Document:

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                                                                   Exhibit 10.25

                       NASTECH PHARMACEUTICAL COMPANY INC.

                       STAND-ALONE STOCK OPTION AGREEMENT

I.    NOTICE OF STOCK OPTION GRANT

      Gregory L. Weaver
      [Address]

      You have been granted a Nonstatutory Stock Option to purchase Common Stock
of the Company, subject to the terms and conditions of this Agreement, as
follows:

      Date of Grant                     May 20, 2002

      Vesting Commencement Date         May 20, 2002

      Exercise Price per Share          $15.30

      Total Number of Shares Granted    125,000

      Total Exercise Price              $1,912,500

      Term/Expiration Date:             Ten Years/May 20, 2012

      Vesting Schedule:

      This Option shall vest and may be exercised, in whole or in part, in
accordance with the following schedule:

      One-third of the Shares subject to the Option shall vest on each
anniversary of the Vesting Commencement Date, so that the Option shall be fully
vested three (3) years from the Date of Grant, subject to the Optionee
continuing to be a Service Provider on such dates.

      Termination Period

      This Option may be exercised for three (3) months after Optionee ceases to
be a Service Provider in accordance with Section 7 of this Agreement. Upon the
death or Disability of the Optionee, this Option may be exercised for one year
after the Optionee ceases to be a Service Provider in accordance with Sections 8
and 9 of this Agreement. In no event shall this Option be exercised later that
the Term/Expiration Date provided.

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      II.   AGREEMENT

      1. Definitions. As used herein, the following definitions shall apply:

            (a) "Agreement" means this stock option agreement between the
Company and Optionee evidencing the terms and conditions of this Option.

            (b) "Applicable Laws" means the requirements relating to the
administration of stock options under U.S. state corporate laws, U.S. federal
and state securities laws, the Code, any stock exchange or quotation system on
which the Common Stock is listed or quoted and the applicable laws of any
foreign country or jurisdiction that may apply to this Option.

            (c) "Board" means the Board of Directors of the Company or any
committee of the Board that has been designated by the Board to administer this
Agreement.

            (d) "Code" means the Internal Revenue Code of 1986, as amended.

            (e) "Common Stock" means the common stock of the Company.

            (f) "Company" means Nastech Pharmaceutical Company, Inc., a Delaware
corporation.

            (g) "Consultant" means any person, including an advisor, engaged by
the Company or a Parent or Subsidiary to render services to such entity.

            (h) "Director" means a member of the Board.

            (i) "Disability" means total and permanent disability as defined in
Section 22(e)(3) of the Code.

            (j) "Employee" means any person, including Officers and Directors,
employed by the Company or any Parent or Subsidiary of the Company. A Service
Provider shall not cease to be an Employee in the case of (i) any leave of
absence approved by the Company or (ii) transfers between locations of the
Company or between the Company, its Parent, any Subsidiary, or any successor.
Neither service as a Director nor payment of a director's fee by the Company
shall be sufficient to constitute "employment" by the Company.

            (k) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

            (l) "Fair Market Value" means, as of any date, the value of Common
Stock determined as follows:

                  (1) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system on
the date of determination or, if there were no sales on that date, on the last
market trading day prior to the date of determination;

                                                                             -2-
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                  (2) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
shall be the mean between the high bid and low asked prices for the Common Stock
on the date of determination or, if there were no sales on that date, on the
last market trading day prior to the date of determination; or

                  (3) In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith by the
Board.

            (m) "Nonstatutory Stock Option" means an Option not intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code and the regulations promulgated thereunder.

            (n) "Notice of Grant" means a written notice, in Part I of this
Agreement, evidencing certain the terms and conditions of this Option grant. The
Notice of Grant is part of the Option Agreement.

            (o) "Officer" means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.

            (p) "Option" means this stock option.

            (q) "Optioned Stock" means the Common Stock subject to this Option.

            (r) "Optionee" means the person named in the Notice of Grant or such
person's successor.

            (s) "Parent" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.

            (t) "Service Provider" means an Employee, Director or Consultant.

            (u) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 11 of this Agreement.

            (v) "Subsidiary" means a "subsidiary corporation", whether now or
hereafter existing, as defined in Section 424(f) of the Code.

      2. Grant of Option. The Board hereby grants to the Optionee named in the
Notice of Grant attached as Part I of this Agreement the Option to purchase the
number of Shares, as set forth in the Notice of Grant, at the exercise price per
share set forth in the Notice of Grant (the "Exercise Price"), subject to the
terms and conditions of this Agreement.

