Document:

EXHIBIT 10.1

                                 LOAN AGREEMENT

         This Loan Agreement  ("Agreement") dated as of July 1, 2008, is between
BANK OF AMERICA,  N.A., a national banking  association (the "Bank"),  and CRAFT
BREWERS ALLIANCE,  INC., a Washington corporation (the "Borrower").  The Line of
Credit and the Term Loan,  as defined  below,  are  together  referred to as the
"Facilities."

1.       LINE OF CREDIT AMOUNT AND TERMS

         1.1. Line of Credit Amount.

                  (a) During the  availability  period described below, the Bank
         will provide a line of credit to the  Borrower  (the "Line of Credit").
         The amount of the Line of Credit (the  "Commitment") is Fifteen Million
         and No/100 Dollars ($15,000,000.00).

                  (b) The Line of Credit is a revolving  line of credit.  During
         the availability  period,  at any time, from time to time, the Borrower
         may repay principal  amounts under the Line of Credit,  without premium
         or penalty  except  with  respect to  "Portions"  pursuant  to Sections
         3.2(f) and 3.3(e) below, and reborrow them.

                  (c) The Borrower agrees not to permit the principal balance of
         the  Line of  Credit  outstanding  to  exceed  the  Commitment.  If the
         Borrower  exceeds this limit,  the Borrower  will  immediately  pay the
         excess to the Bank upon the Bank's demand.

         1.2.  Availability  Period. The Line of Credit is available between the
date of this  Agreement  and  January  1,  2013,  or  such  earlier  date as the
availability  may  terminate  as provided  in this  Agreement  (the  "Expiration
Date").

         1.3. Repayment Terms.

                  (a) The  Borrower  will pay  interest  in arrears on August 1,
         2008, and then on the first day of each month  thereafter until payment
         in full of any  principal  outstanding  under the Line of  Credit.  Any
         interest  period for an optional  interest  rate (as  described  below)
         shall expire no later than the Expiration Date.

                  (b) The  Borrower  will  repay in full all  principal  and any
         unpaid interest or other charges  outstanding  under the Line of Credit
         no later than the Expiration Date.

         1.4. Interest Rate.

                  (a) The  interest  rate is a rate per year equal to the Bank's
         Prime Rate plus the Applicable Rate as defined below.

                  (b) The Prime Rate is the rate of interest publicly  announced
         from time to time by the Bank as its Prime Rate.  The Prime Rate is set
         by the Bank based on various  factors,  including  the Bank's costs and
         desired return,  general economic conditions and other factors,  and is
         used as a reference  point for pricing  some loans.  The Bank may price
         loans to its customers at, above,  or below the Prime Rate.  Any change
         in the Prime Rate shall take  effect at the  opening of business on the
         day  specified  in the  public  announcement  of a change in the Bank's
         Prime Rate.

         1.5. Optional Interest Rates. Instead of the interest rate based on the
rate stated in Section  1.4(a),  the Borrower  may elect the  optional  interest
rates listed below for the Line of Credit during  interest  periods set forth in
Section 3.2(a) and 3.3(a).  The optional  interest rates shall be subject to the
terms and  conditions  described  in Article  3. Any  principal  amount  bearing
interest at an optional rate under this Agreement is referred to as a "Portion."
The following optional interest rates are available:

                      o The  LIBOR  Rate  plus the  Applicable  Rate as  defined
                        below.

                      o The IBOR Rate plus the Applicable Rate as defined below.

                                      -1-
<PAGE>

         1.6.  Applicable  Rate.  The  Applicable  Rate  shall be (a)  1.75% for
LIBOR/IBOR  and  0.30%  for the Fee  Margin  until  receipt  by the  Bank of the
Borrower's financial statements for the period ending December 31, 2008, and (b)
thereafter, the following amounts per annum, based upon the ratio of Funded Debt
to EBITDA (as defined in Section 9.3, the "Financial Test"), as set forth in the
most  recent  compliance  certificate  (or,  if  no  compliance  certificate  is
required,  the Borrower's most recent financial statements) received by the Bank
as required in Section 9.2:

<TABLE>
<CAPTION>

--------------------------------------------------------- ------------------------------------------------------------
                                                                                 Applicable Rate
                                                                        (in percentage points per annum)
----------------------- --------------------------------- ---------------------- ------------------ ------------------
<S>                     <C>                               <C>                    <C>                <C>
    Pricing Level            Funded Debt to EBITDA            LIBOR/IBOR +           Prime +/-         Fee Margin:
----------------------- --------------------------------- ---------------------- ------------------ ------------------

----------------------- --------------------------------- ---------------------- ------------------ ------------------

----------------------- --------------------------------- ---------------------- ------------------ ------------------
          1                 <4.0 to 1 but = 3.0 to 1              1.500                -0.25              0.225
----------------------- --------------------------------- ---------------------- ------------------ ------------------
          2                 <3.0 to 1 but = 2.0 to 1              1.250                -0.25              0.225
----------------------- --------------------------------- ---------------------- ------------------ ------------------
          3                        < 2.0 to 1                     1.125                -0.50              0.200
----------------------- --------------------------------- ---------------------- ------------------ ------------------

</TABLE>

The Applicable Rate shall be in effect from the date the most recent  compliance
certificate  or  financial  statement is received by the Bank until the date the
next  compliance  certificate  or financial  statement  is  received;  provided,
however,  that if the  Borrower  fails to  timely  deliver  the next  compliance
certificate or financial  statement by more than 30 days,  the  Applicable  Rate
from the date 30 days after such compliance  certificate or financial  statement
was due until the date such  compliance  certificate  or financial  statement is
received by the Bank shall be the highest pricing level set forth above.

If, as a result  of any  restatement  of or other  adjustment  to the  financial
statements  of the  Borrower or for any other  reason,  the Borrower or the Bank
determines  that (i) the Financial  Test as calculated by the Borrower as of any
applicable  date was inaccurate  and (ii) a proper  calculation of the Financial
Test would have resulted in higher  pricing for such period,  the Borrower shall
immediately and retroactively be obligated to pay to the Bank an amount equal to
the excess of the amount of  interest  and fees that  should  have been paid for
such period over the amount of interest and fees  actually paid for such period.
The Bank's acceptance of payment of such amounts will not constitute a waiver of
any  default  under  this  Agreement.  The  Borrower's  obligations  under  this
paragraph  shall survive the  termination of this Agreement and the repayment of
all other obligations.

         1.7. Letters of Credit.

                  (a)  During the  availability  period,  at the  request of the
         Borrower,  the Bank will issue standby letters of credit with a maximum
         maturity of 365 days but not to extend beyond the Expiration  Date. The
         standby  letters of credit may include a provision  providing  that the
         maturity  date  will  be  automatically   extended  each  year  for  an
         additional year unless the Bank gives written notice to the contrary.

                  (b) The amount of the letters of credit outstanding at any one
         time  (including the drawn and  unreimbursed  amounts of the letters of
         credit) may not exceed Two Million  Five  Hundred  Thousand  and No/100
         Dollars ($2,500,000).

                  (c) In calculating the principal amount  outstanding under the
         Commitment,  the calculation shall include the amount of any letters of
         credit  outstanding,  including  amounts drawn on any letters of credit
         and not yet reimbursed.

                  (d) The Borrower agrees:

                           (i) Any sum drawn  under a letter of credit  may,  at
                  the  option  of the  Bank,  be added to the  principal  amount
                  outstanding  under  this  Agreement.   The  amount  will  bear
                  interest and be due as described elsewhere in this Agreement.

                           (ii) If there is a default under this  Agreement,  at
                  the Bank's  request,  to  immediately  secure  the  Borrower's
                  reimbursement  obligations  under all  outstanding  letters of
                  credit  with  cash  collateral  in  an  amount  equal  to  the
                  aggregate stated amount of all such letters of credit.

                                      -2-
<PAGE>

                           (iii) The  issuance  of any  letter of credit and any
                  amendment  to a letter  of  credit is  subject  to the  Bank's
                  written approval and must be in form and content  satisfactory
                  to the Bank and in favor of a  beneficiary  acceptable  to the
                  Bank.

                           (iv)  To  sign  the  Bank's  form   Application   and
                  Agreement for Standby Letter of Credit.

                           (v) To pay any  issuance  and/or  other fees that the
                  Bank  notifies  the  Borrower  will be charged for issuing and
                  processing letters of credit for the Borrower.

                           (vi) To allow the Bank to  automatically  charge  its
                  checking  account for applicable  fees,  discounts,  and other
                  charges.

                           (vii) To pay the Bank a  non-refundable  fee equal to
                  the Applicable  Rate per annum set forth for  "LIBOR/IBOR"  in
                  Section 1.6,  multiplied by the outstanding  undrawn amount of
                  each standby  letter of credit,  payable  annually in advance,
                  calculated on the basis of the face amount  outstanding on the
                  day the fee is calculated.

2.       TERM LOAN AMOUNT AND TERMS

         2.1.  Loan  Amount.  The Bank  agrees  to  provide  a term  loan to the
Borrower in the amount of Thirteen  Million  Five  Hundred  Thousand  and No/100
Dollars  ($13,500,000.00)  (the "Term Loan") for  refinancing a loan made to the
Borrower's  predecessor by merger,  Widmer Brothers Brewing  Company,  an Oregon
corporation ("Widmer"), for purposes of constructing an expansion of its brewery
facility (the "Project").

         2.2.  Availability  Period.  The Term Loan is  available in one or more
disbursements  from the Bank  between the date of this  Agreement  and August 1,
2008, unless the Borrower is in default.

         2.3.  Repayment Terms.

                  (a) The  Borrower  will pay  interest  in arrears on August 1,
         2008, and then on the first day of each month  thereafter until payment
         in full of any principal outstanding under the Term Loan.

                  (b) The Borrower will repay  principal in  installments on the
         dates and in the amounts  stated on the attached  Exhibit A. On July 1,
         2018, the Borrower will repay the remaining  principal balance plus any
         interest then due.

                  (c) The  Borrower  may prepay the Term Loan in full or in part
         at any  time,  without  premium  or  penalty  except  with  respect  to
         "Portions"   pursuant  to  Sections  3.2(f)  and  3.3(e)  below,.   The
         prepayment  will be applied to the most remote payment of principal due
         under the Term Loan.

         2.4.  Interest  Rate. The interest rate is a rate per year equal to the
Bank's Prime Rate plus the Applicable Rate as defined in Section 1.6.

         2.5. Optional Interest Rates. Instead of the interest rate based on the
rate stated in Section 2.4, the Borrower may elect the optional  interest  rates
listed  below for the Term Loan  during  interest  periods  set forth in Section
3.2(a) and 3.3(a). The optional interest rates shall be subject to the terms and
conditions  described in Article 3. Any principal  amount bearing interest at an
optional  rate under the Term Loan is referred to as a "Portion."  The following
optional interest rates are available:

                      o The LIBOR  Rate plus the  Applicable  Rate as defined in
                        Section 1.6.

                      o The IBOR Rate plus the  Applicable  Rate as  defined  in
                        Section 1.6.

