Document:

Exhibit 10.25
                             BUSINESS LOAN AGREEMENT
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------------------- --------------- ---------------- ---------------- -------------- ---------- ------------- ----------
    Principal         Loan Date        Maturity          Loan No       Call / Coll    Account      Officer     Initials
   $182,741.25        09-14-2001      09-15-2004           42           599 / 990    0010130085      610
------------------- --------------- ---------------- ---------------- -------------- ---------- ------------- ----------
References in the shaded area are for Lender's use only and do not limit the applicability of this document to any
particular loan or item. Any item above containing "***" has been omitted due to text length limitations.
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Borrower:       Portland Brewing Company                               Lender:      Washington Mutual Bank dba Western Bank
                2730 NW 31st Avenue                                                 Beaverton Business Banking Center
                Portland, OR  97210                                                 12655 SW Center Street, Suite 500
                                                                                    Beaverton, OR  97005
</TABLE>

THIS BUSINESS LOAN AGREEMENT dated September 14, 2001, is made and executed
between Portland Brewing Company ("Borrower") and Washington Mutual Bank dba
Western Bank ("Lender") on the following terms and conditions. Borrower has
received prior commercial loans from Lender or has applied to Lender for a
commercial loan or loans or other financial accommodations, including those
which may be described on any exhibit or schedule attached to this Agreement
("Loan"). Borrower understands and agrees that: (A) in granting, renewing, or
extending any Loan, Lender is relying upon Borrower's representations,
warranties, and agreements as set forth in this Agreement, and (B) all such
Loans shall be and remain subject to the terms and conditions of this Agreement.

TERM. This Agreement shall be effective as of September 14, 2001, and shall
continue in full force and effect until such time as all of Borrower's Loans in
favor of Lender have been paid in full, including principal, interest, costs,
expenses, attorneys' fees, and other fees and charges, or until such time as the
parties may agree in writing to terminate this Agreement.

CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligation to make the initial
Advance and each subsequent Advance under this Agreement shall be subject to the
fulfillment to Lender's satisfaction of all of the conditions set forth in this
Agreement and in the Related Documents.

     Loan Documents. Borrower shall provide to Lender the following documents
     for the Loan: (1) the Note; (2) guaranties; (3) together with all such
     Related Documents as Lender may require for the Loan; all in form and
     substance satisfactory to Lender and Lender's counsel.

     Borrower's Authorization. Borrower shall have provided in form and
     substance satisfactory to Lender properly certified resolutions, duly
     authorizing the execution and delivery of this Agreement, the Note and the
     Related Documents. In addition, Borrower shall have provided such other
     resolutions, authorizations, documents and instruments as Lender or its
     counsel, may require.

     Payment of Fees and Expenses. Borrower shall have paid to Lender all fees,
     charges, and other expenses which are then due and payable as specified in
     this Agreement or any Related Document.

     Representations and Warranties. The representations and warranties set
     forth in this Agreement, in the Related Documents, and in any document or
     certificate delivered to Lender under this Agreement are true and correct.

     No Event of Default. There shall not exist at the time of any Advance a
     condition which would constitute an Event of Default under this Agreement
     or under any Related Document.

REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as
of the date of this Agreement, as of the date of each disbursement of loan
proceeds, as of the date of any renewal, extension or modification of any Loan,
and at all times any Indebtedness exists:

     Organization. Borrower is a corporation for profit which is, and at all
     times shall be, duly organized and validly existing, under and by virtue of
     the laws of the State of Oregon. Borrower is duly authorized to transact
     business in all other states in which Borrower is doing business, obtained
     all necessary filings, governmental licenses and approvals for each state
     in which Borrower is doing business, in both cases, in all states in which
     the failure to so qualify would have a material adverse effect on its
     business or financial condition. Borrower has the full power and authority
     to own its properties and to transact the business in which it is presently
     engaged or presently proposes to engage. Borrower maintains an office at
     2730 NW 31st Avenue, Portland, OR 97210. Unless Borrower has designated
     otherwise in writing, the principal office is the office at which Borrower
     keeps its books and records including its records concerning the
     Collateral. Borrower will notify Lender prior to any change in the location
     of Borrower's state of organization or any change in Borrower's name.
     Borrower shall do all things necessary to preserve and to keep in full
     force and effect its existence, rights and privileges, and shall comply
     with all regulations, rules, ordinances, statutes, orders and decrees of
     any governmental or quasi-governmental authority or court applicable to
     Borrower and Borrower's business activities.

     Assumed Business Names. Borrower has filed or recorded all documents or
     filings required by law relating to all assumed business names used by
     Borrower. Excluding the name of Borrower, the following is a complete list
     of all assumed business names under which Borrower does business: See
     Addendum.

     Authorization. Borrower's execution, delivery, and performance of this
     Agreement and all the Related Documents have been duly authorized by all
     necessary action by Borrower and do not conflict with, result in a
     violation of, or constitute a default under (1) any provision of Borrower's
     articles of incorporation, or bylaws, or any agreement or other instrument
     binding upon Borrower or (2) any law, governmental regulation, court
     decree, or order applicable to Borrower or to Borrower's properties.

     Financial Information. Each of Borrower's financial statements supplied to
     Lender truly and completely disclosed Borrower's financial condition as of
     the date of the statement, and there has been no material adverse change in
     Borrower's financial condition subsequent to the date of the most recent
     financial statement supplied to Lender. Borrower has no material contingent
     obligations except as disclosed in such financial statements.

     Legal Effect. This Agreement constitutes, and any instrument or agreement
     Borrower is required to give under this Agreement when delivered will
     constitute legal, valid, and binding obligations of Borrower.

     Properties. Except as contemplated by this Agreement or as previously
     disclosed in Borrower's financial statements or in writing to Lender and as
     accepted by Lender, and except for property tax liens for taxes not
     presently due and payable, Borrower owns and has good title to all of
     Borrower's properties free and clear of all Security Interests, and has not
     executed any security documents or financing statements relating to such
     properties. All of Borrower's properties are titled in Borrower's legal
     name, and Borrower has not used, or filed a financing statement under, any
     other name for at least the last five (5) years. See Addendum.

     Hazardous Substances. Except as disclosed to and acknowledged by Lender in
     writing or as permitted by law, Borrower represents and warrants that: (1)
     During the period of Borrower's ownership of Borrower's Collateral, there
     has been no use, generation, manufacture, storage, treatment, disposal,
     release or threatened release of any Hazardous Substance by any person on,
     under, about or from any of the Collateral. (2) Borrower has no knowledge
     of, or reason to believe that there has been (a) any breach or violation of
     any Environmental Laws; (b) any use, generation, manufacture, storage,
     treatment, disposal, release or threatened release of any Hazardous
     Substance on, under, about or from the Collateral by any prior owners or
     occupants of any of the Collateral; or (c) any actual or threatened
     litigation or claims of any kind by any person relating to such matters.
     (3) Neither Borrower nor any tenant, contractor, agent or other authorized
     user of any of the Collateral shall use, generate, manufacture, store,
     treat, dispose of or release any Hazardous Substance on, under, about or
     from any of the Collateral; and any such activity shall be conducted in
     compliance with all applicable federal, state, and local laws, regulations,
     and ordinances, including without limitation all Environmental Laws.
     Borrower authorizes Lender and its agents to enter upon the Collateral to
     make such inspections and tests as Lender may deem appropriate to determine
     compliance of the Collateral with this section of the Agreement. Any
     inspections or tests made by Lender shall be at Borrower's expense and for
     Lender's purposes only and shall not be construed to create any
     responsibility or liability on the part of Lender to Borrower or to any
     other person. The representations and warranties contained herein are based
     on Borrower's due diligence in investigating the Collateral for hazardous
     waste and Hazardous Substances. Borrower hereby (1) releases and waives any
     future claims against Lender for indemnity or contribution in the event
     Borrower becomes liable for cleanup or other costs under any such laws, and
     (2) agrees to indemnify and hold harmless Lender against any and all
     claims, losses, liabilities, damages, penalties, and expenses which Lender
     may directly or indirectly sustain or suffer resulting from a breach of
     this section of the Agreement or as a consequence of any use, generation,
     manufacture, storage, disposal, release or threatened release of a
     hazardous waste or substance on the Collateral, or as a result of a
     violation of any Environmental Laws. The provisions of this section of the
     Agreement, including the obligation to indemnify, shall survive the payment
     of the Indebtedness and the termination, expiration or satisfaction of this
     Agreement and shall not be affected by Lender's acquisition of any interest
     in any of the Collateral, whether by foreclosure or otherwise.

     Litigation and Claims. No litigation, claim, investigation, administrative
     proceeding or similar action (including those for unpaid taxes) against
     Borrower is pending or threatened, and no other event has occurred which
     may materially adversely affect Borrower's financial condition or
     properties, other than litigation, claims, or other events, if any, that
     have been disclosed to and acknowledged by Lender in writing.

     Taxes. To the best of Borrower's knowledge, all of Borrower's tax returns
     and reports that are or were required to be filed, have been filed, and all
     taxes, assessments and other governmental charges have been paid in full,
     except those presently being or to be contested by Borrower in good faith
     in the ordinary course of business and for which adequate reserves have
     been provided.

     Lien Priority. Unless otherwise previously disclosed to Lender in writing,
     Borrower has not entered into or granted any Security Agreements, or
     permitted the filing or attachment of any Security Interests on or
     affecting any of the Collateral directly or indirectly securing repayment
     of Borrower's Loan and Note, that would be prior or that may in any way be
     superior to Lender's Security Interests and rights in and to such
     Collateral.

     Binding Effect. This Agreement, the Note, all Security Agreements (if any),
     and all Related Documents are binding upon the signers thereof, as well as
     upon their successors, representatives and assigns.

AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, so long
as this Agreement remains in effect, Borrower will:

     Notices of Claims and Litigation. Promptly inform Lender in writing of (1)
     all material adverse changes in Borrower's financial condition, and (2) all
     existing and all threatened litigation, claims, investigations,
     administrative proceedings or similar actions affecting Borrower or any
     Guarantor which could materially affect the financial condition of Borrower
     or the financial condition of any Guarantor.

     Financial Records. Maintain its books and records sufficient to prepare
     financial statements in accordance with GAAP, applied on a consistent
     basis, and permit Lender to examine and audit Borrower's books and records
     at all reasonable times.

     Financial Statements. See Addendum.

     Additional Information. Furnish such additional information and statements,
     as Lender may request from time to time.

     Financial Covenants and Ratios. Comply with the following covenants and
     ratios:

         Other Requirements.
         Cash Coverage Ratio (UCA Method) to be at least 1.000 to 1.000, tested
         on an annual basis. "Cash Coverage Ratio" shall mean the ratio of net
         cash after operations divided by financing costs plus current portion
         of long-term debt excluding this loan plus capital expenditures.

         Except as provided above, all computations made to determine compliance
         with the requirements contained in this paragraph shall be made in
         accordance with generally accepted accounting principles, applied on a
         consistent basis, and certified by Borrower as being true and correct.

     Insurance. Maintain fire and other risk insurance, public liability
     insurance, and such other insurance as Lender may require with respect to
     Borrower's properties and operations, in form, amounts, coverages and with
     insurance companies acceptable to Lender. Borrower, upon request of Lender,
     will deliver to Lender from time to time the policies or certificates of
     insurance in form satisfactory to Lender, including stipulations that
     coverages will not be cancelled or diminished without at least ten (10)
     days prior written notice to Lender. Each insurance policy also shall
     include an endorsement providing that coverage in favor of Lender will not
     be impaired in any way by any act, omission or default of Borrower or any
     other person. In connection with all policies covering assets in which
     Lender holds or is offered a security interest for the Loans, Borrower will
     provide Lender with such lender's loss payable or other endorsements as
     Lender may require.

     Insurance Reports. Furnish to Lender, upon request of Lender, reports on
     each existing insurance policy showing such information as Lender may
     reasonably request, including without limitation the following: (1) the
     name of the insurer; (2) the risks insured; (3) the amount of the policy;
     (4) the properties insured; (5) the then current property values on the
     basis of which insurance has been obtained, and the manner of determining
     those values; and (6) the expiration date of the policy. In addition, upon
     request of Lender (however not more often than annually), Borrower will
     have an independent appraiser satisfactory to Lender determine, as
     applicable, the actual cash value or replacement cost of any Collateral.
     The cost of such appraisal shall be paid by Borrower.

     Guaranties. Prior to disbursement of any Loan proceeds, furnish executed
     guaranties of the Loans in favor of Lender, executed by the guarantors
     named below, on Lender's forms, and in the amounts and under the conditions
     set forth in those guaranties.

            Names of Guarantors                           Amounts

            Charles A. Adams                            $182,741.25
            Robert M. MacTarnahan                       $182,741.25
            Harmer Mill & Logging Supply Co.            $182,741.25
            MacTarnahan Limited Partnership             $182,741.25
            Charles A. Adams Family Trust               $182,741.25
            MacTarnahan Family Trust                    $182,741.25

     Other Agreements. Comply with all terms and conditions of all other
     agreements, whether now or hereafter existing, between Borrower and any
     other party and notify Lender immediately in writing of any default in
     connection with any other such agreements.

     Loan Proceeds. Use all Loan proceeds solely for Borrower's business
     operations, unless specifically consented to the contrary by Lender in
     writing.

     Taxes, Charges and Liens. Pay and discharge when due all of its
     indebtedness and obligations, including without limitation all assessments,
     taxes, governmental charges, levies and liens, of every kind and nature,
     imposed upon Borrower or its properties, income, or profits, prior to the
     date on which penalties would attach, and all lawful claims that, if
     unpaid, might become a lien or charge upon any of Borrower's properties,
     income, or profits. See Addendum.

     Performance. Perform and comply, in a timely manner, with all terms,
     conditions, and provisions set forth in this Agreement, and in the Related
     Documents. Borrower shall notify Lender immediately in writing of any
     default in connection with any such agreement.

     Operations. Maintain executive and management personnel with substantially
     the same qualifications and experience as the present executive and
     management personnel; provide written notice to Lender of any change in
     executive and management personnel; conduct its business affairs in a
     reasonable and prudent manner.

     Environmental Studies. Promptly conduct and complete, at Borrower's
     expense, all such investigations, studies, samplings and testings as may be
     requested by Lender or any governmental authority relative to any
     substance, or any waste or by-product of any substance defined as toxic or
     a hazardous substance under applicable federal, state, or local law, rule,
     regulation, order or directive, at or affecting any property or any
     facility owned, leased or used by Borrower.

     Compliance with Governmental Requirements. Comply with all laws,
     ordinances, and regulations, now or hereafter in effect, of all
     governmental authorities applicable to the conduct of Borrower's
     properties, businesses and operations, and to the use or occupancy of the
     Collateral, including without limitation, the Americans With Disabilities
     Act. Borrower may contest in good faith any such law, ordinance, or
     regulation and withhold compliance during any proceeding, including
     appropriate appeals, so long as Borrower has notified Lender in writing
     prior to doing so and so long as, in Lender's sole opinion, Lender's
     interests in the Collateral are not jeopardized. Lender may require
     Borrower to post adequate security or a surety bond, reasonably
     satisfactory to Lender, to protect Lender's interest.

     Inspection. Permit employees or agents of Lender at any reasonable time to
     inspect any and all Collateral for the Loan or Loans and Borrower's other
     properties and to examine or audit Borrower's books, accounts, and records
     and to make copies and memoranda of Borrower's books, accounts, and
     records. If Borrower now or at any time hereafter maintains any records
     (including without limitation computer generated records and computer
     software programs for the generation of such records) in the possession of
     a third party, Borrower, upon request of Lender, shall notify such party to
     permit Lender free access to such records at all reasonable times and to
     provide Lender with copies of any records it may request, all at Borrower's
     expense.

     Compliance Certificates. Unless waived in writing by Lender, provide Lender
     at least annually with a certificate executed by Borrower's chief financial
     officer, or other officer or person acceptable to Lender, certifying that
     the representations and warranties set forth in this Agreement are true and
     correct as of the date of the certificate and further certifying that, as
     of the date of the certificate, no Event of Default exists under this
     Agreement.

     Environmental Compliance and Reports. Borrower shall comply in all respects
     with any and all Environmental Laws; not cause or permit to exist, as a
     result of an intentional or unintentional action or omission on Borrower's
     part or on the part of any third party, on property owned and/or occupied
     by Borrower, any environmental activity where damage may result to the
     environment, unless such environmental activity is pursuant to and in
     compliance with the conditions of a permit issued by the appropriate
     federal, state or local governmental authorities; shall furnish to Lender
     promptly and in any event within thirty (30) days after receipt thereof a
     copy of any notice, summons, lien, citation, directive, letter or other
     communication from any governmental agency or instrumentality concerning
     any intentional or unintentional action or omission on Borrower's part in
     connection with any environmental activity whether or not there is damage
     to the environment and/or other natural resources.

     Additional Assurances. Make, execute and deliver to Lender such promissory
     notes, mortgages, deeds of trust, security agreements, assignments,
     financing statements, instruments, documents and other agreements as Lender
     or its attorneys may reasonably request to evidence and secure the Loans
     and to perfect all Security Interests.

LENDER'S EXPENDITURES. If any action or proceeding is commenced that would
materially affect Lender's interest in the Collateral or if Borrower fails to
comply with any provision of this Agreement or any Related Documents, including
but not limited to Borrower's failure to discharge or pay when due any amounts
Borrower is required to discharge or pay under this Agreement or any Related
Documents, Lender on Borrower's behalf may (but shall not be obligated to) take
any action that Lender deems appropriate, including but not limited to
discharging or paying all taxes, liens, security interests, encumbrances and
other claims, at any time levied or placed on any Collateral and paying all
costs for insuring, maintaining and preserving any Collateral. All such
expenditures incurred or paid by Lender for such purposes will then bear
interest at the rate charged under the Note from the date incurred or paid by
Lender to the date of repayment by Borrower. All such expenses will become a
part of the Indebtedness and, at Lender's option, will (A) be payable on demand;
(B) be added to the balance of the Note and be apportioned among and be payable
with any installment payments to become due during either (1) the term of any
applicable insurance policy; or (2) the remaining term of the Note; or (C) be
treated as a balloon payment which will be due and payable at the Note's
maturity.

NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this
Agreement is in effect, Borrower shall not, without the prior written consent of
Lender:

     Indebtedness and Liens. (1) Except for trade debt incurred in the normal
     course of business and indebtedness to Lender contemplated by this
     Agreement, create, incur or assume indebtedness for borrowed money,
     including capital leases, (2) sell, transfer, mortgage, assign, pledge,
     lease, grant a security interest in, or encumber any of Borrower's assets
     (except as allowed as Permitted Liens), or (3) sell with recourse any of
     Borrower's accounts, except to Lender.

     Continuity of Operations. (1) Engage in any business activities
     substantially different than those in which Borrower is presently engaged,
     (2) cease operations, liquidate, merge, transfer, or consolidate with any
     other entity, change its name, dissolve or transfer or sell Collateral out
     of the ordinary course of business, (3) pay any dividends on Borrower's
     stock (other than dividends payable in its stock), or (4) purchase or
     retire any of Borrower's outstanding shares or alter or amend Borrower's
     capital structure.

     Loans, Acquisitions and Guaranties. (1) Loan, invest in or advance money or
     assets, or (2) incur any obligation as surety or guarantor other than in
     the ordinary course of business.

CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan to
Borrower, whether under this Agreement or under any other agreement, Lender
shall have no obligation to make Loan Advances or to disburse Loan proceeds if:
(A) Borrower or any Guarantor is in default under the terms of this Agreement or
any of the Related Documents or any other agreement that Borrower has with
Lender; or (B) Borrower or any Guarantor or becomes insolvent, files a petition
in bankruptcy or similar proceedings, or is adjudged a bankrupt.

RIGHT OF SETOFF. See Addendum.

DEFAULT. Each of the following shall constitute an Event of Default under this
Agreement:

     Payment Default. Borrower fails to make any payment when due under the
     Loan.

     Other Defaults. Borrower fails to comply with or to perform any other term,
     obligation, covenant or condition contained in this Agreement or in any of
     the Related Documents or to comply with or to perform any term, obligation,
     covenant or condition contained in any other agreement between Lender and
     Borrower.

     Default in Favor of Third Parties. Borrower or any Grantor defaults and the
     amount is accelerated under any loan, extension of credit, security
     agreement, purchase or sales agreement, or any other agreement, in favor of
     any other creditor or person that may materially affect any of Borrower's
     or any Grantor's property or Borrower's or any Grantor's ability to repay
     the Loans or perform their respective obligations under this Agreement or
     any of the Related Documents.

     False Statements. Any warranty, representation or statement made or
     furnished to Lender by Borrower or on Borrower's behalf under this
     Agreement or the Related Documents is false or misleading in any material
     respect, either now or at the time made or furnished or becomes false or
     misleading at any time thereafter.

     Insolvency. The dissolution or termination of Borrower's existence as a
     going business, the insolvency of Borrower, the appointment of a receiver
     for any part of Borrower's property, any assignment for the benefit of
     creditors, any type of creditor workout, or the commencement of any
     proceeding under any bankruptcy or insolvency laws by or against Borrower.

     Defective Collateralization. This Agreement or any of the Related Documents
     ceases to be in full force and effect (including failure of any collateral
     document to create a valid and perfected security interest or lien) at any
     time and for any reason.

     Creditor or Forfeiture Proceedings. Commencement of foreclosure or
     forfeiture proceedings, whether by judicial proceeding, self-help,
     repossession or any other method, by any creditor of Borrower or by any
     governmental agency against any collateral securing the Loan. This includes
     a garnishment of any of Borrower's accounts, including deposit accounts,
     with Lender. However, this Event of Default shall not apply if there is a
     good faith dispute by Borrower as to the validity or reasonableness of the
     claim which is the basis of the creditor or forfeiture proceeding and if
     Borrower gives Lender written notice of the creditor or forfeiture
     proceeding and deposits with Lender monies or a surety bond for the
     creditor or forfeiture proceeding, in an amount determined by Lender, in
     its sole discretion, as being an adequate reserve or bond for the dispute.

     See Addendum

EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except where
otherwise provided in this Agreement or the Related Documents, all commitments
and obligations of Lender under this Agreement or the Related Documents or any
other agreement immediately will terminate (including any obligation to make
further Loan Advances or disbursements), and, at Lender's option, all
Indebtedness immediately will become due and payable, all without notice of any
kind to Borrower, except that in the case of an Event of Default of the type
described in the "Insolvency" subsection above, such acceleration shall be
automatic and not optional. In addition, Lender shall have all the rights and
remedies provided in the Related Documents or available at law, in equity, or
otherwise. Except as may be prohibited by applicable law, all of Lender's rights
and remedies shall be cumulative and may be exercised singularly or
concurrently. Election by Lender to pursue any remedy shall not exclude pursuit
of any other remedy, and an election to make expenditures or to take action to
perform an obligation of Borrower or of any Grantor shall not affect Lender's
right to declare a default and to exercise its rights and remedies.

GUARANTOR'S FINANCIAL STATEMENTS.

Guarantor agrees to furnish Lender with the following:

     Annual Statements for Individual Guarantors. As soon as available after the
     end of each fiscal year, Guarantor's balance sheet and income statement for
     the year ended, prepared by Individual Guarantor.

     Annual Statements for Corporate, Partnership and Trust Entity Guarantors.
     As soon as available, after the end of each fiscal year, Guarantor's
     balance sheet and income statement for the year ended, compiled by a
     certified public accountant satisfactory to Lender.

     Tax Returns. As soon as available, but in no event later than thirty (30)
     days after the applicable filing date for the tax reporting period ended,
     Federal and other governmental tax returns, prepared by Guarantor.

     Additional Requirements. Tax returns to include all supplemental schedules
     together with K-1's. Guarantor's Financial Statements to be submitted with
     Tax Returns.

AGING AND LISTING OF ACCOUNTS RECEIVABLE AND PAYABLE. Borrower covenants and
agrees with Lender that, while this Agreement is in effect, Borrower shall
deliver to Lender within thirty days after the end of each month, a detailed
aging of Borrower's accounts and contracts receivable and accounts payable as of
the last day of the month, together with an explanation of any adjustments made
at the end of that month, all in a form acceptable to Lender.

MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:

     Amendments. This Agreement, together with any Related Documents,
     constitutes the entire understanding and agreement of the parties as to the
     matters set forth in this Agreement. No alteration of or amendment to this
     Agreement shall be effective unless given in writing and signed by the
     party or parties sought to be charged or bound by the alteration or
     amendment.

     Attorneys' Fees; Expenses. Borrower agrees to pay upon demand all of
     Lender's costs and expenses, including Lender's attorneys' fees and
     Lender's legal expenses, incurred in connection with the enforcement of
     this Agreement. Lender may hire or pay someone else to help enforce this
     Agreement, and Borrower shall pay the costs and expenses of such
     enforcement. Costs and expenses include Lender's attorneys' fees and legal
     expenses whether or not there is a lawsuit, including attorneys' fees and
     legal expenses for bankruptcy proceedings (including efforts to modify or
     vacate any automatic stay or injunction), appeals, and any anticipated
     post-judgment collection services. Borrower also shall pay all court costs
     and such additional fees as may be directed by the court.

     Caption Headings. Caption headings in this Agreement are for convenience
     purposes only and are not to be used to interpret or define the provisions
     of this Agreement.

     Consent to Loan Participation. Borrower agrees and consents to Lender's
     sale or transfer, whether now or later, of one or more participation
     interests in the Loan to one or more purchasers, whether related or
     unrelated to Lender. Subject to securities laws, Lender may provide,
     without any limitation whatsoever, to any one or more purchasers, or
     potential purchasers, any information or knowledge Lender may have about
     Borrower or about any other matter relating to the Loan, and Borrower
     hereby waives any rights to privacy Borrower may have with respect to such
     matters. Borrower additionally waives any and all notices of sale of
     participation interests, as well as all notices of any repurchase of such
     participation interests. Borrower also agrees that the purchasers of any
     such participation interests will be considered as the absolute owners of
     such interests in the Loan and will have all the rights granted under the
     participation agreement or agreements governing the sale of such
     participation interests. Borrower further waives all rights of offset or
     counterclaim that it may have now or later against Lender or against any
     purchaser of such a participation interest and unconditionally agrees that
     either Lender or such purchaser may enforce Borrower's obligation under the
     Loan irrespective of the failure or insolvency of any holder of any
     interest in the Loan. Borrower further agrees that the purchaser of any
     such participation interests may enforce its interests irrespective of any
     personal claims or defenses that Borrower may have against Lender.

     Governing Law. This Agreement will be governed by, construed and enforced
     in accordance with federal law and the laws of the State of Oregon. This
     Agreement has been accepted by Lender in the State of Oregon.

     No Waiver by Lender. Lender shall not be deemed to have waived any rights
     under this Agreement unless such waiver is given in writing and signed by
     Lender. No delay or omission on the part of Lender in exercising any right
     shall operate as a waiver of such right or any other right. A waiver by
     Lender of a provision of this Agreement shall not prejudice or constitute a
     waiver of Lender's right otherwise to demand strict compliance with that
     provision or any other provision of this Agreement. No prior waiver by
     Lender, nor any course of dealing between Lender and Borrower, or between
     Lender and any Grantor, shall constitute a waiver of any of Lender's rights
     or of any of Borrower's or any Grantor's obligations as to any future
     transactions. Whenever the consent of Lender is required under this
     Agreement, the granting of such consent by Lender in any instance shall not
     constitute continuing consent to subsequent instances where such consent is
     required and in all cases such consent may be granted or withheld in the
     sole discretion of Lender.

     Notices. Any notice required to be given under this Agreement shall be
     given in writing, and shall be effective when actually delivered, when
     actually received by telefacsimile (unless otherwise required by law), when
     deposited with a nationally recognized overnight courier, or, if mailed,
     when deposited in the United States mail, as first class, certified or
     registered mail postage prepaid, directed to the addresses shown near the
     beginning of this Agreement. Any party may change its address for notices
     under this Agreement by giving formal written notice to the other parties,
     specifying that the purpose of the notice is to change the party's address.
     For notice purposes, Borrower agrees to keep Lender informed at all times
     of Borrower's current address. Unless otherwise provided or required by
     law, if there is more than one Borrower, any notice given by Lender to any
     Borrower is deemed to be notice given to all Borrowers.

     Severability. If a court of competent jurisdiction finds any provision of
     this Agreement to be illegal, invalid, or unenforceable as to any
     circumstance, that finding shall not make the offending provision illegal,
     invalid, or unenforceable as to any other circumstance. If feasible, the
     offending provision shall be considered modified so that it becomes legal,
     valid and enforceable. If the offending provision cannot be so modified, it
     shall be considered deleted from this Agreement. Unless otherwise required
     by law, the illegality, invalidity, or unenforceability of any provision of
     this Agreement shall not affect the legality, validity or enforceability of
     any other provision of this Agreement.

     Subsidiaries and Affiliates of Borrower. To the extent the context of any
     provisions of this Agreement makes it appropriate, including without
     limitation any representation, warranty or covenant, the word "Borrower" as
     used in this Agreement shall include all of Borrower's subsidiaries and
     affiliates. Notwithstanding the foregoing however, under no circumstances
     shall this Agreement be construed to require Lender to make any Loan or
     other financial accommodation to any of Borrower's subsidiaries or
     affiliates.

     Successors and Assigns. All covenants and agreements contained by or on
     behalf of Borrower shall bind Borrower's successors and assigns and shall
     inure to the benefit of Lender and its successors and assigns. Borrower
     shall not, however, have the right to assign Borrower's rights under this
     Agreement or any interest therein, without the prior written consent of
     Lender.

     Survival of Representations and Warranties. Borrower understands and agrees
     that in making the Loan, Lender is relying on all representations,
     warranties, and covenants made by Borrower in this Agreement or in any
     certificate or other instrument delivered by Borrower to Lender under this
     Agreement or the Related Documents. Borrower further agrees that regardless
     of any investigation made by Lender, all such representations, warranties
     and covenants will survive the making of the Loan and delivery to Lender of
     the Related Documents, shall be continuing in nature, and shall remain in
     full force and effect until such time as Borrower's Indebtedness shall be
     paid in full, or until this Agreement shall be terminated in the manner
     provided above, whichever is the last to occur.

     Time is of the Essence. Time is of the essence in the performance of this
     Agreement.

     See Addendum.

DEFINITIONS. The following capitalized words and terms shall have the following
meanings when used in this Agreement. Unless specifically stated to the
contrary, all references to dollar amounts shall mean amounts in lawful money of
the United States of America. Words and terms used in the singular shall include
the plural, and the plural shall include the singular, as the context may
require. Words and terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code. Accounting
words and terms not otherwise defined in this Agreement shall have the meanings
assigned to them in accordance with generally accepted accounting principles as
in effect on the date of this Agreement:

     Advance. The word "Advance" means a disbursement of Loan funds made, or to
     be made, to Borrower or on Borrower's behalf on a line of credit or
     multiple advance basis under the terms and conditions of this Agreement.

     Agreement. The word "Agreement" means this Business Loan Agreement, as this
     Business Loan Agreement may be amended or modified from time to time,
     together with all exhibits, addendum and schedules attached to this
     Business Loan Agreement from time to time.

     Borrower. The word "Borrower" means Portland Brewing Company, and all other
     persons and entities signing the Note in whatever capacity.

     Collateral. The word "Collateral" means all property and assets granted as
     collateral security for a Loan, whether real or personal property, whether
     granted directly or indirectly, whether granted now or in the future, and
     whether granted in the form of a security interest, mortgage, collateral
     mortgage, deed of trust, assignment, pledge, crop pledge, chattel mortgage,
     collateral chattel mortgage, chattel trust, factor's lien, equipment trust,
     conditional sale, trust receipt, lien, charge, lien or title retention
     contract, lease or consignment intended as a security device, or any other
     security or lien interest whatsoever, whether created by law, contract, or
     otherwise.