      3. Exercise of Option.

            (a) Right to Exercise. This Option is exercisable during its term in
accordance with the Vesting Schedule set out in the Notice of Grant and the
applicable provisions of this Agreement.

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            (b) Method of Exercise. This Option is exercisable by delivery of an
exercise notice, in the form attached as Exhibit A (the "Exercise Notice"),
which shall state the election to exercise the Option, the number of Shares in
respect of which the Option is being exercised (the "Exercised Shares"), and
such other representations and agreements as may be required by the Company. The
Exercise Notice shall be completed by the Optionee and delivered to Secretary of
the Company. The Exercise Notice shall be accompanied by payment of the
aggregate Exercise Price as to all Exercised Shares. This Option shall be deemed
to be exercised upon receipt by the Company of such fully executed Exercise
Notice accompanied by such aggregate Exercise Price.

            (c) Legal Compliance. No Shares shall be issued pursuant to the
exercise of this Option unless such issuance and exercise complies with
Applicable Laws. Assuming such compliance, for income tax purposes the Exercised
Shares shall be considered transferred to the Optionee on the date the Option is
exercised with respect to such Exercised Shares.

            (d) Buyout Provisions. The Board may at any time offer to buy out
for a payment in cash or Shares an Option previously granted based on such terms
and conditions as the Board shall establish and communicate to the Optionee at
the time that such offer is made.

      4. Method of Payment. Payment of the aggregate Exercise Price shall be by
any of the following, or a combination thereof, at the election of the Optionee:

            (a) cash or check;

            (b) consideration received by the Company under a cashless exercise
program implemented by the Company; or

            (c) surrender of other Shares which (i) in the case of Shares
acquired upon exercise of an option, have been owned by the Optionee for more
than six (6) months on the date of surrender, AND (ii) have a Fair Market Value
on the date of surrender equal to the aggregate Exercise Price of the Exercised
Shares.

      5. Non-Transferability of Option. This Option may not be transferred in
any manner otherwise than by will or by the laws of descent or distribution and
may be exercised during the lifetime of Optionee only by the Optionee. The terms
of this Agreement shall be binding upon the executors, administrators, heirs,
successors and assigns of the Optionee.

      6. Term of Option. This Option may be exercised only within the term set
out in the Notice of Grant, and may be exercised during such term only in
accordance with the terms of this Agreement.

      7. Termination of Relationship as a Service Provider. If the Optionee
ceases to be a Service Provider (other than for death or Disability), this
Option may be exercised for a period of three (3) months after the date of such
termination (but in no event later than the expiration date of this Option as
set forth in the Notice of Grant) to the extent that the Option is vested on the
date of such termination. To the extent that the Optionee does not exercise this
Option within the time specified herein, the Option shall terminate.

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      8. Disability of Optionee. If the Optionee ceases to be a Service Provider
as a result of the Optionee's Disability, this Option may be exercised for a
period of twelve (12) months after the date of such termination (but in no event
later than the expiration date of this Option as set forth in the Notice of
Grant) to the extent that the Option is vested on the date of such termination.
To the extent that Optionee does not exercise this Option within the time
specified herein, the Option shall terminate.

      9. Death of Optionee. If the Optionee dies while a Service Provider, the
Option may be exercised at any time within twelve (12) months following the date
of death (but in no event later than the expiration date of this Option as set
forth in the Notice of Grant), by the Optionee's estate or by a person who
acquired the right to exercise the Option by bequest or inheritance, but only to
the extent that the Optionee was entitled to exercise the Option at the date of
death. If, after death, the Optionee's estate or a person who acquired the right
to exercise the Option by bequest or inheritance does not exercise the Option
within the time specified herein, the Option shall terminate.

      10. Adjustments upon Changes in Capitalization, Dissolution, Merger or
Asset Sale.

            (a) Changes in Capitalization. Subject to any required action by the
stockholders of the Company, the number of shares of Common Stock covered by
this Option, as well as the price per share of Common Stock covered by this
Option, shall be proportionately adjusted for any increase or decrease in the
number of issued shares of Common Stock resulting from a stock split, reverse
stock split, stock dividend, combination or reclassification of the Common
Stock, or any other increase or decrease in the number of issued shares of
Common Stock effected without receipt of consideration by the Company; provided,
however, that conversion of any convertible securities of the Company shall not
be deemed to have been "effected without receipt of consideration." Such
adjustment shall be made by the Board, whose determination in that respect shall
be final, binding and conclusive. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of shares
of Common Stock subject to this Option.

