character or use of the Premises, but
Landlord shall not be required to relet for any use or purpose other than that
specified in the lease or which Landlord may reasonably consider injurious to
the Premises, or to any tenant that Landlord may reasonably consider
objectionable.  Landlord may relet all or part of the Premises, alone or in
conjunction with other properties, for a term longer or shorter than the term
of this lease, upon any reasonable terms and conditions, including the granting
of some rent-free occupancy or other rent concession.

    14.3  DAMAGES.  In the event of termination or retaking of possession
following default, Landlord shall be entitled to recover immediately, without
waiting until the due date of any future rent or until the date fixed for
expiration of the lease term, the following amounts as damages:

    (1)  The loss of rental from the date of default until a new tenant is, or
with the exercise of reasonable efforts could have been, secured and paying out.

    (2)  The reasonable costs of reentry and reletting including without
limitation the cost of any cleanup, refurbishing, removal of Tenant's property
and fixtures, costs incurred under Section 14.5, or any other expense
occasioned by Tenant's default including but not limited to, any remodeling or
repair costs, attorney fees, court costs, broker commissions, and advertising
costs.

    (3)  Any excess of the value of the rent and all of Tenant's other
obligations under this lease over the reasonable expected return from the
premises for the period commencing on the earlier of the date of trial or the
date the premises are relet, and continuing through the end of the term.  The
present value of future amounts will be computed using a discount rate equal to
the prime loan rate of major Oregon banks in effect on the date of trial.

    14.4  RIGHT TO SUE MORE THAN ONCE.  Landlord may sue periodically to
recover damages during the period corresponding to the remainder of the lease
term, and no action for damages shall bar a later action for damages
subsequently accruing.

    14.5  LANDLORD'S RIGHT TO CURE DEFAULTS.  If Tenant fails to perform any
obligation under this lease, Landlord shall have the option to do so after 30
days' written notice to Tenant.  All of Landlord's expenditures to correct the
default shall be reimbursed by Tenant on demand with


PAGE 15 - COMMERCIAL LEASE

                       DONALDSON, ALBERT, TWEET, CONNOLLY,
                                 HANNA & MUNIZ
                                   PO BOX 968
                                SALEM, OR 97308
                                 (503) 585-2055

<PAGE>

interest at the rate of 8% annum from the date of expenditure by Landlord.
Such action by Landlord shall not waive any other remedies available to
Landlord because of the default.

    14.6  REMEDIES CUMULATIVE.  The foregoing remedies shall be in addition to
and shall not exclude any other remedy available to Landlord under applicable
law.

SECTION 15.  SURRENDER AT EXPIRATION

    15.1  CONDITION OF PREMISES.  Upon expiration of the lease term or earlier
termination on account of default, Tenant shall deliver all keys to Landlord
and surrender the Premises in first-class condition and broom clean ordinary
wear and tear excepted.  Alterations constructed by Tenant with permission from
Landlord shall not be removed or restored to the original condition unless the
terms of permission for the alteration so require.  Tenant's obligations under
this section shall be subordinate to the provisions of Section 8 relating to
destruction and Section 9 relating to eminent domain.

    15.2  FIXTURES

    (1)  All fixtures placed upon the Premises during the term, other than
Tenant's trade fixtures, shall, at Landlord's option, become the property of
Landlord.  If Landlord so elects, Tenant shall remove any or all fixtures that
would otherwise remain the property of Landlord, and shall repair any physical
damage resulting from the removal.  If Tenant fails to remove such fixtures,
Landlord may do so and charge the cost to Tenant with interest at the legal
rate from the date of expenditure.

    (2)  Prior to expiration or other termination of the lease term Tenant
shall remove all furnishings, furniture, and trade fixtures that remain its
property.  If Tenant fails to do so, this shall be an abandonment of the
property, and Landlord may retain the property and all rights of Tenant with
respect to it shall cease or, by notice in writing given to Tenant within 20
days after removal was required, Landlord may elect to hold Tenant to its
obligation of removal.  If Landlord elects to require Tenant to remove,
Landlord may effect a removal and place the property in public storage for
Tenant's account.  Tenant shall be liable to Landlord for the cost of removal,
transportation to storage, and storage, with interest at the legal rate on all
such expenses from the date of expenditure by Landlord.

    (3)  Notwithstanding any other provision of this lease, Tenant shall have
the right to place its trade fixtures and other equipment at the Premises and
such shall be and remain the property of Tenant at all times.  Tenant shall
have the right to remove such trade fixtures and equipment upon the termination
or expiration of this Lease provided that Tenant is not in default and that
Tenant shall repair any damage to the Premises caused by such removal.