3.       OPTIONAL INTEREST RATE

         3.1. Optional Rates. Each optional interest rate is a rate per year. At
the end of any interest period, the interest rate will revert to the rate stated
in  Section  1.4(a)  with  respect to the Line of  Credit,  or Section  2.4 with
respect to the Term Loan,  unless the Borrower has designated  another  optional
interest  rate for the  Portion.  No Portion  will be  converted  to a different
interest rate during the applicable  interest period.  Upon the occurrence of an
event of default under this Agreement,  the Bank may terminate the  availability
of optional  interest rates for interest  periods  commencing  after the default
occurs.

                                      -3-
<PAGE>

         3.2.  LIBOR Rate.  The  election of LIBOR Rates shall be subject to the
following terms and requirements:

                  (a) The interest period during which the LIBOR Rate will be in
         effect will be one,  two,  three,  or six months.  The first day of the
         interest  period  must be a day other  than a  Saturday  or a Sunday on
         which the Bank is open for  business in New York and London and dealing
         in  offshore  dollars  (a  "LIBOR  Banking  Day").  The last day of the
         interest  period and the  actual  number of days  during  the  interest
         period will be determined by the Bank using the practices of the London
         inter-bank market.

                  (b) Each  LIBOR  Rate  Portion  will be for an amount not less
         than  $1,000,000,  with  additional  increments  of  $100,000 in excess
         thereof.

                  (c) The "LIBOR Rate" means the interest rate determined by the
         following  formula.  (All amounts in the calculation will be determined
         by the Bank as of the first day of the interest period.)

                     LIBOR Rate =     London Inter-Bank Offered Rate
                                      ------------------------------
                                        (1.00 - Reserve Percentage)

         Where,

                           (i) "London  Inter-Bank  Offered Rate" means, for any
                  applicable  interest  period,  the rate per annum equal to the
                  British  Bankers  Association  LIBOR  Rate ("BBA  LIBOR"),  as
                  published by Reuters (or other  commercially  available source
                  providing quotations of BBA LIBOR as selected by the Bank from
                  time to time) at approximately  11:00 a.m. London time two (2)
                  London  Banking Days before the  commencement  of the interest
                  period,  for U.S.  Dollar  deposits (for delivery on the first
                  day of such  interest  period) with a term  equivalent to such
                  interest  period.  If such rate is not  available at such time
                  for any reason, then the rate for that interest period will be
                  determined by such alternate method as reasonably  selected by
                  the Bank.  A "London  Banking  Day" is a day on which banks in
                  London are open for business and dealing in offshore dollars.

                           (ii)  "Reserve  Percentage"  means  the  total of the
                  maximum reserve percentages for determining the reserves to be
                  maintained by member banks of the Federal  Reserve  System for
                  Eurocurrency Liabilities,  as defined in Federal Reserve Board
                  Regulation  D,  rounded  upward  to the  nearest  1/100 of one
                  percent.  The percentage  will be expressed as a decimal,  and
                  will  include,  but not be limited  to,  marginal,  emergency,
                  supplemental, special, and other reserve percentages.

                  (d) The  Borrower  shall  irrevocably  request  a  LIBOR  Rate
         Portion no later than 12:00 noon,  Pacific  time,  on the LIBOR Banking
         Day preceding the day on which the London Inter-Bank  Offered Rate will
         be set, as specified  above.  For example,  if there are no intervening
         holidays or weekend days in any of the relevant locations,  the request
         must be made at least three days before the LIBOR Rate takes effect.

                  (e) The Bank will have no obligation to accept an election for
         a LIBOR  Rate  Portion  if any of the  following  described  events has
         occurred and is continuing:

                           (i) Dollar deposits in the principal amount,  and for
                  periods equal to the interest period,  of a LIBOR Rate Portion
                  are not available in the London inter-bank market; or

                           (ii) the LIBOR Rate does not  accurately  reflect the
cost of a LIBOR Rate Portion.

                  (f)  Each   prepayment  of  a  LIBOR  Rate  Portion,   whether
         voluntary, by reason of acceleration or otherwise,  will be accompanied
         by  the  amount  of  accrued  interest  on  the  amount  prepaid  and a
         prepayment fee as described  below.  A "prepayment"  is a payment of an
         amount  on a date  earlier  than the  scheduled  payment  date for such
         amount as required by this Agreement.

                                      -4-
<PAGE>

                  (g) The  prepayment  fee shall be in an amount  sufficient  to
         compensate the Bank for any loss,  cost or expense  incurred by it as a
         result of the prepayment, including any loss of anticipated profits and
         any loss or expense  arising from the  liquidation or  reemployment  of
         funds  obtained by it to maintain  such Portion or from fees payable to
         terminate  the  deposits  from  which such  funds  were  obtained.  The
         Borrower  shall also pay any customary  administrative  fees charged by
         the  Bank in  connection  with  the  foregoing.  For  purposes  of this
         section,  the Bank  shall be deemed to have  funded  each  Portion by a
         matching deposit or other borrowing in the applicable interbank market,
         whether or not such Portion was in fact so funded.

         3.3.  IBOR Rate.  The  election  of IBOR Rates  shall be subject to the
following terms and requirements:

                  (a) The interest  period during which the IBOR Rate will be in
         effect  will be no shorter  than 14 days and no longer than six months.
         The last day of the  interest  period  will be  determined  by the Bank
         using the practices of the offshore dollar inter-bank market.

                  (b) Each IBOR Rate Portion will be for an amount not less than
         $1,000,000.

                  (c) The "IBOR Rate" means the interest rate  determined by the
         following formula,  rounded upward to the nearest 1/100 of one percent.
         (All amounts in the  calculation  will be  determined by the Bank as of
         the first day of the interest period.)

                     IBOR Rate =           IBOR Base Rate
                                           --------------
                                     (1.00 - Reserve Percentage)

         Where,

                           (i) "IBOR Base Rate" means the interest rate at which
                  the Bank's Grand Cayman Banking Center, Grand Cayman,  British
                  West  Indies,   would  offer  U.S.  dollar  deposits  for  the
                  applicable  interest  period  to  other  major  banks  in  the
                  offshore dollar inter-bank market.

                           (ii)  "Reserve  Percentage"  means  the  total of the
                  maximum reserve percentages for determining the reserves to be
                  maintained by member banks of the Federal  Reserve  System for
                  Eurocurrency Liabilities,  as defined in Federal Reserve Board
                  Regulation  D,  rounded  upward  to the  nearest  1/100 of one
                  percent.  The percentage  will be expressed as a decimal,  and
                  will  include,  but not be limited  to,  marginal,  emergency,
                  supplemental, special, and other reserve percentages.

                  (d) The Bank will have no obligation to accept an election for
         an IBOR Rate  Portion  if any of the  following  described  events  has
         occurred and is continuing:

                           (i) Dollar deposits in the principal amount,  and for
                  periods equal to the interest period,  of an IBOR Rate Portion
                  are not available in the offshore dollar inter-bank market; or

                           (ii) the IBOR Rate does not  accurately  reflect  the
                  cost of an IBOR Rate Portion.

                  (e)  Each   prepayment  of  an  IBOR  Rate  Portion,   whether
         voluntary, by reason of acceleration or otherwise,  will be accompanied
         by the  amount  of  accrued  interest  on  the  amount  prepaid,  and a
         prepayment fee as described  below.  A "prepayment"  is a payment of an
         amount  on a date  earlier  than the  scheduled  payment  date for such
         amount as required by this Agreement.

                  (f) The  prepayment  fee shall be in an amount  sufficient  to
         compensate the Bank for any loss,  cost or expense  incurred by it as a
         result of the prepayment, including any loss of anticipated profits and
         any loss or expense  arising from the  liquidation or  reemployment  of
         funds  obtained by it to maintain  such Portion or from fees payable to
         terminate  the  deposits  from  which such  funds  were  obtained.  The
         Borrower  shall also pay any customary  administrative  fees charged by
         the  Bank in  connection  with  the  foregoing.  For  purposes  of this
         section,  the Bank  shall be deemed to have  funded  each  Portion by a
         matching deposit or other borrowing in the applicable interbank market,
         whether or not such Portion was in fact so funded.

                                      -5-
<PAGE>

4.       FEES AND EXPENSES

         4.1. Fees.

                  (a) Unused Commitment Fee. The Borrower agrees to pay a fee on
         any  difference  between the  Commitment  and the amount of the Line of
         Credit it actually uses,  determined by the average of the daily amount
         of credit  outstanding  under the Line of Credit  during the  specified
         period. The fee will be calculated at a rate per year equal to the "Fee
         Margin" as determined in accordance  with Section 1.6. The  calculation
         of credit  outstanding  shall  include  the  undrawn  amount of standby
         letters of credit.  This fee is due on September  30, 2008,  and on the
         last  day of  each  following  calendar  quarter  until,  and  on,  the
         Expiration Date.

                  (b) Loan  Fee.  The  Borrower  agrees to pay a loan fee in the
         amount of $25,000.00 for the Term Loan.  This fee is due on the date of
         this Agreement.

                  (c) Waiver  Fee.  If the Bank,  at its  discretion,  agrees to
         waive or amend any terms of this  Agreement,  the Borrower will, at the
         Bank's  option,  pay the Bank a fee for each waiver or  amendment in an
         amount advised by the Bank at the time the Borrower requests the waiver
         or  amendment.  Nothing in this  section  shall  imply that the Bank is
         obligated  to  agree  to  any  waiver  or  amendment  requested  by the
         Borrower. The Bank may impose additional requirements as a condition to
         any waiver or amendment.

                  (d) Late Fee. To the extent  permitted  by law,  the  Borrower
         agrees to pay a late fee in an amount not to exceed four  percent  (4%)
         of any payment that is more than fifteen (15) days late. The imposition
         and payment of a late fee shall not  constitute  a waiver of the Bank's
         rights with respect to the default.

         4.2.  Expenses.  The Borrower agrees to immediately  repay the Bank for
expenses  that  include,  but are not limited to,  filing,  recording and search
fees, appraisal fees, title report fees, and documentation fees.

         4.3. Reimbursement Costs.

                  (a) The Borrower agrees to reimburse the Bank for any expenses
         it incurs in the  preparation  of this  Agreement  and any agreement or
         instrument  required by this Agreement.  Expenses include,  but are not
         limited to, reasonable  attorneys' fees,  including any allocated costs
         of the Bank's  in-house  counsel to the extent  permitted by applicable
         law.

                  (b) The Borrower  agrees to reimburse the Bank for the cost of
         periodic  field  examinations  of the  Borrower's  books,  records  and
         collateral,  and appraisals of the collateral, at such intervals as the
         Bank may reasonably require.  The actions described in this section may
         be performed by employees of the Bank or by independent appraisers.

5.       COLLATERAL

         5.1. Personal  Property.  The Borrower's  obligations to the Bank under
this Agreement will be secured by all personal  property assets the Borrower now
owns or will own in the future.  The collateral is further defined in a security
agreement to be executed by the Borrower.