            (b) Dissolution or Liquidation. Except as provided by the Change In
Control Severance Agreement between the Company and Optionee dated July 31, 2002
(the "Severance Agreement"), to the extent the Option has not been previously
exercised, the Option will terminate immediately prior to the consummation of
such proposed dissolution or liquidation of the Company.

            (c) Merger or Asset Sale. In the event of a merger of the Company
with or into another corporation, or the sale of substantially all of the assets
of the Company, the Option shall be assumed or an equivalent option substituted
by the successor corporation or a Parent or Subsidiary of the successor
corporation; provided, however, that such assumed or equivalent option shall be
continue to be subject to the provisions of the Severance Agreement. In the
event that the successor corporation refuses to assume or substitute for the
Option, the Optionee shall fully vest in and have the right to exercise the
Option as to all of the Optioned Stock, including Shares as to which it would
not otherwise be vested or exercisable. If the Option becomes fully vested and
exercisable in lieu of assumption or substitution in the event of a merger or
sale of assets, the Board shall notify the Optionee in writing or electronically
that the Option shall be fully exercisable for a period of ten (10) days from
the date of such notice, and the Option shall terminate upon the expiration of
such period.

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For the purposes of this paragraph, the Option shall be considered assumed if,
following the merger or sale of assets, the option confers the right to purchase
or receive, for each Share of Optioned Stock subject to the Option immediately
prior to the merger or sale of assets, the consideration (whether stock, cash,
or other securities or property) received in the merger or sale of assets by
holders of Common Stock for each Share held on the effective date of the
transaction (and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding Shares);
provided, however, that if such consideration received in the merger or sale of
assets is not solely common stock of the successor corporation or its Parent,
the Administrator may, with the consent of the successor corporation, provide
for the consideration to be received upon the exercise of the Option, for each
Share of Optioned Stock subject to the Option, to be solely common stock of the
successor corporation or its Parent equal in fair market value to the per share
consideration received by holders of Common Stock in the merger or sale of
assets.

      11. Notices. Any notice to be given to the Company hereunder shall be in
writing and shall be addressed to the Company. at its then current principal
executive office or to such other address as the Company may hereafter designate
to the Optionee by notice as provided in this Section. Any notice to be given to
the Optionee hereunder shall be addressed to the Optionee at the address set
forth beneath his signature hereto, or at such other address as the Optionee may
hereafter designate to the Company by notice as provided herein. A notice shall
be deemed to have been duly given when personally delivered or mailed by
registered or certified mail to the party entitled to receive it.

      12. Tax Consequences. Some of the federal tax consequences relating to
this Option, as of the date of this Option, are set forth below. THIS SUMMARY IS
NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE.
THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR
DISPOSING OF THE SHARES.

            (a) Exercising the Option. The Optionee may incur regular federal
income tax liability upon exercise of a Nonstatutory Stock Option (an "NSO").
The Optionee will be treated as having received compensation income (taxable at
ordinary income tax rates) equal to the excess, if any, of the Fair Market Value
of the Exercised Shares on the date of exercise over their aggregate Exercise
Price. If the Optionee is an Employee or a former Employee, the Company will be
required to withhold from his or her compensation or collect from Optionee and
pay to the applicable taxing authorities an amount in cash equal to a percentage
of this compensation income at the time of exercise, and may refuse to honor the
exercise and refuse to deliver Shares if such withholding amounts are not
delivered at the time of exercise.

            (b) Disposition of Shares. If the Optionee holds NSO Shares for at
least one year, any gain realized on disposition of the Shares will be treated
as long-term capital gain for federal income tax purposes.

      13. Entire Agreement; Governing Law. This Agreement constitute the entire
agreement of the parties with respect to the subject matter hereof and supersede
in their entirety all prior undertakings and agreements of the Company and
Optionee with respect to the subject matter hereof, and may not be modified
adversely to the Optionee's interest except by means of a writing

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signed by the Company and Optionee. This agreement is governed by the internal
substantive laws, but not the choice of law rules, of Washington.

      14. NO GUARANTEE OF CONTINUED SERVICE. OPTIONEE ACKNOWLEDGES AND AGREES
THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED
ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (AND NOT
THROUGH THE ACT OF BEING HIRED, BEING GRANTED AN OPTION OR PURCHASING SHARES
HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE
TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO
NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUES ENGAGEMENT AS A
SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL
NOT INTERFERE WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO TERMINATE
OPTIONEE'S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT
CAUSE.