    15.3  HOLDOVER

    (1)  If Tenant does not vacate the Premises at the time required, Landlord
shall have the option to treat Tenant as a tenant from month to month, subject
to all of the provisions of this lease except the provisions for term and
renewal and at a rental rate equal to rent last paid by Tenant during the
original term, adjusted by any escalation provision contained in this lease, or
to eject Tenant from the Premises and recover damages caused by wrongful
holdover.  Failure of Tenant to remove fixtures, furniture, furnishings, or
trade fixtures that Tenant is required to remove under


PAGE 16 - COMMERCIAL LEASE

                       DONALDSON, ALBERT, TWEET, CONNOLLY,
                                 HANNA & MUNIZ
                                   PO BOX 968
                                SALEM, OR 97308
                                 (503) 585-2055

<PAGE>

this lease shall constitute a failure to vacate to which this section shall
apply if the property not removed will substantially interfere with occupancy
of the Premises by another tenant or with occupancy by Landlord for any purpose
including preparation for a new tenant.

    (2)  If a month-to-month tenancy results from a holdover by Tenant under
this Section 15.3, the tenancy shall be terminable at the end of any monthly
rental period on written notice from Landlord given not less than 10 days prior
to the termination date which shall be specified in the notice.  Tenant waives
any notice that would otherwise be provided by law with respect to a
month-to-month tenancy.

SECTION 16.  LANDLORD'S DEFAULT

    Except where the provisions of this Lease grant Tenant an express exclusive
remedy, if Landlord shall fail to perform or observe any covenant, term,
provision or condition of this Lease and such default should continue beyond a
period of ten (10) days as to a monetary default or thirty (30) days (or such
longer period as is reasonably necessary to remedy a default provided Landlord
shall continuously and diligently pursue such remedy at all times until such
default is cured, or in the event of an emergency, such shorter reasonable time
period as is warranted by the nature of the emergency, but in no event shall
such shorter time period be less than forty-eight hours) as to a non-monetary
default, after in each instance receipt of a written notice (the "Notice")
thereof is given by Tenant to Landlord, then, in any such event Tenant, upon
expiration of the applicable grace period, shall have the right (a) to cure
such default, and Landlord shall reimburse Tenant on demand for all sums
expended in so curing the default plus interest thereon at the rate of eight
percent (8%) per annum until paid (and if not paid by Landlord on demand,
Tenant may offset such amount due from the rent and all other sums due
hereunder until paid) and (b) to commence such actions at law or in equity to
which Tenant may be entitled.

SECTION 17.  MISCELLANEOUS

    17.1  NONWAIVER.  Waiver by either party of strict performance of any
provision of this lease shall not be a waiver of or prejudice the party's right
to require strict performance of the same provision in the future or of any
other provision.

    17.2  ATTORNEY FEES.  If suit or action is instituted in connection with
any controversy arising out of this lease, the prevailing party shall be
entitled to recover in addition to costs such sum as the court may adjudge
reasonable as attorney fees at trial, on petition for review, and on appeal.

    17.3  NOTICES.  Any notice required or permitted under this lease shall be
given when actually delivered by overnight courier or telecopy or 48 hours
after deposited in United States mail as certified mail addressed to the
address first given in this lease or to such other address as may be specified
from time to time by either of the parties in writing.

    17.4  SUCCESSION.  Subject to the above-stated limitations on transfer of
Tenant's interest, this lease shall be binding on and inure to the benefit of
the parties and their respective successors and assigns.

PAGE 17 - COMMERCIAL LEASE

                       DONALDSON, ALBERT, TWEET, CONNOLLY,
                                 HANNA & MUNIZ
                                   PO BOX 968
                                SALEM, OR 97308
                                 (503) 585-2055

<PAGE>

    17.5  RECORDATION.  This lease may be recorded at the option of Tenant,
provided that Tenant pays the cost or recording a memorandum of the lease.

    17.6  ENTRY FOR INSPECTION.  Landlord shall have the right to enter upon
the Premises at any time upon reasonable advance notice to determine Tenant's
compliance with this lease, to make necessary repairs to the building or to the
Premises,  or in the last 6 months of the term show the Premises to any
prospective tenant or purchaser, and in addition shall have the right, at any
time during the last two months of the term of this lease, to place and
maintain upon the Premises notices for leasing or selling of the Premises.
Landlord shall comply with all "bond room" restrictions in exercising its right
of entry.

    17.7  INTEREST ON RENT AND OTHER CHARGES.  Any rent or other payment
required of Tenant by this lease shall, if not paid within 10 days after it is
due, bear interest at the rate of 8% per annum (but not in any event at a rate
greater than the maximum rate of interest permitted by law) from the due date
until paid.

    17.8  PRORATION OF RENT.  In the event of commencement or termination of
this lease at a time other than the beginning or end of one of the specified
rental periods, then the rent shall be prorated as of the date of commencement
or termination and in the event of termination for reasons other than default,
all prepaid rent shall be refunded to Tenant or paid on its account.

    17.9  TIME OF ESSENCE.  Time is of the essence of the performance of each
of Tenant's obligations under this lease.

    17.10  PARKING.  Tenant may improve and stripe the parking areas around the
building at its cost and expense.  For the first year after the rent
commencement date of this lease, Tenant shall be entitled to use eighty-two
percent (82%) of the spaces created and may designate certain spaces for its
exclusive use.

    17.11 CONTINGENCIES.  This lease is subject to:

         (1)  Approval of Tenant's use by all zoning and planning authorities.