         5.2. Real Property.  The Borrower's  obligations to the Bank under both
Facilities will be secured by a lien covering real property located at 924 North
Russell Street,  Portland,  Oregon owned by the Borrower.  The foregoing lien is
legally  described in the Line of Credit  Commercial Deed of Trust,  Assignment,
Security  Agreement and Fixture  Filing (the "Deed of Trust") dated December 28,
2007,  made by Widmer,  as Grantor,  recorded  December 31,  2007,  in Multnomah
County,  Oregon, under recording number 2007-220398.  The Deed of Trust shall be
amended to reference this Agreement as its primary secured  obligation,  and the
Bank shall receive at the Borrower's  expense a modification  endorsement to its
title policy covering the Deed of Trust reflecting such amendment.

                                      -6-
<PAGE>

         5.3. Assumption of Obligations. The Borrower, as successor by merger to
Widmer,  assumes and agrees to pay and perform all  obligations  of Widmer under
the Deed of Trust,  and  under the  Environmental  Indemnification  and  Release
Agreement dated as of the December 28, 2007, by and between Widmer and the Bank.

         5.4.  Swap   Transactions.   If  the  Borrower  enters  into  any  Swap
Transaction with the Bank, the collateral  described above shall also secure all
Swap  Obligations.   "Swap  Transaction"  shall  mean  any  interest  rate  swap
transaction,  forward  rate  transaction,  interest  rate  cap,  floor or collar
transaction,  swaption,  bond or bond price swap,  option or  forward,  treasury
lock, any similar transaction, any option to enter into any of the foregoing and
any  combination  of the foregoing,  which  agreements may be oral or in writing
including, without limitation, any master agreement relating to or governing any
or  all  of  the  foregoing  any  related  schedule  or   confirmations.   "Swap
Obligations"  shall mean all indebtedness and obligations of the Borrower to the
Bank under any Swap Transaction,  as any or all of them may from time to time be
modified, amended, extended, renewed and restated.

6.       DISBURSEMENTS, PAYMENTS AND COSTS

         6.1. Disbursements and Payments.

                  (a) Each payment by the Borrower will be made in U.S.  Dollars
         and immediately available funds by debit to the "Designated Account" as
         described in this  Agreement or otherwise  authorized  by the Borrower.
         For payments not made by direct debit, payments will be made by mail to
         the address shown on the  Borrower's  statement or at one of the Bank's
         banking centers in the United States, or by such other method as may be
         permitted by the Bank.

                  (b) The Bank may honor instructions for advances or repayments
         given  by  the  Borrower  (if  an  individual),  or by  any  one of the
         individuals  authorized  to  sign  loan  agreements  on  behalf  of the
         Borrower,  or  any  other  individual  designated  by any  one of  such
         authorized signers (each an "Authorized Individual").

                  (c) For any payment  under this  Agreement  made by debit to a
         deposit  account,  the Borrower  will maintain  sufficient  immediately
         available  funds in the deposit  account to cover each debit.  If there
         are insufficient  immediately available funds in the deposit account on
         the date the Bank enters any such debit  authorized by this  Agreement,
         the Bank may reverse the debit.

                  (d) Each  disbursement  by the Bank  and each  payment  by the
         Borrower  will be evidenced  by records kept by the Bank.  In addition,
         the Bank may, at its  discretion,  require the  Borrower to sign one or
         more promissory notes.

                  (e) Prior to the date each payment of  principal  and interest
         and any fees from the Borrower  becomes due (the "Due Date"),  the Bank
         will mail to the  Borrower a statement  of the amounts that will be due
         on that Due Date (the "Billed  Amount").  The  calculations in the bill
         will be made on the  assumption  that no new  extensions  of  credit or
         payments will be made between the date of the billing statement and the
         Due Date, and that there will be no changes in the applicable  interest
         rate.  If the Billed  Amount  differs from the actual amount due on the
         Due Date (the "Accrued  Amount"),  the  discrepancy  will be treated as
         follows:

                           (i) If the  Billed  Amount is less  than the  Accrued
                  Amount,  the Billed  Amount for the following Due Date will be
                  increased by the amount of the discrepancy.  The Borrower will
                  not be in default by reason of any such discrepancy.

                           (ii) If the  Billed  Amount is more than the  Accrued
                  Amount,  the Billed  Amount for the following Due Date will be
                  decreased by the amount of the discrepancy.

         Regardless  of any such  discrepancy,  interest will continue to accrue
         based  on  the  actual   amount  of   principal   outstanding   without
         compounding.  The  Bank  will  not pay  the  Borrower  interest  on any
         overpayment.

                                      -7-
<PAGE>

         6.2. Telephone and Telefax Authorization.

                  (a) The Bank may honor telephone or telefax  instructions  for
         advances, repayments, the designation of optional interest rates or the
         issuance of letters of credit given,  or purported to be given,  by any
         one of the Authorized Individuals.

                  (b)  Advances  will be  deposited  in and  repayments  will be
         withdrawn  from an  account  at the  Bank  owned  by the  Borrower,  as
         designated   in  writing  by  the  Borrower  from  time  to  time  (the
         "Designated Account").

                  (c) The Borrower  will  indemnify  and hold the Bank  harmless
         from  all  liability,  loss,  and  costs  in  connection  with  any act
         resulting from telephone or telefax  instructions  the Bank  reasonably
         believes are made by any  Authorized  Individual.  This  paragraph will
         survive this Agreement's termination, and will benefit the Bank and its
         officers, employees, and agents.

         6.3.  Direct Debit.  The Borrower  agrees that on the Due Date the Bank
will debit the Billed Amount from the Designated Account.

         6.4.  Banking Days.  Unless  otherwise  provided in this  Agreement,  a
banking  day is a day  other  than a  Saturday,  Sunday  or  other  day on which
commercial  banks are authorized to close,  or are in fact closed,  in the state
where the Bank's lending office is located,  and, if such day relates to amounts
bearing  interest  at an  offshore  rate (if  any),  means any such day on which
dealings in dollar  deposits are  conducted  among banks in the offshore  dollar
interbank  market.  All payments and  disbursements  which would be due on a day
which is not a banking day will be due on the next  banking  day.  All  payments
received on a day which is not a banking  day will be applied to the  Facilities
on the next banking day.

         6.5.  Interest   Calculation.   Except  as  otherwise  stated  in  this
Agreement,  all  interest and fees,  if any,  will be computed on the basis of a
360-day  year and the  actual  number  of days  elapsed.  This  results  in more
interest  or a  higher  fee than if a  365-day  year is  used.  Installments  of
principal  which are not paid when due under this  Agreement  shall  continue to
bear interest until paid.

         6.6.  Default  Rate.  Upon the  occurrence  of any  default  under this
Agreement, all amounts outstanding under this Agreement, including any interest,
fees,  or costs which are not paid when due, will at the option of the Bank bear
interest  at a rate which is 4.0  percentage  point(s)  higher  than the rate of
interest otherwise provided under this Agreement. This may result in compounding
of interest. This will not constitute a waiver of any default.

7.       CONDITIONS

The Bank must receive the following items, in form and content acceptable to the
Bank,  before it is  required  to extend any credit to the  Borrower  under this
Agreement:

         7.1.  Conditions  to  First  Extension  of  Credit.  Before  the  first
extension of credit:

                  (a) Merger.  Evidence  that the merger of Widmer into  Redhook
         Ale Brewery,  Incorporated,  a Washington corporation ("Redhook"),  and
         the resulting name change of Redhook to Craft Brewers  Alliance,  Inc.,
         has been completed.

                  (b) Authorizations.  Evidence that the execution, delivery and
         performance  by the Borrower of this  Agreement  and any  instrument or
         agreement required under this Agreement have been duly authorized.

                  (c) Governing Documents.  Copies of the Borrower's articles of
         incorporation,  bylaws,  articles  of merger  reflecting  the merger of
         Widmer and Redhook, articles of amendment evidencing the name change to
         Craft  Brewers  Alliance,  Inc.,  and  certificate  of existence of the
         Borrower.

                  (d) Legal Opinion. A written opinion from the Borrower's legal
         counsel  affirming  the  elements of Sections  8.1 through 8.5, in form
         acceptable to the Bank.

                  (e) Security  Agreement.  Signed original  security  agreement
         covering the personal property collateral which the Bank requires.

                                      -8-
<PAGE>

                  (f) Perfection and Evidence of Priority.  Financing statements
         and fixture  filings (and any  collateral  in which the Bank requires a
         possessory security interest), together with evidence that the security
         interests  and liens in favor of the Bank are valid,  enforceable,  and
         prior to all  others'  rights  and  interests,  except  those  the Bank
         consents to in writing.

                  (g)  Payment  of  Fees.  Payment  of all  accrued  and  unpaid
         expenses incurred by the Bank as required by Section 4.3.

                  (h) Deed of Trust Amendment.  Signed and acknowledged original
         deed of trust amendment executed by the Borrower and the Bank, amending
         the Deed of Trust.

                  (i) Title Insurance. At the Borrower's expense, a modification
         endorsement to the ALTA lender's title  insurance  policy  covering the
         Deed of Trust,  showing  no liens  subsequent  to the date of  original
         recording of the Deed of Trust, other than those acceptable to the Bank
         in its sole discretion.

                  (j) Other  Items.  Any other  items  that the Bank  reasonably
         requires.

         7.2.  Conditions  to  Subsequent   Advances.   Before  each  subsequent
extension of credit:

                  (a)  Representations  and Warranties.  The representations and
         warranties  made  by the  Borrower  in the  loan  documents  and in any
         certificate,  document,  or financial  statement  furnished at any time
         shall  continue to be true and correct,  except to the extent that such
         representations and warranties expressly relate to an earlier date.

                  (b) No Material Adverse Change.  Subsequent to the date of the
         Borrower's  most recent annual  financial  statements  delivered to the
         Bank,  the Borrower has not incurred any  liabilities  or  obligations,
         direct or contingent that are prohibited by this  Agreement,  and there
         has not been any material adverse change in the financial  condition of
         the Borrower taken as a whole.

                  (c) Compliance. No event of default or other event which, upon
         notice or lapse of time or both  would  constitute  an event of default
         under this Agreement,  shall have occurred and be continuing,  or shall
         exist after giving effect to the advance of credit to be made.

8.       REPRESENTATIONS AND WARRANTIES

When the Borrower signs this Agreement, so long as the Bank's commitment to make
advances under the Facilities is continuing, and until the Facilities are repaid
in full, the Borrower makes the following  representations and warranties.  Each
request   for  an   extension   of  credit   constitutes   a  renewal  of  these
representations and warranties as of the date of the request:

         8.1. Formation.  The Borrower is duly formed as a corporation  existing
under the laws of the state of Washington.

         8.2.  Authorization.  This  Agreement,  and any instrument or agreement
required hereunder, are within the Borrower's powers, have been duly authorized,
and do not conflict with any of its organizational papers.