     Environmental Laws. The words "Environmental Laws" mean any and all state,
     federal and local statutes, regulations and ordinances relating to the
     protection of human health or the environment, including without limitation
     the Comprehensive Environmental Response, Compensation, and Liability Act
     of 1980, as amended, 42 U.S.C. Section 9601, et seq. ("CERCLA"), the
     Superfund Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499
     ("SARA"), the Hazardous Materials Transportation Act, 49 U.S.C. Section
     1801, et seq., the Resource Conservation and Recovery Act, 42 U.S.C.
     Section 6901, et seq., or other applicable state or federal laws, rules, or
     regulations adopted pursuant thereto or intended to protect human health or
     the environment.

     Event of Default. The words "Event of Default" mean any of the events of
     default set forth in this Agreement in the default section of this
     Agreement.

     GAAP.  The word "GAAP" means generally accepted accounting principles.

     Grantor. The word "Grantor" means each and all of the persons or entities
     granting a Security Interest in any Collateral for the Loan, including
     without limitation all Borrowers granting such a Security Interest.

     Guarantor. The word "Guarantor" means any guarantor, surety, or
     accommodation party of any or all of the Loan.

     Guaranty. The word "Guaranty" means the guaranty from Guarantor to Lender,
     including without limitation a guaranty of all or part of the Note.

     Hazardous Substances. The words "Hazardous Substances" mean materials that,
     because of their quantity, concentration or physical, chemical or
     infectious characteristics, may cause or pose a present or potential hazard
     to human health or the environment when improperly used, treated, stored,
     disposed of, generated, manufactured, transported or otherwise handled. The
     words "Hazardous Substances" are used in their very broadest sense and
     include without limitation any and all hazardous or toxic substances,
     materials or waste as defined by or listed under the Environmental Laws.
     The term "Hazardous Substances" also includes, without limitation,
     petroleum and petroleum by-products or any fraction thereof and asbestos.

     Indebtedness. The word "Indebtedness" means the indebtedness evidenced by
     the Note or Related Documents, including all principal and interest
     together with all other indebtedness and costs and expenses for which
     Borrower is responsible under this Agreement or under any of the Related
     Documents.

     Lender. The word "Lender" means Washington Mutual Bank dba Western Bank,
     its successors and assigns.

     Loan. The word "Loan" means any and all loans and financial accommodations
     from Lender to Borrower whether now or hereafter existing, and however
     evidenced, including without limitation those loans and financial
     accommodations described herein or described on any exhibit or schedule
     attached to this Agreement from time to time.

     Note. The word "Note" means the Note executed by Borrower in the principal
     amount of $182,741.25 dated September 14, 2001, together with all renewals
     of, extensions of, modifications of, refinancings of, consolidations of,
     and substitutions for the note or credit agreement.

     Permitted Liens. The words "Permitted Liens" mean (1) liens and security
     interests securing Indebtedness owed by Borrower to Lender; (2) liens for
     taxes, assessments, or similar charges either not yet due or being
     contested in good faith; (3) liens of materialmen, mechanics, warehousemen,
     or carriers, or other like liens arising in the ordinary course of business
     and securing obligations which are not yet delinquent; (4) purchase money
     liens or purchase money security interests upon or in any property acquired
     or held by Borrower in the ordinary course of business to secure
     indebtedness outstanding on the date of this Agreement or permitted to be
     incurred under the paragraph of this Agreement titled "Indebtedness and
     Liens"; (5) liens and security interests which, as of the date of this
     Agreement, have been disclosed to and approved by the Lender in writing;
     and (6) those liens and security interests which in the aggregate
     constitute an immaterial and insignificant monetary amount with respect to
     the net value of Borrower's assets. See Addendum.

     Related Documents. The words "Related Documents" mean all promissory notes,
     credit agreements, loan agreements, environmental agreements, guaranties,
     security agreements, mortgages, deeds of trust, security deeds, collateral
     mortgages, and all other instruments, agreements and documents, whether now
     or hereafter existing, executed in connection with the Loan.

     Security Agreement. The words "Security Agreement" mean and include without
     limitation any agreements, promises, covenants, arrangements,
     understandings or other agreements, whether created by law, contract, or
     otherwise, evidencing, governing, representing, or creating a Security
     Interest.

     Security Interest. The words "Security Interest" mean, without limitation,
     any and all types of collateral security, present and future, whether in
     the form of a lien, charge, encumbrance, mortgage, deed of trust, security
     deed, assignment, pledge, crop pledge, chattel mortgage, collateral chattel
     mortgage, chattel trust, factor's lien, equipment trust, conditional sale,
     trust receipt, lien or title retention contract, lease or consignment
     intended as a security device, or any other security or lien interest
     whatsoever, whether created by law, contract, or otherwise.

UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY US (LENDER)
AFTER OCTOBER 3, 1989 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.

BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN
AGREEMENT AND BORROWER AGREES TO ITS TERMS. THIS BUSINESS LOAN AGREEMENT IS
DATED SEPTEMBER 14, 2001.

BORROWER:

Portland Brewing Company

By:
    Charles A. Adams, President/CEO of Portland
    Brewing Company

LENDER:

WASHINGTON MUTUAL BANK DBA WESTERN BANK

By:
    Authorized Signer

<PAGE>
                       ADDENDUM TO BUSINESS LOAN AGREEMENT

         This ADDENDUM TO BUSINESS LOAN AGREEMENT is attached to and by this
reference is made a part of the Business Loan Agreement dated September 14,
2001, and executed in connection with a loan or other financial accommodations
between Washington Mutual Bank doing business as Western Bank and Portland
Brewing Company. To the extent there is an inconsistency between this Addendum
and the Business Loan Agreement, this Addendum will control.

REPRESENTATIONS AND WARRANTIES:

         ASSUMED BUSINESS NAMES. Assumed business names under which Borrower
does business: MacTarnahan Brewing Company, Saxer Brewing Company and Nor'wester
Brewing.

AFFIRMATION COVENANTS:

         FINANCIAL STATEMENTS.  Furnish Lender with the following:

         Monthly Statements. As soon as available, but in no event later than 30
days after the end of each month, Borrower's unaudited balance sheet and profit
and loss statement for the month ended, prepared by Borrower.

         Quarterly Statements. As soon as available, but in no event later than
30 days after the filing of the Borrower's Form 10-QSBs with the SEC, Borrower's
unaudited balance sheet and profit and loss statement for the quarter ended,
prepared by Borrower.

         Annual Statements. As soon as available, but in no event later than 120
days after the Borrower's fiscal year end, Borrower's balance sheet and profit
and loss statement for the year ended, audited by a certified public accountant
satisfactory to Lender.
         All financial reports required to be provided under this Agreement
shall be prepared in accordance with GAAP, applied on a consistent basis and
certified by Borrower as being true and correct, except that unaudited quarterly
and monthly financial statements will be subject to changes resulting form
audit, year end adjustments and without notes.

         TAXES, CHARGES AND LIENS. Provided however, Borrower will not be
required to pay and discharge any such assessment, tax, charge, levy, lien or
claim so long as (a) the legality of the same shall be contested in good faith
by appropriate proceedings, and (b) Borrower shall have established on its books
adequate reserves with respect to such contested assessment, tax, charge, levy,
lien or claim in accordance with GAAP.

RIGHT OF SETOFF. Lender shall not have a security interest in, nor shall Lender
set off against amounts due under this agreement, the sums in any account of
Borrower maintained with Lender.

DEFAULT. Notwithstanding the foregoing, Borrower will not be in default as
provided unless and until (a) Lender gives to Borrower written notice of the
alleged default specifying that the default be cured within the time allowed by
this Business Loan Agreement, and (b) Borrower fails to cure the alleged default
within such time period. With respect to a failure to make a payment hereunder,
the amount of time allowed to cure the default shall be ten days following such
written notice from Lender. With respect to any other default, the amount of
time allowed for cure shall be 30 days following written notice of default;
provided, however, in the event a default reasonably requires more than 30 days
for cure, Borrower shall not be deemed in default so long as Borrower commences
cure within such 30-day period and thereafter diligently pursues cure to
completion.

Addendum agreed to:

WASHINGTON MUTUAL Bank DBA WESTERN BANK initial _______
GUARANTOR initial _______
<PAGE>
                                 PROMISSORY NOTE
<TABLE>
<CAPTION>
------------------- --------------- ---------------- ---------------- -------------- ---------- ------------- ----------
    Principal         Loan Date        Maturity          Loan No       Call / Coll    Account      Officer     Initials
   $182,741.25        09-14-2001      09-15-2004           42           599 / 990    0010130085      610
------------------- --------------- ---------------- ---------------- -------------- ---------- ------------- ----------
References in the shaded area are for Lender's use only and do not limit the applicability of this document to any
particular loan or item. Any item above containing "***" has been omitted due to text length limitations.
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                    <C>
Borrower:       Portland Brewing Company                               Lender:      Washington Mutual Bank dba Western Bank
                2730 NW 31st Avenue                                                 Beaverton Business Banking Center
                Portland, OR  97210                                                 12655 SW Center Street, Suite 500
                                                                                    Beaverton, OR  97005

Principal Amount:  $182,741.25                       Initial Rate:  8.000%                        Date of Note:  September 14, 2001
</TABLE>
PROMISE TO PAY. Portland Brewing Company ("Borrower") promises to pay to
Washington Mutual Bank dba Western Bank ("Lender"), or order, in lawful money of
the United States of America, the principal amount of One Hundred Eighty-two
Thousand Seven Hundred Forty-one & 25/100 Dollars ($182,741.25), together with
interest on the unpaid principal balance from September 15, 2001, until paid in
full.

PAYMENT. Subject to any payment changes resulting from changes in the Index,
Borrower will pay this loan in 36 payments of $5,735.47 each payment. Borrower's
first payment is due October 15, 2001, and all subsequent payments are due on
the same day of each month after that. Borrower's final payment will be due on
September 15, 2004, and will be for all principal and all accrued interest not
yet paid. Payments include principal and interest. Unless otherwise agreed or
required by applicable law, payments will be applied first to accrued unpaid
interest, then to principal, and any remaining amount to any unpaid collection
costs and late charges. The annual interest rate for this Note is computed on a
365/360 basis; that is, by applying the ratio of the annual interest rate over a
year of 360 days, multiplied by the outstanding principal balance, multiplied by
the actual number of days the principal balance is outstanding. Borrower will
pay Lender at Lender's address shown above or at such other place as Lender may
designate in writing.

VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from
time to time based on changes in an independent index which is the annual
interest rate, adjusted daily, published from time to time in The Wall Street
Journal (Western Edition) as the "Prime Rate" in the "Money Rates" section, as
of any date of determination (the "Index"). The Index is not necessarily the
lowest rate charged by Lender on its loans. If the Index becomes unavailable
during the term of this loan, Lender may designate a substitute index after
notice to Borrower. Lender will tell Borrower the current Index rate upon
Borrower's request. The interest rate change will not occur more often than each
day. Borrower understands that Lender may make loans based on other rates as
well. The Index currently is 6.500% per annum. The interest rate to be applied
to the unpaid principal balance of this Note will be at a rate of 1.500
percentage points over the Index, resulting in an initial rate of 8.000% per
annum. NOTICE: Under no circumstances will the interest rate on this Note be
more than the maximum rate allowed by applicable law. Whenever increases occur
in the interest rate, Lender, at its option, may do one or more of the
following: (A) increase Borrower's payments to ensure Borrower's loan will pay
off by its original final maturity date, (B) increase Borrower's payments to
cover accruing interest, (C) increase the number of Borrower's payments, and (D)
continue Borrower's payments at the same amount and increase Borrower's final
payment.

PREPAYMENT. Borrower agrees that all loan fees and other prepaid finance charges
are earned fully as of the date of the loan and will not be subject to refund
upon early payment (whether voluntary or as a result of default), except as
otherwise required by law. Except for the foregoing, Borrower may pay without
penalty all or a portion of the amount owed earlier than it is due. Early
payments will not, unless agreed to by Lender in writing, relieve Borrower of
Borrower's obligation to continue to make payments under the payment schedule.
Rather, early payments will reduce the principal balance due and may result in
Borrower's making fewer payments. Borrower agrees not to send Lender payments
marked "paid in full," "without recourse," or similar language. If Borrower
sends such payment, Lender may accept it without losing any of Lender's rights
under this Note, and Borrower will remain obligated to pay any further amount
owed to Lender. All written communications concerning disputed amounts,
including any check or other payment instrument that indicates that the payment
constitutes "payment in full" of the amount owed or that is tendered with other
conditions or limitations or as full satisfaction of a disputed amount must be
mailed or delivered to: Washington Mutual Bank dba Western Bank, Beaverton
Business Banking Center, 12655 SW Center Street, Suite 500, Beaverton, OR 97005.

LATE CHARGE. If a payment is 10 days or more late, Borrower will be charged
5.000% of the unpaid portion of the regularly scheduled interest payment or
$25.00, whichever is greater.

INTEREST AFTER DEFAULT. Upon default, including failure to pay upon final
maturity, Lender, at its option, may, if permitted under applicable law,
increase the variable interest rate on this Note to 7.500 percentage points over
the Index. The interest rate will not exceed the maximum rate permitted by
applicable law.

DEFAULT. Each of the following shall constitute an event of default ("Event of
Default") under this Note:

     Payment Default. Borrower fails to make any payment when due under this
     Note.

     Other Defaults. Borrower fails to comply with or to perform any other term,
     obligation, covenant or condition contained in this Note or in any of the
     related documents or to comply with or to perform any term, obligation,
     covenant or condition contained in any other agreement between Lender and
     Borrower.

     Default In Favor of Third Parties. Borrower or any Grantor defaults or any
     such amount is accelerated under any loan, extension of credit, security
     agreement, purchase or sales agreement, or any other agreement, in favor of
     any other creditor or person that may materially affect any of Borrower's
     property or Borrower's ability to repay this Note or perform Borrower's
     obligations under this Note or any of the related documents.

     False Statements. Any warranty, representation or statement made or
     furnished to Lender by Borrower or on Borrower's behalf under this Note or
     the related documents is false or misleading in any material respect,
     either now or at the time made or furnished or becomes false or misleading
     at any time thereafter.

     Insolvency. The dissolution or termination of Borrower's existence as a
     going business, the insolvency of Borrower, the appointment of a receiver
     for any part of Borrower's property, any assignment for the benefit of
     creditors, any type of creditor workout, or the commencement of any
     proceeding under any bankruptcy or insolvency laws by or against Borrower.

     Creditor or Forfeiture Proceedings. Commencement of foreclosure or
     forfeiture proceedings, whether by judicial proceedings, self-help,
     repossession or any other method, by any creditor of Borrower or by any
     governmental agency against any collateral securing the loan. This includes
     a garnishment of any of Borrower's accounts, including deposit accounts,
     with Lender. However, this Event of Default shall not apply if there is a
     good faith dispute by Borrower as to the validity or reasonableness of the
     claim which is the basis of the creditor or forfeiture proceeding and if
     Borrower gives Lender written notice of the creditor or forfeiture
     proceeding and deposits with Lender monies or a surety bond for the
     creditor or forfeiture proceeding, in an amount determined by Lender, in
     its sole discretion, as being an adequate reserve or bond for the dispute.

     See Addendum.

LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal
balance on this Note and all accrued unpaid interest immediately due, and then
Borrower will pay that amount.

ATTORNEYS' FEES; EXPENSES. Lender may hire or pay someone else to help collect
this Note if Borrower does not pay. Borrower will pay Lender that amount. This
includes, subject to any limits under applicable law, Lender's attorneys' fees
and Lender's legal expenses, whether or not there is a lawsuit, including
attorneys' fees, expenses for bankruptcy proceedings (including efforts to
modify or vacate any automatic stay or injunction), and appeals. If not
prohibited by applicable law, Borrower also will pay any court costs, in
addition to all other sums provided by law.

GOVERNING LAW. This Note will be governed by, construed and enforced in
accordance with federal law and the laws of the State of Oregon. This Note has
been accepted by Lender in the State of Oregon.

DISHONORED ITEM FEE. Borrower will pay a fee to Lender of $12.50 if Borrower
makes a payment on Borrower's loan and the check or preauthorized charge with
which Borrower pays is later dishonored.

RIGHT OF SETOFF. See Addendum.

SUCCESSOR INTERESTS. The terms of this Note shall be binding upon Borrower, and
upon Borrower's heirs, personal representatives, successors and assigns, and
shall inure to the benefit of Lender and its successors and assigns.

GENERAL PROVISIONS. Lender may delay or forgo enforcing any of its rights or
remedies under this Note without losing them. Borrower and any other person who
signs, guarantees or endorses this Note, to the extent allowed by law, waive
presentment, demand for payment, and notice of dishonor. Upon any change in the
terms of this Note, and unless otherwise expressly stated in writing, no party
who signs this Note, whether as maker, guarantor, accommodation maker or
endorser, shall be released from liability. All such parties agree that Lender
may renew or extend (repeatedly and for any length of time) this loan or release
any party or guarantor or collateral; or impair, fail to realize upon or perfect
Lender's security interest in the collateral; and take any other action deemed
necessary by Lender without the consent of or notice to anyone. All such parties
also agree that Lender may modify this loan without the consent of or notice to
anyone other than the party with whom the modification is made. The obligations
under this Note are joint and several.

UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY US (LENDER)
AFTER OCTOBER 3, 1989 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.

PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO
THE TERMS OF THIS NOTE.

BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE.

BORROWER:

Portland Brewing Company

By:
    Charles A. Adams, President/CEO of Portland
    Brewing Company
<PAGE>
                           ADDENDUM TO PROMISSORY NOTE

         This Addendum to Promissory Note ("Addendum") is attached to and by
this reference made a part of the Promissory Note dated September 14, 2001, and
executed in connection with a Loan from Washington Mutual Bank doing business as
Western Bank to Portland Brewing Company.

DEFAULT. Notwithstanding the foregoing, Borrower will not be in default as
provided above unless and until (a) Lender gives to Borrower written notice of
the alleged default specifying that the default be cured within the time allowed
by this Promissory Note, and (b) Borrower fails to cure the alleged default
within such time period. With respect to a failure to make a payment hereunder,
the amount of time allowed to cure the default shall be ten days following such
written notice from Lender. With respect to any other default, the amount of
time allowed for cure shall be 30 days following written notice of default;
provided, however, in the event a default reasonably requires more than 30 days
for cure, Borrower shall not be deemed in default so long as Borrower commences
cure within such 30-day period and thereafter diligently pursues cure to
completion.

RIGHT OF SETOFF. Lender shall not have a security interest in, nor shall Lender
set off against amounts due hereunder, the sums in any account of Borrower
maintained with Lender.

WASHINGTON MUTUAL Bank DBA WESTERN BANK initial: _______

PORTLAND BREWING COMPANY initial: _______
<PAGE>
                               COMMERCIAL GUARANTY
<TABLE>
<CAPTION>
------------------- --------------- ---------------- ---------------- -------------- ---------- ------------- ----------
    Principal         Loan Date        Maturity          Loan No       Call / Coll    Account      Officer     Initials
                                                                         599/990                     610
------------------- --------------- ---------------- ---------------- -------------- ---------- ------------- ----------
References in the shaded area are for Lender's use only and do not limit the applicability of this document to any
particular loan or item. Any item above containing "***" has been omitted due to text length limitations.
------------------------------------------------------------------------------------------------------------------------
<S>                                                                    <C>
Borrower:       Portland Brewing Company                               Lender:  Washington Mutual Bank dba Western Bank
                2730 NW 31st Avenue                                             Beaverton Business Banking Center
                Portland, OR  97210                                             12655 SW Center Street, Suite 500
                                                                                Beaverton, OR  97005

Guarantor:      Charles A. Adams
                2730 NW 31st Avenue
                Portland, OR  97210
</TABLE>

AMOUNT OF GUARANTY. The amount of this Guaranty is One Hundred Eighty-two
Thousand Seven Hundred Forty-one & 25/100 Dollars ($182,741.25).

CONTINUING GUARANTY. For good and valuable consideration, Charles A. Adams
("Guarantor") absolutely and unconditionally guarantees and promises to pay to
Washington Mutual Bank dba Western Bank ("Lender") or its order, in legal tender
of the United States of America, the Indebtedness (as that term is defined
below) of Portland Brewing Company ("Borrower") to Lender on the terms and
conditions set forth in this Guaranty. The obligations of Guarantor under this
Guaranty are continuing.

MAXIMUM LIABILITY. The maximum liability of Guarantor under this Guaranty shall
not exceed at any one time $182,741.25 plus all costs and expenses of (A)
enforcement of this Guaranty and (B) collection and sale of any collateral
securing this Guaranty.

The above limitation on liability is not a restriction on the amount of the
Indebtedness of Borrower to Lender either in the aggregate or at any one time.
If Lender presently holds one or more guaranties, or hereafter receives
additional guaranties from Guarantor, Lender's rights under all guaranties shall
be cumulative. This Guaranty shall not (unless specifically provided below to
the contrary) affect or invalidate any such other guaranties. Guarantor's
liability will be Guarantor's aggregate liability under the terms of this
Guaranty and any such other unterminated guaranties.

INDEBTEDNESS GUARANTEED. The Indebtedness is guaranteed and whether any such
Indebtedness is voluntarily or involuntarily incurred, due or not due, absolute
or contingent, liquidated or unliquidated, determined or undetermined; whether
Borrower may be liable individually or jointly with others, or primarily or
secondarily, or as guarantor or surety; whether recovery on the Indebtedness may
be or may become barred or unenforceable against Borrower for any reason
whatsoever; and whether the Indebtedness arises from transactions which may be
voidable on account of infancy, insanity, ultra vires, or otherwise.

DURATION OF GUARANTY. This Guaranty will take effect when received by Lender
without the necessity of any acceptance by Lender, or any notice to Guarantor or
to Borrower, and will continue in full force until all Indebtedness incurred or
contracted before receipt by Lender of any notice of revocation shall have been
fully and finally paid and satisfied and all of Guarantor's other obligations
under this Guaranty shall have been performed in full. If Guarantor elects to
revoke this Guaranty, Guarantor may only do so in writing. Guarantor's written
notice of revocation must be mailed to Lender, by certified mail, at Lender's
address listed above or such other place as Lender may designate in writing.
Written revocation of this Guaranty will apply only to advances or new
Indebtedness created after actual receipt by Lender of Guarantor's written
revocation. For this purpose and without limitation, the term "new Indebtedness"
does not include Indebtedness which at the time of notice of revocation is
contingent, unliquidated, undetermined or not due and which later becomes
absolute, liquidated, determined or due. This Guaranty will continue to bind
Guarantor for all Indebtedness incurred by Borrower or committed by Lender prior
to receipt of Guarantor's written notice of revocation, including any
extensions, renewals, substitutions or modifications of the Indebtedness. All
renewals, extensions, substitutions, and modifications of the Indebtedness
granted after Guarantor's revocation, are contemplated under this Guaranty and,
specifically will not be considered to be new Indebtedness. This Guaranty shall
bind Guarantor's estate as to Indebtedness created both before and after
Guarantor's death or incapacity, regardless of Lender's actual notice of
Guarantor's death. Subject to the foregoing, Guarantor's executor or
administrator or other legal representative may terminate this Guaranty in the
same manner in which Guarantor might have terminated it and with the same
effect. Release of any other guarantor or termination of any other guaranty of
the Indebtedness shall not affect the liability of Guarantor under this
Guaranty. A revocation Lender receives from any one or more Guarantors shall not
affect the liability of any remaining Guarantors under this Guaranty. It is
anticipated that fluctuations may occur in the aggregate amount of Indebtedness
covered by this Guaranty, and Guarantor specifically acknowledges and agrees
that reductions in the amount of Indebtedness, even to zero dollars ($0.00),
prior to Guarantor's written revocation of this Guaranty shall not constitute a
termination of this Guaranty. This Guaranty is binding upon Guarantor and
Guarantor's heirs, successors and assigns so long as any of the guaranteed
Indebtedness remains unpaid and even though the Indebtedness guaranteed may from
time to time be zero dollars ($0.00).

GUARANTOR'S AUTHORIZATION TO LENDER. Guarantor authorizes Lender, either before
or after any revocation hereof, without notice or demand and without lessening
Guarantor's liability under this Guaranty, from time to time: (A) prior to
revocation as set forth above, to make one or more additional secured or
unsecured loans to Borrower, to lease equipment or other goods to Borrower, or
otherwise to extend additional credit to Borrower; (B) to alter, compromise,
renew, extend, accelerate, or otherwise change one or more times the time for
payment or other terms of the Indebtedness or any part of the Indebtedness,
including increases and decreases of the rate of interest on the Indebtedness;
and extensions may be repeated and may be for longer than the original loan
term; (C) to take and hold security for the payment of this Guaranty or the
Indebtedness; exchange, enforce, waive, subordinate, fail or decide not to
perfect, and release any such security, with or without the substitution of new
collateral; (D) to release, substitute, agree not to sue, or deal with any one
or more of Borrower's sureties, endorsers, or other guarantors on any terms or
in any manner Lender may choose; (E) to determine how, when and what application
of payments and credits shall be made on the Indebtedness (F) to apply such
security and direct the order or manner of sale thereof, including without
limitation, any nonjudicial sale permitted by the terms of the controlling
security agreement or deed of trust, as Lender in its discretion may determine;
(G) to sell, transfer, assign or grant participations in all or any part of the
Indebtedness; and (H) to assign or transfer this Guaranty in whole or in part.

GUARANTOR'S REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants to
Lender that (A) no representations or agreements of any kind have been made to
Guarantor which would limit or qualify in any way the terms of this Guaranty;
(B) this Guaranty is executed at Borrower's request and not at the request of
Lender; (C) Guarantor has full power, right and authority to enter into this
Guaranty; (D) the provisions of this Guaranty do not conflict with or result in
a default under any agreement or other instrument binding upon Guarantor and do
not result in a violation of any law, regulation, court decree or order
applicable to Guarantor; (E) Guarantor has not and will not, without the prior
written consent of Lender, sell, lease, assign, encumber, hypothecate, transfer,
or otherwise dispose of all or substantially all of Guarantor's assets, or any
interest therein; (F) upon Lender's request, Guarantor will provide to Lender
financial and credit information in form acceptable to Lender, and all such
financial information which currently has been, and all future financial
information which will be provided to Lender is and will be true and correct in
all material respects and fairly present Guarantor's financial condition as of
the dates the financial information is provided; (G) no material adverse change
has occurred in Guarantor's financial condition since the date of the most
recent financial statements provided to Lender and no event has occurred which
may materially adversely affect Guarantor's financial condition; (H) no
litigation, claim, investigation, administrative proceeding or similar action
(including those for unpaid taxes) against Guarantor is pending or threatened;
(I) Lender has made no representation to Guarantor as to the creditworthiness of
Borrower; and (J) Guarantor has established adequate means of obtaining from
Borrower on a continuing basis information regarding Borrower's financial
condition. Guarantor agrees to keep adequately informed from such means of any
facts, events, or circumstances which might in any way affect Guarantor's risks
under this Guaranty, and Guarantor further agrees that, absent a request for
information, Lender shall have no obligation to disclose to Guarantor any
information or documents acquired by Lender in the course of its relationship
with Borrower.

GUARANTOR'S FINANCIAL STATEMENTS. Guarantor agrees to furnish Lender with the
following:

     Annual Statements. As soon as available after the end of each fiscal year,
     Guarantor's balance sheet and income statement for the year ended, prepared
     by Guarantor.

     Tax Returns. As soon as available, but in no event later than thirty (30)
     days after the applicable filing date for the tax reporting period ended,
     Federal and other governmental tax returns, prepared by Guarantor.

     Additional Requirements. Tax Returns to include all supplemental schedules
     together with K-1's.

     Guarantor's Financial Statement to be submitted with Tax Returns.

All financial reports required to be provided under this Guaranty shall be
prepared in accordance with GAAP, applied on a consistent basis, and certified
by Guarantor as being true and correct.

GUARANTOR'S WAIVERS. Except as prohibited by applicable law, Guarantor waives
any right to require Lender (A) to continue lending money or to extend other
credit to Borrower; (B) to make any presentment, protest, demand, or notice of
any kind, including notice of any nonpayment of the Indebtedness or of any
nonpayment related to any collateral, or notice of any action or nonaction on
the part of Borrower, Lender, any surety, endorser, or other guarantor in
connection with the Indebtedness or in connection with the creation of new or
additional loans or obligations; (C) to resort for payment or to proceed
directly or at once against any person, including Borrower or any other
guarantor; (D) to proceed directly against or exhaust any collateral held by
Lender from Borrower, any other guarantor, or any other person; (E) to give
notice of the terms, time, and place of any public or private sale of personal
property security held by Lender from Borrower or to comply with any other
applicable provisions of the Uniform Commercial Code; (F) to pursue any other
remedy within Lender's power; or (G) to commit any act or omission of any kind,
or at any time, with respect to any matter whatsoever.

Guarantor also waives any and all rights or defenses arising by reason of (A)
any "one action" or "anti-deficiency" law or any other law which may prevent
Lender from bringing any action, including a claim for deficiency, against
Guarantor, before or after Lender's commencement or completion of any
foreclosure action, either judicially or by exercise of a power of sale; (B) any
election of remedies by Lender which destroys or otherwise adversely affects
Guarantor's subrogation rights or Guarantor's rights to proceed against Borrower
for reimbursement, including without limitation, any loss of rights Guarantor
may suffer by reason of any law limiting, qualifying, or discharging the
Indebtedness; (C) any disability or other defense of Borrower, of any other
guarantor, or of any other person, or by reason of the cessation of Borrower's
liability from any cause whatsoever, other than payment in full in legal tender,
of the Indebtedness; (D) any right to claim discharge of the Indebtedness on the
basis of unjustified impairment of any collateral for the Indebtedness; (E) any
statute of limitations, if at any time any action or suit brought by Lender
against Guarantor is commenced, there is outstanding Indebtedness of Borrower to
Lender which is not barred by any applicable statute of limitations; or (F) any
defenses given to guarantors at law or in equity other than actual payment and
performance of the Indebtedness. If payment is made by Borrower, whether
voluntarily or otherwise, or by any third party, on the Indebtedness and
thereafter Lender is forced to remit the amount of that payment to Borrower's
trustee in bankruptcy or to any similar person under any federal or state
bankruptcy law or law for the relief of debtors, the Indebtedness shall be
considered unpaid for the purpose of the enforcement of this Guaranty.

Guarantor further waives and agrees not to assert or claim at any time any
deductions to the amount guaranteed under this Guaranty for any claim of setoff,
counterclaim, counter demand, recoupment or similar right, whether such claim,
demand or right may be asserted by the Borrower, the Guarantor, or both.

GUARANTOR'S UNDERSTANDING WITH RESPECT TO WAIVERS. Guarantor warrants and agrees
that each of the waivers set forth above is made with Guarantor's full knowledge
of its significance and consequences and that, under the circumstances, the
waivers are reasonable and not contrary to public policy or law. If any such
waiver is determined to be contrary to any applicable law or public policy, such
waiver shall be effective only to the extent permitted by law or public policy.

RIGHT OF SETOFF. See Addendum.

SUBORDINATION OF BORROWER'S DEBTS TO GUARANTOR. Guarantor agrees that the
Indebtedness of Borrower to Lender, whether now existing or hereafter created,
shall be superior to any claim that Guarantor may now have or hereafter acquire
against Borrower, whether or not Borrower becomes insolvent. Guarantor hereby
expressly subordinates any claim Guarantor may have against Borrower, upon any
account whatsoever, to any claim that Lender may now or hereafter have against
Borrower. In the event of insolvency and consequent liquidation of the assets of
Borrower, through bankruptcy, by an assignment for the benefit of creditors, by
voluntary liquidation, or otherwise, the assets of Borrower applicable to the
payment of the claims of both Lender and Guarantor shall be paid to Lender and
shall be first applied by Lender to the Indebtedness of Borrower to Lender.
Guarantor does hereby assign to Lender all claims which it may have or acquire
against Borrower or against any assignee or trustee in bankruptcy of Borrower;
provided however, that such assignment shall be effective only for the purpose
of assuring to Lender full payment in legal tender of the Indebtedness. If
Lender so requests, any notes or credit agreements now or hereafter evidencing
any debts or obligations of Borrower to Guarantor shall be marked with a legend
that the same are subject to this Guaranty and shall be delivered to Lender.
Guarantor agrees, and Lender is hereby authorized, in the name of Guarantor,
from time to time to execute and file financing statements and continuation
statements and to execute such other documents and to take such other actions as
Lender deems necessary or appropriate to perfect, preserve and enforce its
rights under this Guaranty.

