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                             ARTICLES SUPPLEMENTARY

     Kevin E. Brannon and Marjorie McGinnis certify that they are the Chairman
and Assistant Secretary, respectively, of Frederick Brewing Co., a Maryland
corporation (hereinafter referred to as the "Corporation" or the "Company");
that, pursuant to the Articles of Incorporation, as amended, and Section 2-208
of the Maryland General Corporation Law, the Board of Directors of the
Corporation adopted the following resolutions on December 24, 1997; and that
none of the Series E Convertible Preferred Stock referred to in these Articles
Supplementary has been issued.

     1. Creation of Series E Convertible Preferred Stock. There is hereby
created a series of preferred stock consisting of 3,000 shares and designated as
the Series E Convertible Preferred Stock, having the voting powers, preferences,
relative, participating, limitations, qualifications optional and other special
rights and the qualifications, limitations and restrictions thereof that are set
forth below.

     2. Dividend Provisions. The holders of shares of Series E Convertible
Preferred Stock shall be entitled to receive, an 4% annual dividend, equal in
value to $40.00 per share, payable on each July 1 commencing on July 1, 1998 on
conversion pro rata based on a 360-day year. In the option of the Corporation,
such dividend may be paid in cash or in Common Stock valued at the Conversion
Rate in effect as of such July 1 or the Conversion Date. Each share of Series E
Convertible Preferred Stock shall rank on a parity with each other share of
Series E Convertible Preferred Stock with respect to dividends.

     3. Redemption Provisions. Each outstanding share of the Series A
Convertible Preferred Stock is redeemable on the following manner, at a price of
$1,300.00 per Share (the "Redemption Price"). The Corporation shall have the
right to redeem each share on the 120th day following the Closing Date (as such
term is defined in Section 5(a)(3) (the "Redemption Date"), by giving facsimile
notice (followed within 48 hours by personal delivery) to the registered holder
of the Shares on or before five calendar days prior to the Redemption Date, that
the Company intends to redeem the shares. The Shares may be redeemed in whole or
in part. The Corporation shall deliver the Redemption Price payable by bank
check or wire transfer, to the holder of the Shares redeemed within 3 business
days of the Redemption Date. If the Redemption Date falls on a day on which the
New York Stock Exchange is closed, the Redemption Date shall be fixed at the
next day on which such exchange is open for business.

     4. Liquidation Provisions. In the event of any liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary, the Series E
Convertible Preferred Stock shall be entitled to receive an amount equal to
$1,300.00 per share. After the full preferential liquidation amount has been
paid to, or determined and set apart for the Series E Convertible Preferred
Stock and all other series of Preferred Stock hereafter authorized and issued,
if any, the remaining assets of the Corporation available for distribution to
shareholders shall be distributed ratably to the holders of the common stock. In
the event the assets of the Corporation available for distribution to its
shareholders are insufficient to pay the full preferential liquidation amount
per share required to be paid the Corporation's Series E Convertible Preferred
Stock, the entire amount of assets of the Corporation available for distribution
to shareholders shall be paid up to their respective full liquidation amounts
first to the Series E Convertible Preferred Stock, then to any other series of
Preferred Stock hereafter authorized and issued, all of which amounts shall be
distributed ratably among holders of each such series of Preferred Stock, and
the common stock shall receive nothing. A reorganization or any other
consolidation or merger of the Corporation with or into any other corporation,
or any other sale of all or substantially all of the assets of the Corporation,
shall not be deemed to be a liquidation, dissolution or winding up of the
Corporation within the meaning of this Section 4, and the Series E, Convertible
Preferred Stock shall be entitled only to (i) the right provided in any
agreement or plan governing the reorganization or other consolidation, merger or
sale of assets transaction, (ii) the rights contained in the Maryland General
Corporation Law and (iii) the rights contained in other Sections hereof.

     5. Conversion Provisions. The holders of shares of Series E Convertible
Preferred Stock shall have conversion rights as follows (the "Conversion
Rights"):