      By your signature and the signature of the Company's representative below,
you and the Company agree that this Option is granted under and governed by the
terms and conditions of this Agreement. Optionee has reviewed this Agreement in
its entirety, has had an opportunity to obtain the advice of counsel prior to
executing this Agreement and fully understands all provisions of this Agreement.
Optionee hereby agrees to accept as binding, conclusive and final all decisions
or interpretations of the Board upon any questions relating to this Agreement.
Optionee further agrees to notify the Company upon any change in the residence
address indicated below.

OPTIONEE                                 Nastech Pharmaceutical Company Inc.

/s/ Gregory L. Weaver                    /s/ Steven C. Quay
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Signature                                Steven C. Quay

 Gregory L. Weaver                       President and Chief Executive Officer
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Print Name

Date: 2/14/2003
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                                    EXHIBIT A

                       NASTECH PHARMACEUTICAL COMPANY INC.

                                 EXERCISE NOTICE

NASTECH PHARMACEUTICAL COMPANY INC.
3450 MONTE VILLA PARKWAY
BOTHELL, WA 98021

Attention: _____________

      1. Exercise of Option. Effective as of today, ________________, 200__, the
undersigned ("Purchaser") hereby elects to purchase ______________ shares (the
"Shares") of the Common Stock of Nastech Pharmaceutical Company Inc. (the
"Company") under and pursuant to the Stock Option Agreement dated _____________,
2003 (the "Option Agreement"). The purchase price for the Shares shall be
$_______, as required by the Option Agreement.

      2. Delivery of Payment. Purchaser herewith delivers to the Company the
full purchase price for the Shares.

      3. Representations of Purchaser. Purchaser acknowledges that Purchaser has
received, read and understood the Option Agreement and agrees to abide by and be
bound by their terms and conditions.

      4. Rights as Shareholder. Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the Shares, no right to vote or receive dividends or
any other rights as a stockholder shall exist with respect to the Optioned
Stock, notwithstanding the exercise of the Option. The Shares so acquired shall
be issued to the Optionee as soon as practicable after exercise of the Option.
No adjustment will be made for a dividend or other right for which the record
date is prior to the date of issuance, except as provided in Section 10 of the
Option Agreement.

      5. Tax Consultation. Purchaser understands that Purchaser may suffer
adverse tax consequences as a result of Purchaser's purchase or disposition of
the Shares. Purchaser represents that Purchaser has consulted with any tax
consultants Purchaser deems advisable in connection with the purchase or
disposition of the Shares and that Purchaser is not relying on the Company for
any tax advice.

      6. Successors and Assigns. The Company may assign any of its rights under
this Exercise Notice to single or multiple assignees, and this Exercise Notice
shall inure to the benefit of the successors and assigns of the Company. Subject
to the restrictions on transfer herein set forth, this Exercise Notice shall be
binding upon Optionee and his or her heirs, executors, administrators,
successors and assigns.

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      7. Interpretation. Any dispute regarding the interpretation of this
Exercise Notice shall be submitted by Optionee or by the Company forthwith to
the Administrator which shall review such dispute at its next regular meeting.
The resolution of such a dispute by the Administrator shall be final and binding
on all parties.

      8. Entire Agreement; Governing Law. The Option Agreement is incorporated
herein by reference. This Agreement, and the Option Agreement constitute the
entire agreement of the parties with respect to the subject matter hereof and
supersede in their entirety all prior undertakings and agreements of the Company
and Purchaser with respect to the subject matter hereof, and may not be modified
adversely to the Purchaser's interest except by means of a writing signed by the
Company and Purchaser. This agreement is governed by the internal substantive
laws, but not the choice of law rules, of Washington.

Submitted by:                              Accepted by:

OPTIONEE                                   NASTECH PHARMACEUTICAL COMPANY INC.

---------------------------------------    -------------------------------------
Signature

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Print Name

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Address                                    Address

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                                           Date Received:
                                                         -----------------------

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EXHIBIT 10.21 - PURCHASING AGREEMENT DATED AS OF NOVEMBER 21, 2002, BETWEEN AND
ANHEUSER-BUSCH, INCORPORATED

                              PURCHASING AGREEMENT

      This Purchasing Agreement ("Agreement") is executed between Redhook Ale
Brewery, Incorporated ("Redhook") and Anheuser-Busch, Incorporated ("ABI") as of
November 21, 2002. In consideration of the covenants hereinafter set forth and
intending to be legally bound hereby, Redhook and ABI agree as follows:

      1.    For purposes of this Agreement, (a) "Distribution Agreement" shall
mean the Master Distributor Agreement between ABI and Redhook dated October 18,
1994 as amended to the date hereof and as it may be amended from time to time;
(b) "Packaging Materials" shall mean glass bottles and corrugated boxes, trays,
solid fiber boxes, chipboard or corrugated partitions and carrier inserts used
to package the glass bottles; (c) "Requirements" shall mean the total amount of
each Packaging Material used by Redhook in all products manufactured by Redhook
in its brewery located in Portsmouth, New Hampshire; (d) "Supplier" shall mean
Owens Illinois; and (e) "Supply Agreement" shall mean the agreement between ABI
and Supplier pursuant to which the Packaging Materials that are the subject
hereof will be purchased and sold, as amended to the date hereof and as it may
be amended from time to time.