         8.3.  Enforceable  Agreement.  This  Agreement  is a legal,  valid  and
binding  agreement  of  the  Borrower,   enforceable  against  the  Borrower  in
accordance with its terms, and any instrument or agreement  required  hereunder,
when  executed  and  delivered,  will be  similarly  legal,  valid,  binding and
enforceable.

         8.4. Good Standing.  In each state in which the Borrower does business,
it is properly licensed, in good standing (if applicable),  and, where required,
in compliance with fictitious name statutes.

         8.5. No  Conflicts.  This  Agreement  does not  conflict  with any law,
agreement, or obligation by which the Borrower is bound.

         8.6.  Financial  Information.  All financial and other information that
has been or will be  supplied to the Bank is  sufficiently  complete to give the
Bank accurate  knowledge of the Borrower's  financial  condition,  including all
material  contingent  liabilities.  Since the date of the most recent  financial
statement provided to the Bank, there has been no material adverse change in the
business condition (financial or otherwise), operations, properties or prospects
of the Borrower taken as a whole.

                                      -9-
<PAGE>

         8.7. Lawsuits.  There is no lawsuit, tax claim or other dispute pending
or threatened  against the Borrower which, if lost,  would impair the Borrower's
financial  condition  or  ability to repay the  Facilities,  except as have been
disclosed in writing to the Bank.

         8.8. Collateral.  All collateral required in this Agreement is owned by
the  Borrower  free of any title  defects or any liens or  interests  of others,
except those which have been approved by the Bank in writing.

         8.9.  Permits,   Franchises.   The  Borrower   possesses  all  permits,
memberships,  franchises,  contracts  and licenses  required  and all  trademark
rights, trade name rights, patent rights and fictitious name rights necessary to
enable it to conduct the business in which it is now engaged.

         8.10.  Other  Obligations.  The  Borrower  is  not  in  default  on any
obligation  for borrowed  money,  any  purchase  money  obligation  or any other
material lease, commitment,  contract,  instrument or obligation, except as have
been disclosed in writing to the Bank.

         8.11.  Tax  Matters.  The  Borrower  has no  knowledge  of any  pending
assessments or adjustments of its income tax for any year and all taxes due have
been paid, except as have been disclosed in writing to the Bank.

         8.12.  No Event of Default.  There is no event which is, or with notice
or lapse of time or both would be, a default under this Agreement.

         8.13. Insurance.  The Borrower has obtained,  and maintained in effect,
the insurance coverage required in Section 9.16 of this Agreement.

         8.14.  Employee  Benefit  Plan.  The Borrower is in  compliance  in all
material respects with the provisions of the Employee Retirement Income Security
Act  of  1974,  as  amended   ("ERISA"),   and  the  regulations  and  published
interpretations  thereunder.  The  Borrower  has  not  engaged  in any  acts  or
omissions,  which would make the Borrower  materially liable to any Plan, to any
of  its  participants,   or  to  the  Internal  Revenue  Service,  under  ERISA.
Capitalized terms in this section shall have the meanings defined within ERISA.

         8.15. UCC  Information.  The Borrower was  originally  formed under the
laws  of the  State  of  Oregon,  and  remains  a  Washington  corporation.  The
Borrower's  "organizational  identification  number" for  purposes of the UCC is
600407212.  The Borrower's  place of business (or, if the Borrower has more than
one place of  business,  its chief  executive  office) is located at the address
listed under the Borrower's signature on this Agreement.

9.       COVENANTS

The Borrower agrees, so long as the Bank's commitment to make advances under the
Facilities is continuing, and until the Facilities are repaid in full:

         9.1.  Use of  Proceeds.  To use the  proceeds of the Line of Credit for
working capital  purposes and general  corporate  purposes,  and to use the Term
Loan for  refinance of  construction  of a brewery  expansion  and other general
corporate purposes.

         9.2.  Financial   Information.   To  provide  the  following  financial
information and statements in form and content  acceptable to the Bank, and such
additional information as requested by the Bank from time to time:

                  (a)  Within  120  days of the  fiscal  year  end,  the  annual
         financial  statements  of  the  Borrower,  certified  and  dated  by an
         authorized  financial  officer.  These  financial  statements  must  be
         audited  (with an  opinion  satisfactory  to the  Bank) by a  Certified
         Public  Accountant  acceptable  to the Bank.  The  statements  shall be
         prepared on a consolidated basis.

                  (b) Within 45 days of the  period's  end  (including  the last
         period in each fiscal  year),  quarterly  financial  statements  of the
         Borrower, certified and dated by an authorized financial officer. These
         financial statements may be  company-prepared.  The statements shall be
         prepared on a consolidated and consolidating basis.

                                      -10-
<PAGE>

                  (c)  Within the  period(s)  provided  in (a) and (b) above,  a
         compliance   certificate  of  the  Borrower  signed  by  an  authorized
         financial officer of the Borrower setting forth (i) the information and
         computations  (in sufficient  detail) to establish that the Borrower is
         in  compliance  with all  financial  covenants at the end of the period
         covered  by the  financial  statements  then being  furnished  and (ii)
         whether there existed as of the date of such  financial  statements and
         whether  there  exists as of the date of the  certificate,  any default
         under this  Agreement and, if any such default  exists,  specifying the
         nature  thereof and the action the  Borrower is taking and  proposes to
         take with respect thereto.

                  (d) By  January  31 of each  year,  an annual  budget  for the
         Borrower.

         9.3. Funded Debt to EBITDA Ratio. To maintain on a consolidated basis a
ratio of Funded  Debt to EBITDA  not  exceeding  the ratios  indicated  for each
period specified below:

                   Period                                      Ratios
                   ------                                      ------

                   From the closing date
                   through September 30, 2008:                 4.75 to 1

                   From December 31, 2008
                   through September 30, 2009                  4.0 to 1

                   From December 31, 2009
                   through September 30, 2010                  3.5 to 1

                   From December 31, 2010,
                   and thereafter                              3.0 to 1

                  (a)  "Funded  Debt"  means  all  outstanding  liabilities  for
         borrowed  money  and  other  interest-bearing  liabilities,   including
         current  and  long  term  debt,   less  the   non-current   portion  of
         Subordinated Liabilities.

                  (b) "EBITDA"  means net income,  less income or plus loss from
         discontinued  operations and  extraordinary  items,  plus income taxes,
         plus interest expense, plus depreciation,  depletion, and amortization,
         minus dividends,  plus other non-cash charges,  including restructuring
         charges in accordance  with the schedule  attached as Exhibit B to this
         Agreement,  plus additional  indirect charges of $2,000,000 for quarter
         ending  September 30, 2008, and of $1,000,000  for the quarters  ending
         December 31, 2008, and March 31, 2009 (and of zero thereafter).

                  (c) "Subordinated  Liabilities" means liabilities subordinated
         to the Borrower's obligations to the Bank in a manner acceptable to the
         Bank in its sole discretion.

                  (d) This ratio will be calculated at the end of each reporting
         period  for which the Bank  requires  financial  statements,  using the
         results of the twelve-month period ending with that reporting period.

                                      -11-
<PAGE>

         9.4. Fixed Charge Coverage Ratio. To maintain on a consolidated basis a
Fixed Charge  Coverage  Ratio of at least the ratios  indicated  for each period
specified below:

                    Period                                      Ratios
                    ------                                      ------

                    From the closing date
                    through quarter ending
                    September 30, 2008:                         1.15 to 1

                    From quarter ending
                    December 31, 2008 and thereafter            1.25 to 1

                  (a) "Fixed Charge Coverage Ratio" means the ratio of:

                           (i) EBITDA (as defined  above) minus cash taxes minus
                  Maintenance Capital Expenditures, divided by

                           (ii) current  year  scheduled  principal  payments on
                  long-term Debt,  plus current portion of capital leases,  plus
                  cash interest expense.

                  (b)  "Maintenance   Capital   Expenditures"  means  $2,000,000
         through  December 31, 2008, and $3,000,000 as of all reporting  periods
         thereafter.

                  (c) This ratio will be calculated at the end of each reporting
         period  for which the Bank  requires  financial  statements,  using the
         results of the twelve-month  period ending with that reporting  period.
         The current portion of long-term liabilities will be measured as of the
         last day of the calculation period.

         9.5.  Dividends  and  Stock  Repurchases.  Not to  declare  or pay  any
dividends on any of its shares, and not to purchase, redeem or otherwise acquire
for value any of its  shares,  or create any sinking  fund in relation  thereto,
except dividends or share repurchases may be paid if:

                  (a) prior to the  distribution  the Borrower is in  compliance
         with Section 9.4, AND

                  (b) after the distribution the Borrower would be in compliance
         with Section 9.4 on a pro forma basis, AND

                  (c) no event of default has occurred and is  continuing  under
         this  Agreement,  and no event  of  default  would  result  under  this
         Agreement from such dividend(s) or repurchase(s).

         9.6. Retention.  Not to release the general contractor's  retention for
the Project until a certificate of occupancy,  if applicable,  has been obtained
by the  Borrower  as to the  Project,  and until 90 days have  passed  following
recording of a notice of completion,  and no construction liens appear of record
or are being litigated.

         9.7.  Bank  as  Principal  Depository.  To  maintain  the  Bank  as its
principal  depository  bank,  including for the  maintenance  of business,  cash
management, operating and administrative deposit accounts.

         9.8.  Other  Debts.  Not to have  outstanding  or incur  any  direct or
contingent  liabilities  (including  liability for the liabilities of others) or
lease obligations  (collectively,  "Indebtedness") (other than Indebtedness owed
to the  Bank)  without  the  Bank's  written  consent.  This  does not  prohibit
(collectively, "Permitted Indebtedness"):

                  (a) Acquiring goods,  supplies, or merchandise on normal trade
credit.

                  (b)  Endorsing  negotiable  instruments  received in the usual
         course of business.

                  (c) Obtaining surety bonds in the usual course of business.

                  (d) Debt  secured by  purchase  money  security  interests  in
         assets  acquired  after  the  date of this  Agreement  ("purchase-money
         debt"), if such  purchase-money  debt does not exceed $1,000,000 of new
         purchase-money debt annually.

                                      -12-
<PAGE>

                  (e) Equipment leases under lease  arrangements with the Bank's
         equipment lease affiliate.

                  (f)  Liabilities,  lines of credit and leases in  existence on
         the date of this Agreement disclosed in writing to the Bank.

                  (g) In  addition  to the  Indebtedness  permitted  by Sections
         9.8(a) through (f), other  Indebtedness  in an aggregate  amount not to
         exceed $250,000 at any time outstanding.

         9.9.  Other  Liens.  Not to  create,  assume,  or  allow  any  security
interest, lien, judicial liens, or assignments (collectively,  "Liens") on or of
property  the  Borrower  now or later  owns,  except  (collectively,  "Permitted
Liens"):

                  (a) Liens and security interests in favor of the Bank.

                  (b) Liens for taxes not yet due.