MISCELLANEOUS PROVISIONS.  The following miscellaneous provisions are a part of
this Guaranty:

     Amendments. This Guaranty, together with any Related Documents, constitutes
     the entire understanding and agreement of the parties as to the matters set
     forth in this Guaranty. No alteration of or amendment to this Guaranty
     shall be effective unless given in writing and signed by the party or
     parties sought to be charged or bound by the alteration or amendment.

     Attorneys' Fees; Expenses. Guarantor agrees to pay upon demand all of
     Lender's costs and expenses, including Lender's attorneys' fees and
     Lender's legal expenses, incurred in connection with the enforcement of
     this Guaranty. Lender may hire or pay someone else to help enforce this
     Guaranty, and Guarantor shall pay the costs and expenses of such
     enforcement. Costs and expenses include Lender's attorneys' fees and legal
     expenses whether or not there is a lawsuit, including attorneys' fees and
     legal expenses for bankruptcy proceedings (including efforts to modify or
     vacate any automatic stay or injunction), appeals, and any anticipated
     post-judgment collection services. Guarantor also shall pay all court costs
     and such additional fees as may be directed by the court.

     Caption Headings. Caption headings in this Guaranty are for convenience
     purposes only and are not to be used to interpret or define the provisions
     of this Guaranty.

     Governing Law. This Guaranty will be governed by, construed and enforced in
     accordance with federal law and the laws of the State of Oregon. This
     Guaranty has been accepted by Lender in the State of Oregon.

     Integration. Guarantor further agrees that Guarantor has read and fully
     understands the terms of this Guaranty; Guarantor has had the opportunity
     to be advised by Guarantor's attorney with respect to this Guaranty; the
     Guaranty fully reflects Guarantor's intentions and parol evidence is not
     required to interpret the terms of this Guaranty. Guarantor hereby
     indemnifies and holds Lender harmless from all losses, claims, damages, and
     costs (including Lender's attorneys' fees) suffered or incurred by Lender
     as a result of any breach by Guarantor of the warranties, representations
     and agreements of this paragraph.

     Interpretation. In all cases where there is more than one Borrower or
     Guarantor, then all words used in this Guaranty in the singular shall be
     deemed to have been used in the plural where the context and construction
     so require; and where there is more than one Borrower named in this
     Guaranty or when this Guaranty is executed by more than one Guarantor, the
     words "Borrower" and "Guarantor" respectively shall mean all and any one or
     more of them. The words "Guarantor," "Borrower," and "Lender" include the
     heirs, successors, assigns, and transferees of each of them. If a court
     finds that any provision of this Guaranty is not valid or should not be
     enforced, that fact by itself will not mean that the rest of this Guaranty
     will not be valid or enforced. Therefore, a court will enforce the rest of
     the provisions of this Guaranty even if a provision of this Guaranty may be
     found to be invalid or unenforceable. If any one or more of Borrower or
     Guarantor are corporations, partnerships, limited liability companies, or
     similar entities, it is not necessary for Lender to inquire into the powers
     of Borrower or Guarantor or of the officers, directors, partners, managers,
     or other agents acting or purporting to act on their behalf, and any Loan
     indebtedness made or created in reliance upon the professed exercise of
     such powers shall be guaranteed under this Guaranty.

     Notices. Any notice required to be given under this Guaranty shall be given
     in writing, and, except for revocation notices by Guarantor, shall be
     effective when actually delivered, when actually received by telefacsimile
     (unless otherwise required by law), when deposited with a nationally
     recognized overnight courier, or, if mailed, when deposited in the United
     States mail, as first class, certified or registered mail postage prepaid,
     directed to the addresses shown near the beginning of this Guaranty. All
     revocation notices by Guarantor shall be in writing and shall be effective
     upon delivery to Lender as provided in the section of this Guaranty
     entitled "DURATION OF GUARANTY." Any party may change its address for
     notices under this Guaranty by giving formal written notice to the other
     parties, specifying that the purpose of the notice is to change the party's
     address. For notice purposes, Guarantor agrees to keep Lender informed at
     all times of Guarantor's current address. Unless otherwise provided or
     required by law, if there is more than one Guarantor, any notice given by
     Lender to any Guarantor is deemed to be notice given to all Guarantors.

     No Waiver by Lender. Lender shall not be deemed to have waived any rights
     under this Guaranty unless such waiver is given in writing and signed by
     Lender. No delay or omission on the part of Lender in exercising any right
     shall operate as a waiver of such right or any other right. A waiver by
     Lender of a provision of this Guaranty shall not prejudice or constitute a
     waiver of Lender's right otherwise to demand strict compliance with that
     provision or any other provision of this Guaranty. No prior waiver by
     Lender, nor any course of dealing between Lender and Guarantor, shall
     constitute a waiver of any of Lender's rights or of any of Guarantor's
     obligations as to any future transactions. Whenever the consent of Lender
     is required under this Guaranty, the granting of such consent by Lender in
     any instance shall not constitute continuing consent to subsequent
     instances where such consent is required and in all cases such consent may
     be granted or withheld in the sole discretion of Lender.

     Successors and Assigns. Subject to any limitations stated in this Guaranty
     on transfer of Guarantor's interest, this Guaranty shall be binding upon
     and inure to the benefit of the parties, their successors and assigns.

DEFINITIONS. The following capitalized words and terms shall have the following
meanings when used in this Guaranty. Unless specifically stated to the contrary,
all references to dollar amounts shall mean amounts in lawful money of the
United States of America. Words and terms used in the singular shall include the
plural, and the plural shall include the singular, as the context may require.
Words and terms not otherwise defined in this Guaranty shall have the meanings
attributed to such terms in the Uniform Commercial Code:

     Borrower. The word "Borrower" means Portland Brewing Company, and all other
     persons and entities signing the Note in whatever capacity.

     Guarantor. The word "Guarantor" means each and every person or entity
     signing this Guaranty, including without limitation Charles A. Adams.

     Guaranty. The word "Guaranty" means the guaranty from Guarantor to Lender,
     including without limitation a guaranty of all or part of the Note.

     Indebtedness. The word "Indebtedness" means Borrower's indebtedness to
     Lender as more particularly described in the Business Loan Agreement.

     Lender. The word "Lender" means Washington Mutual Bank dba Western Bank,
     its successors and assigns.

     Related Documents. The words "Related Documents" mean all promissory notes,
     credit agreements, loan agreements, environmental agreements, guaranties,
     security agreements, mortgages, deeds of trust, security deeds, collateral
     mortgages, and all other instruments, agreements and documents, whether now
     or hereafter existing, executed in connection with the Indebtedness.

GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS COMMERCIAL
GUARANTY AND GUARANTOR AGREES TO ITS TERMS. THIS COMMERCIAL GUARANTY IS DATED
SEPTEMBER 14, 2001.

GUARANTOR:

By:
    Charles A. Adams, Individually
<PAGE>
                         ADDENDUM TO COMMERCIAL GUARANTY

         This ADDENDUM TO COMMERCIAL GUARANTY is attached to and by this
reference is made a part of each Commercial Guaranty dated September 14, 2001,
and executed in connection with a loan or other financial accommodations between
Washington Mutual Bank doing business as Western Bank and Portland Brewing
Company.

RIGHT OF SETOFF. Lender shall not have a security interest in, nor shall Lender
set off against amounts due hereunder, the sums in any account of Guarantor
maintained with Lender.

Addendum agreed to:

WASHINGTON MUTUAL Bank DBA WESTERN BANK initial _______

GUARANTOR initial _______

<PAGE>
                                TRUST CERTIFICATE
<TABLE>
<CAPTION>
------------------- --------------- ---------------- ---------------- -------------- ---------- ------------- ----------
    Principal         Loan Date        Maturity          Loan No       Call / Coll    Account      Officer     Initials
   $182,741.25        09-14-2001      09-15-2004           42           599 / 990                    610
------------------- --------------- ---------------- ---------------- -------------- ---------- ------------- ----------
References in the shaded area are for Lender's use only and do not limit the applicability of this document to any
particular loan or item. Any item above containing "***" has been omitted due to text length limitations.
------------------------------------------------------------------------------------------------------------------------
<S>                                                                    <C>
Borrower:       Portland Brewing Company                               Lender:  Washington Mutual Bank dba Western Bank
                2730 NW 31st Avenue                                             Beaverton Business Banking Center
                Portland, OR  97210                                             12655 SW Center Street, Suite 500
                                                                                Beaverton, OR  97005
Trust:          Charles A. Adams Family Trust
                4047 SW Shattuck Road
                Portland, OR  97221-3042
</TABLE>

WE, THE UNDERSIGNED, DO HEREBY CERTIFY THAT:

CERTIFICATION OF TRUST. This Trust Certificate is given by each of the Trustee
voluntarily, pursuant to the Uniform Trustees' Powers Act as set forth in ORS
128.003 to 128.045 and under penalty of perjury, intending that the facts set
forth in this Certificate be relied upon by Lender as true and correct.

     (A) The Trust is in existence as of this date and is evidenced by a Trust
instrument executed on 08-03-1989.

     (B) The name of the Trustee is:  Charles A. Adams.

     (C) The name of the Trust Settlor is:  Charles A. Adams.

     (D) The powers of Trustee include the power to do, or perform, all of the
     acts and things on behalf of the Trust set forth in this Certificate.

     (E) The Trust is revocable, and the name of the person holding any power to
     revoke the trust is: Charles A. Adams.

     (F) The trust instrument requires the signature of any 1 Trustee to
     exercise any powers of the Trustee.

     (G) The Trust's tax or employer identification number is 54-3509210.

     (H) The Trust is established under the laws of the State of Oregon.

     (I) Title to Trust assets is to be taken in the name of Charles A. Adams
     Family Trust.

     (J) Trustee hereby certifies that the Trust has not been revoked, modified,
     or amended in any manner which would cause the representations contained in
     this Certificate to be incorrect and this Certificate is being signed by
     all of the currently acting Trustees of the Trust. Trustee acknowledges and
     agrees that Lender may require Trustee to provide copies of excerpts from
     the trust instrument and amendments which designate the Trustee and confer
     upon the Trustee the power to act in these transactions, and that Lender
     may require such further identification or legal opinion supporting the
     Trustee authority and power as Lender shall deem necessary and prudent.

     (K) The Trust may be modified or amended by Charles A. Adams.

BORROWING CERTIFICATE. Trustee, for and on behalf of the Trust, is authorized
and empowered on behalf of the Trust to:

     Guaranty. To guarantee or act as surety for loans or other financial
     accommodations to borrower from Lender on such guarantee or surety terms as
     may be agreed upon between the Trustee of the Trust and Lender and in such
     sum or sums of money as in his or her judgment should be guaranteed or
     assured, not exceeding, however, at any one time the amount of One Hundred
     Eighty-two Thousand Seven Hundred Forty-one & 25/100 Dollars ($182,741.25),
     in addition to such sum or sums of money as the Trust currently may have
     guaranteed to Lender (the "Guaranty").

     Grant Security. To mortgage, pledge, transfer, endorse, hypothecate, or
     otherwise encumber and deliver to Lender any property now or hereafter
     belonging to the Trust or in which the Trust now or hereafter may have an
     interest, including without limitation all real property and all personal
     property (tangible or intangible) of the Trust, as security for the
     Guaranty, and as a security for the payment of any loans, any promissory
     notes, or any other or further indebtedness of Portland Brewing Company to
     Lender at any time owing, however the same may be evidenced. Such property
     may be mortgaged, pledged, transferred, endorsed, hypothecated or
     encumbered at the time such loans are obtained or such indebtedness is
     incurred, or at any other time or times, and may be either in addition to
     or in lieu of any property theretofore mortgaged, pledged, transferred,
     endorsed, hypothecated or encumbered. The provisions of this Certificate
     authorizing or relating to the pledge, mortgage, transfer, endorsement,
     hypothecation, granting of a security interest in, or in any way
     encumbering, the assets of the Trust shall include, without limitation,
     doing so in order to lend collateral security for the indebtedness, now or
     hereafter existing, and of any nature whatsoever, of Portland Brewing
     Company to Lender. The Trustees have considered the value to the Trust of
     lending collateral in support of such indebtedness, and the Trustees
     represent to Lender that the Trust is benefited by doing so.

     Execute Security Documents. To execute and deliver to Lender the forms of
     mortgage, deed of trust, pledge agreement, hypothecation agreement, and
     other security agreements and financing statements which Lender may require
     and which shall evidence the terms and conditions under and pursuant to
     which such liens and encumbrances, or any of them, are given; and also to
     execute and deliver to Lender any other written instruments, any chattel
     paper, or any other collateral, of any kind or nature, which Lender may
     deem necessary or proper in connection with or pertaining to the giving of
     the liens and encumbrances.

     Negotiate Items. To draw, endorse, and discount with Lender all drafts,
     trade acceptances, promissory notes, or other evidences of indebtedness
     payable to or belonging to the Trust or in which the Trust may have an
     interest, and either to receive cash for the same or to cause such proceeds
     to be credited to the Trust's account with Lender, or to cause such other
     disposition of the proceeds derived therefrom as he or she may deem
     advisable.

     Further Acts. To do and perform such other acts and things and to execute
     and deliver such other documents and agreements as the Trustee may in his
     or her discretion deem reasonably necessary or proper in order to carry
     into effect the provisions of this Certificate.

NOTICES TO LENDER. The Trustees will promptly notify Lender in writing at
Lender's address shown above (or such other addresses as Lender may designate
from time to time) prior to any (A) change in the Trust's name; (B) change in
the Trust's assumed business name(s); (C) change in the Trustees of the Trust;
(D) change in the authorized signer(s); (E) change in the Trust's state of
organization; (F) conversion of the Trust to a new or different type of business
entity; or (G) change in any other aspect of the Trust that directly or
indirectly relates to any agreements between the Trust and Lender. No change in
the Trust's name or state of organization will take effect until after Lender
has received notice

FURTHER TRUST CERTIFICATIONS. The person named above is duly appointed and
acting Trustee of the Trust and is duly authorized to act on behalf of the Trust
in the manner described above; we are familiar with the purpose of the
Indebtedness; the Indebtedness proceeds are to be used for a legitimate trust
purpose and for the benefit of the the Trust and its beneficiaries.

CONTINUING VALIDITY. This Certificate shall be continuing, shall remain in full
force and effect and Lender may rely on it until written notice of its
revocation shall have been delivered to and received by Lender at Lender's
address shown above (or such addresses as Lender may designate from time to
time). Any such notice shall not affect any of the Trust's agreements or
commitments in effect at the time notice is given.

IN TESTIMONY WHEREOF, We have hereunto set our hand.

We each have read all the provisions of this Certificate, and we each personally
and on behalf of the Trust certify that all statements and representations made
in this Certificate are true and correct. This Trust Certificate is dated
September 14, 2001.

                      CERTIFIED TO AND ATTESTED BY:

                      By:
                          Authorized Signer for Charles A. Adams Family Trust
<PAGE>
                               COMMERCIAL GUARANTY

<TABLE>
<CAPTION>
------------------- --------------- ---------------- ---------------- -------------- ---------- ------------- ----------
    Principal         Loan Date        Maturity          Loan No       Call / Coll    Account      Officer     Initials
                                                                         599/990                     610
------------------- --------------- ---------------- ---------------- -------------- ---------- ------------- ----------
References in the shaded area are for Lender's use only and do not limit the applicability of this document to any
particular loan or item. Any item above containing "***" has been omitted due to text length limitations.
------------------------------------------------------------------------------------------------------------------------
<S>                                                                    <C>
Borrower:       Portland Brewing Company                               Lender:  Washington Mutual Bank dba Western Bank
                2730 NW 31st Avenue                                             Beaverton Business Banking Center
                Portland, OR  97210                                             12655 SW Center Street, Suite 500
                                                                                Beaverton, OR  97005

Guarantor:      Charles A. Adams Family Trust
                4047 SW Shattuck Road
                Portland, OR  97221-3042
</TABLE>

AMOUNT OF GUARANTY. The amount of this Guaranty is One Hundred Eighty-two
Thousand Seven Hundred Forty-one & 25/100 Dollars ($182,741.25).

CONTINUING GUARANTY. For good and valuable consideration, Charles A. Adams
Family Trust ("Guarantor") absolutely and unconditionally guarantees and
promises to pay to Washington Mutual Bank dba Western Bank ("Lender") or its
order, in legal tender of the United States of America, the Indebtedness (as
that term is defined below) of Portland Brewing Company ("Borrower") to Lender
on the terms and conditions set forth in this Guaranty. The obligations of
Guarantor under this Guaranty are continuing.

MAXIMUM LIABILITY. The maximum liability of Guarantor under this Guaranty shall
not exceed at any one time $182,741.25 plus all costs and expenses of (A)
enforcement of this Guaranty and (B) collection and sale of any collateral
securing this Guaranty.

The above limitation on liability is not a restriction on the amount of the
Indebtedness of Borrower to Lender either in the aggregate or at any one time.
If Lender presently holds one or more guaranties, or hereafter receives
additional guaranties from Guarantor, Lender's rights under all guaranties shall
be cumulative. This Guaranty shall not (unless specifically provided below to
the contrary) affect or invalidate any such other guaranties. Guarantor's
liability will be Guarantor's aggregate liability under the terms of this
Guaranty and any such other unterminated guaranties.

INDEBTEDNESS GUARANTEED. The Indebtedness is guaranteed is and whether any such
Indebtedness is voluntarily or involuntarily incurred, due or not due, absolute
or contingent, liquidated or unliquidated, determined or undetermined; whether
Borrower may be liable individually or jointly with others, or primarily or
secondarily, or as guarantor or surety; whether recovery on the Indebtedness may
be or may become barred or unenforceable against Borrower for any reason
whatsoever; and whether the Indebtedness arises from transactions which may be
voidable on account of infancy, insanity, ultra vires, or otherwise.

DURATION OF GUARANTY. This Guaranty will take effect when received by Lender
without the necessity of any acceptance by Lender, or any notice to Guarantor or
to Borrower, and will continue in full force until all Indebtedness incurred or
contracted before receipt by Lender of any notice of revocation shall have been
fully and finally paid and satisfied and all of Guarantor's other obligations
under this Guaranty shall have been performed in full. If Guarantor elects to
revoke this Guaranty, Guarantor may only do so in writing. Guarantor's written
notice of revocation must be mailed to Lender, by certified mail, at Lender's
address listed above or such other place as Lender may designate in writing.
Written revocation of this Guaranty will apply only to advances or new
Indebtedness created after actual receipt by Lender of Guarantor's written
revocation. For this purpose and without limitation, the term "new Indebtedness"
does not include Indebtedness which at the time of notice of revocation is
contingent, unliquidated, undetermined or not due and which later becomes
absolute, liquidated, determined or due. This Guaranty will continue to bind
Guarantor for all Indebtedness incurred by Borrower or committed by Lender prior
to receipt of Guarantor's written notice of revocation, including any
extensions, renewals, substitutions or modifications of the Indebtedness. All
renewals, extensions, substitutions, and modifications of the Indebtedness
granted after Guarantor's revocation, are contemplated under this Guaranty and,
specifically will not be considered to be new Indebtedness. This Guaranty shall
bind Guarantor's estate as to Indebtedness created both before and after
Guarantor's death or incapacity, regardless of Lender's actual notice of
Guarantor's death. Subject to the foregoing, Guarantor's executor or
administrator or other legal representative may terminate this Guaranty in the
same manner in which Guarantor might have terminated it and with the same
effect. Release of any other guarantor or termination of any other guaranty of
the Indebtedness shall not affect the liability of Guarantor under this
Guaranty. A revocation Lender receives from any one or more Guarantors shall not
affect the liability of any remaining Guarantors under this Guaranty. It is
anticipated that fluctuations may occur in the aggregate amount of Indebtedness
covered by this Guaranty, and Guarantor specifically acknowledges and agrees
that reductions in the amount of Indebtedness, even to zero dollars ($0.00),
prior to Guarantor's written revocation of this Guaranty shall not constitute a
termination of this Guaranty. This Guaranty is binding upon Guarantor and
Guarantor's heirs, successors and assigns so long as any of the guaranteed
Indebtedness remains unpaid and even though the Indebtedness guaranteed may from
time to time be zero dollars ($0.00).

GUARANTOR'S AUTHORIZATION TO LENDER. Guarantor authorizes Lender, either before
or after any revocation hereof, without notice or demand and without lessening
Guarantor's liability under this Guaranty, from time to time: (A) prior to
revocation as set forth above, to make one or more additional secured or
unsecured loans to Borrower, to lease equipment or other goods to Borrower, or
otherwise to extend additional credit to Borrower; (B) to alter, compromise,
renew, extend, accelerate, or otherwise change one or more times the time for
payment or other terms of the Indebtedness or any part of the Indebtedness,
including increases and decreases of the rate of interest on the Indebtedness;
extensions may be repeated and may be for longer than the original loan term;
(C) to take and hold security for the payment of this Guaranty or the
Indebtedness, and exchange, enforce, waive, subordinate, fail or decide not to
perfect, and release any such security, with or without the substitution of new
collateral; (D) to release, substitute, agree not to sue, or deal with any one
or more of Borrower's sureties, endorsers, or other guarantors on any terms or
in any manner Lender may choose; (E) to determine how, when and what application
of payments and credits shall be made on the Indebtedness (F) to apply such
security and direct the order or manner of sale thereof, including without
limitation, any nonjudicial sale permitted by the terms of the controlling
security agreement or deed of trust, as Lender in its discretion may determine;
(G) to sell, transfer, assign or grant participations in all or any part of the
Indebtedness; and (H) to assign or transfer this Guaranty in whole or in part.

GUARANTOR'S REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants to
Lender that (A) no representations or agreements of any kind have been made to
Guarantor which would limit or qualify in any way the terms of this Guaranty;
(B) this Guaranty is executed at Borrower's request and not at the request of
Lender; (C) Guarantor has full power, right and authority to enter into this
Guaranty; (D) the provisions of this Guaranty do not conflict with or result in
a default under any agreement or other instrument binding upon Guarantor and do
not result in a violation of any law, regulation, court decree or order
applicable to Guarantor; (E) Guarantor has not and will not, without the prior
written consent of Lender, sell, lease, assign, encumber, hypothecate, transfer,
or otherwise dispose of all or substantially all of Guarantor's assets, or any
interest therein; (F) upon Lender's request, Guarantor will provide to Lender
financial and credit information in form acceptable to Lender, and all such
financial information which currently has been, and all future financial
information which will be provided to Lender is and will be true and correct in
all material respects and fairly present Guarantor's financial condition as of
the dates the financial information is provided; (G) no material adverse change
has occurred in Guarantor's financial condition since the date of the most
recent financial statements provided to Lender and no event has occurred which
may materially adversely affect Guarantor's financial condition; (H) no
litigation, claim, investigation, administrative proceeding or similar action
(including those for unpaid taxes) against Guarantor is pending or threatened;
(I) Lender has made no representation to Guarantor as to the creditworthiness of
Borrower; and (J) Guarantor has established adequate means of obtaining from
Borrower on a continuing basis information regarding Borrower's financial
condition. Guarantor agrees to keep adequately informed from such means of any
facts, events, or circumstances which might in any way affect Guarantor's risks
under this Guaranty, and Guarantor further agrees that, absent a request for
information, Lender shall have no obligation to disclose to Guarantor any
information or documents acquired by Lender in the course of its relationship
with Borrower.

GUARANTOR'S FINANCIAL STATEMENTS. Guarantor agrees to furnish Lender with the
following:

     Annual Statements. As soon as available after the end of each fiscal year,
     Guarantor's balance sheet and income statement for the year ended, compiled
     by a certified public accountant satisfactory to Lender.

     Tax Returns. As soon as available, but in no event later than thirty (30)
     days after the applicable filing date for the tax reporting period ended,
     Federal and other governmental tax returns, prepared by Guarantor.

     Additional Requirements. Tax returns to include all supplemental schedules
     together with K-1's.

     Guarantor's Financial Statement to be submitted with Tax Returns.

All financial reports required to be provided under this Guaranty shall be
prepared in accordance with GAAP, applied on a consistent basis, and certified
by Guarantor as being true and correct.

GUARANTOR'S WAIVERS. Except as prohibited by applicable law, Guarantor waives
any right to require Lender (A) to continue lending money or to extend other
credit to Borrower; (B) to make any presentment, protest, demand, or notice of
any kind, including notice of any nonpayment of the Indebtedness or of any
nonpayment related to any collateral, or notice of any action or nonaction on
the part of Borrower, Lender, any surety, endorser, or other guarantor in
connection with the Indebtedness or in connection with the creation of new or
additional loans or obligations; (C) to resort for payment or to proceed
directly or at once against any person, including Borrower or any other
guarantor; (D) to proceed directly against or exhaust any collateral held by
Lender from Borrower, any other guarantor, or any other person; (E) to give
notice of the terms, time, and place of any public or private sale of personal
property security held by Lender from Borrower or to comply with any other
applicable provisions of the Uniform Commercial Code; (F) to pursue any other
remedy within Lender's power; or (G) to commit any act or omission of any kind,
or at any time, with respect to any matter whatsoever.

Guarantor also waives any and all rights or defenses arising by reason of (A)
any "one action" or "anti-deficiency" law or any other law which may prevent
Lender from bringing any action, including a claim for deficiency, against
Guarantor, before or after Lender's commencement or completion of any
foreclosure action, either judicially or by exercise of a power of sale; (B) any
election of remedies by Lender which destroys or otherwise adversely affects
Guarantor's subrogation rights or Guarantor's rights to proceed against Borrower
for reimbursement, including without limitation, any loss of rights Guarantor
may suffer by reason of any law limiting, qualifying, or discharging the
Indebtedness; (C) any disability or other defense of Borrower, of any other
guarantor, or of any other person, or by reason of the cessation of Borrower's
liability from any cause whatsoever, other than payment in full in legal tender,
of the Indebtedness; (D) any right to claim discharge of the Indebtedness on the
basis of unjustified impairment of any collateral for the Indebtedness; (E) any
statute of limitations, if at any time any action or suit brought by Lender
against Guarantor is commenced, there is outstanding Indebtedness of Borrower to
Lender which is not barred by any applicable statute of limitations; or (F) any
defenses given to guarantors at law or in equity other than actual payment and
performance of the Indebtedness. If payment is made by Borrower, whether
voluntarily or otherwise, or by any third party, on the Indebtedness and
thereafter Lender is forced to remit the amount of that payment to Borrower's
trustee in bankruptcy or to any similar person under any federal or state
bankruptcy law or law for the relief of debtors, the Indebtedness shall be
considered unpaid for the purpose of the enforcement of this Guaranty.

Guarantor further waives and agrees not to assert or claim at any time any
deductions to the amount guaranteed under this Guaranty for any claim of setoff,
counterclaim, counter demand, recoupment or similar right, whether such claim,
demand or right may be asserted by the Borrower, the Guarantor, or both.

GUARANTOR'S UNDERSTANDING WITH RESPECT TO WAIVERS. Guarantor warrants and agrees
that each of the waivers set forth above is made with Guarantor's full knowledge
of its significance and consequences and that, under the circumstances, the
waivers are reasonable and not contrary to public policy or law. If any such
waiver is determined to be contrary to any applicable law or public policy, such
waiver shall be effective only to the extent permitted by law or public policy.

RIGHT OF SETOFF. See Addendum.

SUBORDINATION OF BORROWER'S DEBTS TO GUARANTOR. Guarantor agrees that the
Indebtedness of Borrower to Lender, whether now existing or hereafter created,
shall be superior to any claim that Guarantor may now have or hereafter acquire
against Borrower, whether or not Borrower becomes insolvent. Guarantor hereby
expressly subordinates any claim Guarantor may have against Borrower, upon any
account whatsoever, to any claim that Lender may now or hereafter have against
Borrower. In the event of insolvency and consequent liquidation of the assets of
Borrower, through bankruptcy, by an assignment for the benefit of creditors, by
voluntary liquidation, or otherwise, the assets of Borrower applicable to the
payment of the claims of both Lender and Guarantor shall be paid to Lender and
shall be first applied by Lender to the Indebtedness of Borrower to Lender.
Guarantor does hereby assign to Lender all claims which it may have or acquire
against Borrower or against any assignee or trustee in bankruptcy of Borrower;
provided however, that such assignment shall be effective only for the purpose
of assuring to Lender full payment in legal tender of the Indebtedness. If
Lender so requests, any notes or credit agreements now or hereafter evidencing
any debts or obligations of Borrower to Guarantor shall be marked with a legend
that the same are subject to this Guaranty and shall be delivered to Lender.
Guarantor agrees, and Lender is hereby authorized, in the name of Guarantor,
from time to time to execute and file financing statements and continuation
statements and to execute such other documents and to take such other actions as
Lender deems necessary or appropriate to perfect, preserve and enforce its
rights under this Guaranty.

MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Guaranty:

     Amendments. This Guaranty, together with any Related Documents, constitutes
     the entire understanding and agreement of the parties as to the matters set
     forth in this Guaranty. No alteration of or amendment to this Guaranty
     shall be effective unless given in writing and signed by the party or
     parties sought to be charged or bound by the alteration or amendment.

     Attorneys' Fees; Expenses. Guarantor agrees to pay upon demand all of
     Lender's costs and expenses, including Lender's attorneys' fees and
     Lender's legal expenses, incurred in connection with the enforcement of
     this Guaranty. Lender may hire or pay someone else to help enforce this
     Guaranty, and Guarantor shall pay the costs and expenses of such
     enforcement. Costs and expenses include Lender's attorneys' fees and legal
     expenses whether or not there is a lawsuit, including attorneys' fees and
     legal expenses for bankruptcy proceedings (including efforts to modify or
     vacate any automatic stay or injunction), appeals, and any anticipated
     post-judgment collection services. Guarantor also shall pay all court costs
     and such additional fees as may be directed by the court.

     Caption Headings. Caption headings in this Guaranty are for convenience
     purposes only and are not to be used to interpret or define the provisions
     of this Guaranty.

     Governing Law. This Guaranty will be governed by, construed and enforced in
     accordance with federal law and the laws of the State of Oregon. This
     Guaranty has been accepted by Lender in the State of Oregon.

     Integration. Guarantor further agrees that Guarantor has read and fully
     understands the terms of this Guaranty; Guarantor has had the opportunity
     to be advised by Guarantor's attorney with respect to this Guaranty; the
     Guaranty fully reflects Guarantor's intentions and parol evidence is not
     required to interpret the terms of this Guaranty. Guarantor hereby
     indemnifies and holds Lender harmless from all losses, claims, damages, and
     costs (including Lender's attorneys' fees) suffered or incurred by Lender
     as a result of any breach by Guarantor of the warranties, representations
     and agreements of this paragraph.

     Interpretation. In all cases where there is more than one Borrower or
     Guarantor, then all words used in this Guaranty in the singular shall be
     deemed to have been used in the plural where the context and construction
     so require; and where there is more than one Borrower named in this
     Guaranty or when this Guaranty is executed by more than one Guarantor, the
     words "Borrower" and "Guarantor" respectively shall mean all and any one or
     more of them. The words "Guarantor," "Borrower," and "Lender" include the
     heirs, successors, assigns, and transferees of each of them. If a court
     finds that any provision of this Guaranty is not valid or should not be
     enforced, that fact by itself will not mean that the rest of this Guaranty
     will not be valid or enforced. Therefore, a court will enforce the rest of
     the provisions of this Guaranty even if a provision of this Guaranty may be
     found to be invalid or unenforceable. If any one or more of Borrower or
     Guarantor are corporations, partnerships, limited liability companies, or
     similar entities, it is not necessary for Lender to inquire into the powers
     of Borrower or Guarantor or of the officers, directors, partners, managers,
     or other agents acting or purporting to act on their behalf, and any Loan
     indebtedness made or created in reliance upon the professed exercise of
     such powers shall be guaranteed under this Guaranty.