      2.    Except as provided for below, ABI agrees to source, supply and sell
to Redhook, and Redhook agrees to purchase from ABI, all of Redhook's
Requirements for Packaging Materials, such purchases and sales to commence on
December 2, 2002 (in the event Redhook has legally binding orders for Packaging
Materials placed prior to the date hereof, the purchases by Redhook pursuant to
such orders shall be deemed to reduce Redhook's Requirements hereunder).

      3.    Notwithstanding the provisions of Section 2 hereof, Redhook shall
have the right to purchase up to 50% of its annual Requirements (measured by the
purchase price paid by Redhook for the Packaging Materials) from an alternative
source if (i) Redhook obtains a commitment from a supplier to provide Redhook
with substantially equivalent Packaging Materials at a per unit price at least
five percent lower than that available hereunder, with respect to which
commitment ABI does not exercise the right of first refusal created by this
Section 3 or (ii) after consultation with ABI and Supplier, Redhook determines
that there is a substantial possibility that Supplier will be unable to provide
Redhook with a supply of Packaging Materials adequate for its operations (such
determination to be made in good faith and on a commercially reasonably basis).
Prior to the exercise by Redhook of the right described in Section 3(i) hereof,
Redhook shall provide ABI and Supplier with at least 30 days' advance written
notice (such 30 day period to begin no sooner than upon the expiration of ABI's
right of first refusal
<PAGE>
described below), such notice to indicate the quantities of Packaging Materials
to be purchased by Redhook from the alternative source.

            Nothing in this section shall prohibit Redhook from receiving
unsolicited proposals from suppliers or from soliciting proposals for the
purchase and sale of Packaging Materials but Redhook shall not disclose to any
supplier the unit pricing paid by Redhook hereunder. Redhook shall not accept
any commitment from any supplier for the purchase and sale of Packaging
Materials for use in its Portsmouth operations pursuant to the right described
in Section 3(i) hereof without providing ABI in writing a 30 day right of first
refusal.

      4.    Supplier shall be the source for all Packaging Materials to be
purchased and sold pursuant to this Agreement. Redhook shall place all orders
for Packaging Materials directly with Supplier in a format agreed upon between
Redhook and Supplier and shall instruct Supplier to deliver all Packaging
Materials to Redhook's premises at Portsmouth, New Hampshire. Contemporaneously
with placing each order with Supplier, Redhook shall notify ABI in writing of
such order, the quantities of Packaging Materials to be purchased and sold
pursuant to such order and the expected date of delivery of such Packaging
Materials. On or before November 30 of each year during the term of this
Agreement, Redhook shall provide Supplier and ABI with Redhook's best estimate
of Redhook's anticipated Requirements for Packaging Materials for the next
succeeding calendar year in a format satisfactory to each of Redhook and
Supplier. On or before the last business day of each month, Redhook shall
provide Supplier and ABI with a rolling three month forecast of Redhook's
anticipated Requirements for Packaging Materials in a format satisfactory to
each of Redhook and Supplier. On or before the last business day of each week,
Redhook shall provide Supplier and ABI with its estimated requirements for the
next succeeding week in a format satisfactory to each of Redhook and Supplier.

      5.    The initial purchase price to be paid by Redhook for Packaging
Materials shall be as previously specified in writing to Redhook. Redhook shall
pay to ABI the purchase price for any delivery of Packaging Materials within 10
calendar days of Redhook's acceptance of such delivery. At the option of ABI,
ABI may obtain payment of the purchase price, in whole or in part, by reducing
the amounts otherwise payable by ABI to Redhook pursuant to the Distribution
Agreement. If ABI elects to obtain payment by such method, ABI shall provide
Redhook with reasonable detail concerning the amounts owed by Redhook, and ABI
shall make such offset only against amounts due to be paid by ABI on or after
the date on which Redhook's payment for the Purchasing Materials would otherwise
have been due. In the event that with respect to any delivery of Packaging
Materials, ABI determines to obtain payment of any portion of the purchase price
therefor other than by means of such reduction, ABI shall provide to Redhook
written notice of such determination and Redhook shall pay to ABI such portion
of the purchase price by wire transfer of immediately available funds to an
account specified in writing by ABI (or by such other means as may be agreed
upon between ABI and Redhook) on or prior to the later of (i) 10 calendar days
after Redhook's receipt and acceptance of such delivery and (ii) five calendar
days after such notification.