                  (c) Liens outstanding on the date of this Agreement  disclosed
         in  writing  to the  Bank,  or of  public  record  on the  date of this
         Agreement.

                  (d) Liens securing Permitted Indebtedness.

                  (e) easements,  rights of way, and other encumbrances on title
         to real  property  owned or leased by Borrower that do not render title
         to the property encumbered thereby unmarketable or materially adversely
         affect the use of such property for its present purposes.

                  (f) pledges or deposits to secure  obligations  under workers'
         compensation  laws  or  similar  legislation  or to  secure  public  or
         statutory obligations.

                  (g) Liens imposed by law, such as  materialmen's,  mechanics',
         carriers',  workmen's and,  repairmen's,  Liens and other similar Liens
         arising in the ordinary course of business  securing  obligations  that
         are either:  (i) not overdue for a period of more than 45 days; or (ii)
         are being  contested in good faith and by proper  proceedings and as to
         which appropriate reserves are being maintained.

                  (h) Liens on proceeds of any of the assets permitted to be the
         subject of any Lien or assignment  permitted by Section 9.8(d), so long
         as such Liens only secure the  purchase  price of the assets  purchased
         with such financing.

                  (i) The  replacement,  extension,  or renewal of any Permitted
         Lien,  so long as such Lien does not secure an amount  greater than the
         amount previously secured by such Lien.

         9.10. Maintenance of Assets.

                  (a) Not to sell, assign,  lease, transfer or otherwise dispose
         of any part of the Borrower's  business or the Borrower's assets except
         in the ordinary course of the Borrower's business.

                  (b) Not to sell, assign,  lease, transfer or otherwise dispose
         of any  assets  for less  than fair  market  value,  or enter  into any
         agreement to do so.

                  (c)  Not to  enter  into  any  sale  and  leaseback  agreement
         covering any of its fixed assets.

                  (d) To  maintain  and  preserve  all rights,  privileges,  and
         franchises the Borrower now has.

                  (e) To make any repairs, renewals, or replacements to keep the
         Borrower's properties in good working condition.

         9.11.  Investments.  Not  to  have  any  existing,  or  make  any  new,
investments in any individual or entity,  or make any capital  contributions  or
other transfers of assets to any individual or entity, except for:

                  (a) Existing investments disclosed to the Bank in writing.

                                      -13-
<PAGE>

                  (b)  Investments in Fulton Street Brewery LLC ("FSB") and Kona
Brewery LLC ("Kona").

                  (c) Investments in any of the following:

                           (i) certificates of deposit;

                           (ii) Money market mutual funds, bankers' acceptances,
                  eurodollar  investments,   repurchase  agreements,  and  other
                  short-term money market investments acceptable to the Bank.

                           (iii) U.S.  treasury  bills and other  obligations of
                  the federal government;

                           (iv)   readily   marketable   securities   (including
                  commercial  paper,  but excluding  restricted  stock and stock
                  subject to the  provisions of Rule 144 of the  Securities  and
                  Exchange Commission).

                  (d) Minority interests in other craft brewers up to $5,000,000
         in  the  aggregate,  provided  that  after  the  closing  of  any  such
         investment  the amount  available  to be drawn under the Line of Credit
         must exceed $2,500,000.

         9.12.  Loans.  Not to make any loans,  advances or other  extensions of
credit to any individual or entity, except for:

                  (a)  Existing  extensions  of credit  disclosed to the Bank in
         writing.

                  (b)   Extensions   of   credit  to  the   Borrower's   current
         subsidiaries.

                  (c) Extensions of credit in the nature of accounts  receivable
         or notes receivable arising from the sale or lease of goods or services
         in the ordinary course of business to non-affiliated entities.

                  (d)  Extensions  of credit to  officers  of the  Borrower  for
         relocation or similar  expenses so long as the aggregate  amount of all
         such loans outstanding do not at any one time exceed $250,000.

         9.13. Change of Ownership.  Not to cause, permit, or suffer a Change in
Control  to occur.  "Change  in  Control"  means an event or series of events by
which:

                  (a) any  "person"  or  "group"  (as  such  terms  are  used in
         Sections  13(d) and 14(d) of the  Securities  Exchange Act of 1934, but
         excluding any employee benefit plan of such person or its subsidiaries,
         and any person or entity  acting in its  capacity as trustee,  agent or
         other  fiduciary  or  administrator  of  any  such  plan)  becomes  the
         "beneficial  owner"  (as  defined  in Rules  13d-3 and 13d-5  under the
         Securities Exchange Act of 1934, except that a person or group shall be
         deemed  to have  "beneficial  ownership"  of all  securities  that such
         person  or  group  has the  right to  acquire,  whether  such  right is
         exercisable  immediately or only after the passage of time (such right,
         an "option  right")),  directly  or  indirectly,  of 50% or more of the
         equity  securities of the Borrower  entitled to vote for members of the
         board of directors or  equivalent  governing  body of the Borrower on a
         fully-diluted  basis (and taking into account all such  securities that
         such  person or group has the right to acquire  pursuant  to any option
         right); or

                  (b) any  individual(s)  or entity(s)  acting in concert  shall
         have  acquired by contract or  otherwise,  or shall have entered into a
         contract or arrangement that, upon consummation thereof, will result in
         its or  their  acquisition  of  the  power  to  exercise,  directly  or
         indirectly, control over the equity securities of the Borrower entitled
         to vote for members of the board of directors or  equivalent  governing
         body of the Borrower on a fully-diluted  basis (and taking into account
         all such securities that such  individual(s)  or entity(s) or group has
         the right to acquire pursuant to any option right)  representing 50% or
         more of the combined voting power of such securities.

         9.14. Additional Negative Covenants. Not to, without the Bank's written
consent:

                  (a)   Enter   into  any   consolidation,   merger,   or  other
         combination,  or become a partner in a partnership, a member of a joint
         venture, or a member of a limited liability company.

                                      -14-
<PAGE>

                  (b) Acquire or purchase a business or its assets.

                  (c) Engage in any business activities  substantially different
         from the Borrower's present business.

                  (d) Liquidate or dissolve the Borrower's business.

                  (e) Voluntarily  suspend its business for more than 15 days in
         any 30-day period.

         9.15. Notices to Bank. To promptly notify the Bank in writing of:

                  (a) Any lawsuit  over  $1,000,000  against the Borrower or any
         Obligor.

                  (b) Any substantial dispute between any governmental authority
         and the Borrower or any Obligor.

                  (c) Any event of default  under this  Agreement,  or any event
         which,  with notice or lapse of time or both, would constitute an event
         of default.

                  (d) Any  material  adverse  change  in the  Borrower's  or any
         Obligor's  business  condition  (financial or  otherwise),  operations,
         properties or prospects, taken as a whole, or the Borrower's ability to
         repay the Facilities.

                  (e) Any change in the Borrower's or any Obligor's name,  legal
         structure, place of business, or chief executive office if the Borrower
         or any Obligor has more than one place of business.

                  (f) Any actual  contingent  liabilities of the Borrower or any
         Obligor,  and any such  contingent  liabilities  which  are  reasonably
         foreseeable,  where such liabilities are in excess of $1,000,000 in the
         aggregate.

                  (g)  Until  such  time  as  the   endorsement   for  lien-free
         completion as required under Section 10.7 has been provided,  notice of
         any construction liens recorded against the real property collateral.

For purposes of this Agreement, "Obligor" shall mean any guarantor and any party
pledging collateral to the Bank.

         9.16. Insurance.

                  (a)  General  Business   Insurance.   To  maintain   insurance
         satisfactory  to the Bank as to  amount,  nature and  carrier  covering
         property  damage  (including  loss of use and  occupancy) to any of the
         Borrower's real properties, business interruption insurance, commercial
         general  liability   insurance   including   coverage  for  contractual
         liability,  product liability and workers' compensation,  and any other
         insurance which is usual and reasonable for the Borrower's business.

                  (b)  Insurance  Covering  Personal  Property  Collateral.   To
         maintain all risk property damage insurance policies (including without
         limitation  windstorm  coverage,  and hurricane coverage as applicable,
         and to the extent  obtainable  at a  commercially  reasonable  premium)
         covering the tangible personal property comprising the collateral. Each
         insurance  policy  must be in an amount  acceptable  to the  Bank.  The
         insurance must be issued by an insurance company acceptable to the Bank
         and must include a lender's  loss payable  endorsement  in favor of the
         Bank in a form  acceptable  to the Bank.  Upon the request of the Bank,
         the Borrower shall deliver to the Bank a copy of each insurance policy,
         or, if permitted by the Bank, a  certificate  of insurance  listing all
         insurance in force.

                  (c) Insurance  Covering Real Property  Collateral.  To provide
         and maintain in force at all times all risk property  damage  insurance
         (including  without  limitation   windstorm  coverage,   and  hurricane
         coverage as applicable) on the real property  collateral and such other
         type of insurance on the real property collateral as may be required by
         the  Bank  in its  reasonable  judgment.  At the  Bank's  request,  the
         Borrower  shall  provide  the Bank with a  counterpart  original of any
         policy,  together  with a  certificate  of insurance  setting forth the
         coverage,  the limits of liability,  the carrier, the policy number and
         the  expiration  date.  Each such  policy of  insurance  shall be in an
         amount,  for a term, and in form and content  satisfactory to the Bank,
         and  shall be  written  only by  companies  approved  by the  Bank.  In
         addition,  each policy of hazard  insurance shall include a Form 438BFU
         or equivalent loss payable endorsement in favor of the Bank.

                                      -15-
<PAGE>

         9.17. Damages and Insurance and Condemnation Proceeds.

                  (a) The Borrower hereby absolutely and irrevocably  assigns to
         the Bank,  and  authorizes  the payor to pay to the Bank, the following
         claims,  causes of  action,  awards,  payments  and  rights to  payment
         (collectively, the "Claims"):

                           (i) all awards of damages and all other  compensation
                  payable  directly  or  indirectly  because of a  condemnation,
                  proposed  condemnation  or taking for  public or  private  use
                  which affects all or part of the real  property  collateral or
                  any interest in it;

                           (ii) all other  awards,  claims and causes of action,
                  arising  out of any breach of  warranty  or  misrepresentation
                  affecting all or any part of the real property collateral,  or
                  for damage or injury to, or defect in, or decrease in value of
                  all or part of the real property collateral or any interest in
                  it;

                           (iii) all proceeds of any insurance  policies payable
                  because of loss  sustained to all or part of the real property
                  collateral,   whether  or  not  such  insurance  policies  are
                  required by the Bank; and

                           (iv) all  interest  which  may  accrue  on any of the
                  foregoing.

                  (b) The Borrower shall immediately  notify the Bank in writing
         if:

                           (i)  any  damage  occurs  or any  injury  or  loss is
                  sustained to all or part of the real property  collateral,  or
                  any action or proceeding  relating to any such damage,  injury
                  or loss is commenced; or

                           (ii) any offer is made,  or any action or  proceeding
                  is  commenced,   which  relates  to  any  actual  or  proposed
                  condemnation  or  taking  of all or part of the real  property
                  collateral.