     Notices. Any notice required to be given under this Guaranty shall be given
     in writing, and, except for revocation notices by Guarantor, shall be
     effective when actually delivered, when actually received by telefacsimile
     (unless otherwise required by law), when deposited with a nationally
     recognized overnight courier, or, if mailed, when deposited in the United
     States mail, as first class, certified or registered mail postage prepaid,
     directed to the addresses shown near the beginning of this Guaranty. All
     revocation notices by Guarantor shall be in writing and shall be effective
     upon delivery to Lender as provided in the section of this Guaranty
     entitled "DURATION OF GUARANTY." Any party may change its address for
     notices under this Guaranty by giving formal written notice to the other
     parties, specifying that the purpose of the notice is to change the party's
     address. For notice purposes, Guarantor agrees to keep Lender informed at
     all times of Guarantor's current address. Unless otherwise provided or
     required by law, if there is more than one Guarantor, any notice given by
     Lender to any Guarantor is deemed to be notice given to all Guarantors.

     No Waiver by Lender. Lender shall not be deemed to have waived any rights
     under this Guaranty unless such waiver is given in writing and signed by
     Lender. No delay or omission on the part of Lender in exercising any right
     shall operate as a waiver of such right or any other right. A waiver by
     Lender of a provision of this Guaranty shall not prejudice or constitute a
     waiver of Lender's right otherwise to demand strict compliance with that
     provision or any other provision of this Guaranty. No prior waiver by
     Lender, nor any course of dealing between Lender and Guarantor, shall
     constitute a waiver of any of Lender's rights or of any of Guarantor's
     obligations as to any future transactions. Whenever the consent of Lender
     is required under this Guaranty, the granting of such consent by Lender in
     any instance shall not constitute continuing consent to subsequent
     instances where such consent is required and in all cases such consent may
     be granted or withheld in the sole discretion of Lender.

     Successors and Assigns. Subject to any limitations stated in this Guaranty
     on transfer of Guarantor's interest, this Guaranty shall be binding upon
     and inure to the benefit of the parties, their successors and assigns.

DEFINITIONS. The following capitalized words and terms shall have the following
meanings when used in this Guaranty. Unless specifically stated to the contrary,
all references to dollar amounts shall mean amounts in lawful money of the
United States of America. Words and terms used in the singular shall include the
plural, and the plural shall include the singular, as the context may require.
Words and terms not otherwise defined in this Guaranty shall have the meanings
attributed to such terms in the Uniform Commercial Code:

     Borrower. The word "Borrower" means Portland Brewing Company, and all other
     persons and entities signing the Note in whatever capacity.

     Guarantor. The word "Guarantor" means each and every person or entity
     signing this Guaranty, including without limitation Charles A. Adams Family
     Trust.

     Guaranty. The word "Guaranty" means the guaranty from Guarantor to Lender,
     including without limitation a guaranty of all or part of the Note.

     Indebtedness. The word "Indebtedness" means Borrower's indebtedness to
     Lender as more particularly described in the Business Loan Agreement.

     Lender. The word "Lender" means Washington Mutual Bank dba Western Bank,
     its successors and assigns.

     Related Documents. The words "Related Documents" mean all promissory notes,
     credit agreements, loan agreements, environmental agreements, guaranties,
     security agreements, mortgages, deeds of trust, security deeds, collateral
     mortgages, and all other instruments, agreements and documents, whether now
     or hereafter existing, executed in connection with the Indebtedness.

GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS COMMERCIAL
GUARANTY AND GUARANTOR AGREES TO ITS TERMS. THIS COMMERCIAL GUARANTY IS DATED
SEPTEMBER 14, 2001.

GUARANTOR:

CHARLES A. ADAMS FAMILY TRUST

By:
    Charles A. Adams, Trustee of
    Charles A. Adams Family Trust

<PAGE>

                         ADDENDUM TO COMMERCIAL GUARANTY

         This ADDENDUM TO COMMERCIAL GUARANTY is attached to and by this
reference is made a part of each Commercial Guaranty dated September 14, 2001,
and executed in connection with a loan or other financial accommodations between
Washington Mutual Bank doing business as Western Bank and Portland Brewing
Company.

RIGHT OF SETOFF. Lender shall not have a security interest in, nor shall Lender
set off against amounts due hereunder, the sums in any account of Guarantor
maintained with Lender.

Addendum agreed to:

WASHINGTON MUTUAL Bank DBA WESTERN BANK initial _______

GUARANTOR initial _______

<PAGE>
                     DISBURSEMENT REQUEST AND AUTHORIZATION

<TABLE>
<CAPTION>
------------------- --------------- ---------------- ---------------- -------------- ---------- ------------- ----------
    Principal         Loan Date        Maturity          Loan No       Call / Coll    Account      Officer     Initials
   $182,741.25        09-14-2001      09-15-2004           42           599 / 990    0010130085      610
------------------- --------------- ---------------- ---------------- -------------- ---------- ------------- ----------
References in the shaded area are for Lender's use only and do not limit the applicability of this document to any
particular loan or item. Any item above containing "***" has been omitted due to text length limitations.
------------------------------------------------------------------------------------------------------------------------
<S>                                                                    <C>
Borrower:       Portland Brewing Company                               Lender:  Washington Mutual Bank dba Western Bank
                2730 NW 31st Avenue                                             Beaverton Business Banking Center
                Portland, OR  97210                                             12655 SW Center Street, Suite 500
                                                                                Beaverton, OR  97005
</TABLE>

LOAN TYPE. This is a Variable Rate Nondisclosable Loan to a Corporation for
$182,741.25 due on September 15, 2004. The reference rate (Prime-Daily,
currently 6.500%) is added to the margin of 1.500%, resulting in an initial rate
of 8.000.

PRIMARY PURPOSE OF LOAN.  The primary purpose of this loan is for:

         |_|  Personal, Family, or Household Purposes or Personal Investment.

         |X|  Business (Including Real Estate Investment).

SPECIFIC PURPOSE. This specific purpose of this loan is: Refinance debt owing by
Portland Brewing Building LLC.

DISBURSEMENT INSTRUCTIONS. Borrower understands that no loan proceeds will be
disbursed until all of Lender's conditions for making the loan have been
satisfied. Please disburse the loan proceeds of $182,741.25 as follows:

         Amount paid on Borrower's account:                     $182,741.25
              $182,741.25 Payment on Loan # 0010129913-18

         Note Principal:                                        $182,741.25

CHARGES PAID IN CASH.  Borrower has paid or will pay in cash as agreed the
following charges:

         Prepaid Finance Charges Paid in Cash:                      $250.00
              $250.00 Loan Fees

         Total Charges Paid in Cash:                                $250.00

AUTOMATIC PAYMENTS. Borrower hereby authorizes Lender automatically to deduct
from Borrower's account numbered 014-02062401 the amount of any loan payment. If
the funds in the account are insufficient to cover any payment, Lender shall not
be obligated to advance funds to cover the payment. At any time and for any
reason, Borrower or Lender may voluntarily terminate Automatic Payments.

FINANCIAL CONDITION. BY SIGNING THIS AUTHORIZATION, BORROWER REPRESENTS AND
WARRANTS TO LENDER THAT THE INFORMATION PROVIDED ABOVE IS TRUE AND CORRECT AND
THAT THERE HAS BEEN NO MATERIAL ADVERSE CHANGE IN BORROWER'S FINANCIAL CONDITION
AS DISCLOSED IN BORROWER'S MOST RECENT FINANCIAL STATEMENT TO LENDER. THIS
AUTHORIZATION IS DATED SEPTEMBER 14, 2001.

BORROWER:

PORTLAND BREWING COMPANY

By:
    Charles A. Adams, President/CEO of Portland
    Brewing Company
<PAGE>
                                TRUST CERTIFICATE

<TABLE>
<CAPTION>
------------------- --------------- ---------------- ---------------- -------------- ---------- ------------- ----------
    Principal         Loan Date        Maturity          Loan No       Call / Coll    Account      Officer     Initials
   $182,741.25        09-14-2001      09-15-2004           42           599 / 990    0010130085      610
------------------- --------------- ---------------- ---------------- -------------- ---------- ------------- ----------
References in the shaded area are for Lender's use only and do not limit the applicability of this document to any
particular loan or item. Any item above containing "***" has been omitted due to text length limitations.
------------------------------------------------------------------------------------------------------------------------
<S>                                                                    <C>
Borrower:       Portland Brewing Company                               Lender:  Washington Mutual Bank dba Western Bank
                2730 NW 31st Avenue                                             Beaverton Business Banking Center
                Portland, OR  97210                                             12655 SW Center Street, Suite 500
                                                                                Beaverton, OR  97005
Trust:          MacTarnahan Family Trust
                11416 SW Lynnridge Avenue
                Portland, OR  97225
</TABLE>

WE, THE UNDERSIGNED, DO HEREBY CERTIFY THAT:

CERTIFICATION OF TRUST. This Trust Certificate is given by each of the Trustee
voluntarily, pursuant to the Uniform Trustees' Powers Act as set forth in ORS
128.003 to 128.045 and under penalty of perjury, intending that the facts set
forth in this Certificate be relied upon by Lender as true and correct.

     (A) The Trust is in existence as of this date and is evidenced by a Trust
instrument executed on 04-13-1994.

     (B) The name of the Trustee is:  Robert M. MacTarnahan.

     (C) The name of the Trust Settlor is:  Robert M. MacTarnahan.

     (D) The powers of Trustee include the power to do, or perform, all of the
     acts and things on behalf of the Trust set forth in this Certificate.

     (E) The Trust is irrevocable.

     (F) The trust instrument requires the signature of any 1 Trustee to
     exercise any powers of the Trustee.

     (G) The Trust's tax or employer identification number is .

     (H) The Trust is established under the laws of the State of Oregon.

     (I) Title to Trust assets is to be taken in the name of MacTarnahan Family
     Trust.

     (J) Trustee hereby certifies that the Trust has not been revoked, modified,
     or amended in any manner which would cause the representations contained in
     this Certificate to be incorrect and this Certificate is being signed by
     all of the currently acting Trustees of the Trust. Trustee acknowledges and
     agrees that Lender may require Trustee to provide copies of excerpts from
     the trust instrument and amendments which designate the Trustee and confer
     upon the Trustee the power to act in these transactions, and that Lender
     may require such further identification or legal opinion supporting the
     Trustee authority and power as Lender shall deem necessary and prudent.

     (K) The Trust may not be modified or amended.

BORROWING CERTIFICATE. Trustee, for and on behalf of the Trust, is authorized
and empowered on behalf of the Trust to:

     Guaranty. To guarantee or act as surety for loans or other financial
     accommodations to borrower from Lender on such guarantee or surety terms as
     may be agreed upon between the Trustee of the Trust and Lender and in such
     sum or sums of money as in his or her judgment should be guaranteed or
     assured, not exceeding, however, at any one time the amount of One Hundred
     Eighty-two Thousand Seven Hundred Forty-one & 25/100 Dollars ($182,741.25),
     in addition to such sum or sums of money as the Trust currently may have
     guaranteed to Lender (the "Guaranty").

     Grant Security. To mortgage, pledge, transfer, endorse, hypothecate, or
     otherwise encumber and deliver to Lender any property now or hereafter
     belonging to the Trust or in which the Trust now or hereafter may have an
     interest, including without limitation all real property and all personal
     property (tangible or intangible) of the Trust, as security for the
     Guaranty, and as a security for the payment of any loans, any promissory
     notes, or any other or further indebtedness of Portland Brewing Company to
     Lender at any time owing, however the same may be evidenced. Such property
     may be mortgaged, pledged, transferred, endorsed, hypothecated or
     encumbered at the time such loans are obtained or such indebtedness is
     incurred, or at any other time or times, and may be either in addition to
     or in lieu of any property theretofore mortgaged, pledged, transferred,
     endorsed, hypothecated or encumbered. The provisions of this Certificate
     authorizing or relating to the pledge, mortgage, transfer, endorsement,
     hypothecation, granting of a security interest in, or in any way
     encumbering, the assets of the Trust shall include, without limitation,
     doing so in order to lend collateral security for the indebtedness, now or
     hereafter existing, and of any nature whatsoever, of Portland Brewing
     Company to Lender. The Trustees have considered the value to the Trust of
     lending collateral in support of such indebtedness, and the Trustees
     represent to Lender that the Trust is benefited by doing so.

     Execute Security Documents. To execute and deliver to Lender the forms of
     mortgage, deed of trust, pledge agreement, hypothecation agreement, and
     other security agreements and financing statements which Lender may require
     and which shall evidence the terms and conditions under and pursuant to
     which such liens and encumbrances, or any of them, are given; and also to
     execute and deliver to Lender any other written instruments, any chattel
     paper, or any other collateral, of any kind or nature, which Lender may
     deem necessary or proper in connection with or pertaining to the giving of
     the liens and encumbrances.

     Negotiate Items. To draw, endorse, and discount with Lender all drafts,
     trade acceptances, promissory notes, or other evidences of indebtedness
     payable to or belonging to the Trust or in which the Trust may have an
     interest, and either to receive cash for the same or to cause such proceeds
     to be credited to the Trust's account with Lender, or to cause such other
     disposition of the proceeds derived therefrom as he or she may deem
     advisable.

     Further Acts. To do and perform such other acts and things and to execute
     and deliver such other documents and agreements as the Trustee may in his
     or her discretion deem reasonably necessary or proper in order to carry
     into effect the provisions of this Certificate.

NOTICES TO LENDER. The Trustees will promptly notify Lender in writing at
Lender's address shown above (or such other addresses as Lender may designate
from time to time) prior to any (A) change in the Trust's name; (B) change in
the Trust's assumed business name(s); (C) change in the Trustees of the Trust;
(D) change in the authorized signer(s); (E) change in the Trust's state of
organization; (F) conversion of the Trust to a new or different type of business
entity; or (G) change in any other aspect of the Trust that directly or
indirectly relates to any agreements between the Trust and Lender. No change in
the Trust's name or state of organization will take effect until after Lender
has received notice

FURTHER TRUST CERTIFICATIONS. The person named above is duly appointed and
acting Trustee of the Trust and is duly authorized to act on behalf of the Trust
in the manner described above; we are familiar with the purpose of the
Indebtedness; the Indebtedness proceeds are to be used for a legitimate trust
purpose and for the benefit of the the Trust and its beneficiaries.

CONTINUING VALIDITY. This Certificate shall be continuing, shall remain in full
force and effect and Lender may rely on it until written notice of its
revocation shall have been delivered to and received by Lender at Lender's
address shown above (or such addresses as Lender may designate from time to
time). Any such notice shall not affect any of the Trust's agreements or
commitments in effect at the time notice is given.

IN TESTIMONY WHEREOF, We have hereunto set our hand.

We each have read all the provisions of this Certificate, and we each personally
and on behalf of the Trust certify that all statements and representations made
in this Certificate are true and correct. This Trust Certificate is dated
September 14, 2001.

                             CERTIFIED TO AND ATTESTED BY:

                             By:
                                 Authorized Signer for MacTarnahan Family Trust
<PAGE>
                               COMMERCIAL GUARANTY

<TABLE>
<CAPTION>
------------------- --------------- ---------------- ---------------- -------------- ---------- ------------- ----------
    Principal         Loan Date        Maturity          Loan No       Call / Coll    Account      Officer     Initials
                                                                        599 / 990                    610
------------------- --------------- ---------------- ---------------- -------------- ---------- ------------- ----------
References in the shaded area are for Lender's use only and do not limit the applicability of this document to any
particular loan or item. Any item above containing "***" has been omitted due to text length limitations.
------------------------------------------------------------------------------------------------------------------------
<S>                                                                    <C>
Borrower:       Portland Brewing Company                               Lender:  Washington Mutual Bank dba Western Bank
                2730 NW 31st Avenue                                             Beaverton Business Banking Center
                Portland, OR  97210                                             12655 SW Center Street, Suite 500
                                                                                Beaverton, OR  97005
Guarantor:      MacTarnahan Family Trust
                11416 SW Lynnridge Avenue
                Portland, OR  97225
</TABLE>

AMOUNT OF GUARANTY. The amount of this Guaranty is One Hundred Eighty-two
Thousand Seven Hundred Forty-one & 25/100 Dollars ($182,741.25).

CONTINUING GUARANTY. For good and valuable consideration, MacTarnahan Family
Trust ("Guarantor") absolutely and unconditionally guarantees and promises to
pay to Washington Mutual Bank dba Western Bank ("Lender") or its order, in legal
tender of the United States of America, the Indebtedness (as that term is
defined below) of Portland Brewing Company ("Borrower") to Lender on the terms
and conditions set forth in this Guaranty. The obligations of Guarantor under
this Guaranty are continuing.

MAXIMUM LIABILITY. The maximum liability of Guarantor under this Guaranty shall
not exceed at any one time $182,741.25 plus all costs and expenses of (A)
enforcement of this Guaranty and (B) collection and sale of any collateral
securing this Guaranty.

The above limitation on liability is not a restriction on the amount of the
Indebtedness of Borrower to Lender either in the aggregate or at any one time.
If Lender presently holds one or more guaranties, or hereafter receives
additional guaranties from Guarantor, Lender's rights under all guaranties shall
be cumulative. This Guaranty shall not (unless specifically provided below to
the contrary) affect or invalidate any such other guaranties. Guarantor's
liability will be Guarantor's aggregate liability under the terms of this
Guaranty and any such other unterminated guaranties.

INDEBTEDNESS GUARANTEED. The Indebtedness is guaranteed and whether any such
Indebtedness is voluntarily or involuntarily incurred, due or not due, absolute
or contingent, liquidated or unliquidated, determined or undetermined; whether
Borrower may be liable individually or jointly with others, or primarily or
secondarily, or as guarantor or surety; whether recovery on the Indebtedness may
be or may become barred or unenforceable against Borrower for any reason
whatsoever; and whether the Indebtedness arises from transactions which may be
voidable on account of infancy, insanity, ultra vires, or otherwise.

DURATION OF GUARANTY. This Guaranty will take effect when received by Lender
without the necessity of any acceptance by Lender, or any notice to Guarantor or
to Borrower, and will continue in full force until all Indebtedness incurred or
contracted before receipt by Lender of any notice of revocation shall have been
fully and finally paid and satisfied and all of Guarantor's other obligations
under this Guaranty shall have been performed in full. If Guarantor elects to
revoke this Guaranty, Guarantor may only do so in writing. Guarantor's written
notice of revocation must be mailed to Lender, by certified mail, at Lender's
address listed above or such other place as Lender may designate in writing.
Written revocation of this Guaranty will apply only to advances or new
Indebtedness created after actual receipt by Lender of Guarantor's written
revocation. For this purpose and without limitation, the term "new Indebtedness"
does not include Indebtedness which at the time of notice of revocation is
contingent, unliquidated, undetermined or not due and which later becomes
absolute, liquidated, determined or due. This Guaranty will continue to bind
Guarantor for all Indebtedness incurred by Borrower or committed by Lender prior
to receipt of Guarantor's written notice of revocation, including any
extensions, renewals, substitutions or modifications of the Indebtedness. All
renewals, extensions, substitutions, and modifications of the Indebtedness
granted after Guarantor's revocation, are contemplated under this Guaranty and,
specifically will not be considered to be new Indebtedness. This Guaranty shall
bind Guarantor's estate as to Indebtedness created both before and after
Guarantor's death or incapacity, regardless of Lender's actual notice of
Guarantor's death. Subject to the foregoing, Guarantor's executor or
administrator or other legal representative may terminate this Guaranty in the
same manner in which Guarantor might have terminated it and with the same
effect. Release of any other guarantor or termination of any other guaranty of
the Indebtedness shall not affect the liability of Guarantor under this
Guaranty. A revocation Lender receives from any one or more Guarantors shall not
affect the liability of any remaining Guarantors under this Guaranty. It is
anticipated that fluctuations may occur in the aggregate amount of Indebtedness
covered by this Guaranty, and Guarantor specifically acknowledges and agrees
that reductions in the amount of Indebtedness, even to zero dollars ($0.00),
prior to Guarantor's written revocation of this Guaranty shall not constitute a
termination of this Guaranty. This Guaranty is binding upon Guarantor and
Guarantor's heirs, successors and assigns so long as any of the guaranteed
Indebtedness remains unpaid and even though the Indebtedness guaranteed may from
time to time be zero dollars ($0.00).

GUARANTOR'S AUTHORIZATION TO LENDER. Guarantor authorizes Lender, either before
or after any revocation hereof, without notice or demand and without lessening
Guarantor's liability under this Guaranty, from time to time: (A) prior to
revocation as set forth above, to make one or more additional secured or
unsecured loans to Borrower, to lease equipment or other goods to Borrower, or
otherwise to extend additional credit to Borrower; (B) to alter, compromise,
renew, extend, accelerate, or otherwise change one or more times the time for
payment or other terms of the Indebtedness or any part of the Indebtedness,
including increases and decreases of the rate of interest on the Indebtedness;
extensions may be repeated and may be for longer than the original loan term;
(C) to take and hold security for the payment of this Guaranty or the
Indebtedness, and exchange, enforce, waive, subordinate, fail or decide not to
perfect, and release any such security, with or without the substitution of new
collateral; (D) to release, substitute, agree not to sue, or deal with any one
or more of Borrower's sureties, endorsers, or other guarantors on any terms or
in any manner Lender may choose; (E) to determine how, when and what application
of payments and credits shall be made on the Indebtedness (F) to apply such
security and direct the order or manner of sale thereof, including without
limitation, any nonjudicial sale permitted by the terms of the controlling
security agreement or deed of trust, as Lender in its discretion may determine;
(G) to sell, transfer, assign or grant participations in all or any part of the
Indebtedness; and (H) to assign or transfer this Guaranty in whole or in part.

GUARANTOR'S REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants to
Lender that (A) no representations or agreements of any kind have been made to
Guarantor which would limit or qualify in any way the terms of this Guaranty;
(B) this Guaranty is executed at Borrower's request and not at the request of
Lender; (C) Guarantor has full power, right and authority to enter into this
Guaranty; (D) the provisions of this Guaranty do not conflict with or result in
a default under any agreement or other instrument binding upon Guarantor and do
not result in a violation of any law, regulation, court decree or order
applicable to Guarantor; (E) Guarantor has not and will not, without the prior
written consent of Lender, sell, lease, assign, encumber, hypothecate, transfer,
or otherwise dispose of all or substantially all of Guarantor's assets, or any
interest therein; (F) upon Lender's request, Guarantor will provide to Lender
financial and credit information in form acceptable to Lender, and all such
financial information which currently has been, and all future financial
information which will be provided to Lender is and will be true and correct in
all material respects and fairly present Guarantor's financial condition as of
the dates the financial information is provided; (G) no material adverse change
has occurred in Guarantor's financial condition since the date of the most
recent financial statements provided to Lender and no event has occurred which
may materially adversely affect Guarantor's financial condition; (H) no
litigation, claim, investigation, administrative proceeding or similar action
(including those for unpaid taxes) against Guarantor is pending or threatened;
(I) Lender has made no representation to Guarantor as to the creditworthiness of
Borrower; and (J) Guarantor has established adequate means of obtaining from
Borrower on a continuing basis information regarding Borrower's financial
condition. Guarantor agrees to keep adequately informed from such means of any
facts, events, or circumstances which might in any way affect Guarantor's risks
under this Guaranty, and Guarantor further agrees that, absent a request for
information, Lender shall have no obligation to disclose to Guarantor any
information or documents acquired by Lender in the course of its relationship
with Borrower.

GUARANTOR'S FINANCIAL STATEMENTS. Guarantor agrees to furnish Lender with the
following:

     Annual Statements. As soon as available after the end of each fiscal year,
     Guarantor's balance sheet and income statement for the year ended, complied
     by a certified public accountant satisfactory to Lender.

     Tax Returns. As soon as available, but in no event later than thirty (30)
     days after the applicable filing date for the tax reporting period ended,
     Federal and other governmental tax returns, prepared by Guarantor.

     Additional Requirements. Tax Returns to include all supplemental schedules
     together with K-1's.

     Guarantor's Financial Statements to be submitted with Tax Returns.

All financial reports required to be provided under this Guaranty shall be
prepared in accordance with GAAP, applied on a consistent basis, and certified
by Guarantor as being true and correct.

GUARANTOR'S WAIVERS. Except as prohibited by applicable law, Guarantor waives
any right to require Lender (A) to continue lending money or to extend other
credit to Borrower; (B) to make any presentment, protest, demand, or notice of
any kind, including notice of any nonpayment of the Indebtedness or of any
nonpayment related to any collateral, or notice of any action or nonaction on
the part of Borrower, Lender, any surety, endorser, or other guarantor in
connection with the Indebtedness or in connection with the creation of new or
additional loans or obligations; (C) to resort for payment or to proceed
directly or at once against any person, including Borrower or any other
guarantor; (D) to proceed directly against or exhaust any collateral held by
Lender from Borrower, any other guarantor, or any other person; (E) to give
notice of the terms, time, and place of any public or private sale of personal
property security held by Lender from Borrower or to comply with any other
applicable provisions of the Uniform Commercial Code; (F) to pursue any other
remedy within Lender's power; or (G) to commit any act or omission of any kind,
or at any time, with respect to any matter whatsoever.

Guarantor also waives any and all rights or defenses arising by reason of (A)
any "one action" or "anti-deficiency" law or any other law which may prevent
Lender from bringing any action, including a claim for deficiency, against
Guarantor, before or after Lender's commencement or completion of any
foreclosure action, either judicially or by exercise of a power of sale; (B) any
election of remedies by Lender which destroys or otherwise adversely affects
Guarantor's subrogation rights or Guarantor's rights to proceed against Borrower
for reimbursement, including without limitation, any loss of rights Guarantor
may suffer by reason of any law limiting, qualifying, or discharging the
Indebtedness; (C) any disability or other defense of Borrower, of any other
guarantor, or of any other person, or by reason of the cessation of Borrower's
liability from any cause whatsoever, other than payment in full in legal tender,
of the Indebtedness; (D) any right to claim discharge of the Indebtedness on the
basis of unjustified impairment of any collateral for the Indebtedness; (E) any
statute of limitations, if at any time any action or suit brought by Lender
against Guarantor is commenced, there is outstanding Indebtedness of Borrower to
Lender which is not barred by any applicable statute of limitations; or (F) any
defenses given to guarantors at law or in equity other than actual payment and
performance of the Indebtedness. If payment is made by Borrower, whether
voluntarily or otherwise, or by any third party, on the Indebtedness and
thereafter Lender is forced to remit the amount of that payment to Borrower's
trustee in bankruptcy or to any similar person under any federal or state
bankruptcy law or law for the relief of debtors, the Indebtedness shall be
considered unpaid for the purpose of the enforcement of this Guaranty.

Guarantor further waives and agrees not to assert or claim at any time any
deductions to the amount guaranteed under this Guaranty for any claim of setoff,
counterclaim, counter demand, recoupment or similar right, whether such claim,
demand or right may be asserted by the Borrower, the Guarantor, or both.

GUARANTOR'S UNDERSTANDING WITH RESPECT TO WAIVERS. Guarantor warrants and agrees
that each of the waivers set forth above is made with Guarantor's full knowledge
of its significance and consequences and that, under the circumstances, the
waivers are reasonable and not contrary to public policy or law. If any such
waiver is determined to be contrary to any applicable law or public policy, such
waiver shall be effective only to the extent permitted by law or public policy.

RIGHT OF SETOFF. See Addendum.

SUBORDINATION OF BORROWER'S DEBTS TO GUARANTOR. Guarantor agrees that the
Indebtedness of Borrower to Lender, whether now existing or hereafter created,
shall be superior to any claim that Guarantor may now have or hereafter acquire
against Borrower, whether or not Borrower becomes insolvent. Guarantor hereby
expressly subordinates any claim Guarantor may have against Borrower, upon any
account whatsoever, to any claim that Lender may now or hereafter have against
Borrower. In the event of insolvency and consequent liquidation of the assets of
Borrower, through bankruptcy, by an assignment for the benefit of creditors, by
voluntary liquidation, or otherwise, the assets of Borrower applicable to the
payment of the claims of both Lender and Guarantor shall be paid to Lender and
shall be first applied by Lender to the Indebtedness of Borrower to Lender.
Guarantor does hereby assign to Lender all claims which it may have or acquire
against Borrower or against any assignee or trustee in bankruptcy of Borrower;
provided however, that such assignment shall be effective only for the purpose
of assuring to Lender full payment in legal tender of the Indebtedness. If
Lender so requests, any notes or credit agreements now or hereafter evidencing
any debts or obligations of Borrower to Guarantor shall be marked with a legend
that the same are subject to this Guaranty and shall be delivered to Lender.
Guarantor agrees, and Lender is hereby authorized, in the name of Guarantor,
from time to time to execute and file financing statements and continuation
statements and to execute such other documents and to take such other actions as
Lender deems necessary or appropriate to perfect, preserve and enforce its
rights under this Guaranty.

MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Guaranty:

     Amendments. This Guaranty, together with any Related Documents, constitutes
     the entire understanding and agreement of the parties as to the matters set
     forth in this Guaranty. No alteration of or amendment to this Guaranty
     shall be effective unless given in writing and signed by the party or
     parties sought to be charged or bound by the alteration or amendment.

     Attorneys' Fees; Expenses. Guarantor agrees to pay upon demand all of
     Lender's costs and expenses, including Lender's attorneys' fees and
     Lender's legal expenses, incurred in connection with the enforcement of
     this Guaranty. Lender may hire or pay someone else to help enforce this
     Guaranty, and Guarantor shall pay the costs and expenses of such
     enforcement. Costs and expenses include Lender's attorneys' fees and legal
     expenses whether or not there is a lawsuit, including attorneys' fees and
     legal expenses for bankruptcy proceedings (including efforts to modify or
     vacate any automatic stay or injunction), appeals, and any anticipated
     post-judgment collection services. Guarantor also shall pay all court costs
     and such additional fees as may be directed by the court.

     Caption Headings. Caption headings in this Guaranty are for convenience
     purposes only and are not to be used to interpret or define the provisions
     of this Guaranty.

     Governing Law. This Guaranty will be governed by, construed and enforced in
     accordance with federal law and the laws of the State of Oregon. This
     Guaranty has been accepted by Lender in the State of Oregon.

     Integration. Guarantor further agrees that Guarantor has read and fully
     understands the terms of this Guaranty; Guarantor has had the opportunity
     to be advised by Guarantor's attorney with respect to this Guaranty; the
     Guaranty fully reflects Guarantor's intentions and parol evidence is not
     required to interpret the terms of this Guaranty. Guarantor hereby
     indemnifies and holds Lender harmless from all losses, claims, damages, and
     costs (including Lender's attorneys' fees) suffered or incurred by Lender
     as a result of any breach by Guarantor of the warranties, representations
     and agreements of this paragraph.

     Interpretation. In all cases where there is more than one Borrower or
     Guarantor, then all words used in this Guaranty in the singular shall be
     deemed to have been used in the plural where the context and construction
     so require; and where there is more than one Borrower named in this
     Guaranty or when this Guaranty is executed by more than one Guarantor, the
     words "Borrower" and "Guarantor" respectively shall mean all and any one or
     more of them. The words "Guarantor," "Borrower," and "Lender" include the
     heirs, successors, assigns, and transferees of each of them. If a court
     finds that any provision of this Guaranty is not valid or should not be
     enforced, that fact by itself will not mean that the rest of this Guaranty
     will not be valid or enforced. Therefore, a court will enforce the rest of
     the provisions of this Guaranty even if a provision of this Guaranty may be
     found to be invalid or unenforceable. If any one or more of Borrower or
     Guarantor are corporations, partnerships, limited liability companies, or
     similar entities, it is not necessary for Lender to inquire into the powers
     of Borrower or Guarantor or of the officers, directors, partners, managers,
     or other agents acting or purporting to act on their behalf, and any Loan
     indebtedness made or created in reliance upon the professed exercise of
     such powers shall be guaranteed under this Guaranty.

     Notices. Any notice required to be given under this Guaranty shall be given
     in writing, and, except for revocation notices by Guarantor, shall be
     effective when actually delivered, when actually received by telefacsimile
     (unless otherwise required by law), when deposited with a nationally
     recognized overnight courier, or, if mailed, when deposited in the United
     States mail, as first class, certified or registered mail postage prepaid,
     directed to the addresses shown near the beginning of this Guaranty. All
     revocation notices by Guarantor shall be in writing and shall be effective
     upon delivery to Lender as provided in the section of this Guaranty
     entitled "DURATION OF GUARANTY." Any party may change its address for
     notices under this Guaranty by giving formal written notice to the other
     parties, specifying that the purpose of the notice is to change the party's
     address. For notice purposes, Guarantor agrees to keep Lender informed at
     all times of Guarantor's current address. Unless otherwise provided or
     required by law, if there is more than one Guarantor, any notice given by
     Lender to any Guarantor is deemed to be notice given to all Guarantors.