                                       2
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      6.    ABI shall have no responsibility or liability for any of the
conditions, properties, deliveries or specifications of the Packaging Materials.
With respect to any order or delivery of Packaging Materials, Supplier's
compliance with its obligations under the terms of the Supply Agreement shall be
deemed to satisfy the rights of Redhook hereunder. At the request of Redhook,
ABI shall assign to Redhook all rights that ABI has against Supplier with
respect to any Packaging Materials that are delivered or were to be delivered to
Redhook hereunder. In the event that Redhook and Supplier are engaged in a
dispute concerning any delivery or order of Packaging Materials, Redhook shall
not withhold payment of any portion of the purchase price therefor unless (i)
under the circumstances such action is permitted to a purchaser under applicable
law or under the rights ABI has under the terms of the Supply Agreement and (ii)
Redhook has notified ABI in writing at least three business days prior to the
date payment of the purchase price would otherwise be required that it intends
to withhold payment of the purchase price. In the event of a dispute between
Redhook and Supplier, ABI shall use commercially reasonable best efforts to
assist Redhook to resolve such dispute equitably and shall provide Redhook with
information in reasonable detail concerning the provisions of the Supply
Agreement pertinent to such dispute. In the event that Redhook satisfies the
requirements of this section and duly and timely notifies ABI that it shall not
pay the purchase price for any delivery or order, then ABI shall not seek
payment for such delivery or order from Redhook until the earlier of such time
(a) as Redhook instructs ABI that it is willing to pay the purchase price or (b)
as Redhook no longer satisfies the criteria set forth in this section for
withholding payment.

      7.    (a) Except as otherwise provided in this Section 7, the obligations
of ABI and Redhook to purchase and sell Packaging Materials shall continue until
such time as the Supply Agreement is no longer in force.

                  (i)   In the event that the Supply Agreement terminates,
expires or is modified or supplemented for any reason and the parties do not
agree pursuant to Section 9 on the terms and conditions pursuant to which AB
shall continue to source, supply and sell Packaging Materials to Redhook, then
the purchase and sale obligations of Redhook and ABI under this Agreement shall
terminate on the date of termination, expiration, modification or supplement.
ABI shall provide Redhook reasonable advance notice prior to any expiration,
termination, modification or supplement of or to the Supply Agreement, to the
extent reasonably practicable.

            (b)   Either party shall have the right to terminate the purchase
and sale obligations of Redhook and ABI under this Agreement, without prejudice
to any other legal rights to which such terminating party may be entitled, upon
the occurrence of any one or more of the following:

                  (i)   any default by the other party in the performance of any
of the provisions of this Agreement or by the Supplier in the performance of its
obligations

                                       3
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under the Supply Agreement, which default is not cured within 30 days after
written notice of such default;

                  (ii)  the Distribution Agreement is duly terminated;

                  (iii) an assignment by the other party for the benefit of
creditors; or the commencement by the other party of a voluntary case or
proceeding or the consent to or the acquiescence by the other party in the entry
of an order for relief against it in an involuntary case or proceeding under any
bankruptcy, reorganization, insolvency or similar law;

                  (iv)  the appointment of a trustee or receiver or similar
officer of any court for the other party or for a substantial part of the
property of the other party, whether with or without the consent of the other
party, which is not terminated within 60 days from the date of appointment;

                  (v)   the institution of bankruptcy, reorganization,
insolvency or liquidation proceedings against the other party without such
proceedings being dismissed within 60 days from the date of the institution
thereof.

            (c)   In the event that the orders and deliveries of Packaging
Materials made by Supplier to Redhook have failed in respects material to
Redhook's Portsmouth operations to comply with the terms of the Supply Agreement
and Redhook determines (such determination to be made in good faith and on a
commercially reasonable basis) that such failures are likely to continue,
Redhook may terminate the purchase and sale obligations of Redhook and ABI under
this Agreement upon 30 days written notice to ABI and Supplier.

            (d)   In the sole judgment of Redhook, Redhook may terminate the
purchase and sale obligations of Redhook and ABI under this Agreement by written
notice to ABI and Supplier delivered on or prior to October 31, such termination
to be effective on the next succeeding January 1.