         If the  Bank  chooses  to do so,  it may in its own name  appear  in or
         prosecute any action or proceeding to enforce any cause of action based
         on breach of warranty or misrepresentation, or for damage or injury to,
         defect  in, or  decrease  in value of all or part of the real  property
         collateral,  and it may make any compromise or settlement of the action
         or  proceeding.  The Bank,  if it so chooses,  may  participate  in any
         action or proceeding  relating to condemnation or taking of all or part
         of the real property collateral, and may join the Borrower in adjusting
         any loss covered by insurance.

                  (c) All proceeds of the Claims assigned to the Bank under this
         Section  shall be paid to the Bank.  In each  instance,  the Bank shall
         apply those  proceeds first toward  reimbursement  of all of the Bank's
         costs and expenses of  recovering  the proceeds,  including  attorneys'
         fees.  The Borrower  further  authorizes the Bank, at the Bank's option
         and in the Bank's sole  discretion,  and regardless of whether there is
         any  impairment  of the real  property  collateral,  (i) to  apply  the
         balance of such proceeds, or any portion of them, to pay or prepay some
         or all of the obligations of the Borrower under this Agreement, in such
         order or  proportion  as the Bank  may  determine,  or (ii) to hold the
         balance   of  such   proceeds,   or  any   portion   of  them,   in  an
         interest-bearing  account  to be used for the  cost of  reconstruction,
         repair  or  alteration  of the real  property  collateral,  or (iii) to
         release the balance of such  proceeds,  or any portion of them,  to the
         Borrower. If any proceeds are released to the Borrower,  the Bank shall
         not be obligated to see to, approve or supervise the proper application
         of such  proceeds.  If the  proceeds are held by the Bank to be used to
         reimburse the Borrower for the costs of  restoration  and repair of the
         real  property  collateral,  the  real  property  collateral  shall  be
         restored to the  equivalent  of its original  condition,  or such other
         condition  as the Bank may  approve in  writing.  The Bank may,  at the
         Bank's  option,  condition  disbursement  of the proceeds on the Bank's
         approval  of such plans and  specifications  prepared  by an  architect
         satisfactory  to the Bank,  contractor's  cost  estimates,  architect's
         certificates,  waivers of liens,  sworn  statements  of  mechanics  and
         materialmen, and such other evidence of costs, percentage of completion
         of construction,  application of payments, and satisfaction of liens as
         the Bank may reasonably require.

                                      -16-
<PAGE>

         9.18.  Compliance  with Laws.  To comply with the laws  (including  any
fictitious or trade name  statute),  regulations,  and orders of any  government
body with authority over the Borrower's business.

         9.19.  ERISA  Plans.  Promptly  during each year,  to pay and cause any
subsidiaries to pay contributions  adequate to meet at least the minimum funding
standards  under  ERISA with  respect to each and every  Plan;  file each annual
report  required to be filed pursuant to ERISA in connection  with each Plan for
each year;  and notify the Bank  within ten (10) days of the  occurrence  of any
Reportable  Event that might  constitute  grounds for termination of any capital
Plan by the Pension Benefit  Guaranty  Corporation or for the appointment by the
appropriate  United States  District  Court of a trustee to administer any Plan.
"ERISA" means the Employee  Retirement  Income  Security Act of 1974, as amended
from time to time.  Capitalized  terms in this  section  shall have the meanings
defined within ERISA.

         9.20. Books and Records. To maintain adequate books and records.

         9.21.  Audits.  To  allow  the  Bank  and its  agents  to  inspect  the
Borrower's  properties and examine,  audit, and make copies of books and records
at any reasonable  time. If any of the Borrower's  properties,  books or records
are in the possession of a third party, the Borrower authorizes that third party
to permit the Bank or its agents to have access to perform inspections or audits
and  to  respond  to  the  Bank's  requests  for  information   concerning  such
properties, books and records.

         9.22.  Perfection  of Liens.  To help the Bank  perfect and protect its
security  interests  and liens,  and reimburse it for related costs it incurs to
protect its security interests and liens.

         9.23. Cooperation.  To take any action reasonably requested by the Bank
to carry out the intent of this Agreement.

         9.24.  Flood  Insurance.  If any improved real  property  collateral is
located in a designated  flood hazard area,  or becomes  located in a designated
flood hazard area after the date of this Agreement as a result of any re-mapping
of flood insurance maps by the Federal Emergency Management Agency, the Borrower
will be required to maintain  flood  insurance  on the real  property and on any
tangible personal property collateral located on the real property. In addition,
the  Borrower  shall  maintain  such other  insurance as the Bank may require to
comply  with  the  Bank's   regular   requirements   and  practices  in  similar
transactions, which may include earthquake insurance and insurance covering acts
of terrorism.

         9.25.  Inspections  and Appraisals of Real Property.  To allow the Bank
and its agents to visit the real property  collateral at any reasonable time for
the purpose of  inspecting  the real  property and  conducting  appraisals,  and
deliver  to the Bank any  financial  or other  information  concerning  the real
property as the Bank may request.

         9.26.  Use or Leasing of the Real  Property  Collateral.  To occupy the
real property  collateral for the conduct of its regular business.  The Borrower
will not change its intended use of the real  property  without the Bank's prior
written approval.

         9.27.  Indemnity  Regarding  Use  of  Real  Property   Collateral.   To
indemnify,  defend  with  counsel  acceptable  to the  Bank,  and  hold the Bank
harmless from and against all liabilities,  claims, actions,  damages, costs and
expenses  (including all legal fees and expenses of Bank's counsel)  arising out
of or resulting from the  construction of any  improvements on the real property
collateral, or the ownership, operation, or use of the real property collateral,
whether such claims are based on theories of derivative  liability,  comparative
negligence  or  otherwise,  except to the extent that the  liabilities,  claims,
actions, damages, costs and expenses arise out of the Bank's gross negligence or
willful  misconduct.  The Borrower's  obligations to the Bank under this Section
shall survive  termination  of this  Agreement  and repayment of the  Borrower's
obligations  to the Bank  under  this  Agreement,  and  shall  also  survive  as
unsecured  obligations  after any  acquisition  by the Bank of the real property
collateral or any part of it by foreclosure or any other means.

                                      -17-
<PAGE>

10.      DEFAULT AND REMEDIES

If any of the following events of default occurs, the Bank may do one or more of
the  following:  declare the  Borrower in  default,  stop making any  additional
credit  available to the Borrower,  and require the Borrower to repay its entire
debt immediately and without prior notice. In addition,  if any event of default
occurs, the Bank shall have all rights,  powers and remedies available under any
instruments  and  agreements  required by or executed  in  connection  with this
Agreement,  as well as all rights and remedies available at law or in equity. If
an event of default  occurs under  Section  10.5,  with respect to the Borrower,
then the entire debt outstanding under this Agreement will  automatically be due
immediately.

         10.1.  Failure to Pay. The Borrower  fails to make a payment under this
Agreement when due, and such failure is not cured within three (3) business days
after the due date.

         10.2.  Other Bank  Agreements.  The Borrower (or any Obligor)  fails to
observe or  perform  any  obligation,  term,  covenant  or  agreement  under any
agreement (other than the Loan Documents, as defined below) the Borrower (or any
Obligor) has with the Bank or any affiliate of the Bank.

         10.3.  Cross-default.   Any  default  occurs  under  any  agreement  in
connection  with any credit the Borrower  (or any  Obligor)  has  obtained  from
anyone else or which the Borrower (or any Obligor) has guaranteed, if the amount
of credit exceeds $250,000.

         10.4.  Representations  and Warranties.  Any representation or warranty
made by the Borrower herein or financial  information  given by the Borrower (or
any of its officers) in connection  with this Agreement shall prove to have been
incorrect in any material respect when made.

         10.5.  Bankruptcy.  The  Borrower  or any  Obligor  files a  bankruptcy
petition,  an  involuntary  bankruptcy  petition  is  filed  against  any of the
foregoing  parties  and such  petition  is not  dismissed  within 60 days  after
filing,  or the  Borrower  or any  Obligor  makes a general  assignment  for the
benefit of creditors.

         10.6.  Receivers.  A receiver or similar  official is  appointed  for a
substantial portion of the Borrower's or any Obligor's business, or the business
is terminated, or any Obligor is liquidated or dissolved.

         10.7.  Lien-Free  Completion.   The  Bank  has  not  received,  at  the
Borrower's  expense, a lien-free  completion  endorsement to its title insurance
policy insuring the Deed of Trust, within 120 days of the filing of a completion
notice for the Project.

         10.8. Lien Priority. Except for Permitted Liens, the Bank fails to have
an  enforceable  first lien  (except  for any prior  liens to which the Bank has
consented in writing) on or security  interest in any property given as security
for this Agreement.

         10.9.  Lawsuits.  Any lawsuit or lawsuits are filed on behalf of one or
more trade creditors  against the Borrower or any Obligor in an aggregate amount
of $1,000,000 or more in excess of any insurance coverage.

         10.10.  Judgments.  Any  judgments  or  arbitration  awards are entered
against the Borrower or any Obligor,  or the Borrower or any Obligor enters into
any settlement  agreements with respect to any litigation or arbitration,  in an
aggregate amount of $1,000,000 or more in excess of any insurance coverage.

         10.11. Material Adverse Change. A material adverse change occurs, or is
reasonably  likely to  occur,  in the  Borrower's  (or any  Obligor's)  business
condition (financial or otherwise),  operations,  properties or prospects, taken
as a whole, or ability to repay the Facilities.

         10.12.  Default under Loan Documents.  The Borrower fails to observe or
perform any term,  covenant,  or  agreement in this  Agreement or any  guaranty,
subordination agreement,  security agreement,  deed of trust, mortgage, or other
document   required  by  or  delivered  in   connection   with  this   Agreement
(collectively,  the "Loan  Documents"),  and such failure is not cured within 30
days after written notice thereof is delivered to the Borrower by the Bank.

         10.13. ERISA Plans. Any one or more of the following events occurs with
respect to a Plan of the Borrower  subject to Title IV of ERISA,  provided  such
event or events could  reasonably  be expected,  in the judgment of the Bank, to
subject the Borrower to any tax, penalty or liability (or any combination of the
foregoing) which, in the aggregate,  could have a material adverse effect on the
financial condition of the Borrower, taken as a whole:

                                      -18-
<PAGE>

                  (a) A reportable  event shall occur under  Section  4043(c) of
         ERISA with respect to a Plan.

                  (b) Any Plan  termination  (or  commencement of proceedings to
         terminate a Plan) or the full or partial  withdrawal from a Plan by the
         Borrower or any ERISA Affiliate.

11.      ENFORCING THIS AGREEMENT; MISCELLANEOUS

         11.1. GAAP. Except as otherwise stated in this Agreement, all financial
information  provided to the Bank and all financial covenants will be made under
generally accepted accounting principles, consistently applied.