     No Waiver by Lender. Lender shall not be deemed to have waived any rights
     under this Guaranty unless such waiver is given in writing and signed by
     Lender. No delay or omission on the part of Lender in exercising any right
     shall operate as a waiver of such right or any other right. A waiver by
     Lender of a provision of this Guaranty shall not prejudice or constitute a
     waiver of Lender's right otherwise to demand strict compliance with that
     provision or any other provision of this Guaranty. No prior waiver by
     Lender, nor any course of dealing between Lender and Guarantor shall
     constitute a waiver of any of Lender's rights or of any of Guarantor's
     obligations as to any future transactions. Whenever the consent of Lender
     is required under this Guaranty, the granting of such consent by Lender in
     any instance shall not constitute continuing consent to subsequent
     instances where such consent is required and in all cases such consent may
     be granted or withheld in the sole discretion of Lender.

     Successors and Assigns. Subject to any limitations stated in this Guaranty
     or transfer of Guarantor's interest, this Guaranty shall be binding upon
     and inure to the benefit of the parties, their successors and assigns.

DEFINITIONS. The following capitalized words and terms shall have the following
meanings when used in this Guaranty. Unless specifically stated to the contrary,
all references to dollar amounts shall mean amounts in lawful money of the
United States of America. Words and terms used in the singular shall include the
plural, and the plural shall include the singular, as the context may require.
Words and terms not otherwise defined in this Guaranty shall have the meanings
attributed to such terms in the Uniform Commercial Code:

     Borrower. The word "Borrower" means Portland Brewing Company, and all other
     persons and entities signing the Note in whatever capacity.

     Guarantor. The word "Guarantor" means each and every person or entity
     signing this Guaranty, including without limitation MacTarnahan Family
     Trust.

     Guaranty. The word "Guaranty" means the guaranty from Guarantor to Lender,
     including without limitation a guaranty of all or part of the Note.

     Indebtedness. The word "Indebtedness" means Borrower's indebtedness to
     Lender as more particularly described in the Business Loan Agreement.

     Lender. The word "Lender" means Washington Mutual Bank dba Western Bank,
     its successors and assigns.

     Related Documents. The words "Related Documents" mean all promissory notes,
     credit agreements, loan agreements, environmental agreements, guaranties,
     security agreements, mortgages, deeds of trust, security deeds, collateral
     mortgages, and all other instruments, agreements and documents, whether now
     or hereafter existing, executed in connection with the Indebtedness.

GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS COMMERCIAL
GUARANTY AND GUARANTOR AGREES TO ITS TERMS. THIS COMMERCIAL GUARANTY IS DATED
SEPTEMBER 14, 2001.

GUARANTOR:

MACTARNAHAN FAMILY TRUST

By:
    Robert M. MacTarnahan, Trustee of
    MacTarnahan Family Trust
<PAGE>
                         ADDENDUM TO COMMERCIAL GUARANTY

         This ADDENDUM TO COMMERCIAL GUARANTY is attached to and by this
reference is made a part of each Commercial Guaranty dated September 14, 2001,
and executed in connection with a loan or other financial accommodations between
Washington Mutual Bank doing business as Western Bank and Portland Brewing
Company.

RIGHT OF SETOFF. Lender shall not have a security interest in, nor shall Lender
set off against amounts due hereunder, the sums in any account of Guarantor
maintained with Lender.

Addendum agreed to:

WASHINGTON MUTUAL Bank DBA WESTERN BANK initial _______

GUARANTOR initial _______
<PAGE>
                               COMMERCIAL GUARANTY

<TABLE>
<CAPTION>
------------------- --------------- ---------------- ---------------- -------------- ---------- ------------- ----------
    Principal         Loan Date        Maturity          Loan No       Call / Coll    Account      Officer     Initials
                                                                        599 / 990                    610
------------------- --------------- ---------------- ---------------- -------------- ---------- ------------- ----------
References in the shaded area are for Lender's use only and do not limit the applicability of this document to any
particular loan or item. Any item above containing "***" has been omitted due to text length limitations.
------------------------------------------------------------------------------------------------------------------------
<S>                                                                    <C>
Borrower:       Portland Brewing Company                               Lender:  Washington Mutual Bank dba Western Bank
                2730 NW 31st Avenue                                             Beaverton Business Banking Center
                Portland, OR  97210                                             12655 SW Center Street, Suite 500
                                                                                Beaverton, OR  97005
Guarantor:      Robert M. MacTarnahan
                11416 SW Lynnridge Avenue
                Portland, OR  97225
</TABLE>

AMOUNT OF GUARANTY. The amount of this Guaranty is One Hundred Eighty-two
Thousand Seven Hundred Forty-one & 25/100 Dollars ($182,741.25).

CONTINUING GUARANTY. For good and valuable consideration, Robert M. MacTarnahan
("Guarantor") absolutely and unconditionally guarantees and promises to pay to
Washington Mutual Bank dba Western Bank ("Lender") or its order, in legal tender
of the United States of America, the Indebtedness (as that term is defined
below) of Portland Brewing Company ("Borrower") to Lender on the terms and
conditions set forth in this Guaranty. The obligations of Guarantor under this
Guaranty are continuing.

MAXIMUM LIABILITY. The maximum liability of Guarantor under this Guaranty shall
not exceed at any one time $182,741.25 plus all costs and expenses of (A)
enforcement of this Guaranty and (B) collection and sale of any collateral
securing this Guaranty.

The above limitation on liability is not a restriction on the amount of the
Indebtedness of Borrower to Lender either in the aggregate or at any one time.
If Lender presently holds one or more guaranties, or hereafter receives
additional guaranties from Guarantor, Lender's rights under all guaranties shall
be cumulative. This Guaranty shall not (unless specifically provided below to
the contrary) affect or invalidate any such other guaranties. Guarantor's
liability will be Guarantor's aggregate liability under the terms of this
Guaranty and any such other unterminated guaranties.

INDEBTEDNESS GUARANTEED. The Indebtedness is guaranteed is and whether any such
Indebtedness is voluntarily or involuntarily incurred, due or not due, absolute
or contingent, liquidated or unliquidated, determined or undetermined; whether
Borrower may be liable individually or jointly with others, or primarily or
secondarily, or as guarantor or surety; whether recovery on the Indebtedness may
be or may become barred or unenforceable against Borrower for any reason
whatsoever; and whether the Indebtedness arises from transactions which may be
voidable on account of infancy, insanity, ultra vires, or otherwise.

DURATION OF GUARANTY. This Guaranty will take effect when received by Lender
without the necessity of any acceptance by Lender, or any notice to Guarantor or
to Borrower, and will continue in full force until all Indebtedness incurred or
contracted before receipt by Lender of any notice of revocation shall have been
fully and finally paid and satisfied and all of Guarantor's other obligations
under this Guaranty shall have been performed in full. If Guarantor elects to
revoke this Guaranty, Guarantor may only do so in writing. Guarantor's written
notice of revocation must be mailed to Lender, by certified mail, at Lender's
address listed above or such other place as Lender may designate in writing.
Written revocation of this Guaranty will apply only to advances or new
Indebtedness created after actual receipt by Lender of Guarantor's written
revocation. For this purpose and without limitation, the term "new Indebtedness"
does not include Indebtedness which at the time of notice of revocation is
contingent, unliquidated, undetermined or not due and which later becomes
absolute, liquidated, determined or due. This Guaranty will continue to bind
Guarantor for all Indebtedness incurred by Borrower or committed by Lender prior
to receipt of Guarantor's written notice of revocation, including any
extensions, renewals, substitutions or modifications of the Indebtedness. All
renewals, extensions, substitutions, and modifications of the Indebtedness
granted after Guarantor's revocation, are contemplated under this Guaranty and,
specifically will not be considered to be new Indebtedness. This Guaranty shall
bind Guarantor's estate as to Indebtedness created both before and after
Guarantor's death or incapacity, regardless of Lender's actual notice of
Guarantor's death. Subject to the foregoing, Guarantor's executor or
administrator or other legal representative may terminate this Guaranty in the
same manner in which Guarantor might have terminated it and with the same
effect. Release of any other guarantor or termination of any other guaranty of
the Indebtedness shall not affect the liability of Guarantor under this
Guaranty. A revocation Lender receives from any one or more Guarantors shall not
affect the liability of any remaining Guarantors under this Guaranty. It is
anticipated that fluctuations may occur in the aggregate amount of Indebtedness
covered by this Guaranty, and Guarantor specifically acknowledges and agrees
that reductions in the amount of Indebtedness, even to zero dollars ($0.00),
prior to Guarantor's written revocation of this Guaranty shall not constitute a
termination of this Guaranty. This Guaranty is binding upon Guarantor and
Guarantor's heirs, successors and assigns so long as any of the guaranteed
Indebtedness remains unpaid and even though the Indebtedness guaranteed may from
time to time be zero dollars ($0.00).

GUARANTOR'S AUTHORIZATION TO LENDER. Guarantor authorizes Lender, either before
or after any revocation hereof, without notice or demand and without lessening
Guarantor's liability under this Guaranty, from time to time: (A) prior to
revocation as set forth above, to make one or more additional secured or
unsecured loans to Borrower, to lease equipment or other goods to Borrower, or
otherwise to extend additional credit to Borrower; (B) to alter, compromise,
renew, extend, accelerate, or otherwise change one or more times the time for
payment or other terms of the Indebtedness or any part of the Indebtedness,
including increases and decreases of the rate of interest on the Indebtedness;
extensions may be repeated and may be for longer than the original loan term;
(C) to take and hold security for the payment of this Guaranty or the
Indebtedness, and exchange, enforce, waive, subordinate, fail or decide not to
perfect, and release any such security, with or without the substitution of new
collateral; (D) to release, substitute, agree not to sue, or deal with any one
or more of Borrower's sureties, endorsers, or other guarantors on any terms or
in any manner Lender may choose; (E) to determine how, when and what application
of payments and credits shall be made on the Indebtedness (F) to apply such
security and direct the order or manner of sale thereof, including without
limitation, any nonjudicial sale permitted by the terms of the controlling
security agreement or deed of trust, as Lender in its discretion may determine;
(G) to sell, transfer, assign or grant participations in all or any part of the
Indebtedness; and (H) to assign or transfer this Guaranty in whole or in part.

GUARANTOR'S REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants to
Lender that (A) no representations or agreements of any kind have been made to
Guarantor which would limit or qualify in any way the terms of this Guaranty;
(B) this Guaranty is executed at Borrower's request and not at the request of
Lender; (C) Guarantor has full power, right and authority to enter into this
Guaranty; (D) the provisions of this Guaranty do not conflict with or result in
a default under any agreement or other instrument binding upon Guarantor and do
not result in a violation of any law, regulation, court decree or order
applicable to Guarantor; (E) Guarantor has not and will not, without the prior
written consent of Lender, sell, lease, assign, encumber, hypothecate, transfer,
or otherwise dispose of all or substantially all of Guarantor's assets, or any
interest therein; (F) upon Lender's request, Guarantor will provide to Lender
financial and credit information in form acceptable to Lender, and all such
financial information which currently has been, and all future financial
information which will be provided to Lender is and will be true and correct in
all material respects and fairly present Guarantor's financial condition as of
the dates the financial information is provided; (G) no material adverse change
has occurred in Guarantor's financial condition since the date of the most
recent financial statements provided to Lender and no event has occurred which
may materially adversely affect Guarantor's financial condition; (H) no
litigation, claim, investigation, administrative proceeding or similar action
(including those for unpaid taxes) against Guarantor is pending or threatened;
(I) Lender has made no representation to Guarantor as to the creditworthiness of
Borrower; and (J) Guarantor has established adequate means of obtaining from
Borrower on a continuing basis information regarding Borrower's financial
condition. Guarantor agrees to keep adequately informed from such means of any
facts, events, or circumstances which might in any way affect Guarantor's risks
under this Guaranty, and Guarantor further agrees that, absent a request for
information, Lender shall have no obligation to disclose to Guarantor any
information or documents acquired by Lender in the course of its relationship
with Borrower.

GUARANTOR'S FINANCIAL STATEMENTS. Guarantor agrees to furnish Lender with the
following:

     Annual Statements. As soon as available after the end of each fiscal year,
     Guarantor's balance sheet and income statement for the year ended, prepared
     by Guarantor.

     Tax Returns. As soon as available, but in no event later than thirty (30)
     days after the applicable filing date for the tax reporting period ended,
     Federal and other governmental tax returns, prepared by Guarantor.

     Additional Requirements. Tax Returns to include all supplemental schedules
     together with K-1's.

     Guarantor's Financial Statement to be submitted with Tax Returns.

All financial reports required to be provided under this Guaranty shall be
prepared in accordance with GAAP, applied on a consistent basis, and certified
by Guarantor as being true and correct.

GUARANTOR'S WAIVERS. Except as prohibited by applicable law, Guarantor waives
any right to require Lender (A) to continue lending money or to extend other
credit to Borrower; (B) to make any presentment, protest, demand, or notice of
any kind, including notice of any nonpayment of the Indebtedness or of any
nonpayment related to any collateral, or notice of any action or nonaction on
the part of Borrower, Lender, any surety, endorser, or other guarantor in
connection with the Indebtedness or in connection with the creation of new or
additional loans or obligations; (C) to resort for payment or to proceed
directly or at once against any person, including Borrower or any other
guarantor; (D) to proceed directly against or exhaust any collateral held by
Lender from Borrower, any other guarantor, or any other person; (E) to give
notice of the terms, time, and place of any public or private sale of personal
property security held by Lender from Borrower or to comply with any other
applicable provisions of the Uniform Commercial Code; (F) to pursue any other
remedy within Lender's power; or (G) to commit any act or omission of any kind,
or at any time, with respect to any matter whatsoever.

Guarantor also waives any and all rights or defenses arising by reason of (A)
any "one action" or "anti-deficiency" law or any other law which may prevent
Lender from bringing any action, including a claim for deficiency, against
Guarantor, before or after Lender's commencement or completion of any
foreclosure action, either judicially or by exercise of a power of sale; (B) any
election of remedies by Lender which destroys or otherwise adversely affects
Guarantor's subrogation rights or Guarantor's rights to proceed against Borrower
for reimbursement, including without limitation, any loss of rights Guarantor
may suffer by reason of any law limiting, qualifying, or discharging the
Indebtedness; (C) any disability or other defense of Borrower, of any other
guarantor, or of any other person, or by reason of the cessation of Borrower's
liability from any cause whatsoever, other than payment in full in legal tender,
of the Indebtedness; (D) any right to claim discharge of the Indebtedness on the
basis of unjustified impairment of any collateral for the Indebtedness; (E) any
statute of limitations, if at any time any action or suit brought by Lender
against Guarantor is commenced, there is outstanding Indebtedness of Borrower to
Lender which is not barred by any applicable statute of limitations; or (F) any
defenses given to guarantors at law or in equity other than actual payment and
performance of the Indebtedness. If payment is made by Borrower, whether
voluntarily or otherwise, or by any third party, on the Indebtedness and
thereafter Lender is forced to remit the amount of that payment to Borrower's
trustee in bankruptcy or to any similar person under any federal or state
bankruptcy law or law for the relief of debtors, the Indebtedness shall be
considered unpaid for the purpose of the enforcement of this Guaranty.

Guarantor further waives and agrees not to assert or claim at any time any
deductions to the amount guaranteed under this Guaranty for any claim of setoff,
counterclaim, counter demand, recoupment or similar right, whether such claim,
demand or right may be asserted by the Borrower, the Guarantor, or both.

GUARANTOR'S UNDERSTANDING WITH RESPECT TO WAIVERS. Guarantor warrants and agrees
that each of the waivers set forth above is made with Guarantor's full knowledge
of its significance and consequences and that, under the circumstances, the
waivers are reasonable and not contrary to public policy or law. If any such
waiver is determined to be contrary to any applicable law or public policy, such
waiver shall be effective only to the extent permitted by law or public policy.

RIGHT OF SETOFF. See Addendum.

SUBORDINATION OF BORROWER'S DEBTS TO GUARANTOR. Guarantor agrees that the
Indebtedness of Borrower to Lender, whether now existing or hereafter created,
shall be superior to any claim that Guarantor may now have or hereafter acquire
against Borrower, whether or not Borrower becomes insolvent. Guarantor hereby
expressly subordinates any claim Guarantor may have against Borrower, upon any
account whatsoever, to any claim that Lender may now or hereafter have against
Borrower. In the event of insolvency and consequent liquidation of the assets of
Borrower, through bankruptcy, by an assignment for the benefit of creditors, by
voluntary liquidation, or otherwise, the assets of Borrower applicable to the
payment of the claims of both Lender and Guarantor shall be paid to Lender and
shall be first applied by Lender to the Indebtedness of Borrower to Lender.
Guarantor does hereby assign to Lender all claims which it may have or acquire
against Borrower or against any assignee or trustee in bankruptcy of Borrower;
provided however, that such assignment shall be effective only for the purpose
of assuring to Lender full payment in legal tender of the Indebtedness. If
Lender so requests, any notes or credit agreements now or hereafter evidencing
any debts or obligations of Borrower to Guarantor shall be marked with a legend
that the same are subject to this Guaranty and shall be delivered to Lender.
Guarantor agrees, and Lender is hereby authorized, in the name of Guarantor,
from time to time to execute and file financing statements and continuation
statements and to execute such other documents and to take such other actions as
Lender deems necessary or appropriate to perfect, preserve and enforce its
rights under this Guaranty.

MISCELLANEOUS PROVISIONS.  The following miscellaneous provisions are a part of
this Guaranty:

     Amendments. This Guaranty, together with any Related Documents, constitutes
     the entire understanding and agreement of the parties as to the matters set
     forth in this Guaranty. No alteration of or amendment to this Guaranty
     shall be effective unless given in writing and signed by the party or
     parties sought to be charged or bound by the alteration or amendment.

     Attorneys' Fees; Expenses. Guarantor agrees to pay upon demand all of
     Lender's costs and expenses, including Lender's attorneys' fees and
     Lender's legal expenses, incurred in connection with the enforcement of
     this Guaranty. Lender may hire or pay someone else to help enforce this
     Guaranty, and Guarantor shall pay the costs and expenses of such
     enforcement. Costs and expenses include Lender's attorneys' fees and legal
     expenses whether or not there is a lawsuit, including attorneys' fees and
     legal expenses for bankruptcy proceedings (including efforts to modify or
     vacate any automatic stay or injunction), appeals, and any anticipated
     post-judgment collection services. Guarantor also shall pay all court costs
     and such additional fees as may be directed by the court.

     Caption Headings. Caption headings in this Guaranty are for convenience
     purposes only and are not to be used to interpret or define the provisions
     of this Guaranty.

     Governing Law. This Guaranty will be governed by, construed and enforced in
     accordance with federal law and the laws of the State of Oregon. This
     Guaranty has been accepted by Lender in the State of Oregon.

     Integration. Guarantor further agrees that Guarantor has read and fully
     understands the terms of this Guaranty; Guarantor has had the opportunity
     to be advised by Guarantor's attorney with respect to this Guaranty; the
     Guaranty fully reflects Guarantor's intentions and parol evidence is not
     required to interpret the terms of this Guaranty. Guarantor hereby
     indemnifies and holds Lender harmless from all losses, claims, damages, and
     costs (including Lender's attorneys' fees) suffered or incurred by Lender
     as a result of any breach by Guarantor of the warranties, representations
     and agreements of this paragraph.

     Interpretation. In all cases where there is more than one Borrower or
     Guarantor, then all words used in this Guaranty in the singular shall be
     deemed to have been used in the plural where the context and construction
     so require; and where there is more than one Borrower named in this
     Guaranty or when this Guaranty is executed by more than one Guarantor, the
     words "Borrower" and "Guarantor" respectively shall mean all and any one or
     more of them. The words "Guarantor," "Borrower," and "Lender" include the
     heirs, successors, assigns, and transferees of each of them. If a court
     finds that any provision of this Guaranty is not valid or should not be
     enforced, that fact by itself will not mean that the rest of this Guaranty
     will not be valid or enforced. Therefore, a court will enforce the rest of
     the provisions of this Guaranty even if a provision of this Guaranty may be
     found to be invalid or unenforceable. If any one or more of Borrower or
     Guarantor are corporations, partnerships, limited liability companies, or
     similar entities, it is not necessary for Lender to inquire into the powers
     of Borrower or Guarantor or of the officers, directors, partners, managers,
     or other agents acting or purporting to act on their behalf, and any Loan
     indebtedness made or created in reliance upon the professed exercise of
     such powers shall be guaranteed under this Guaranty.

     Notices. Any notice required to be given under this Guaranty shall be given
     in writing, and, except for revocation notices by Guarantor, shall be
     effective when actually delivered, when actually received by telefacsimile
     (unless otherwise required by law), when deposited with a nationally
     recognized overnight courier, or, if mailed, when deposited in the United
     States mail, as first class, certified or registered mail postage prepaid,
     directed to the addresses shown near the beginning of this Guaranty. All
     revocation notices by Guarantor shall be in writing and shall be effective
     upon delivery to Lender as provided in the section of this Guaranty
     entitled "DURATION OF GUARANTY." Any party may change its address for
     notices under this Guaranty by giving formal written notice to the other
     parties, specifying that the purpose of the notice is to change the party's
     address. For notice purposes, Guarantor agrees to keep Lender informed at
     all times of Guarantor's current address. Unless otherwise provided or
     required by law, if there is more than one Guarantor, any notice given by
     Lender to any Guarantor is deemed to be notice given to all Guarantors.

     No Waiver by Lender. Lender shall not be deemed to have waived any rights
     under this Guaranty unless such waiver is given in writing and signed by
     Lender. No delay or omission on the part of Lender in exercising any right
     shall operate as a waiver of such right or any other right. A waiver by
     Lender of a provision of this Guaranty shall not prejudice or constitute a
     waiver of Lender's right otherwise to demand strict compliance with that
     provision or any other provision of this Guaranty. No prior waiver by
     Lender, nor any course of dealing between Lender and Guarantor, shall
     constitute a waiver of any of Lender's rights or of any of Guarantor's
     obligations as to any future transactions. Whenever the consent of Lender
     is required under this Guaranty, the granting of such consent by Lender in
     any instance shall not constitute continuing consent to subsequent
     instances where such consent is required and in all cases such consent may
     be granted or withheld in the sole discretion of Lender.

     Successors and Assigns. Subject to any limitations stated in this Guaranty
     on transfer of Guarantor's interest, this Guaranty shall be binding upon
     and inure to the benefit of the parties, their successors and assigns.

DEFINITIONS. The following capitalized words and terms shall have the following
meanings when used in this Guaranty. Unless specifically stated to the contrary,
all references to dollar amounts shall mean amounts in lawful money of the
United States of America. Words and terms used in the singular shall include the
plural, and the plural shall include the singular, as the context may require.
Words and terms not otherwise defined in this Guaranty shall have the meanings
attributed to such terms in the Uniform Commercial Code:

     Borrower. The word "Borrower" means Portland Brewing Company, and all other
     persons and entities signing the Note in whatever capacity.

     Guarantor. The word "Guarantor" means each and every person or entity
     signing this Guaranty, including without limitation Robert M. MacTarnahan.

     Guaranty. The word "Guaranty" means the guaranty from Guarantor to Lender,
     including without limitation a guaranty of all or part of the Note.

     Indebtedness. The word "Indebtedness" means Borrower's indebtedness to
     Lender as more particularly described in the Business Loan Agreement.

     Lender. The word "Lender" means Washington Mutual Bank dba Western Bank,
     its successors and assigns.

     Related Documents. The words "Related Documents" mean all promissory notes,
     credit agreements, loan agreements, environmental agreements, guaranties,
     security agreements, mortgages, deeds of trust, security deeds, collateral
     mortgages, and all other instruments, agreements and documents, whether now
     or hereafter existing, executed in connection with the Indebtedness.

GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS COMMERCIAL
GUARANTY AND GUARANTOR AGREES TO ITS TERMS. THIS COMMERCIAL GUARANTY IS DATED
SEPTEMBER 14, 2001.

GUARANTOR:

By:
    Robert M. MacTarnahan, Individually
<PAGE>
                         ADDENDUM TO COMMERCIAL GUARANTY

         This ADDENDUM TO COMMERCIAL GUARANTY is attached to and by this
reference is made a part of each Commercial Guaranty dated September 14, 2001,
and executed in connection with a loan or other financial accommodations between
Washington Mutual Bank doing business as Western Bank and Portland Brewing
Company.

RIGHT OF SETOFF. Lender shall not have a security interest in, nor shall Lender
set off against amounts due hereunder, the sums in any account of Guarantor
maintained with Lender.

Addendum agreed to:

WASHINGTON MUTUAL Bank DBA WESTERN BANK initial _______

GUARANTOR initial _______
<PAGE>
                CORPORATE RESOLUTION TO BORROW / GRANT COLLATERAL

<TABLE>
<CAPTION>
------------------- --------------- ---------------- ---------------- -------------- ---------- ------------- ----------
    Principal         Loan Date        Maturity          Loan No       Call / Coll    Account      Officer     Initials
   $182,741.25        09-14-2001      09-15-2004           42           599 / 990    0010130085      610
------------------- --------------- ---------------- ---------------- -------------- ---------- ------------- ----------
References in the shaded area are for Lender's use only and do not limit the applicability of this document to any
particular loan or item. Any item above containing "***" has been omitted due to text length limitations.
------------------------------------------------------------------------------------------------------------------------
<S>                                                                    <C>
Corporation:    Portland Brewing Company                               Lender:  Washington Mutual Bank dba Western Bank
                2730 NW 31st Avenue                                             Beaverton Business Banking Center
                Portland, OR  97210                                             12655 SW Center Street, Suite 500
                                                                                Beaverton, OR  97005
</TABLE>

WE, THE UNDERSIGNED, DO HEREBY CERTIFY THAT:

THE CORPORATION'S EXISTENCE. The complete and correct name of the Corporation is
Portland Brewing Company ("Corporation"). The Corporation is a corporation for
profit which is, and at all times shall be, duly organized and validly existing,
under and by virtue of the laws of the State of Oregon. The Corporation is duly
authorized to transact business in all other states in which the Corporation is
doing business, having obtained all necessary filings, governmental licenses and
approvals for each state in which the Corporation is doing business.
Specifically, the Corporation is, and at all times shall be, duly qualified as a
foreign corporation in all states in which the failure to so qualify would have
a material adverse effect on its business or financial condition. The
Corporation has the full power and authority to own its properties and to
transact the business in which it is presently engaged or presently proposes to
engage. The Corporation maintains an office at 2730 NW 31st Avenue, Portland, OR
97210. Unless the Corporation has designated otherwise in writing, the principal
office is the office at which the Corporation keeps its books and records. The
Corporation will notify Lender prior to any change in the location of the
Corporation's state of organization or any change in the Corporation's name. The
Corporation shall do all things necessary to preserve and to keep in full force
and effect its existence, rights and privileges, and shall comply with all
regulations, rules, ordinances, statutes, orders and decrees of any governmental
or quasi-governmental authority or court applicable to the Corporation and the
Corporation's business activities.

AUTHORIZATIONS ADOPTED. At a meeting of the Directors of the Corporation, or if
the Corporation is a close corporation having no Board of Directors then at a
meeting of the Corporation's shareholders, duly called and held on September 14,
2001, at which a quorum was present and voting, or by other duly authorized
action in lieu of a meeting, the resolutions set forth in this Resolution were
adopted.

OFFICER.  The following named person is an officer of Portland Brewing Company:

     NAMES                 TITLES            AUTHORIZED       ACTUAL SIGNATURES
     -----                 ------            ----------       -----------------

     Charles A. Adams      President/CEO     Y                X

ACTIONS AUTHORIZED. The authorized person listed above may enter into any
agreements of any nature with Lender, and those agreements will bind the
Corporation. Specifically, but without limitation, the authorized person is
authorized, empowered, and directed to do the following for and on behalf of the
Corporation:

     Borrow Money. To borrow, as a cosigner or otherwise, from time to time from
     Lender, on such terms as may be agreed upon between the Corporation and
     Lender, such sum or sums of money as in his or her judgment should be
     borrowed; however, not exceeding at any one time the amount of, One Hundred
     Eighty-two Thousand Seven Hundred Forty-one & 25/100 Dollars ($182,741.25),
     in addition to such sum or sums of money as may be currently borrowed by
     the Corporation from Lender.

     Execute Notes. To execute and deliver to Lender the promissory note or
     notes, or other evidence of the Corporation's credit accommodations, on
     Lender's forms, at such rates of interest and on such terms as may be
     agreed upon, evidencing the sums of money so borrowed or any of the
     Corporation's indebtedness to Lender, and also to execute and deliver to
     Lender one or more renewals, extensions, modifications, refinancings,
     consolidations, or substitutions for one or more of the notes, any portion
     of the notes, or any other evidence of credit accommodations.

     Grant Security. To mortgage, pledge, transfer, endorse, hypothecate, or
     otherwise encumber and deliver to Lender any property now or hereafter
     belonging to the Corporation or in which the Corporation now or hereafter
     may have an interest, including without limitation all real property and
     all personal property (tangible or intangible) of the Corporation, as
     security for the payment of any loans of credit accommodations so obtained,
     any promissory notes so executed (including any amendments to or
     modifications, renewals, and extensions of such promissory notes), or any
     other or further indebtedness of the Corporation to Lender at any time
     owing, however the same may be evidenced. Such property may be mortgaged,
     pledged, transferred, endorsed, hypothecated or encumbered at the time such
     loans are obtained or such indebtedness is incurred, or at any other time
     or times, and may be either in addition to or in lieu of any property
     theretofore mortgaged, pledged, transferred, endorsed, hypothecated or
     encumbered.

     Execute Security Documents. To execute and deliver to Lender the forms of
     mortgage, deed of trust, pledge agreement, hypothecation agreement, and
     other security agreements and financing statements which Lender may require
     and which shall evidence the terms and conditions under and pursuant to
     which such liens and encumbrances, or any of them, are given; and also to
     execute and deliver to Lender any other written instruments, any chattel
     paper, or any other collateral, of any kind or nature, which Lender may
     deem necessary or proper in connection with or pertaining to the giving of
     the liens and encumbrances.

     Negotiate Items. To draw, endorse, and discount with Lender all drafts,
     trade acceptances, promissory notes, or other evidences of indebtedness
     payable to or belonging to the Corporation or in which the Corporation may
     have an interest, and either to receive cash for the same or to cause such
     proceeds to be credited to the Corporation's account with Lender, or to
     cause such other disposition of the proceeds derived therefrom as he or she
     may deem advisable.

     Further Acts. In case the lines of credit, to designate additional or
     alternate individuals as being authorized to request advances under such
     lines, and in all cases, to do and perform such other acts and things, to
     pay any and all fees and costs, and to execute and deliver such other
     documents and agreements as the officer may in his or her discretion deem
     reasonably necessary or proper in order to carry into effect the provisions
     of this Resolution.

ASSUMED BUSINESS NAMES. The Corporation has filed or recorded all documents or
filings required by law relating to all assumed business names used in the
Corporation. Excluding the name of the Corporation, the following is a completed
list of all assumed business names under which the Corporation does business:
See Addendum to Business Loan Agreement.

NOTICES TO LENDER. The Corporation will promptly notify Lender in writing at
Lender's address shown above (or such other addresses as Lender may designate
from time to time) prior to any (A) change in the Corporation's name; (B) change
in the Corporation's assumed business name(s); (C) change in the management of
the Corporation; (D) change in the authorized signer(s); (E) change in the
Corporation's principal office address; (F) change in the Corporation's state of
organization; (G) conversion of the Corporation to a new or different type of
business entity; or (H) change in any other aspect of the Corporation that
directly or indirectly relates to any agreements between the Corporation and
Lender. No change in the Corporation's name or state of organization will take
effect until after Lender has received notice.