            (e)   In the event that ABI determines (such determination to be
made in good faith and on a commercially reasonable basis) that Supplier is
likely to be unable to supply Packaging Materials to Redhook without reducing
the amount of Packaging Materials that it would otherwise deliver to ABI, at the
option of ABI, ABI may suspend deliveries of Packaging Materials hereunder to
Redhook upon 30 days' written notice to Redhook to the extent necessary to
assure that Supplier is able to satisfy ABI's operational requirements for
Packaging Materials as determined by ABI (the determination by ABI of such
operational requirements to be made in good faith and on a commercially
reasonable basis). Deliveries of Packaging Materials to Redhook will promptly
resume upon ABI receiving assurances that it determines to be reasonable (such
determination to be made in good faith and on a commercially reasonable basis)
that Supplier's delivery of Packaging Materials to Redhook will not reduce the
amount of

                                       4
<PAGE>
Packaging Materials that Supplier would otherwise deliver to ABI. If any such
suspension occurs and would be reasonably expected to have a material adverse
effect on Redhook's operations, Redhook may terminate the purchase and sale of
obligations of Redhook and ABI under this Agreement upon 30 days' advance
written notice to ABI and Supplier.

            (f)   In the event of any termination of the purchase and sale of
obligations of Redhook and ABI under this Agreement for any reason, at the
option of ABI, Redhook shall purchase from Supplier any inventory of Packaging
Materials produced or purchased by Supplier prior to the date of termination in
contemplation of the sale by Supplier of such Packaging Materials to Redhook.
Such purchases shall be made in the ordinary course of business at the pricing
previously provided for under this Agreement, and on a delivery and payment
schedule that would have been applicable if the Agreement had not been
terminated.

      8.    Redhook shall, and Redhook shall cause its officers, directors,
employees, agents and other representatives to, treat in confidence and not
disclose to others any of the material terms of this Agreement including the
unit pricing paid for Packaging Materials, or any other information disclosed to
Redhook by ABI pursuant to this Agreement, except to the extent that (A) any
such information is generally available to the public, (B) is acquired from a
third party rightfully having such information, (C) is already in their
possession prior to disclosure hereunder or is acquired by such party
independently from any disclosures pursuant to this Agreement or (D) as required
by applicable law or regulation. With respect to the foregoing confidentiality
obligations, ABI acknowledges that Redhook is likely to be required to file this
Agreement with the Securities and Exchange Commission as a material contract and
will be required to disclose the existence of this Agreement. Redhook agrees
that any such disclosure shall be limited in scope and detail to the maximum
extent permitted under the applicable securities laws.

      With respect to the foregoing confidentiality obligations, Redhook
acknowledges that it has been informed that an unauthorized disclosure of the
terms of the purchasing agreements and arrangements between ABI and Supplier
could result in the termination of such agreements and arrangements and the
supply of Packaging Materials thereunder, or the loss of substantial commercial
benefits to ABI thereunder. In addition to other remedies available to ABI, in
the event of Redhook's breach of its foregoing confidentiality obligations, ABI
shall be entitled to injunctive and other equitable relief against Redhook to
prevent any such breach and, to the extent that any breach by Redhook of its
confidentiality obligations hereunder causes or contributes to the termination
of any purchasing agreements or arrangements between ABI and Supplier, Redhook
shall be liable to such extent for any harm or damages resulting to ABI from
such termination.

      9.    In the event that the Supply Agreement terminates, expires or is
modified or supplemented, AB and Redhook shall discuss whether AB shall continue
to source,

                                       5
<PAGE>
supply and sell to Redhook the Packaging Materials, the price therefor and any
additional terms and conditions applicable to the source, supply and sale. If
the parties agree that AB shall continue to do so, and on the pricing therefore,
they shall execute a written instrument specifying the pricing therefor and any
other terms and conditions not provided thereby. Thereafter the Packaging
Materials shall be deemed to continue to be purchased and sold pursuant to the
terms hereof, as supplemented by such instrument.

      10.   Redhook represents, warrants and covenants that all Packaging
Materials purchased by Redhook hereunder shall be used by Redhook in its
manufacture and packaging of malt beverage products and that Redhook shall not
resell any Packaging Materials prior to such materials being used by Redhook in
the manufacturing and packaging of malt beverage products.