         11.2.  Oregon Law. This Agreement shall be governed by and construed in
accordance  with the laws of  Oregon.  To the extent  that the Bank has  greater
rights or remedies  under federal law,  whether as a national bank or otherwise,
this  paragraph  shall not be  deemed to  deprive  the Bank of such  rights  and
remedies  as may be  available  under  federal  law.  The  Borrower  irrevocably
consents to the personal jurisdiction of the state and federal courts located in
the State of Oregon in any action  brought  under this  Agreement or any related
loan document,  and any action based upon the  transactions  encompassed by this
Agreement,  whether or not based in contract.  Venue of any such action shall be
laid in Multnomah  County,  Oregon,  unless some other venue is required for the
Bank to fully  realize upon the assets of the  Borrower,  or any  collateral  or
guaranties.

         11.3.  Successors  and  Assigns.  This  Agreement  is  binding  on  the
Borrower's and the Bank's successors and assignees.  The Borrower agrees that it
may not assign this  Agreement  without the Bank's prior  consent.  The Bank may
sell  participations in or assign the Facilities,  and may exchange  information
about the Borrower (including, without limitation, any information regarding any
hazardous  substances)  with  actual or  potential  participants  or  assignees;
provided,  however,  that  except in the event of an  assignment  of 100% of the
Commitment  then held by the Bank, no assignment will be of less than $1,000,000
of the  Commitment  or an integral  multiple of  $1,000,000  in excess  thereof;
further provided,  that any assignee will have the rights and obligations of the
Bank hereunder.

         11.4.  Dispute  Resolution  Provision.  This  section,   including  the
subsections  below, is referred to as the "Dispute  Resolution  Provision." This
Dispute Resolution  Provision is a material  inducement for the parties entering
into this Agreement.

                  (a) This Dispute Resolution  Provision concerns the resolution
         of any controversies or claims between the parties,  whether arising in
         contract,   tort  or  by   statute,   including   but  not  limited  to
         controversies  or  claims  that  arise out of or  relate  to:  (i) this
         Agreement  (including any renewals,  extensions or  modifications);  or
         (ii) any document  related to this Agreement  (collectively a "Claim").
         For the purposes of this Dispute  Resolution  Provision  only, the term
         "parties" shall include any parent corporation, subsidiary or affiliate
         of the Bank involved in the servicing,  management or administration of
         any obligation described or evidenced by this Agreement.

                  (b) At the request of any party to this  Agreement,  any Claim
         shall be resolved by binding arbitration in accordance with the Federal
         Arbitration  Act (Title 9, U.S.  Code) (the "Act").  The Act will apply
         even though this Agreement provides that it is governed by the law of a
         specified state.

                  (c) Arbitration  proceedings  will be determined in accordance
         with the Act, the then-current rules and procedures for the arbitration
         of financial services disputes of the American Arbitration  Association
         or any  successor  thereof  ("AAA"),  and the  terms  of  this  Dispute
         Resolution Provision.  In the event of any inconsistency,  the terms of
         this Dispute Resolution Provision shall control. If AAA is unwilling or
         unable to (i) serve as the provider of  arbitration or (ii) enforce any
         provision of this arbitration  clause,  the Bank may designate  another
         arbitration  organization  with  similar  procedures  to  serve  as the
         provider of arbitration.

                                      -19-
<PAGE>

                  (d)  The   arbitration   shall  be  administered  by  AAA  and
         conducted,  unless otherwise required by law, in Portland,  Oregon. All
         Claims shall be determined by one arbitrator; however, if Claims exceed
         Five Million Dollars  ($5,000,000),  upon the request of any party, the
         Claims shall be decided by three arbitrators.  All arbitration hearings
         shall  commence  within ninety (90) days of the demand for  arbitration
         and close within ninety (90) days of commencement  and the award of the
         arbitrator(s)  shall be issued  within thirty (30) days of the close of
         the hearing. However, the arbitrator(s),  upon a showing of good cause,
         may extend the  commencement  of the  hearing  for up to an  additional
         sixty (60) days.  The  arbitrator(s)  shall  provide a concise  written
         statement  of  reasons  for the  award.  The  arbitration  award may be
         submitted to any court  having  jurisdiction  to be confirmed  and have
         judgment entered and enforced.

                  (e)  The  arbitrator(s)   will  give  effect  to  statutes  of
         limitation in determining  any Claim and may dismiss the arbitration on
         the basis that the Claim is barred.  For purposes of the application of
         any statutes of  limitation,  the service on AAA under  applicable  AAA
         rules  of a  notice  of  Claim is the  equivalent  of the  filing  of a
         lawsuit. Any dispute concerning this arbitration provision or whether a
         Claim is arbitrable shall be determined by the arbitrator(s), except as
         set forth at subsection (h) of this Dispute Resolution  Provision.  The
         arbitrator(s)  shall have the power to award legal fees pursuant to the
         terms of this Agreement.

                  (f) This section does not limit the right of any party to: (i)
         exercise self-help  remedies,  such as but not limited to, setoff; (ii)
         initiate  judicial  or  non-judicial  foreclosure  against  any real or
         personal property  collateral;  (iii) exercise any judicial or power of
         sale rights, or (iv) act in a court of law to obtain an interim remedy,
         such as but not limited to,  injunctive  relief,  writ of possession or
         appointment of a receiver, or additional or supplementary remedies.

                  (g) The filing of a court action is not intended to constitute
         a  waiver  of the  right  of any  party,  including  the  suing  party,
         thereafter to require submittal of the Claim to arbitration.

                  (h) Any arbitration or trial by a judge of any Claim will take
         place on an  individual  basis  without  resort to any form of class or
         representative  action  (the  "Class  Action  Waiver").  Regardless  of
         anything else in this Dispute  Resolution  Provision,  the validity and
         effect of the Class Action Waiver may be determined only by a court and
         not by an arbitrator.  The parties to this Agreement  acknowledge  that
         the Class Action Waiver is material and essential to the arbitration of
         any disputes between the parties and is nonseverable from the agreement
         to arbitrate Claims.  If the Class Action Waiver is limited,  voided or
         found unenforceable,  then the parties' agreement to arbitrate shall be
         null and void with respect to such proceeding,  subject to the right to
         appeal the limitation or invalidation  of the Class Action Waiver.  The
         Parties  acknowledge and agree that under no circumstances will a class
         action be arbitrated.

                  (i)  By   agreeing   to  binding   arbitration,   the  parties
         irrevocably and voluntarily waive any right they may have to a trial by
         jury in respect of any Claim. Furthermore, without intending in any way
         to limit this  Agreement to  arbitrate,  to the extent any Claim is not
         arbitrated,  the parties  irrevocably and  voluntarily  waive any right
         they may have to a trial by jury in respect of such Claim.  This waiver
         of jury trial shall remain in effect even if the Class Action Waiver is
         limited, voided or found unenforceable. WHETHER THE CLAIM IS DECIDED BY
         ARBITRATION  OR BY TRIAL BY A JUDGE,  THE PARTIES AGREE AND  UNDERSTAND
         THAT THE EFFECT OF THIS  AGREEMENT IS THAT THEY ARE GIVING UP THE RIGHT
         TO TRIAL BY JURY TO THE EXTENT PERMITTED BY LAW.

         11.5.  Severability;  Waivers.  If any  part of this  Agreement  is not
enforceable,  the rest of the  Agreement  may be enforced.  The Bank retains all
rights,  even if it makes a loan after default. If the Bank waives a default, it
may enforce a later default.  Any consent or waiver under this Agreement must be
in writing.

         11.6.  Attorneys'  Fees. The Borrower shall  reimburse the Bank for any
reasonable costs and attorneys' fees incurred by the Bank in connection with the
enforcement or  preservation  of any rights or remedies under this Agreement and
any  other  documents  executed  in  connection  with  this  Agreement,  and  in
connection with any amendment,  waiver,  "workout" or  restructuring  under this
Agreement. In the event of a lawsuit or arbitration  proceeding,  the prevailing
party is entitled to recover costs and  reasonable  attorneys'  fees incurred in
connection  with the lawsuit or  arbitration  proceeding,  as  determined by the
court or  arbitrator.  In the event that any case is commenced by or against the
Borrower under the Bankruptcy Code (Title 11, United States Code) or any similar
or  successor  statute,  the Bank is  entitled to recover  costs and  reasonable
attorneys' fees incurred by the Bank related to the preservation, protection, or
enforcement  of any rights of the Bank in such a case.  As used in this section,
"attorneys' fees" includes the allocated costs of the Bank's in-house counsel.

                                      -20-
<PAGE>

         11.7. One Agreement.  This Agreement and any related  security or other
agreements required by this Agreement, collectively:

                  (a) represent  the sum of the  understandings  and  agreements
         between the Bank and the Borrower concerning the Facilities;

                  (b) replace any prior oral or written  agreements  between the
         Bank and the Borrower concerning the Facilities; and

                  (c) are  intended  by the Bank and the  Borrower as the final,
         complete and exclusive statement of the terms agreed to by them.

In the event of any conflict  between this  Agreement  and any other  agreements
required by this  Agreement,  this Agreement will prevail.  Any reference in any
related document to a "promissory note" or a "note" executed by the Borrower and
dated  as of the  date of this  Agreement  shall  be  deemed  to  refer  to this
Agreement, as now in effect or as hereafter amended, renewed, or restated.

         11.8. Statutory Notice. Under Oregon law, most agreements, promises and
commitments made by the Bank concerning loans and other credit  extensions which
are not for  personal,  family or  household  purposes or secured  solely by the
Borrower's residence must be in writing,  express consideration and be signed by
us to be enforceable.

         11.9.  Indemnification.  The Borrower will  indemnify and hold the Bank
harmless from any loss,  liability,  damages,  judgments,  and costs of any kind
relating to or arising  directly or indirectly  out of (a) this Agreement or any
document required hereunder, (b) any credit extended or committed by the Bank to
the Borrower  hereunder,  and (c) any  litigation  or  proceeding  related to or
arising out of this  Agreement,  any such  document,  or any such  credit.  This
indemnity  includes  but  is not  limited  to  attorneys'  fees  (including  the
allocated cost of in-house  counsel).  This  indemnity  extends to the Bank, its
parent, subsidiaries and all of their directors,  officers,  employees,  agents,
successors, attorneys, and assigns. This indemnity will survive repayment of the
Borrower's  obligations to the Bank. All sums due to the Bank hereunder shall be
obligations of the Borrower, due and payable immediately without demand.

         11.10.  Notices.  Unless  otherwise  provided in this  Agreement  or in
another agreement between the Bank and the Borrower,  all notices required under
this  Agreement  shall be  personally  delivered  or sent by first  class  mail,
postage prepaid, or by overnight courier, to the addresses on the signature page
of this  Agreement,  or sent by  facsimile  to the  fax  numbers  listed  on the
signature  page,  or to such other  addresses  as the Bank and the  Borrower may
specify from time to time in writing.  Notices and other communications shall be
effective  (i) if  mailed,  upon the  earlier  of receipt or five (5) days after
deposit in the U.S. mail, first class, postage prepaid, (ii) if telecopied, when
transmitted,  or (iii) if  hand-delivered,  by courier or  otherwise  (including
telegram, lettergram or mailgram), when delivered.