CERTIFICATION CONCERNING OFFICERS AND RESOLUTIONS. The officer named above is
duly elected, appointed, or employed by or for the Corporation, as the case may
be, and occupies the position set opposite his or her respective name. This
Resolution now stands of record on the books of the Corporation, is in full
force and effect, and has not been modified or revoked in any manner whatsoever.

NO CORPORATE SEAL. The Corporation has no corporate seal, and therefore, no seal
is affixed to this Resolution.

CONTINUING VALIDITY. Any and all acts authorized pursuant to this Resolution and
performed prior to the passage of this Resolution are hereby ratified and
approved. This Resolution shall be continuing, shall remain in full force and
effect and Lender may rely on it until written notice of its revocation shall
have been delivered to and received by Lender at Lender's address shown above
(or such addresses as Lender may designate from time to time). Any such notice
shall not affect any of the Corporation's agreements or commitments in effect at
the time notice is given.

IN TESTIMONY WHEREOF, We have hereunto set our hand.

The undersigned have read all the provisions of this Resolution, and on behalf
of the Corporation certify that all statements and representations made in this
Resolution are true and correct. This Corporate Resolution to Borrow / Grant
Collateral is dated September 14, 2001.

                            CERTIFIED AND ATTESTED BY:

                            By:
                                Authorized Signer for Portland Brewing Company

NOTE: If the Corporation this Resolution is designated by the foregoing document
as one of the officers authorized to act on the Corporation's behalf, it is
advisable to have this Resolution signed by at least one non-authorized partner
of the Corporation.
<PAGE>
              CORPORATE RESOLUTION TO GRANT COLLATERAL / GUARANTEE

<TABLE>
<CAPTION>
------------------- --------------- ---------------- ---------------- -------------- ---------- ------------- ----------
    Principal         Loan Date        Maturity          Loan No       Call / Coll    Account      Officer     Initials
   $182,741.25        09-14-2001      09-15-2004           42           599 / 990    0010130085      610
------------------- --------------- ---------------- ---------------- -------------- ---------- ------------- ----------
References in the shaded area are for Lender's use only and do not limit the applicability of this document to any
particular loan or item. Any item above containing "***" has been omitted due to text length limitations.
------------------------------------------------------------------------------------------------------------------------
<S>                                                                    <C>
Corporation:    Harmer Mill & Logging Supply Co.                       Lender:  Washington Mutual Bank dba Western Bank
                11416 SW Lynnridge Avenue                                       Beaverton Business Banking Center
                Portland, OR  97225                                             12655 SW Center Street, Suite 500
                                                                                Beaverton, OR  97005
</TABLE>

WE, THE UNDERSIGNED, DOES HEREBY CERTIFY THAT:

THE CORPORATION'S EXISTENCE. The complete and correct name of the Corporation is
Harmer Mill & Logging Supply Co. ("Corporation"). The Corporation is a
corporation for profit which is, and at all times shall be, duly organized and
validly existing, under and by virtue of the laws of the State of Oregon. The
Corporation is duly authorized to transact business in all other states in which
the Corporation is doing business, having obtained all necessary filings,
governmental licenses and approvals for each state in which the Corporation is
doing business. Specifically, the Corporation is, and at all times shall be,
duly qualified as a foreign corporation in all states in which the failure to so
qualify would have a material adverse effect on its business or financial
condition. The Corporation has the full power and authority to own its
properties and to transact the business in which it is presently engaged or
presently proposes to engage. The Corporation maintains an office at 11416 SW
Lynnridge Avenue, Portland, OR 97225. Unless the Corporation has designated
otherwise in writing, the principal office is the office at which the
Corporation keeps its books and records. The Corporation will notify Lender
prior to any change in the location of the Corporation's state of organization
or any change in the Corporation's name. The Corporation shall do all things
necessary to preserve and to keep in full force and effect its existence, rights
and privileges, and shall comply with all regulations, rules, ordinances,
statutes, orders and decrees of any governmental or quasi-governmental authority
or court applicable to the Corporation and the Corporation's business
activities.

RESOLUTIONS ADOPTED. At a meeting of the Directors of the Corporation, or if the
Corporation is a close corporation having no Board of Directors then at a
meeting of the Corporation's shareholders, duly called and held on September 14,
2001, at which a quorum was present and voting, or by other duly authorized
action in lieu of a meeting, the resolutions set forth in this Resolution were
adopted.

OFFICER. The following named person is an officer of Harmer Mill & Logging
Supply Co.:

     NAMES                 TITLES            AUTHORIZED       ACTUAL SIGNATURES
     -----                 ------            ----------       -----------------

     Robert M. MacTarnahan President           Y                 X

ACTIONS AUTHORIZED. The authorized person listed above may enter into any
agreements of any nature with Lender, and those agreements will bind the
Corporation. Specifically, but without limitation, the authorized person is
authorized, empowered, and directed to do the following for and on behalf of the
Corporation.

     Guaranty. To guarantee or act as surety for loans or other financial
     accommodations to Borrower from Lender on such guarantee or surety terms as
     may be agreed upon between the officer of the Corporation and Lender and in
     such sum or sums of money as in his or her judgment should be guaranteed or
     assured, not exceeding, however, at any one time the amount of One Hundred
     Eighty-two Thousand Seven Hundred Forty-one & 25/100 Dollars ($182,741.25),
     in addition to such sum or sums of money as the Corporation currently may
     have guaranteed to Lender (the "Guaranty").

     Grant Security. To mortgage, pledge, transfer, endorse, hypothecate, or
     otherwise encumber and deliver to Lender any property now or hereafter
     belonging to the Corporation or in which the Corporation now or hereafter
     may have an interest, including without limitation all real property and
     all personal property (tangible or intangible) of the Corporation, as
     security for the Guaranty, and as a security for the payment of any loans,
     any promissory notes, or any other or further indebtedness of Portland
     Brewing Company to Lender at any time owing, however the same may be
     evidenced. Such property may be mortgaged, pledged, transferred, endorsed,
     hypothecated or encumbered at the time such loans are obtained or such
     indebtedness is incurred, or at any other time or times, and may be either
     in addition to or in lieu of any property theretofore mortgaged, pledged,
     transferred, endorsed, hypothecated or encumbered. The provisions of this
     Resolution authorizing or relating to the pledge, mortgage, transfer,
     endorsement, hypothecation, granting of a security interest in, or in any
     way encumbering, the assets of the Corporation shall include, without
     limitation, doing so in order to lend collateral security for the
     indebtedness, now or hereafter existing, and of any nature whatsoever, of
     Portland Brewing Company to Lender. The Corporation has considered the
     value to itself of lending collateral in support of such indebtedness, and
     the Corporation represents to Lender that the Corporation is benefited by
     doing so.

     Execute Security Documents. To execute and deliver to Lender the forms of
     mortgage, deed of trust, pledge agreement, hypothecation agreement, and
     other security agreements and financing statements which Lender may require
     and which shall evidence the terms and conditions under and pursuant to
     which such liens and encumbrances, or any of them, are given; and also to
     execute and deliver to Lender any other written instruments, any chattel
     paper, or any other collateral, of any kind or nature, which Lender may
     deem necessary or proper in connection with or pertaining to the giving of
     the liens and encumbrances.

     Further Acts. To do and perform such other acts and things and to execute
     and deliver such other documents and agreements as the officer may in his
     or her discretion deem reasonably necessary or proper in order to carry
     into effect the provisions of this Resolution.

ASSUMED BUSINESS NAMES. The Corporation has filed or recorded all documents or
filings required by law relating to all assumed business names used by the
Corporation. Excluding the name of the Corporation, the following is a complete
list of all assumed business names under which the Corporation does business:

     Assumed Business Name                  Filing Location           Date
     Harmer Co.                             Salem, Oregon             07-03-2001

NOTICES TO LENDER. The Corporation will promptly notify Lender in writing at
Lender's address shown above (or such other addresses as Lender may designate
from time to time) prior to any (A) change in the Corporation's name; (B) change
in the Corporation's assumed business name(s); (C) change in the management of
the Corporation; (D) change in the authorized signer(s); (E) change in the
Corporation's principal office address; (F) change in the Corporation's state of
organization; (G) conversion of the Corporation to a new or different type of
business entity; or (H) change in any other aspect of the Corporation that
directly or indirectly relates to any agreements between the Corporation and
Lender. No change in the Corporation's name or state of organization will take
effect until after Lender has received notice.

CERTIFICATION CONCERNING OFFICERS AND RESOLUTIONS. The officer named above is
duly elected, appointed, or employed by or for the Corporation, as the case may
be, and occupies the position set opposite his or her respective name. This
Resolution now stands of record on the books of the Corporation, is in full
force and effect, and has not been modified or revoked in any manner whatsoever.

NO CORPORATE SEAL. The Corporation has no corporate seal, and therefore, no seal
is affixed to this Resolution.

CONTINUING VALIDITY. Any and all acts authorized pursuant to this Resolution and
performed prior to the passage of this Resolution are hereby ratified and
approved. This Certificate shall be continuing, shall remain in full force and
effect and Lender may rely on it until written notice of its revocation shall
have been delivered to and received by Lender at Lender's address shown above
(or such addresses as Lender may designate from time to time). Any such notice
shall not affect any of the Corporation's agreements or commitments in effect at
the time notice is given.

IN TESTIMONY WHEREOF, We have hereunto set our hand.

The undersigned has read all the provisions of this Resolution, and and on
behalf of the Corporation certifies that all statements and representations made
in this Resolution are true and correct. This Corporate Resolution to Grant
Collateral / Guarantee is dated September 14, 2001.

                     CERTIFIED TO AND ATTESTED BY:

                     By:
                         Authorized Signer for Harmer Mill & Logging Supply Co.

NOTE: If the officer signing this Resolution is designated by the foregoing
document as one of the partners authorized to act on the Corporation's behalf,
it is advisable to have this Resolution signed by at least one non-authorized
partner of the Corporation.
<PAGE>
                         RESOLUTION OF CORPORATE PARTNER

<TABLE>
<CAPTION>
------------------- --------------- ---------------- ---------------- -------------- ---------- ------------- ----------
    Principal         Loan Date        Maturity          Loan No       Call / Coll    Account      Officer     Initials
   $182,741.25        09-14-2001      09-15-2004           42           599 / 990    0010130085      610
------------------- --------------- ---------------- ---------------- -------------- ---------- ------------- ----------
References in the shaded area are for Lender's use only and do not limit the applicability of this document to any
particular loan or item. Any item above containing "***" has been omitted due to text length limitations.
------------------------------------------------------------------------------------------------------------------------
<S>                                                                    <C>
Borrower:       Portland Brewing Company                               Lender:  Washington Mutual Bank dba Western Bank
                2730 NW 31st Avenue                                             Beaverton Business Banking Center
                Portland, OR  97210                                             12655 SW Center Street, Suite 500
                                                                                Beaverton, OR  97005
Corporation:    Harmer Mill & Logging Supply Co.
                11416 SW Lynnridge Avenue
                Portland, OR  97225
</TABLE>

WE, THE UNDERSIGNED, DOES HEREBY CERTIFY THAT:

THE CORPORATION'S EXISTENCE. The complete and correct name of the Corporation is
Harmer Mill & Logging Supply Co. ("Corporation"). The Corporation is a
corporation for profit which is, and at all times shall be, duly organized and
validly existing, under and by virtue of the laws of the State of Oregon. The
Corporation is duly authorized to transact business in all other states in which
the Corporation is doing business, having obtained all necessary filings,
governmental licenses and approvals for each state in which the Corporation is
doing business. Specifically, the Corporation is, and at all times shall be,
duly qualified as a foreign corporation in all states in which the failure to so
qualify would have a material adverse effect on its business or financial
condition. The Corporation has the full power and authority to own its
properties and to transact the business in which it is presently engaged or
presently proposes to engage. The Corporation maintains an office at 11416 SW
Lynnridge Avenue, Portland, OR 97225. Unless the Corporation has designated
otherwise in writing, the principal office is the office at which the
Corporation keeps its books and records. The Corporation will notify Lender
prior to any change in the location of the Corporation's state of organization
or any change in the Corporation's name. The Corporation shall do all things
necessary to preserve and to keep in full force and effect its existence, rights
and privileges, and shall comply with all regulations, rules, ordinances,
statutes, orders and decrees of any governmental or quasi-governmental authority
or court applicable to the Corporation and the Corporation's business
activities.

RELATIONSHIP TO GRANTOR AND GUARANTOR. The Corporation is a Partner in
MacTarnahan Limited Partnership. MacTarnahan Limited Partnership has agreed to
guaranty, and has agreed to grant collateral for a loan or loans and other
financial accommodations from Lender, including those which may be described on
any exhibit or schedule attached to this Resolution. The Corporation has
considered the value to itself of MacTarnahan Limited Partnership guarantying
such loans or financial accommodations and granting the collateral.

AUTHORIZATION TO BE A PARTNER. The Corporation is authorized to be and become a
Partner in the Partnership named MacTarnahan Limited Partnership, whose office
is at 11416 SW Lynnridge Avenue, Portland, OR 97255.

RESOLUTIONS ADOPTED. At a meeting of the Directors of the Corporation, or if the
Corporation is a close corporation having no Board of Directors then at a
meeting of the Corporation's shareholders, duly called and held on September 14,
2001, at which a quorum was present and voting, or by other duly authorized
action in lieu of a meeting, the resolutions set forth in this Resolution were
adopted.

OFFICER. The following named person is an officer of Harmer Mill & Logging
Supply Co.:

     NAMES                  TITLES     AUTHORIZED   ACTUAL SIGNATURES
     -----                  ------     ----------   ----------------

     Robert M. MacTarnahan  President  Y            X

ACTIONS AUTHORIZED. The authorized person listed above may enter into any
agreements of any nature with Lender, and those agreements will bind the
Corporation. Specifically, but without limitation, the authorized person is
authorized, empowered, and directed to do the following for and on behalf of the
Corporation:

     Execute Documents. To execute and deliver to Lender the form of Partnership
     Authorization and other loan documents submitted by Lender, confirming the
     nature and existence of MacTarnahan Limited Partnership, including the
     Corporation's participation in MacTarnahan Limited Partnership as a
     Partner, and evidencing the terms of the loan from Lender to MacTarnahan
     Limited Partnership.

     Authorize Officers. To authorize other officers or employees of the
     Corporation, from time to time, to act in his or her stead or as his or her
     successors on behalf of the Corporation as Partner in MacTarnahan Limited
     Partnership.

     Further Acts. To do and perform such other acts and things and to execute
     and deliver such other documents and agreements as the officer may in his
     or her discretion deem reasonably necessary or proper in order to carry
     into effect the provisions of this Resolution.

NOTICES TO LENDER. The Corporation will promptly notify Lender in writing at
Lender's address shown above (or such other addresses as Lender may designate
from time to time) prior to any (A) change in the Corporation's name; (B) change
in the Corporation's assumed business name(s); (C) change in the management of
the Corporation; (D) change in the authorized signer(s); (E) change in the
Corporation's principal office address; (F) change in the Corporation's state of
organization; (G) conversion of the Corporation to a new or different type of
business entity; or (H) change in any other aspect of the Corporation that
directly or indirectly relates to any agreements between the Corporation and
Lender. No change in the Corporation's name or state of organization will take
effect until after Lender has received notice

PARTICIPATION AUTHORIZED. The Corporation's participation in MacTarnahan Limited
Partnership as a Partner and the execution, delivery, and performance of the
documents described herein have been duly authorized by all necessary action by
the Corporation and do not conflict with, result in a violation of, or
constitute a default under (A) any provision of its articles of incorporation,
bylaws, or any agreement or other instrument binding upon the Corporation or (B)
any law, governmental regulation, court decree, or order applicable to the
Corporation.

CERTIFICATION CONCERNING OFFICERS AND RESOLUTIONS. The officer named above is
duly elected, appointed, or employed by or for the Corporation, as the case may
be, and occupies the position set opposite his or her respective name. This
Resolution now stands of record on the books of the Corporation, is in full
force and effect, and has not been modified or revoked in any manner whatsoever.

NO CORPORATE SEAL. The Corporation has no corporate seal, and therefore, no seal
is affixed to this Resolution.

CONTINUING VALIDITY. Any and all acts authorized pursuant to this Resolution and
performed prior to the passage of this Resolution are hereby ratified and
approved. This Resolution shall be continuing, shall remain in full force and
effect and Lender may rely on it until written notice of its revocation shall
have been delivered to and received by Lender at Lender's address shown above
(or such addresses as Lender may designate from time to time). Any such notice
shall not affect any of the Corporation's agreements or commitments in effect at
the time notice is given.

IN TESTIMONY WHEREOF, We have hereunto set our hand.

The undersigned have read all the provisions of this Resolution, and on behalf
of the Corporation certifies that all statements and representations made in
this Resolution are true and correct. This Resolution of Corporate Partner is
dated September 14, 2001.

                       CERTIFIED TO AND ATTESTED BY:

                       By:
                          Authorized Signer for Harmer Mill & Logging Supply Co.
<PAGE>
                         ADDENDUM TO COMMERCIAL GUARANTY

         This ADDENDUM TO COMMERCIAL GUARANTY is attached to and by this
reference is made a part of each Commercial Guaranty dated September 14, 2001,
and executed in connection with a loan or other financial accommodations between
Washington Mutual Bank doing business as Western Bank and Portland Brewing
Company.

RIGHT OF SETOFF. Lender shall not have a security interest in, nor shall Lender
set off against amounts due hereunder, the sums in any account of Guarantor
maintained with Lender.

Addendum agreed to:

WASHINGTON MUTUAL Bank DBA WESTERN BANK initial _______

GUARANTOR initial _______
<PAGE>
                               COMMERCIAL GUARANTY

<TABLE>
<CAPTION>
------------------- --------------- ---------------- ---------------- -------------- ---------- ------------- ----------
    Principal         Loan Date        Maturity          Loan No       Call / Coll    Account      Officer     Initials
                                                                         599/699                     610
------------------- --------------- ---------------- ---------------- -------------- ---------- ------------- ----------
References in the shaded area are for Lender's use only and do not limit the applicability of this document to any
particular loan or item. Any item above containing "***" has been omitted due to text length limitations.
------------------------------------------------------------------------------------------------------------------------
<S>                                                                    <C>
Borrower:       Portland Brewing Company                               Lender:  Washington Mutual Bank dba Western Bank
                2730 NW 31st Avenue                                             Beaverton Business Banking Center
                Portland, OR  97210                                             12655 SW Center Street, Suite 500
                                                                                Beaverton, OR  97005
Guarantor:      Harmer Mill & Logging Supply Co.
                11416 SW Lynnridge Avenue
                Portland, OR  97225
</TABLE>

AMOUNT OF GUARANTY. The amount of this Guaranty is One Hundred Eighty-two
Thousand Seven Hundred Forty-one & 25/100 Dollars ($182,741.25).

CONTINUING GUARANTY. For good and valuable consideration, Harmer Mill & Logging
Supply Co. ("Guarantor") absolutely and unconditionally guarantees and promises
to pay to Washington Mutual Bank dba Western Bank ("Lender") or its order, in
legal tender of the United States of America, the Indebtedness (as that term is
defined below) of Portland Brewing Company ("Borrower") to Lender on the terms
and conditions set forth in this Guaranty. The obligations of Guarantor under
this Guaranty are continuing.

MAXIMUM LIABILITY. The maximum liability of Guarantor under this Guaranty shall
not exceed at any one time $182,741.25 plus all costs and expenses of (A)
enforcement of this Guaranty and (B) collection and sale of any collateral
securing this Guaranty.

The above limitation on liability is not a restriction on the amount of the
Indebtedness of Borrower to Lender either in the aggregate or at any one time.
If Lender presently holds one or more guaranties, or hereafter receives
additional guaranties from Guarantor, Lender's rights under all guaranties shall
be cumulative. This Guaranty shall not (unless specifically provided below to
the contrary) affect or invalidate any such other guaranties. Guarantor's
liability will be Guarantor's aggregate liability under the terms of this
Guaranty and any such other unterminated guaranties.

INDEBTEDNESS GUARANTEED. The Indebtedness is guaranteed whether any such
Indebtedness is voluntarily or involuntarily incurred, due or not due, absolute
or contingent, liquidated or unliquidated, determined or undetermined; whether
Borrower may be liable individually or jointly with others, or primarily or
secondarily, or as guarantor or surety; whether recovery on the Indebtedness may
be or may become barred or unenforceable against Borrower for any reason
whatsoever; and whether the Indebtedness arises from transactions which may be
voidable on account of infancy, insanity, ultra vires, or otherwise.

DURATION OF GUARANTY. This Guaranty will take effect when received by Lender
without the necessity of any acceptance by Lender, or any notice to Guarantor or
to Borrower, and will continue in full force until all Indebtedness incurred or
contracted before receipt by Lender of any notice of revocation shall have been
fully and finally paid and satisfied and all of Guarantor's other obligations
under this Guaranty shall have been performed in full. If Guarantor elects to
revoke this Guaranty, Guarantor may only do so in writing. Guarantor's written
notice of revocation must be mailed to Lender, by certified mail, at Lender's
address listed above or such other place as Lender may designate in writing.
Written revocation of this Guaranty will apply only to advances or new
Indebtedness created after actual receipt by Lender of Guarantor's written
revocation. For this purpose and without limitation, the term "new Indebtedness"
does not include Indebtedness which at the time of notice of revocation is
contingent, unliquidated, undetermined or not due and which later becomes
absolute, liquidated, determined or due. This Guaranty will continue to bind
Guarantor for all Indebtedness incurred by Borrower or committed by Lender prior
to receipt of Guarantor's written notice of revocation, including any
extensions, renewals, substitutions or modifications of the Indebtedness. All
renewals, extensions, substitutions, and modifications of the Indebtedness
granted after Guarantor's revocation, are contemplated under this Guaranty and,
specifically will not be considered to be new Indebtedness. This Guaranty shall
bind Guarantor's estate as to Indebtedness created both before and after
Guarantor's death or incapacity, regardless of Lender's actual notice of
Guarantor's death. Subject to the foregoing, Guarantor's executor or
administrator or other legal representative may terminate this Guaranty in the
same manner in which Guarantor might have terminated it and with the same
effect. Release of any other guarantor or termination of any other guaranty of
the Indebtedness shall not affect the liability of Guarantor under this
Guaranty. A revocation Lender receives from any one or more Guarantors shall not
affect the liability of any remaining Guarantors under this Guaranty. It is
anticipated that fluctuations may occur in the aggregate amount of Indebtedness
covered by this Guaranty, and Guarantor specifically acknowledges and agrees
that reductions in the amount of Indebtedness, even to zero dollars ($0.00),
prior to Guarantor's written revocation of this Guaranty shall not constitute a
termination of this Guaranty. This Guaranty is binding upon Guarantor and
Guarantor's heirs, successors and assigns so long as any of the guaranteed
Indebtedness remains unpaid and even though the Indebtedness guaranteed may from
time to time be zero dollars ($0.00).

GUARANTOR'S AUTHORIZATION TO LENDER. Guarantor authorizes Lender, either before
or after any revocation hereof, without notice or demand and without lessening
Guarantor's liability under this Guaranty, from time to time: (A) prior to
revocation as set forth above, to make one or more additional secured or
unsecured loans to Borrower, to lease equipment or other goods to Borrower, or
otherwise to extend additional credit to Borrower; (B) to alter, compromise,
renew, extend, accelerate, or otherwise change one or more times the time for
payment or other terms of the Indebtedness or any part of the Indebtedness,
including increases and decreases of the rate of interest on the Indebtedness;
extensions may be repeated and may be for longer than the original loan term;
(C) to take and hold security for the payment of this Guaranty or the
Indebtedness, and exchange, enforce, waive, subordinate, fail or decide not to
perfect, and release any such security, with or without the substitution of new
collateral; (D) to release, substitute, agree not to sue, or deal with any one
or more of Borrower's sureties, endorsers, or other guarantors on any terms or
in any manner Lender may choose; (E) to determine how, when and what application
of payments and credits shall be made on the Indebtedness (F) to apply such
security and direct the order or manner of sale thereof, including without
limitation, any nonjudicial sale permitted by the terms of the controlling
security agreement or deed of trust, as Lender in its discretion may determine;
(G) to sell, transfer, assign or grant participations in all or any part of the
Indebtedness; and (H) to assign or transfer this Guaranty in whole or in part.

GUARANTOR'S REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants to
Lender that (A) no representations or agreements of any kind have been made to
Guarantor which would limit or qualify in any way the terms of this Guaranty;
(B) this Guaranty is executed at Borrower's request and not at the request of
Lender; (C) Guarantor has full power, right and authority to enter into this
Guaranty; (D) the provisions of this Guaranty do not conflict with or result in
a default under any agreement or other instrument binding upon Guarantor and do
not result in a violation of any law, regulation, court decree or order
applicable to Guarantor; (E) Guarantor has not and will not, without the prior
written consent of Lender, sell, lease, assign, encumber, hypothecate, transfer,
or otherwise dispose of all or substantially all of Guarantor's assets, or any
interest therein; (F) upon Lender's request, Guarantor will provide to Lender
financial and credit information in form acceptable to Lender, and all such
financial information which currently has been, and all future financial
information which will be provided to Lender is and will be true and correct in
all material respects and fairly present Guarantor's financial condition as of
the dates the financial information is provided; (G) no material adverse change
has occurred in Guarantor's financial condition since the date of the most
recent financial statements provided to Lender and no event has occurred which
may materially adversely affect Guarantor's financial condition; (H) no
litigation, claim, investigation, administrative proceeding or similar action
(including those for unpaid taxes) against Guarantor is pending or threatened;
(I) Lender has made no representation to Guarantor as to the creditworthiness of
Borrower; and (J) Guarantor has established adequate means of obtaining from
Borrower on a continuing basis information regarding Borrower's financial
condition. Guarantor agrees to keep adequately informed from such means of any
facts, events, or circumstances which might in any way affect Guarantor's risks
under this Guaranty, and Guarantor further agrees that, absent a request for
information, Lender shall have no obligation to disclose to Guarantor any
information or documents acquired by Lender in the course of its relationship
with Borrower.

GUARANTOR'S FINANCIAL STATEMENTS. Guarantor agrees to furnish Lender with the
following:

     Annual Statements. As soon as available after the end of each fiscal year,
     Guarantor's balance sheet and income statement for the year ended, compiled
     by a certified public accountant satisfactory to Lender.

     Tax Returns. As soon as available, but in no event later than thirty (30)
     days after the applicable filing date for the tax reporting period ended,
     Federal and other governmental tax returns, prepared by Guarantor.

     Additional Requirements. Tax Returns to include all supplemental schedules
     together with K-1's.

     Guarantor's Financial Statement to be submitted with Tax Returns.

All financial reports required to be provided under this Guaranty shall be
prepared in accordance with GAAP, applied on a consistent basis, and certified
by Guarantor as being true and correct.

GUARANTOR'S WAIVERS. Except as prohibited by applicable law, Guarantor waives
any right to require Lender (A) to continue lending money or to extend other
credit to Borrower; (B) to make any presentment, protest, demand, or notice of
any kind, including notice of any nonpayment of the Indebtedness or of any
nonpayment related to any collateral, or notice of any action or nonaction on
the part of Borrower, Lender, any surety, endorser, or other guarantor in
connection with the Indebtedness or in connection with the creation of new or
additional loans or obligations; (C) to resort for payment or to proceed
directly or at once against any person, including Borrower or any other
guarantor; (D) to proceed directly against or exhaust any collateral held by
Lender from Borrower, any other guarantor, or any other person; (E) to give
notice of the terms, time, and place of any public or private sale of personal
property security held by Lender from Borrower or to comply with any other
applicable provisions of the Uniform Commercial Code; (F) to pursue any other
remedy within Lender's power; or (G) to commit any act or omission of any kind,
or at any time, with respect to any matter whatsoever.

Guarantor also waives any and all rights or defenses arising by reason of (A)
any "one action" or "anti-deficiency" law or any other law which may prevent
Lender from bringing any action, including a claim for deficiency, against
Guarantor, before or after Lender's commencement or completion of any
foreclosure action, either judicially or by exercise of a power of sale; (B) any
election of remedies by Lender which destroys or otherwise adversely affects
Guarantor's subrogation rights or Guarantor's rights to proceed against Borrower
for reimbursement, including without limitation, any loss of rights Guarantor
may suffer by reason of any law limiting, qualifying, or discharging the
Indebtedness; (C) any disability or other defense of Borrower, of any other
guarantor, or of any other person, or by reason of the cessation of Borrower's
liability from any cause whatsoever, other than payment in full in legal tender,
of the Indebtedness; (D) any right to claim discharge of the Indebtedness on the
basis of unjustified impairment of any collateral for the Indebtedness; (E) any
statute of limitations, if at any time any action or suit brought by Lender
against Guarantor is commenced, there is outstanding Indebtedness of Borrower to
Lender which is not barred by any applicable statute of limitations; or (F) any
defenses given to guarantors at law or in equity other than actual payment and
performance of the Indebtedness. If payment is made by Borrower, whether
voluntarily or otherwise, or by any third party, on the Indebtedness and
thereafter Lender is forced to remit the amount of that payment to Borrower's
trustee in bankruptcy or to any similar person under any federal or state
bankruptcy law or law for the relief of debtors, the Indebtedness shall be
considered unpaid for the purpose of the enforcement of this Guaranty.

Guarantor further waives and agrees not to assert or claim at any time any
deductions to the amount guaranteed under this Guaranty for any claim of setoff,
counterclaim, counter demand, recoupment or similar right, whether such claim,
demand or right may be asserted by the Borrower, the Guarantor, or both.

GUARANTOR'S UNDERSTANDING WITH RESPECT TO WAIVERS. Guarantor warrants and agrees
that each of the waivers set forth above is made with Guarantor's full knowledge
of its significance and consequences and that, under the circumstances, the
waivers are reasonable and not contrary to public policy or law. If any such
waiver is determined to be contrary to any applicable law or public policy, such
waiver shall be effective only to the extent permitted by law or public policy.

RIGHT OF SETOFF. See Addendum.

SUBORDINATION OF BORROWER'S DEBTS TO GUARANTOR. Guarantor agrees that the
Indebtedness of Borrower to Lender, whether now existing or hereafter created,
shall be superior to any claim that Guarantor may now have or hereafter acquire
against Borrower, whether or not Borrower becomes insolvent. Guarantor hereby
expressly subordinates any claim Guarantor may have against Borrower, upon any
account whatsoever, to any claim that Lender may now or hereafter have against
Borrower. In the event of insolvency and consequent liquidation of the assets of
Borrower, through bankruptcy, by an assignment for the benefit of creditors, by
voluntary liquidation, or otherwise, the assets of Borrower applicable to the
payment of the claims of both Lender and Guarantor shall be paid to Lender and
shall be first applied by Lender to the Indebtedness of Borrower to Lender.
Guarantor does hereby assign to Lender all claims which it may have or acquire
against Borrower or against any assignee or trustee in bankruptcy of Borrower;
provided however, that such assignment shall be effective only for the purpose
of assuring to Lender full payment in legal tender of the Indebtedness. If
Lender so requests, any notes or credit agreements now or hereafter evidencing
any debts or obligations of Borrower to Guarantor shall be marked with a legend
that the same are subject to this Guaranty and shall be delivered to Lender.
Guarantor agrees, and Lender is hereby authorized, in the name of Guarantor,
from time to time to execute and file financing statements and continuation
statements and to execute such other documents and to take such other actions as
Lender deems necessary or appropriate to perfect, preserve and enforce its
rights under this Guaranty.

MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Guaranty:

     Amendments. This Guaranty, together with any Related Documents, constitutes
     the entire understanding and agreement of the parties as to the matters set
     forth in this Guaranty. No alteration of or amendment to this Guaranty
     shall be effective unless given in writing and signed by the party or
     parties sought to be charged or bound by the alteration or amendment.