         (2)  Approval by Landlord of Tenant's plans for alternation of the
Premises.

         (3)  Satisfactory completion of Tenant's feasibility study and due
diligence.

         (4)  Successful completion by Tenant of a public common stock offering.

Determination of fulfillment of contingencies shall be made by Tenant at its
sole judgment.  If any contingency is not met, Tenant shall so notify Landlord
in writing and this lease shall be of no further force or effect.  All
contingencies shall be deemed fulfilled if Tenant obtains a building permit and
commences alteration of the leased premises.

    17.12  SIGNAGE.  Tenant may erect such signs as seems to it appropriate,
provided, however, that all such signs shall comply with all laws, regulations
and ordinances.

    17.13   APPROVALS.  It is specifically understood and agreed that as
regards any approvals

PAGE 18 - COMMERCIAL LEASE

                       DONALDSON, ALBERT, TWEET, CONNOLLY,
                                 HANNA & MUNIZ
                                   PO BOX 968
                                SALEM, OR 97308
                                 (503) 585-2055

<PAGE>

or matters to be performed to the satisfaction of a party or only with a
party's consent, that party shall not unreasonably withhold or delay its
approval or indication of satisfaction or consent, unless specifically
otherwise provided herein.

    17.14  DUTY OF GOOD FAITH.  Landlord and Tenant shall have at all times a
right and duty to act reasonably and in good faith and mitigate any damages or
claims arising out of this Lease or in connection with the use, condition or
occupancy of the Premises or an occupance of a default in any terms of this
Lease.  The party claiming lack of good faith or failure to mitigate shall have
the burden to prove such a claim.

    17.15  RENT COMMENCEMENT DATE.  The term "rent commencement date" shall be
that date which is ninety (90) days after Tenant is given access to the site to
begin its leasehold improvements, but not before February 15, 1996.

SECTION 18.  RIGHT OF FIRST REFUSAL

    Landlord agrees not to sell, transfer, exchange, grant an option to
purchase, lease, or otherwise dispose of the Property or any part of, or
interest in, the Property without first offering the Property to Tenant on the
terms and conditions set forth in this Agreement.  As used in this Agreement,
the term SELL includes a ground lease of the Property with primary and renewal
terms of more than 15 years in the aggregate.

    When Tenant receives the Notice and a copy of the Offer, Tenant shall have
the prior and preferential right to purchase the Property (or the part of or
interest in the Property covered by the Offer, as the case may be) at the same
price and on the same terms and conditions as are contained in the Offer,
except that if Tenant exercises the right of first refusal by electing to
purchase the Property then (1) the closing of the transaction contemplated by
the Offer shall take place no earlier than 90 days after the date that Tenant
elects to exercise the right of first refusal, and (2) Tenant shall receive a
credit against the sale price of the Property in an amount equal to any
brokerage commission that Landlord may save by selling the Property to Tenant
rather than the Third-Party Offeror.

    Tenant shall have 45 days from the date Tenant receives the Notice and a
copy of the Offer to notify Landlord whether Tenant elects to purchase the
Property pursuant to the terms of the Offer.  If Tenant elects to exercise its
right to purchase the Property, then, in addition to giving Landlord written
notice of its election within the 45-day period, Tenant also shall tender an
amount equal to the earnest money deposit, if any, specified in the Offer,
which will be held and used in accordance with the terms of the Offer.

    If Tenant fails to timely exercise its right to purchase the Property
pursuant to the terms of this Agreement, then Landlord shall be entitled to
sell the Property according to the terms of the Offer to the Third-Party
Offeror in compliance wherewith.

    If Tenant fails to timely exercise its right to purchase the Property
pursuant to the terms of this Agreement, and for any reason Landlord shall not
sell or convey the Property to the Third-Party Offeror on the terms contained
in the Offer within six months of Tenant's election not to purchase, then
Landlord must resubmit the Offer as well as any other offer to Tenant before
selling the Property, and such offers shall be subject to Tenant's right of
first refusal under this

PAGE 19 - COMMERCIAL LEASE

                      DONALDSON, ALBERT, TWEET, CONNOLLY,
                                 HANNA & MUNIZ
                                   PO BOX 968
                                SALEM, OR 97308
                                 (503) 585-2055

<PAGE>

Agreement.


PAGE 20 - COMMERCIAL LEASE

                       DONALDSON, ALBERT, TWEET, CONNOLLY,
                                 HANNA & MUNIZ
                                   PO BOX 968
                                SALEM, OR 97308
                                 (503) 585-2055

<PAGE>

    This first right of refusal shall not apply to the grant of options to, nor
sales to, Willamette Valley, Inc., Microbreweries Across America, a Delaware
corporation.

LANDLORD

Stewart's Ice Cream Co., Inc.


By:___________________________________
   Authorized Agent


TENANT

North Country Brewery, Inc.


By:____________________________________
   James W. Bernau, President



PAGE 21 - COMMERCIAL LEASE

                       DONALDSON, ALBERT, TWEET, CONNOLLY,
                                 HANNA & MUNIZ
                                   PO BOX 968
                                SALEM, OR 97308
                                 (503) 585-2055