         11.11.  Headings.  Article and section  headings are for reference only
and shall not affect the  interpretation  or meaning of any  provisions  of this
Agreement.

         11.12.  Counterparts.  This  Agreement  may  be  executed  in  as  many
counterparts  as  necessary  or  convenient,  and by the  different  parties  on
separate  counterparts  each of  which,  when so  executed,  shall be  deemed an
original  but all  such  counterparts  shall  constitute  but  one and the  same
agreement.

         11.13. Borrower Information;  Reporting to Credit Bureaus. The Borrower
authorizes the Bank at any time to verify or check any information  given by the
Borrower to the Bank, check the Borrower's  credit  references and obtain credit
reports.  The Borrower agrees that the Bank shall have the right at all times to
disclose and report to credit reporting agencies and credit rating agencies such
information pertaining to the Borrower and any Obligor as is consistent with the
Bank's policies and practices from time to time in effect.

                                      -21-
<PAGE>

         11.14. Prior Agreement  Superseded.  This Agreement supersedes the Loan
Agreement entered into as of December 28, 2007, between the Bank and Widmer, and
any credit  outstanding  thereunder shall be deemed to be outstanding under this
Agreement.

         This Agreement is executed as of the date stated at the top of the
         first page.

<TABLE>
<CAPTION>

Bank:                                         Borrower:

<S>                                           <C>
BANK OF AMERICA, N.A.                         CRAFT BREWERS ALLIANCE, INC.

By   /s/ Michael Snook                        By  /s/ Terry Michaelson
     -----------------------------                ---------------------------------------------
     Michael Snook, Vice President                Terry Michaelson, Co-Chief Executive Officer

Address where notices to the Bank             Address where notices to the Borrower
are to be sent:                               are to be sent:

Oregon Commercial Banking                     929 North Russell Street
OR1-129-17-15                                 Portland, Oregon  97227
121 SW Morrison St., Suite 1700               Telephone: (503) 331-7258
Portland, OR  97204                           Telefacsimile: (503) 331-7264
Attention:  Michael Snook
Telephone:  (503) 275-1587
Telefacsimile:  (503) 275-1391

</TABLE>

USA Patriot Act Notice.  Federal law  requires  all  financial  institutions  to
obtain,  verify and record  information that identifies each person who opens an
account  or obtains a loan.  The Bank will ask for the  Borrower's  legal  name,
address, tax ID number and other identifying information.  The Bank may also ask
for additional  information or  documentation  or take other actions  reasonably
necessary to verify the identity of the  Borrower,  guarantors  or other related
persons.

                                      -22-
<PAGE>

                                   Exhibit A

                          Principal Payment Schedule
                          --------------------------

                   Payment                        Principal
                     Date                       Payment Amount
              --------------------        --------------------------

                   8/1/2008                    $13,500,000.00
                   9/2/2008                    $13,473,819.94
                   10/1/2008                   $13,449,894.47
                   11/3/2008                   $13,418,648.19
                   12/1/2008                   $13,396,797.62
                   1/2/2009                    $13,362,891.79
                   2/2/2009                    $13,338,334.27
                   3/2/2009                    $13,311,261.86
                   4/1/2009                    $13,276,929.59
                   5/1/2009                    $13,247,154.22
                   6/1/2009                    $13,217,219.79
                   7/1/2009                    $13,189,478.87
                   8/3/2009                    $13,159,236.36
                   9/1/2009                    $13,135,861.53
                   10/1/2009                   $13,102,993.71
                   11/2/2009                   $13,072,289.22
                   12/1/2009                   $13,046,075.92
                   1/4/2010                    $13,012,744.47
                   2/1/2010                    $12,990,825.87
                   3/1/2010                    $12,954,896.05
                   4/1/2010                    $12,918,787.10
                   5/4/2010                    $12,889,398.91
                   6/1/2010                    $12,864,438.56
                   7/1/2010                    $12,827,878.62
                   8/2/2010                    $12,795,704.57
                   9/1/2010                    $12,767,915.34
                   10/1/2010                   $12,735,420.98
                   11/1/2010                   $12,702,753.05
                   12/1/2010                   $12,672,172.41
                   1/4/2011                    $12,639,166.63
                   2/1/2011                    $12,614,986.43
                   3/1/2011                    $12,577,182.84
                   4/1/2011                    $12,539,190.77
                   5/3/2011                    $12,507,707.32
                   6/1/2011                    $12,478,277.15
                   7/1/2011                    $12,442,013.81
                   8/1/2011                    $12,407,778.59
                   9/1/2011                    $12,375,569.78
                   10/3/2011                   $12,343,183.18
                   11/1/2011                   $12,312,815.59
                   12/1/2011                   $12,275,697.87
                   1/3/2012                    $12,240,574.25
                   2/1/2012                    $12,211,801.52
                   3/1/2012                    $12,174,162.20
                   4/2/2012                    $12,136,328.54
                   5/1/2012                    $12,104,782.33
                   6/1/2012                    $12,066,590.41

LOAN AGREEMENT - Exhibit A, Page 1                                  aws/0460/cba

<PAGE>

                   Payment                        Principal
                     Date                       Payment Amount
              --------------------        --------------------------

                   7/2/2012                    $12,032,498.33
                   8/1/2012                    $11,998,218.08
                   9/4/2012                    $11,961,612.25
                   10/1/2012                   $11,933,330.21
                   11/1/2012                   $11,890,003.39
                   12/3/2012                   $11,854,936.60
                   1/2/2013                    $11,821,787.09
                   2/1/2013                    $11,784,238.83
                   3/1/2013                    $11,746,490.00
                   4/2/2013                    $11,704,356.47
                   5/1/2013                    $11,670,348.98
                   6/3/2013                    $11,629,913.82
                   7/1/2013                    $11,597,552.95
                   8/1/2013                    $11,554,676.88
                   9/3/2013                    $11,517,759.18
                   10/1/2013                   $11,484,739.31
                   11/1/2013                   $11,441,300.81
                   12/2/2013                   $11,403,757.30
                   1/2/2014                    $11,366,006.57
                   2/3/2014                    $11,328,047.46
                   3/3/2014                    $11,291,895.85
                   4/1/2014                    $11,247,495.92
                   5/1/2014                    $11,204,877.31
                   6/2/2014                    $11,164,033.72
                   7/1/2014                    $11,126,947.60
                   8/1/2014                    $11,083,706.52
                   9/2/2014                    $11,044,189.19
                   10/1/2014                   $11,006,420.22
                   11/3/2014                   $10,962,556.79
                   12/1/2014                   $10,926,274.64
                   1/2/2015                    $10,880,051.88
                   2/2/2015                    $10,841,347.69
                   3/2/2015                    $10,800,492.61
                   4/1/2015                    $10,753,642.76
                   5/1/2015                    $10,710,388.83
                   6/1/2015                    $10,666,903.85
                   7/1/2015                    $10,625,085.89
                   8/3/2015                    $10,581,145.25
                   9/1/2015                    $10,542,621.99
                   10/1/2015                   $10,496,363.68
                   11/2/2015                   $10,451,735.45
                   12/1/2015                   $10,410,590.81
                   1/4/2016                    $10,363,650.74
                   2/1/2016                    $10,325,694.83
                   3/1/2016                    $10,276,477.84
                   4/1/2016                    $10,228,845.27
                   5/3/2016                    $10,184,609.35
                   6/1/2016                    $10,141,942.68
                   7/1/2016                    $10,093,615.42
                   8/1/2016                    $10,046,835.85
                   9/1/2016                    $10,001,595.28
                   10/3/2016                    $9,956,105.00
                   11/1/2016                    $9,912,136.37

LOAN AGREEMENT - Exhibit A, Page 2                                  aws/0460/cba

<PAGE>

                   Payment                        Principal
                     Date                       Payment Amount
              --------------------        --------------------------

                   12/1/2016                    $9,862,622.48
                   1/3/2017                     $9,814,609.01
                   2/1/2017                     $9,771,581.71
                   3/1/2017                     $9,721,342.05
                   4/3/2017                     $9,669,112.04
                   5/2/2017                     $9,625,229.82
                   6/1/2017                     $9,574,234.46
                   7/3/2017                     $9,524,680.52
                   8/1/2017                     $9,478,253.73
                   9/1/2017                     $9,426,499.44
                   10/2/2017                    $9,377,834.79
                   11/1/2017                    $9,328,901.52
                   12/1/2017                    $9,278,037.10
                   1/2/2018                     $9,226,900.97
                   2/1/2018                     $9,178,777.50
                   3/1/2018                     $9,127,111.16
                   4/3/2018                     $9,071,918.57
                   5/1/2018                     $9,024,527.35
                   6/1/2018                     $8,968,823.32
                   7/1/2018                     $8,917,632.43

LOAN AGREEMENT - Exhibit A, Page 3                                  aws/0460/cba

<PAGE>

                                    Exhibit B

                        Schedule of Restructuring Charges
                        ---------------------------------

  CBAI 2008 Merger Organizational Cost Forecast

  Direct Merger Costs:

           Severance                                              $2,386,000

           Program Management/Process Integration                    383,000

           Executive Closing Bonuses                                 414,000

           Legal                                                     300,000

           SOX Compliance                                            272,000

           Business Intelligence Assessments                          80,000

           Audit/Tax                                                  75,000

           Executive Compensation Plan Design                         57,000

           Regulatory                                                 40,000

           Public Relations                                           25,000

           Payroll Conversion                                          8,000

           Contingency                                               360,000
                                                                     -------

           TOTAL                                                  $4,400,000

LOAN AGREEMENT - Exhibit B                                          aws/0460/cbaexhibit10_1.htm

    

      

       

      
        	
                Exhibit
      10.1

              

      

       

      

      

      

      “[United
Letterhead]”

      

      

      

      

      Chautauqua
Airlines, Inc.

      2500
South High School Road, Suite 160

      Indianapolis,
Indiana 46214

      Attn:
Bryan Bedford

      

      July 1,
2008

      

      Re: United Express Agreement
between United Air Lines, Inc. and Chautauqua Airlines, Inc. – United Contract
#165974 (the “Agreement”)

      

      Dear
Bryan,

      

      This
letter provides notification that, pursuant to Section II.B.1 of the Agreement,
United hereby exercises its right to terminate the Agreement, effective December
31, 2009.

      

      We look
forward to continuing our favorable relationship with the Republic family
through our relationship with you affiliate, Shuttle America.

      

      Thank you
and please let us know if you have any questions.

      

      Regards,

      

      “/s/
Cynthia C. Szadokierski”

      

      Cynthia
Szadokierski

      Vice
President – United Express and airport Operations Planning

      

      Cc:
Wexford Capital LLC

      411 West
Putnam Avenue

      Greenwich,
CT 06830

      Attn:
President & General Counsel

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