     Attorneys' Fees; Expenses. Guarantor agrees to pay upon demand all of
     Lender's costs and expenses, including Lender's attorneys' fees and
     Lender's legal expenses, incurred in connection with the enforcement of
     this Guaranty. Lender may hire or pay someone else to help enforce this
     Guaranty, and Guarantor shall pay the costs and expenses of such
     enforcement. Costs and expenses include Lender's attorneys' fees and legal
     expenses whether or not there is a lawsuit, including attorneys' fees and
     legal expenses for bankruptcy proceedings (including efforts to modify or
     vacate any automatic stay or injunction), appeals, and any anticipated
     post-judgment collection services. Guarantor also shall pay all court costs
     and such additional fees as may be directed by the court.

     Caption Headings. Caption headings in this Guaranty are for convenience
     purposes only and are not to be used to interpret or define the provisions
     of this Guaranty.

     Governing Law. This Guaranty will be governed by, construed and enforced in
     accordance with federal law and the laws of the State of Oregon. This
     Guaranty has been accepted by Lender in the State of Oregon.

     Integration. Guarantor further agrees that Guarantor has read and fully
     understands the terms of this Guaranty; Guarantor has had the opportunity
     to be advised by Guarantor's attorney with respect to this Guaranty; the
     Guaranty fully reflects Guarantor's intentions and parol evidence is not
     required to interpret the terms of this Guaranty. Guarantor hereby
     indemnifies and holds Lender harmless from all losses, claims, damages, and
     costs (including Lender's attorneys' fees) suffered or incurred by Lender
     as a result of any breach by Guarantor of the warranties, representations
     and agreements of this paragraph.

     Interpretation. In all cases where there is more than one Borrower or
     Guarantor, then all words used in this Guaranty in the singular shall be
     deemed to have been used in the plural where the context and construction
     so require; and where there is more than one Borrower named in this
     Guaranty or when this Guaranty is executed by more than one Guarantor, the
     words "Borrower" and "Guarantor" respectively shall mean all and any one or
     more of them. The words "Guarantor," "Borrower," and "Lender" include the
     heirs, successors, assigns, and transferees of each of them. If a court
     finds that any provision of this Guaranty is not valid or should not be
     enforced, that fact by itself will not mean that the rest of this Guaranty
     will not be valid or enforced. Therefore, a court will enforce the rest of
     the provisions of this Guaranty even if a provision of this Guaranty may be
     found to be invalid or unenforceable. If any one or more of Borrower or
     Guarantor are corporations, partnerships, limited liability companies, or
     similar entities, it is not necessary for Lender to inquire into the powers
     of Borrower or Guarantor or of the officers, directors, partners, managers,
     or other agents acting or purporting to act on their behalf, and any Loan
     indebtedness made or created in reliance upon the professed exercise of
     such powers shall be guaranteed under this Guaranty.

     Notices. Any notice required to be given under this Guaranty shall be given
     in writing, and, except for revocation notices by Guarantor, shall be
     effective when actually delivered, when actually received by telefacsimile
     (unless otherwise required by law), when deposited with a nationally
     recognized overnight courier, or, if mailed, when deposited in the United
     States mail, as first class, certified or registered mail postage prepaid,
     directed to the addresses shown near the beginning of this Guaranty. All
     revocation notices by Guarantor shall be in writing and shall be effective
     upon delivery to Lender as provided in the section of this Guaranty
     entitled "DURATION OF GUARANTY." Any party may change its address for
     notices under this Guaranty by giving formal written notice to the other
     parties, specifying that the purpose of the notice is to change the party's
     address. For notice purposes, Guarantor agrees to keep Lender informed at
     all times of Guarantor's current address. Unless otherwise provided or
     required by law, if there is more than one Guarantor, any notice given by
     Lender to any Guarantor is deemed to be notice given to all Guarantors.

     No Waiver by Lender. Lender shall not be deemed to have waived any rights
     under this Guaranty unless such waiver is given in writing and signed by
     Lender. No delay or omission on the part of Lender in exercising any right
     shall operate as a waiver of such right or any other right. A waiver by
     Lender of a provision of this Guaranty shall not prejudice or constitute a
     waiver of Lender's right otherwise to demand strict compliance with that
     provision or any other provision of this Guaranty. No prior waiver by
     Lender, nor any course of dealing between Lender and Guarantor, shall
     constitute a waiver of any of Lender's rights or of any of Guarantor's
     obligations as to any future transactions. Whenever the consent of Lender
     is required under this Guaranty, the granting of such consent by Lender in
     any instance shall not constitute continuing consent to subsequent
     instances where such consent is required and in all cases such consent may
     be granted or withheld in the sole discretion of Lender.

     Successors and Assigns. Subject to any limitations stated in this Guaranty
     or transfer of Guarantor's interest, this Guaranty shall be binding upon
     and inure to the benefit of the parties, their successors and assigns.

DEFINITIONS. The following capitalized words and terms shall have the following
meanings when used in this Guaranty. Unless specifically stated to the contrary,
all references to dollar amounts shall mean amounts in lawful money of the
United States of America. Words and terms used in the singular shall include the
plural, and the plural shall include the singular, as the context may require.
Words and terms not otherwise defined in this Guaranty shall have the meanings
attributed to such terms in the Uniform Commercial Code:

     Borrower. The word "Borrower" means Portland Brewing Company, and all other
     persons and entities signing the Note in whatever capacity.

     Guarantor. The word "Guarantor" means each and every person or entity
     signing this Guaranty, including without limitation Harmer Mill & Logging
     Supply Co..

     Guaranty. The word "Guaranty" means the guaranty from Guarantor to Lender,
     including without limitation a guaranty of all or part of the Note.

     Indebtedness. The word "Indebtedness" means Borrower's indebtedness to
     Lender as more particularly described in the Business Loan Agreement.

     Lender. The word "Lender" means Washington Mutual Bank dba Western Bank,
     its successors and assigns.

     Related Documents. The words "Related Documents" mean all promissory notes,
     credit agreements, loan agreements, environmental agreements, guaranties,
     security agreements, mortgages, deeds of trust, security deeds, collateral
     mortgages, and all other instruments, agreements and documents, whether now
     or hereafter existing, executed in connection with the Indebtedness.

GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS COMMERCIAL
GUARANTY AND GUARANTOR AGREES TO ITS TERMS. THIS COMMERCIAL GUARANTY IS DATED
SEPTEMBER 14, 2001.

GUARANTOR:

Harmer Mill & Logging Supply Co.

By:
    Robert M. MacTarnahan, President
    of Harmer Mill & Logging Supply Co.
<PAGE>
                         ADDENDUM TO COMMERCIAL GUARANTY

         This ADDENDUM TO COMMERCIAL GUARANTY is attached to and by this
reference is made a part of each Commercial Guaranty dated September 14, 2001,
and executed in connection with a loan or other financial accommodations between
Washington Mutual Bank doing business as Western Bank and Portland Brewing
Company.

RIGHT OF SETOFF. Lender shall not have a security interest in, nor shall Lender
set off against amounts due hereunder, the sums in any account of Guarantor
maintained with Lender.

Addendum agreed to:

WASHINGTON MUTUAL Bank DBA WESTERN BANK initial _______

GUARANTOR initial _______
<PAGE>
                               COMMERCIAL GUARANTY

<TABLE>
<CAPTION>
------------------- --------------- ---------------- ---------------- -------------- ---------- ------------- ----------
    Principal         Loan Date        Maturity          Loan No       Call / Coll    Account      Officer     Initials
                                                                         599/699                     610
------------------- --------------- ---------------- ---------------- -------------- ---------- ------------- ----------
References in the shaded area are for Lender's use only and do not limit the applicability of this document to any
particular loan or item. Any item above containing "***" has been omitted due to text length limitations.
------------------------------------------------------------------------------------------------------------------------
<S>                                                                    <C>
Borrower:       Portland Brewing Company                               Lender:  Washington Mutual Bank dba Western Bank
                2730 NW 31st Avenue                                             Beaverton Business Banking Center
                Portland, OR  97210                                             12655 SW Center Street, Suite 500
                                                                                Beaverton, OR  97005
Guarantor:      MacTarnahan Limited Partnership
                11416 SW Lynnridge Avenue
                Portland, OR  97225
</TABLE>

AMOUNT OF GUARANTY. The amount of this Guaranty is One Hundred Eighty-two
Thousand Seven Hundred Forty-one & 25/100 Dollars ($182,741.25).

CONTINUING GUARANTY. For good and valuable consideration, MacTarnahan Limited
Partnership ("Guarantor") absolutely and unconditionally guarantees and promises
to pay to Washington Mutual Bank dba Western Bank ("Lender") or its order, in
legal tender of the United States of America, the Indebtedness (as that term is
defined below) of Portland Brewing Company ("Borrower") to Lender on the terms
and conditions set forth in this Guaranty. The obligations of Guarantor under
this Guaranty are continuing.

MAXIMUM LIABILITY. The maximum liability of Guarantor under this Guaranty shall
not exceed at any one time $182,741.25 plus all costs and expenses of (A)
enforcement of this Guaranty and (B) collection and sale of any collateral
securing this Guaranty.

The above limitation on liability is not a restriction on the amount of the
Indebtedness of Borrower to Lender either in the aggregate or at any one time.
If Lender presently holds one or more guaranties, or hereafter receives
additional guaranties from Guarantor, Lender's rights under all guaranties shall
be cumulative. This Guaranty shall not (unless specifically provided below to
the contrary) affect or invalidate any such other guaranties. Guarantor's
liability will be Guarantor's aggregate liability under the terms of this
Guaranty and any such other unterminated guaranties.

INDEBTEDNESS GUARANTEED. The Indebtedness is guaranteed and whether any such
Indebtedness is voluntarily or involuntarily incurred, due or not due, absolute
or contingent, liquidated or unliquidated, determined or undetermined; whether
Borrower may be liable individually or jointly with others, or primarily or
secondarily, or as guarantor or surety; whether recovery on the Indebtedness may
be or may become barred or unenforceable against Borrower for any reason
whatsoever; and whether the Indebtedness arises from transactions which may be
voidable on account of infancy, insanity, ultra vires, or otherwise.

DURATION OF GUARANTY. This Guaranty will take effect when received by Lender
without the necessity of any acceptance by Lender, or any notice to Guarantor or
to Borrower, and will continue in full force until all Indebtedness incurred or
contracted before receipt by Lender of any notice of revocation shall have been
fully and finally paid and satisfied and all of Guarantor's other obligations
under this Guaranty shall have been performed in full. If Guarantor elects to
revoke this Guaranty, Guarantor may only do so in writing. Guarantor's written
notice of revocation must be mailed to Lender, by certified mail, at Lender's
address listed above or such other place as Lender may designate in writing.
Written revocation of this Guaranty will apply only to advances or new
Indebtedness created after actual receipt by Lender of Guarantor's written
revocation. For this purpose and without limitation, the term "new Indebtedness"
does not include Indebtedness which at the time of notice of revocation is
contingent, unliquidated, undetermined or not due and which later becomes
absolute, liquidated, determined or due. This Guaranty will continue to bind
Guarantor for all Indebtedness incurred by Borrower or committed by Lender prior
to receipt of Guarantor's written notice of revocation, including any
extensions, renewals, substitutions or modifications of the Indebtedness. All
renewals, extensions, substitutions, and modifications of the Indebtedness
granted after Guarantor's revocation, are contemplated under this Guaranty and,
specifically will not be considered to be new Indebtedness. This Guaranty shall
bind Guarantor's estate as to Indebtedness created both before and after
Guarantor's death or incapacity, regardless of Lender's actual notice of
Guarantor's death. Subject to the foregoing, Guarantor's executor or
administrator or other legal representative may terminate this Guaranty in the
same manner in which Guarantor might have terminated it and with the same
effect. Release of any other guarantor or termination of any other guaranty of
the Indebtedness shall not affect the liability of Guarantor under this
Guaranty. A revocation Lender receives from any one or more Guarantors shall not
affect the liability of any remaining Guarantors under this Guaranty. It is
anticipated that fluctuations may occur in the aggregate amount of Indebtedness
covered by this Guaranty, and Guarantor specifically acknowledges and agrees
that reductions in the amount of Indebtedness, even to zero dollars ($0.00),
prior to Guarantor's written revocation of this Guaranty shall not constitute a
termination of this Guaranty. This Guaranty is binding upon Guarantor and
Guarantor's heirs, successors and assigns so long as any of the guaranteed
Indebtedness remains unpaid and even though the Indebtedness guaranteed may from
time to time be zero dollars ($0.00).

GUARANTOR'S AUTHORIZATION TO LENDER. Guarantor authorizes Lender, either before
or after any revocation hereof, without notice or demand and without lessening
Guarantor's liability under this Guaranty, from time to time: (A) prior to
revocation as set forth above, to make one or more additional secured or
unsecured loans to Borrower, to lease equipment or other goods to Borrower, or
otherwise to extend additional credit to Borrower; (B) to alter, compromise,
renew, extend, accelerate, or otherwise change one or more times the time for
payment or other terms of the Indebtedness or any part of the Indebtedness,
including increases and decreases of the rate of interest on the Indebtedness;
extensions may be repeated and may be for longer than the original loan term;
(C) to take and hold security for the payment of this Guaranty or the
Indebtedness, and exchange, enforce, waive, subordinate, fail or decide not to
perfect, and release any such security, with or without the substitution of new
collateral; (D) to release, substitute, agree not to sue, or deal with any one
or more of Borrower's sureties, endorsers, or other guarantors on any terms or
in any manner Lender may choose; (E) to determine how, when and what application
of payments and credits shall be made on the Indebtedness (F) to apply such
security and direct the order or manner of sale thereof, including without
limitation, any nonjudicial sale permitted by the terms of the controlling
security agreement or deed of trust, as Lender in its discretion may determine;
(G) to sell, transfer, assign or grant participations in all or any part of the
Indebtedness; and (H) to assign or transfer this Guaranty in whole or in part.

GUARANTOR'S REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants to
Lender that (A) no representations or agreements of any kind have been made to
Guarantor which would limit or qualify in any way the terms of this Guaranty;
(B) this Guaranty is executed at Borrower's request and not at the request of
Lender; (C) Guarantor has full power, right and authority to enter into this
Guaranty; (D) the provisions of this Guaranty do not conflict with or result in
a default under any agreement or other instrument binding upon Guarantor and do
not result in a violation of any law, regulation, court decree or order
applicable to Guarantor; (E) Guarantor has not and will not, without the prior
written consent of Lender, sell, lease, assign, encumber, hypothecate, transfer,
or otherwise dispose of all or substantially all of Guarantor's assets, or any
interest therein; (F) upon Lender's request, Guarantor will provide to Lender
financial and credit information in form acceptable to Lender, and all such
financial information which currently has been, and all future financial
information which will be provided to Lender is and will be true and correct in
all material respects and fairly present Guarantor's financial condition as of
the dates the financial information is provided; (G) no material adverse change
has occurred in Guarantor's financial condition since the date of the most
recent financial statements provided to Lender and no event has occurred which
may materially adversely affect Guarantor's financial condition; (H) no
litigation, claim, investigation, administrative proceeding or similar action
(including those for unpaid taxes) against Guarantor is pending or threatened;
(I) Lender has made no representation to Guarantor as to the creditworthiness of
Borrower; and (J) Guarantor has established adequate means of obtaining from
Borrower on a continuing basis information regarding Borrower's financial
condition. Guarantor agrees to keep adequately informed from such means of any
facts, events, or circumstances which might in any way affect Guarantor's risks
under this Guaranty, and Guarantor further agrees that, absent a request for
information, Lender shall have no obligation to disclose to Guarantor any
information or documents acquired by Lender in the course of its relationship
with Borrower.

GUARANTOR'S FINANCIAL STATEMENTS. Guarantor agrees to furnish Lender with the
following:

     Annual Statements. As soon as available after the end of each fiscal year,
     Guarantor's balance sheet and income statement for the year ended, compiled
     by a certified public accountant satisfactory to Lender.

     Tax Returns. As soon as available, but in no event later than thirty (30)
     days after the applicable filing date for the tax reporting period ended,
     Federal and other governmental tax returns, prepared by Guarantor.

     Additional Requirements. Tax Returns to include all supplemental schedules
     together with K-1's.

     Guarantor's Financial Statement to be submitted with Tax Returns.

All financial reports required to be provided under this Guaranty shall be
prepared in accordance with GAAP, applied on a consistent basis, and certified
by Guarantor as being true and correct.

GUARANTOR'S WAIVERS. Except as prohibited by applicable law, Guarantor waives
any right to require Lender (A) to continue lending money or to extend other
credit to Borrower; (B) to make any presentment, protest, demand, or notice of
any kind, including notice of any nonpayment of the Indebtedness or of any
nonpayment related to any collateral, or notice of any action or nonaction on
the part of Borrower, Lender, any surety, endorser, or other guarantor in
connection with the Indebtedness or in connection with the creation of new or
additional loans or obligations; (C) to resort for payment or to proceed
directly or at once against any person, including Borrower or any other
guarantor; (D) to proceed directly against or exhaust any collateral held by
Lender from Borrower, any other guarantor, or any other person; (E) to give
notice of the terms, time, and place of any public or private sale of personal
property security held by Lender from Borrower or to comply with any other
applicable provisions of the Uniform Commercial Code; (F) to pursue any other
remedy within Lender's power; or (G) to commit any act or omission of any kind,
or at any time, with respect to any matter whatsoever.

Guarantor also waives any and all rights or defenses arising by reason of (A)
any "one action" or "anti-deficiency" law or any other law which may prevent
Lender from bringing any action, including a claim for deficiency, against
Guarantor, before or after Lender's commencement or completion of any
foreclosure action, either judicially or by exercise of a power of sale; (B) any
election of remedies by Lender which destroys or otherwise adversely affects
Guarantor's subrogation rights or Guarantor's rights to proceed against Borrower
for reimbursement, including without limitation, any loss of rights Guarantor
may suffer by reason of any law limiting, qualifying, or discharging the
Indebtedness; (C) any disability or other defense of Borrower, of any other
guarantor, or of any other person, or by reason of the cessation of Borrower's
liability from any cause whatsoever, other than payment in full in legal tender,
of the Indebtedness; (D) any right to claim discharge of the Indebtedness on the
basis of unjustified impairment of any collateral for the Indebtedness; (E) any
statute of limitations, if at any time any action or suit brought by Lender
against Guarantor is commenced, there is outstanding Indebtedness of Borrower to
Lender which is not barred by any applicable statute of limitations; or (F) any
defenses given to guarantors at law or in equity other than actual payment and
performance of the Indebtedness. If payment is made by Borrower, whether
voluntarily or otherwise, or by any third party, on the Indebtedness and
thereafter Lender is forced to remit the amount of that payment to Borrower's
trustee in bankruptcy or to any similar person under any federal or state
bankruptcy law or law for the relief of debtors, the Indebtedness shall be
considered unpaid for the purpose of the enforcement of this Guaranty.

Guarantor further waives and agrees not to assert or claim at any time any
deductions to the amount guaranteed under this Guaranty for any claim of setoff,
counterclaim, counter demand, recoupment or similar right, whether such claim,
demand or right may be asserted by the Borrower, the Guarantor, or both.

GUARANTOR'S UNDERSTANDING WITH RESPECT TO WAIVERS. Guarantor warrants and agrees
that each of the waivers set forth above is made with Guarantor's full knowledge
of its significance and consequences and that, under the circumstances, the
waivers are reasonable and not contrary to public policy or law. If any such
waiver is determined to be contrary to any applicable law or public policy, such
waiver shall be effective only to the extent permitted by law or public policy.

RIGHT OF SETOFF. See Addendum.

SUBORDINATION OF BORROWER'S DEBTS TO GUARANTOR. Guarantor agrees that the
Indebtedness of Borrower to Lender, whether now existing or hereafter created,
shall be superior to any claim that Guarantor may now have or hereafter acquire
against Borrower, whether or not Borrower becomes insolvent. Guarantor hereby
expressly subordinates any claim Guarantor may have against Borrower, upon any
account whatsoever, to any claim that Lender may now or hereafter have against
Borrower. In the event of insolvency and consequent liquidation of the assets of
Borrower, through bankruptcy, by an assignment for the benefit of creditors, by
voluntary liquidation, or otherwise, the assets of Borrower applicable to the
payment of the claims of both Lender and Guarantor shall be paid to Lender and
shall be first applied by Lender to the Indebtedness of Borrower to Lender.
Guarantor does hereby assign to Lender all claims which it may have or acquire
against Borrower or against any assignee or trustee in bankruptcy of Borrower;
provided however, that such assignment shall be effective only for the purpose
of assuring to Lender full payment in legal tender of the Indebtedness. If
Lender so requests, any notes or credit agreements now or hereafter evidencing
any debts or obligations of Borrower to Guarantor shall be marked with a legend
that the same are subject to this Guaranty and shall be delivered to Lender.
Guarantor agrees, and Lender is hereby authorized, in the name of Guarantor,
from time to time to execute and file financing statements and continuation
statements and to execute such other documents and to take such other actions as
Lender deems necessary or appropriate to perfect, preserve and enforce its
rights under this Guaranty.

MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Guaranty:

     Amendments. This Guaranty, together with any Related Documents, constitutes
     the entire understanding and agreement of the parties as to the matters set
     forth in this Guaranty. No alteration of or amendment to this Guaranty
     shall be effective unless given in writing and signed by the party or
     parties sought to be charged or bound by the alteration or amendment.

     Attorneys' Fees; Expenses. Guarantor agrees to pay upon demand all of
     Lender's costs and expenses, including Lender's attorneys' fees and
     Lender's legal expenses, incurred in connection with the enforcement of
     this Guaranty. Lender may hire or pay someone else to help enforce this
     Guaranty, and Guarantor shall pay the costs and expenses of such
     enforcement. Costs and expenses include Lender's attorneys' fees and legal
     expenses whether or not there is a lawsuit, including attorneys' fees and
     legal expenses for bankruptcy proceedings (including efforts to modify or
     vacate any automatic stay or injunction), appeals, and any anticipated
     post-judgment collection services. Guarantor also shall pay all court costs
     and such additional fees as may be directed by the court.

     Caption Headings. Caption headings in this Guaranty are for convenience
     purposes only and are not to be used to interpret or define the provisions
     of this Guaranty.

     Governing Law. This Guaranty will be governed by, construed and enforced in
     accordance with federal law and the laws of the State of Oregon. This
     Guaranty has been accepted by Lender in the State of Oregon.

     Integration. Guarantor further agrees that Guarantor has read and fully
     understands the terms of this Guaranty; Guarantor has had the opportunity
     to be advised by Guarantor's attorney with respect to this Guaranty; the
     Guaranty fully reflects Guarantor's intentions and parol evidence is not
     required to interpret the terms of this Guaranty. Guarantor hereby
     indemnifies and holds Lender harmless from all losses, claims, damages, and
     costs (including Lender's attorneys' fees) suffered or incurred by Lender
     as a result of any breach by Guarantor of the warranties, representations
     and agreements of this paragraph.

     Interpretation. In all cases where there is more than one Borrower or
     Guarantor, then all words used in this Guaranty in the singular shall be
     deemed to have been used in the plural where the context and construction
     so require; and where there is more than one Borrower named in this
     Guaranty or when this Guaranty is executed by more than one Guarantor, the
     words "Borrower" and "Guarantor" respectively shall mean all and any one or
     more of them. The words "Guarantor," "Borrower," and "Lender" include the
     heirs, successors, assigns, and transferees of each of them. If a court
     finds that any provision of this Guaranty is not valid or should not be
     enforced, that fact by itself will not mean that the rest of this Guaranty
     will not be valid or enforced. Therefore, a court will enforce the rest of
     the provisions of this Guaranty even if a provision of this Guaranty may be
     found to be invalid or unenforceable. If any one or more of Borrower or
     Guarantor are corporations, partnerships, limited liability companies, or
     similar entities, it is not necessary for Lender to inquire into the powers
     of Borrower or Guarantor or of the officers, directors, partners, managers,
     or other agents acting or purporting to act on their behalf, and any Loan
     indebtedness made or created in reliance upon the professed exercise of
     such powers shall be guaranteed under this Guaranty.

     Notices. Any notice required to be given under this Guaranty shall be given
     in writing, and, except for revocation notices by Guarantor, shall be
     effective when actually delivered, when actually received by telefacsimile
     (unless otherwise required by law), when deposited with a nationally
     recognized overnight courier, or, if mailed, when deposited in the United
     States mail, as first class, certified or registered mail postage prepaid,
     directed to the addresses shown near the beginning of this Guaranty. All
     revocation notices by Guarantor shall be in writing and shall be effective
     upon delivery to Lender as provided in the section of this Guaranty
     entitled "DURATION OF GUARANTY." Any party may change its address for
     notices under this Guaranty by giving formal written notice to the other
     parties, specifying that the purpose of the notice is to change the party's
     address. For notice purposes, Guarantor agrees to keep Lender informed at
     all times of Guarantor's current address. Unless otherwise provided or
     required by law, if there is more than one Guarantor, any notice given by
     Lender to any Guarantor is deemed to be notice given to all Guarantors.

     No Waiver by Lender. Lender shall not be deemed to have waived any rights
     under this Guaranty unless such waiver is given in writing and signed by
     Lender. No delay or omission on the part of Lender in exercising any right
     shall operate as a waiver of such right or any other right. A waiver by
     Lender of a provision of this Guaranty shall not prejudice or constitute a
     waiver of Lender's right otherwise to demand strict compliance with that
     provision or any other provision of this Guaranty. No prior waiver by
     Lender, nor any course of dealing between Lender and Guarantor, shall
     constitute a waiver of any of Lender's rights or of any of Guarantor's
     obligations as to any future transactions. Whenever the consent of Lender
     is required under this Guaranty, the granting of such consent by Lender in
     any instance shall not constitute continuing consent to subsequent
     instances where such consent is required and in all cases such consent may
     be granted or withheld in the sole discretion of Lender.

     Successors and Assigns. Subject to any limitations stated in this Guaranty
     or transfer of Guarantor's interest, this Guaranty shall be binding upon
     and inure to the benefit of the parties, their successors and assigns.

DEFINITIONS. The following capitalized words and terms shall have the following
meanings when used in this Guaranty. Unless specifically stated to the contrary,
all references to dollar amounts shall mean amounts in lawful money of the
United States of America. Words and terms used in the singular shall include the
plural, and the plural shall include the singular, as the context may require.
Words and terms not otherwise defined in this Guaranty shall have the meanings
attributed to such terms in the Uniform Commercial Code:

     Borrower. The word "Borrower" means Portland Brewing Company, and all other
     persons and entities signing the Note in whatever capacity.

     Guarantor. The word "Guarantor" means each and every person or entity
     signing this Guaranty, including without limitation MacTarnahan Limited
     Partnership.

     Guaranty. The word "Guaranty" means the guaranty from Guarantor to Lender,
     including without limitation a guaranty of all or part of the Note.

     Indebtedness. The word "Indebtedness" means Borrower's indebtedness to
     Lender as more particularly described in the Business Loan Agreement.

     Lender. The word "Lender" means Washington Mutual Bank dba Western Bank,
     its successors and assigns.

     Related Documents. The words "Related Documents" mean all promissory notes,
     credit agreements, loan agreements, environmental agreements, guaranties,
     security agreements, mortgages, deeds of trust, security deeds, collateral
     mortgages, and all other instruments, agreements and documents, whether now
     or hereafter existing, executed in connection with the Indebtedness.

GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS COMMERCIAL
GUARANTY AND GUARANTOR AGREES TO ITS TERMS. THIS COMMERCIAL GUARANTY IS DATED
SEPTEMBER 14, 2001.

GUARANTOR:

MacTarnahan Limited Partnership

Harmer mill & logging supply co., Partner of MacTarnahan Limited Partnership

By:
    Robert M. MacTarnahan, President
    of Harmer Mill & Logging Supply Co.
<PAGE>
                            PARTNERSHIP AUTHORIZATION

<TABLE>
<CAPTION>
------------------- --------------- ---------------- ---------------- -------------- ---------- ------------- ----------
    Principal         Loan Date        Maturity          Loan No       Call / Coll    Account      Officer     Initials
   $182,741.25        09-14-2001      09-15-2004           42           599 / 990    0010130085      610
------------------- --------------- ---------------- ---------------- -------------- ---------- ------------- ----------
References in the shaded area are for Lender's use only and do not limit the applicability of this document to any
particular loan or item. Any item above containing "***" has been omitted due to text length limitations.
------------------------------------------------------------------------------------------------------------------------
<S>                                                                    <C>
Borrower:       Portland Brewing Company                               Lender:  Washington Mutual Bank dba Western Bank
                2730 NW 31st Avenue                                             Beaverton Business Banking Center
                Portland, OR  97210                                             12655 SW Center Street, Suite 500
                                                                                Beaverton, OR  97005
Partnership:    MacTarnahan Limited Partnership
                11416 SW Lynnridge Avenue
                Portland, OR  97225
</TABLE>

IN CONSIDERATION OF the existing or proposed lending or banking relationship
between Portland Brewing Company ("Borrower") and Washington Mutual Bank dba
Western Bank ("Lender"), the persons signing below jointly and severally and on
behalf of the Partnership represent and certify to Lender that:

THE PARTNERSHIP'S EXISTENCE. The complete and correct name of the Partnership is
MacTarnahan Limited Partnership ("Partnership"). The Partnership is a limited
partnership which is, and at all times shall be, formed under and by virtue of
the laws of the State of Oregon. The Partnership is duly authorized to transact
business in all other states in which the Partnership is doing business, having
obtained all necessary filings, governmental licenses and approvals for each
state in which the Partnership is doing business. Specifically, the Partnership
is, and at all times shall be, duly qualified as a foreign limited partnership
in all states in which the failure to so qualify would have a material adverse
effect on its business or financial condition. The Partnership has the full
power and authority to own its properties and to transact the business in which
it is presently engaged or presently proposes to engage. The Partnership
maintains an office at 11416 SW Lynnridge Avenue, Portland, OR 97225. Unless the
Partnership has designated otherwise in writing, the principal office is the
office at which the Partnership keeps its books and records. The Partnership
will notify Lender prior to any change in the location of the Partnership's
principal office address or any change in the Partnership's name. The
Partnership shall do all things necessary to preserve and to keep in full force
and effect its existence, rights and privileges, and shall comply with all
regulations, rules, ordinances, statutes, orders and decrees of any governmental
or quasi-governmental authority or court applicable to the Partnership and the
Partnership's business activities.

AUTHORIZATIONS ADOPTED. At a meeting of the partners of the Partnership, duly
called and held on September 14, 2001, or by other duly authorized action in
lieu of a meeting, the agreements and authorizations set forth in this
Authorization were adopted.

PARTNER. The following named entity is a partner of MacTarnahan Limited
Partnership:
<TABLE>
<CAPTION>
<S>                                    <C>             <C>         <C>
     NAMES                             TITLES          AUTHORIZED  ACTUAL SIGNATURES

     Harmer Mill & Logging Supply Co.  General Partner Y           X
</TABLE>

ACTIONS AUTHORIZED. The authorized entity listed above may enter into any
agreements of any nature with Lender, and those agreements will bind the
Partnership. Specifically, but without limitation, the authorized entity is
authorized, empowered, and directed to do the following for and on behalf of the
Partnership:

     Guaranty. To guarantee or act as surety for loans or other financial
     accommodations to Borrower from Lender on such guarantee or surety terms as
     may be agreed upon between the partner of the Partnership and Lender and in
     such sum or sums of money as in its judgment should be guaranteed or
     assured, not exceeding, however, at any one time the amount of One Hundred
     Eighty-two Thousand Seven Hundred Forty-one & 25/100 Dollars ($182,741.25),
     in addition to such sum or sums of money as the Partnership currently may
     have guaranteed to Lender (the "Guaranty").

     Grant Security. To mortgage, pledge, transfer, endorse, hypothecate, or
     otherwise encumber and deliver to Lender any property now or hereafter
     belonging to the Partnership or in which the Partnership now or hereafter
     may have an interest, including without limitation all real property and
     all personal property (tangible or intangible) of the Partnership, as
     security for the Guaranty, and as a security for the payment of any loans,
     any promissory notes, or any other or further indebtedness of Portland
     Brewing Company to Lender at any time owing, however the same may be
     evidenced. Such property may be mortgaged, pledged, transferred, endorsed,
     hypothecated or encumbered at the time such loans are obtained or such
     indebtedness is incurred, or at any other time or times, and may be either
     in addition to or in lieu of any property theretofore mortgaged, pledged,
     transferred, endorsed, hypothecated or encumbered. The provisions of this
     Authorization authorizing or relating to the pledge, mortgage, transfer,
     endorsement, hypothecation, granting of a security interest in, or in any
     way encumbering, the assets of the Partnership shall include, without
     limitation, doing so in order to lend collateral security for the
     indebtedness, now or hereafter existing, and of any nature whatsoever, of
     Portland Brewing Company to Lender. The Partnership have considered the
     value to itself of lending collateral in support of such indebtedness, and
     the Partnership represents to Lender that the Partnership is benefited by
     doing so.