      11.   (a) Redhook shall indemnify, protect, defend and hold harmless each
of ABI, Anheuser-Busch Companies, Inc. ("A-BC"), other direct and indirect
subsidiaries of A-BC, and each of their respective directors, officers,
employees and agents, from and against all claims, liabilities, losses, damages,
injuries, demands, actions, causes of action, suits, proceedings, judgments and
reasonable expenses, including without limitation attorneys' fees, court costs
and other legal expenses arising from, connected with or attributable to (a) a
violation or breach or alleged violation or breach of any other agreements or
obligations to which Redhook is a party or by which it or its assets are bound
arising out of Redhook's execution and delivery of, or performance of its
obligations under, this Agreement and (b) Redhook's violation of its obligations
hereunder. In the event that Redhook fails to comply with any of its obligations
under this Agreement, at the option of ABI, ABI may perform such obligations on
behalf of Redhook and Redhook shall immediately reimburse ABI for all costs
incurred by ABI thereby.

            (b)   ABI shall indemnify, protect, defend and hold harmless each of
Redhook, its direct and indirect subsidiaries and each of their respective
directors, officers, employees and agents, from and against all claims,
liabilities, losses, damages, injuries, demands, actions, causes of action,
suits, proceedings, judgments and reasonable expenses, including without
limitation attorneys' fees, court costs and other legal expenses arising from,
connected with or attributable to (a) a violation or breach or alleged violation
or breach of any other agreements or obligations to which ABI is a party or by
which it or its assets are bound arising out of ABI's execution and delivery of,
or performance of its obligations under, this Agreement and (b) ABI's violation
of its obligations hereunder. In the event that ABI fails to comply with any of
its obligations under this Agreement, at the option of Redhook, Redhook may
perform such obligations on behalf of ABI and ABI shall immediately reimburse
Redhook for all costs incurred by Redhook thereby.

                                       6
<PAGE>
      12.   All notices from one party to the other under the terms of this
Agreement, unless otherwise directed, shall be delivered by hand or by a
responsible overnight courier providing reasonable proof of delivery, addressed
to the parties at the addresses indicated below, and shall be deemed delivered
on the date of receipt if by hand delivery or the first business day succeeding
the date of posting, if sent by overnight courier:

      If to Redhook:

      Redhook Ale Brewery, Incorporated
      14300 NE 145th Street
      Woodinville, Washington  98072
      Attn:  Chief Financial Officer

      If to ABI:

      Anheuser-Busch Companies, Inc.
      One Busch Place
      St. Louis, Missouri  63118
      Attention:  Vice President, Corporate Purchasing

      and

      Anheuser-Busch, Incorporated
      One Busch Place
      St. Louis, Missouri 63118
      Attention:  Vice President, Business Development
                  and Wholesaler Development

      13.   This Agreement is not assignable or transferable, in whole or in
part, by Redhook without the prior written consent of ABI.

      14.   In the event that the purchase and sale obligations of Redhook and
ABI under this Agreement are terminated pursuant to Section 7(a) hereof, ABI
shall discuss with Redhook and negotiate in good faith with Redhook concerning
means by which ABI can assist Redhook in purchasing Packaging Materials at
prices lower than those otherwise available to it.

      15.   (a) No term or provision of this Agreement may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge or
termination is sought. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
preceding or succeeding breach, and no failure by either party to exercise any
right or privilege hereunder shall be deemed a waiver of such party's rights or
privileges hereunder or shall be deemed a waiver of such party's rights to
exercise the same at any subsequent time or times hereunder.

                                       7
<PAGE>
            (b)   This Agreement shall be deemed to have been made and entered
into in the State of Missouri and shall be governed by the laws of Missouri,
without regard to the principles thereof regarding conflicts of laws.

            (c)   This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original and all of which together shall
be deemed to be one and the same instrument.

            (d)   This Agreement constitutes the entire agreement among the
parties hereto and supersede any prior understandings, agreements or
representations by or among the parties hereto, written or oral, to the extent
they are related in any way to the subject matter hereof.

            (e)   ABI hereby represents and warrants that it has no knowledge of
the existence of any occurrence or development that would reasonably be expected
to result in the termination of the Supply Agreement (other than its expiration
pursuant to its terms).

      IN WITNESS WHEREOF, this Agreement is executed on behalf of the parties
hereto by their duly authorized officers as of the day and year first above
written.

                                    ANHEUSER-BUSCH, INCORPORATED

                                    By /s/ Anthony J. Short
                                       --------------------
                                    Anthony J. Short
                                    Vice President
                                    Business and Wholesaler Development

                                    REDHOOK ALE BREWERY, INCORPORATED

                                    By /s/ David J. Mickelson
                                       ----------------------
                                    David Mickelson
                                    Executive Vice President & CFO/COO

                                       8

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