     Execute Security Documents. To execute and deliver to Lender the forms of
     mortgage, deed of trust, pledge agreement, hypothecation agreement, and
     other security agreements and financing statements which Lender may require
     and which shall evidence the terms and conditions under and pursuant to
     which such liens and encumbrances, or any of them, are given; and also to
     execute and deliver to Lender any other written instruments, any chattel
     paper, or any other collateral, of any kind or nature, which Lender may
     deem necessary or proper in connection with or pertaining to the giving of
     the liens and encumbrances.

     Negotiate Items. To draw, endorse, and discount with Lender all drafts,
     trade acceptances, promissory notes, or other evidences of indebtedness
     payable to or belonging to the Partnership or in which the Partnership may
     have an interest, and either to receive cash for the same or to cause such
     proceeds to be credited to the Partnership's account with Lender, or to
     cause such other disposition of the proceeds derived therefrom as it may
     deem advisable.

     Further Acts. To do and perform such other acts and things and to execute
     and deliver such other documents and agreements as the partner may in its
     discretion deem reasonably necessary or proper in order to carry into
     effect the provisions of this Authorization.

ASSUMED BUSINESS NAMES. The Partnership has filed or recorded all documents or
filings required by law relating to all assumed business names used by the
Partnership. Excluding the name of the Partnership, the following is a complete
list of all assumed business names under which the Partnership does business.
None.

JOINT AND SEVERAL LIABILITY. Each partner agrees to be jointly and severally
liable for all of the Partnership's present and future obligations to Lender;
however, any limited partners listed above and identified as such will not be
liable individually beyond its interest in the Partnership plus any liability
created under applicable law or under any other agreements with Lender (such as
a guaranty). We represent and warrant to Lender that the Partnership's
agreements with Lender, including the borrowing of monies, do not conflict with,
result in a violation of, or constitute a default under any agreement or other
instrument with any limited partner of the Partnership; and we agree to
indemnify and hold Lender harmless from all claims, costs and expenses relating
in any way to any such conflict, violation or default.

NOTICES TO LENDER. The Partnership will promptly notify Lender in writing at
Lender's address shown above (or such other addresses as Lender may designate
from time to time) prior to any (A) change in the Partnership's name; (B) change
in the Partnership's assumed business name(s); (C) change in the partners of the
Partnership, including the addition of new partners or the departure of current
partners from the Partnership; (D) change in the authorized signer(s); (E)
change in the Partnership's principal office address; (F) change in the
Partnership's state of organization; (G) conversion of the Partnership to a new
or different type of business entity; or (H) change in any other aspect of the
Partnership that directly or indirectly relates to any agreements between the
Partnership and Lender. No change in the Partnership's name, state or
organization or principal office address will take effect until after Lender has
received notice

CERTIFICATION CONCERNING PARTNERS AND AUTHORIZATIONS. The partner named above is
duly elected, appointed, or employed by or for the Partnership, as the case may
be, and occupies the position set opposite its respective name. This
Authorization now stands of record on the books of the Partnership, is in full
force and effect, and has not been modified or revoked in any manner whatsoever.

CONTINUING VALIDITY. Any and all acts authorized pursuant to this Authorization
and performed prior to the passage of this Authorization are hereby ratified and
approved. This Authorization shall be continuing, shall remain in full force and
effect and Lender may rely on it until written notice of its revocation shall
have been delivered to and received by Lender at Lender's address shown above
(or such addresses as Lender may designate from time to time). Any such notice
shall not affect any of the Partnership's agreements or commitments in effect at
the time notice is given.

IN TESTIMONY WHEREOF, We have hereunto set our hand.

The undersigned has read all the provisions of this Authorization, and on behalf
of the Partnership certifies that all statements and representations made in
this Authorization are true and correct. This Partnership Authorization is dated
September 14, 2001.

                       CERTIFIED TO AND ATTESTED BY:

                       By:
                           Authorized Signer for MacTarnahan Limited Partnership

NOTE: If the partner signing this Authorization is designated by the foregoing
document as one of the partners authorized to act on the Partnership's behalf,
it is advisable to have this Authorization signed by at least one non-authorized
partner of the Partnership.<PAGE>

                                                                    Exhibit 10.1

* Certain confidential information contained in this document, marked by
brackets, has been omitted and filed with the Securities and Exchange Commission
pursuant to Rule 406 of the Securities Act of 1933, as amended. The omitted
portions of this exhibit have been filed separately with the Securities and
Exchange Commission.

                               PURCHASE AGREEMENT

                                      among

                       AMERICAN HOME PRODUCTS CORPORATION

                       AHP SUBSIDIARY HOLDING CORPORATION

                                       and

                               IMMUNEX CORPORATION

<PAGE>

                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----

ARTICLE I.  DEFINITIONS........................................................1

ARTICLE II.  THE SALE; PURCHASE PRICE..........................................8
         2.1.              PURCHASE AND SALE...................................8
         2.2.              NET ASSETS AND OTHER PAYMENTS.......................8
         2.3               TRANSFER TAXES.....................................10
         2.4               ADDITIONAL COSTS...................................11

ARTICLE III.  CLOSING.........................................................11
         3.1.              THE CLOSING........................................11
         3.2.              DELIVERIES BY BUYER................................11
         3.3.              DELIVERIES BY SELLERS..............................12
         3.4.              FURTHER ASSURANCES.................................12

ARTICLE IV.  REPRESENTATIONS AND WARRANTIES OF SELLERS........................13
         4.1               ORGANIZATION.......................................13
         4.2               CAPITALIZATION OF GREENWICH........................13
         4.3               CORPORATE AUTHORITY................................13
         4.4               NO VIOLATION.......................................14
         4.5               LITIGATION.........................................14
         4.6               FINANCIAL STATEMENTS; ABSENCE OF CERTAIN
                           CHANGES OR EVENTS..................................14
         4.7               TITLE TO PROPERTIES; ABSENCE OF LIENS..............15
         4.8               CONDITION OF PHYSICAL ASSETS; INTELLECTUAL
                           PROPERTY...........................................17
         4.9               EMPLOYEE MATTERS...................................17
         4.10              COMPLIANCE WITH LAW................................18
         4.11              CONTRACTS AND COMMITMENTS. (a).....................18
         4.12              BROKERS AND INTERMEDIARIES.........................19
         4.13              LICENSES AND PERMITS...............................19
         4.14              ENVIRONMENTAL MATTERS..............................19
         4.15              TAXES..............................................20
         4.16              DISCLAIMER.........................................21
         4.17              DISCLOSURE IN SCHEDULES............................21

                                      (i)

<PAGE>

ARTICLE V  REPRESENTATIONS AND WARRANTIES OF BUYER............................21
         5.1               ORGANIZATION.......................................21
         5.2               CORPORATE AUTHORITY................................21
         5.3               NO VIOLATION.......................................21
         5.4               FINANCIAL ABILITY TO PERFORM.......................22
         5.5               BROKERS AND INTERMEDIARIES.........................22

ARTICLE VI  CONDUCT OF BUSINESS PENDING THE CLOSING...........................23
         6.1.              OPERATION OF FACILITY PRIOR TO THE CLOSING DATE....23
         6.2.              PERMITTED ACTIONS..................................24
         6.3               ACCOUNTING RECORDS.................................26

ARTICLE VII  ADDITIONAL AGREEMENTS............................................27
         7.1               ANCILLARY AGREEMENTS...............................27
         7.2               ACCESS TO INFORMATION AND CONFIDENTIALITY..........27
         7.3               REGULATORY FILINGS.................................28
         7.4               COMMERCIALLY REASONABLE EFFORTS....................29
         7.5               NOTICES OF CERTAIN EVENTS..........................29
         7.6               START-UP AND OPERATION OF THE FACILITY.............29
         7.7               CAPITAL IMPROVEMENT CONTRACTS......................30
         7.8               BUYER PERSONNEL COSTS..............................30
         7.9               STAFFING...........................................30
         7.10              FACILITY USE.......................................30
         7.11              TRANSFER OF SELLER EMPLOYEES.......................31
         7.12              ASSIGNMENT OF BUYER EMPLOYEES......................31
         7.13              TRANSFER OF PERMITS; CONTRACTS ....................32
         7.14              TAX MATTERS........................................32

ARTICLE VIII  AGREEMENTS WITH RESPECT TO EMPLOYEES AND EMPLOYEE MATTERS.......35
         8.1               BUYER'S OBLIGATIONS TO EMPLOYEES...................35

ARTICLE IX.  CONDITIONS.......................................................38
         9.1.              CONDITIONS TO OBLIGATION OF EACH PARTY TO
                           EFFECT THE TRANSACTIONS CONTEMPLATED BY THIS
                           AGREEMENT..........................................38
         9.2.              CONDITIONS TO THE OBLIGATION OF SELLERS............39
         9.3.              CONDITIONS TO THE OBLIGATION OF BUYER..............39

ARTICLE X.  TERMINATION, AMENDMENT AND WAIVER.................................40
         10.1              TERMINATION........................................40

                                      (ii)

<PAGE>

         10.2              EFFECT OF TERMINATION..............................40

ARTICLE XI.  INDEMNIFICATION..................................................41
         11.1              INDEMNIFICATION BY SELLER..........................41
         11.2              INDEMNIFICATION BY BUYER...........................42
         11.3              CERTAIN LIMITATIONS................................42

ARTICLE XII.  GENERAL PROVISIONS..............................................43
         12.1              SURVIVAL OF REPRESENTATIONS AND WARRANTIES.........43
         12.2              COOPERATION........................................44
         12.3              WAIVER.............................................44
         12.4              NOTICES............................................44
         12.5              GOVERNING LAW AND CONSENT TO JURISDICTION..........44
         12.6              COUNTERPARTS.......................................45
         12.7              HEADINGS...........................................45
         12.8              ENTIRE AGREEMENT...................................45
         12.9              AMENDMENT AND MODIFICATION.........................45
         12.10             BINDING EFFECT; BENEFITS...........................45
         12.11             ASSIGNABILITY......................................45
         12.12             SELLERS' KNOWLEDGE.................................46
         12.13             SEVERABILITY.......................................46

                                     (iii)

<PAGE>

                               PURCHASE AGREEMENT

            This PURCHASE AGREEMENT dated as of November 6, 2001 (the
"Agreement") by and among AMERICAN HOME PRODUCTS CORPORATION, a Delaware
corporation ("AHP"), AHP SUBSIDIARY HOLDING CORPORATION, a Delaware corporation
("Holdings", and together with AHP, the "Sellers") and IMMUNEX CORPORATION, a
Washington corporation ("Buyer").

                              W I T N E S S E T H:

            WHEREAS, Sellers desire to sell to Buyer and Buyer desires to
acquire from Holdings one thousand (1,000) shares (the "Shares") of common
stock, no par value per share, of GREENWICH HOLDINGS INC., a Delaware
corporation ("Greenwich"), which shares constitute all of the issued and
outstanding shares of capital stock of Greenwich, all on the terms and subject
to the conditions set forth herein; and

            WHEREAS, in connection with such sale Buyer shall pay to Holdings
certain costs incurred by Sellers related to readying the Facility (as defined
below) for approval by the Food and Drug Administration (the "FDA") and EMEA (as
defined below); and

            WHEREAS, this Agreement shall govern the parties' management of the
Facility from the date first written above to the Closing Date (as defined
below);

            NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties, covenants and agreements herein contained, the
parties hereto, intending to be legally bound, agree as follows:

                                   ARTICLE I.

                                  DEFINITIONS

            Whenever used in this Agreement, unless otherwise clearly indicated
by the context, the terms defined below shall have the indicated meanings:

      1.1 "Accountants" shall have the meaning set forth in Section 2.2(e)
hereof.

      1.2 "Affiliate" shall mean, with respect to any Person, any Person which
directly or indirectly through stock ownership or through other arrangements
either controls, or is controlled by or is under common control with, such
Person, provided, however, for purposes of this Agreement the term "Affiliate"
shall not include subsidiaries or other entities in which a Person owns a
majority of the ordinary voting power to elect the majority of the board of
directors or other governing board but is restricted from electing such majority
by contract or otherwise, until such time as such restrictions are no longer in
effect. For purposes of this Agreement, Buyer

                                       1

<PAGE>

shall not be deemed to be an Affiliate of Greenwich or either Seller, and AHP,
Greenwich and Holdings shall not be deemed to be Affiliates of Buyer.

      1.3 "Applicable Laws" shall mean all laws, statutes, regulations,
interpretations, publicly available policies which are published by a
Governmental Authority, decrees, injunctions, judgments, orders, rulings,
assessments, writs, directives, rules, codes of conduct and ordinances of any
Governmental Authority.

      1.4 "Applicable Permits" shall mean any waiver, exemption, variance,
permit, certificate of occupancy, authorization, membership, approval, consent,
clearance, franchise, orders, license or similar approval or notification
required to be obtained, maintained or made under Applicable Laws in connection
with the Facility or the Assets or necessary to the operation of the Facility as
presently conducted.

      1.5 "Assets" shall mean collectively, all of the assets (both tangible and
intangible), rights, interests, privileges, appurtenances, easements,
reservations, estates, awards and properties of any kind, nature and description
owned by Greenwich, including, without limitation:

            (i) the Real Property, including the Facility;

            (ii) Personal Property;

            (iii) Transferred Books and Records;

            (iv) Applicable Permits;

            (v) all Contracts, including without limitation the EDC Ground Lease
      and the Phase B Ground Lease; and

            (vi) all of Sellers' or Greenwich's rights, claims, causes of action
      or rights of set-off against third parties relating to the foregoing,
      including, without limitation, unliquidated rights under manufacturers'
      and vendors' warranties.

      1.6 "Buyer Indemnified Claims" shall have the meaning set forth in Section
11.1 hereof.

      1.7 "Buyer Indemnitees" shall have the meaning set forth in Section 11.1
hereof.

      1.8 "Buyer Losses" shall have the meaning set forth in Section 11.1
hereof.

      1.9 "Catalytica Facility" shall have the meaning set forth in Section 1.8
of the Supply Agreement among AHP, Buyer and Catalytica Pharmaceuticals, Inc.
effective as of October 16, 2000.

      1.10 "Closing" shall have the meaning set forth in Section 3.1 hereof.

                                       2

<PAGE>

      1.11 "Closing Date" shall have the meaning set forth in Section 3.1
hereof.

      1.12 "Code" shall mean the Internal Revenue Code of 1986, as amended.

      1.13 "Collaboration Agreement" shall mean that certain agreement entered
into between AHP and/or one or more of its Affiliates and Buyer simultaneously
with the execution of this Agreement regarding the management, inventory and
allocation of Enbrel supplies substantially in the form of Exhibit A, attached
hereto.

      1.14 "Contracts" shall mean each contract, agreement, understanding,
arrangement or commitment outstanding as of the date hereof (a) to which
Greenwich is a party, or (b) to which one or more Sellers is a party and which
relates primarily to the Assets.

      1.15 "Disclosure Schedule" shall mean that certain schedule identified as
such and delivered by Sellers to Buyer pursuant to the Agreement as the same may
be supplemented and updated from time to time pursuant to the Agreement.

      1.16 "EDC Ground Lease" shall mean (i) the ground lease dated March 7,
2001 with Greenwich as lessor and the EDC as lessee for the portion of the Real
Property identified therein, and (ii) the subground lease dated March 7, 2001
with the EDC as lessor and Greenwich as lessee for such portion of the Real
Property.

      1.17 "EMEA" shall mean the European Medicines Evaluation Agency.

      1.18 [*]

      1.19 "Encumbrances" shall mean all claims, security interests, liens,
pledges, charges, escrows, options, proxies, rights of first refusal, preemptive
rights, mortgages, deeds of trust, hypothecations, prior assignments,
rights-of-way, easements, encroachments, title retention agreements, indentures,
security agreements or any other encumbrances of any kind.

      1.20 "Environmental Laws" shall mean all Applicable Laws relating to the
protection or pollution of the environment, including, but not limited to, laws
protecting natural resources, laws protecting plant and animal species or
habitat, and laws relating to the protection of public health or occupational
health, including but not limited to the Comprehensive Environmental Response,
Compensation and Liability Act, Clean Air Act, the Federal Water Pollution
Control Act, the Hazardous Materials Transportation Act, the Resource
Conservation and Recovery Act of 1976 and the Toxic Substances Control Act, and
analogous state statutes.

      1.21 "ERISA" shall mean the Employee Retirement Income Security Act, as
amended from time to time, and related regulations.

      1.22 "ERISA Affiliate" shall mean any corporation, partnership, limited
liability company, sole proprietorship, trade, business, or other entity or
organization that, together with

* Confidential Treatment Requested.

                                       3

<PAGE>

Greenwich, is or was treated as a single employer under Section 414(b), (c),
(m), or (o) of the Code.

      1.23 "Excluded Assets and Liabilities" shall mean the following assets and
liabilities of Greenwich:

            (i)   intercompany receivables and payables;
            (ii)  deferred tax assets and deferred tax liabilities;
            (iii) any personnel costs for employees of a Seller or Greenwich
                  whose responsibilities at the Facility are for training only
                  to eventually be transferred to another facility and other
                  employee costs where such personnel costs are not related to
                  (A) the Real Property, (B) the Project, (C) readying the
                  Facility and the Catalytica Facility for approval by the FDA
                  and/or EMEA or (D) production of Enbrel; and
            (iv)  any costs already paid by Buyer pursuant to the Phase B Ground
                  Lease between Buyer and Greenwich.

      1.24 "Facility" shall mean Greenwich's biopharmaceutical manufacturing
facility located at 40 Technology Way, West Greenwich, Rhode Island, which such
Facility is under renovation in accordance with plans approved by Sellers and
Buyer.

      1.25 "Facility Costs" shall mean any costs incurred directly or indirectly
by Sellers or Greenwich (other than the purchase price paid by Sellers for the
Facility) after September 24, 1999 related to (i) the Real Property, (ii) the
Project, (iii) readying the Facility and the Catalytica Facility for approval by
the FDA and/or EMEA, and (iv) manufacturing Enbrel at the Facility. All Facility
Costs shall be reflected within Net Assets.

      1.26 "Facility Employees" shall have the meaning set forth in Section 4.9
hereof.

      1.27 "GAAP" shall mean United States of America generally accepted
accounting principles.

      1.28 "Governmental Authority" shall mean any governmental department,
commission, board, bureau, agency, regulatory or revenue authority, court or
other instrumentality (including non-statutory authorities) of the United
States, or any other nation or international body, or of any state, county, or
any jurisdiction, municipality, territory (including, without limitation, Puerto
Rico) or other political subdivision thereof or of any supranational authority.

      1.29 "Greenwich" shall have the meaning set forth in the first WHEREAS
clause of this Agreement.

      1.30 "Hazardous Materials" shall mean any hazardous materials, hazardous
wastes, hazardous constituents or hazardous or toxic substances defined or
regulated as such in or under any Environmental Laws.

                                       4

<PAGE>

      1.31 "HSR Act" shall mean Title II of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the related regulations.

      1.32 "Inventory" shall mean all manufactured etanercept (finished product
bulk drug substance and drug product), work in-process and all raw materials.

      1.33 "Material Adverse Effect" shall mean, assuming full utilization of
the Facility, (i) a material adverse effect on the operation or the use of the
Assets (including the cost thereof, whether or not considered as an expense
under GAAP) in the manner currently operated or used and (ii) any material
adverse effect on the ability of Sellers or Buyer to consummate and perform
their obligations under this Agreement (without, in the case of this clause
(ii), giving effect to any change in the manner that the Assets are currently
operated or used, or are intended to be used by Buyer, assuming full utilization
of the Facility).

      1.34 "Material Permit" shall have the meaning set forth in Section 4.13
hereof.

      1.35 "Material Contract" shall mean each Contract set forth in Section
4.11(a) of the Disclosure Schedule.

      1.36 "MOU" shall mean the Memorandum of Understanding Regarding
Greenwich's West Greenwich, RI Biopharmaceutical Facility executed by Buyer and
AHP dated August 9, 2000, as amended.

      1.37 "Multiemployer Plan" means each employee benefit plan described in
Article VIII hereof that is a multiemployer plan, as defined in Section 3(37) of
ERISA.

      1.38 "Net Assets" shall mean, collectively, (i) the sum of the book value
of all the Assets of any kind, nature and description, (ii) minus the sum of the
book value of the liabilities of Greenwich, each so determined in accordance
with GAAP. Net Assets shall include, but not be limited to,

            1)    fees of any legal counsel, accountants and other advisors,
                  excluding any fees or costs of legal counsel and accountants
                  directly related to the negotiations for the purchase and sale
                  of the Shares contemplated herein, or for legal counsel who
                  are employees of Greenwich, or for legal counsel and
                  accountants of a Seller, or an Affiliate of a Seller other
                  than Greenwich;
            2)    Inventory;
            3)    the Real Property;
            4)    the Personal Property;
            5)    the cost of obtaining approvals and Applicable Permits;
            6)    the cost of obtaining agreements or cooperation from
                  Governmental Authorities;
            7)    deposits;
            8)    prepaid expenses;
            9)    accounts payable and accrued expenses; and

                                       5

<PAGE>

            10)   all Facility Costs.

Regardless of the above, the Net Assets shall not include the Excluded Assets
and Liabilities.

      1.39 "Permitted Encumbrances" shall have the meaning set forth in Section
4.7 hereof.

      1.40 "Person" shall mean an individual, a corporation, a partnership, an
association, limited liability company or partnership, a trust or other entity,
joint venture or organization, including a government or political subdivision
or an agency or instrumentality thereof.

      1.41 "Personal Property" shall mean (i) all tangible personal property of
Greenwich, including without limitation all machinery, equipment, furniture,
office equipment, communications equipment, vehicles, storage tanks, spare and
replacement parts, fuel and other tangible property and all warranties and
guaranties relating thereto (all of such warranties and guaranties are
transferred to Buyer without recourse to Sellers).

      1.42 "Phase B" shall mean Buyer's planned construction of additional
biotechnology manufacturing capacity on the land leased by Greenwich to Buyer
under the Phase B Ground Lease.

      1.43 "Phase B Ground Lease" shall mean that ground lease, dated March 9,
2001, between Greenwich, as lessor, and Immunex Manufacturing Corporation, a
wholly-owned subsidiary of Buyer, as lessee.

      1.44 "Project" shall have the meaning set forth in Section 6.2(a) hereof.

      1.45 "Purchase Price" shall have the meaning set forth in Section 2.1
hereof.

      1.46 "Real Property" shall mean all real property of Greenwich, as more
fully described on Section 4.7(a) of the Disclosure Schedule, including the
Facility and any other buildings, structures and improvements thereon, all off
street parking rights and spaces, all fixtures, equipment and machinery attached
thereto, all oil, gas and mineral rights related to the foregoing, all
development rights, land use entitlements and rights in any off-site facilities
and amenities servicing the land or any improvements located thereon, all air
rights, water, water rights, and riparian rights, all rights in and to all
strips and gores, all alleys adjoining the land, and all right in and to the
land lying in the bed of any street, road or avenue, open or proposed adjoining
the land, all right, title and interest in and to any condemnation award or to
any payment in lieu thereof for any taking or for any change in grade of any
street, road or avenue thereto and all easements, rights of way, reservations,
privileges, appurtenances and other estates and rights pertaining thereto owned
by Greenwich and primarily related to the Facility and all warranties and
guaranties relating thereto (all of such warranties and guaranties are
transferred without recourse to Sellers).

      1.47 "Returns" shall mean all returns, declarations, reports, statements,
and other documents required to be filed in respect of Taxes (as defined below),
and any claims for refund

                                       6

<PAGE>

of Taxes, including any amendments or supplements to any of the foregoing. The
term "Return" shall mean any one of the foregoing Returns.

      1.48 "Seller Employees" shall have the meaning set forth in Section 7.11
hereof.

      1.49 "Sellers' Employee Benefit Plans" shall mean all employee benefit
plans applicable to Sellers' employees, including the Facility Employees,
including but not limited to Sellers' Savings Plan, Sellers' Retirement Plan,
Sellers' Retiree Benefits Plans, Sellers' Spending Account Plans, as well as
Sellers' medical, insurance, holiday, vacation, stock option, stock incentive
plans, and any other employee benefit plan, fund, policy or program.

      1.50 "Sellers Indemnified Claims" shall have the meaning set forth in
Section 11.2 hereof.

      1.51 "Seller Indemnitees" shall have the meaning set forth in Section 11.2
hereof.

      1.52 "Sellers Losses" shall have the meaning set forth in Section 11.2
hereof.

      1.53 "Shares" shall have the meaning set forth in the first WHEREAS clause
of this Agreement.

      1.54 "Signing" shall mean the date of execution of this Agreement.

      1.55 "Steering Committee" shall have the meaning set forth in Section
6.2(b) hereof.

      1.56 "Successfully Manufactured" shall mean bulk drug substance Enbrel
that has been produced at the Facility and meets (i) all applicable Enbrel bulk
drug substance specifications, and (ii) applicable FDA regulatory requirements.

      1.57 "Suite A" shall mean Suites A and D of the Facility.

      1.58 "Suite A-3" shall mean Suite B of the Facility.

      1.59 "Tax" or "Taxes" shall mean any income, corporation gross receipts,
profits, gains, capital stock, capital duty, franchise, withholding social
security, unemployment, disability, property, wealth, welfare, stamp, excise,
occupation, sales, use, value added, alternative minimum, estimated or other
similar tax (including any fee, assessment or other charge in the nature of or
in lieu of any tax) imposed by any Governmental Authority (whether national,
local, municipal or otherwise) or political subdivision thereof, and any
interest, penalties, additions to tax or additional amounts in respect of the
foregoing, and including any transferee or secondary liability in respect of any
tax (whether imposed by law, contractual agreement or otherwise) and any
liability in respect of any tax as a result of being a member of an affiliated,
consolidated, combined, unitary or similar group.

      1.60 "Technology Transfer Agreement" shall mean that certain technology
transfer agreement between AHP and Buyer, to be entered into simultaneously with
the Signing, substantially in the form of Exhibit B hereto.

                                       7

<PAGE>

      1.61 "Termination Date" shall have the meaning set forth in Section 10.1
hereof.

      1.62 "Transferred Books and Records" shall mean owner or use guides, all
construction records and invoices related to the Facility, engineering and other
manuals and drawings for operation of the Facility and the machinery and
equipment contained therein, as well as all Applicable Permits, Contracts,
utility bills and documents evidencing ownership of the Assets; provided, that
Transferred Books and Records shall also include all books and records relating
to the Assets or the manufacture of Enbrel (or copies thereof) including, but
not limited to, all regulatory documents, Facility inspection records,
validation records, protocols and standard operating procedures related thereto.
Sellers shall be entitled to keep copies of any Transferred Books and Records,
subject to confidentiality obligations to which Sellers are subject under this
Agreement or other applicable agreements.

      1.63 "Transferred Employees" shall have the meaning set forth in Section
8.1 hereof.

      1.64 "WARN Act" shall mean the Worker Adjustment and Retraining
Notification Act.

      Certain other terms are defined as indicated throughout this Agreement.

                                   ARTICLE II.

                            THE SALE; PURCHASE PRICE

            2.1. PURCHASE AND SALE.

            Upon the terms and subject to the conditions of this Agreement, (i)
Holdings shall sell, assign, transfer and deliver to Buyer the Shares, effective
as of Closing, and (ii) Buyer shall purchase and accept the Shares from Holdings
for an aggregate purchase price (the "Purchase Price") equal to the sum of (x)
Sixty Million Dollars ($60,000,000), payable at Closing, (y) the Interest
Payments, and (z) an amount equal to the book value of the Net Assets as of the
Closing Date, payable as provided for herein. Sellers shall not charge or
otherwise pass through to Immunex any cost of capital for any portion of the
Purchase Price or Net Assets except as provided for in Section 2.2(c).

            2.2. NET ASSETS AND OTHER PAYMENTS.

            (a) Within one (1) day of Signing, Buyer shall pay Holdings fifty
      percent (50%) of the book value of the Net Assets as of the last day of
      the calendar quarter ending immediately prior to the Signing for which
      financial statements of Greenwich have been prepared and are available.
      Payment of the book value of the Net Assets shall be based upon an invoice
      furnished by Sellers to Buyer prior to the Signing, which invoice is
      accompanied by an unaudited statement of Net Assets and a calculation of
      the payment

                                       8

<PAGE>

      due under this Section 2.2(a). Buyer shall have dispute and audit rights
      as set forth in Section 2.2(e).

            (b) Buyer shall pay Holdings fifty percent (50%) of the sum of the
      book value of the Net Assets as of the last day of each calendar quarter
      following the quarter for which the book value of the Net Assets was
      calculated in Section 2.2(a) until the Closing, minus amounts previously
      paid by Buyer under this Section 2.2(b) of the Agreement or Section
      2.2(a), within thirty (30) days after receipt of Sellers' invoice, which
      invoice shall be accompanied by an unaudited statement of Net Assets and a
      calculation of the payment due under this Section 2.2(b). Buyer shall have
      dispute and audit rights as set forth in Section 2.2(e).

            (c) Sellers shall invoice Buyer at the Signing, or as soon as
      practicable thereafter, for the "Interest Payment," as detailed below, and
      Buyer shall pay Holdings the Interest Payment within thirty (30) days
      after receiving the invoice. Interest at the Interest Rate began accruing
      on May 1, 2001 (as if the Signing had occurred on such date) on one-half
      (1/2) of the book value of the Net Assets as of such date and, thereafter,
      interest at the "Interest Rate" accrued as of the last day of each month
      with respect to one-half (1/2) of the book value of the Net Assets at the
      end of such month, up to and until the date of payment pursuant to
      subsection (a) above. So long as the Interest Payment is paid within such
      thirty (30) day period, no interest shall accrue after the payment
      pursuant to subsection (a) above. "Interest Rate" shall be defined as "the
      three-month LIBOR rate as published in the Wall Street Journal on May 1,
      2001 plus 50 basis points and then on the first date of each calendar
      quarter plus 50 basis points, which shall be the interest rate for that
      calendar quarter. Buyer shall have dispute and audit rights as set forth
      in Section 2.2(e). Notwithstanding the foregoing, between November 8, 2001
      and the date of the payment due under subsection (a) above, the Interest
      Rate shall be the applicable LIBOR rate plus 250 basis points, and if not
      paid prior to December 1, 2001, such rate shall be the applicable LIBOR
      rate plus 600 basis points.

            (d) On the Closing Date, Buyer shall pay Holdings (i) the Sixty
      Million Dollars ($60,000,000) referred to in Section 2.1(ii)(x) above,
      plus (ii) an amount equal to the estimated book value of the Net Assets as
      of the Closing Date, or another date mutually agreed to by the parties,
      minus the sum of all of the amounts previously paid by Buyer pursuant to
      Sections 2.2(a) and 2.2(b) above. Not less than five (5) days prior to the
      Closing, Sellers shall provide Buyer an invoice detailing the amounts that
      will be payable at the Closing. As soon as practicable after the Closing,
      Sellers shall provide Buyer with an invoice detailing the actual book
      value of the Net Assets as of Closing and any amount due the Sellers or
      Buyer as a result of finalizing the actual book value of the Net Assets or
      the amounts previously paid by the Buyer. In addition, if Sellers pay any
      Facility Costs to any third party after the Closing, Sellers shall
      promptly provide Buyer with an invoice detailing such payment. Buyer shall
      pay all invoices provided by Sellers after the Closing within thirty (30)
      days after Buyer's receipt thereof. Buyer shall have dispute and audit
      rights as set forth in Section 2.2(e).

                                       9

<PAGE>

            (e) With each invoice submitted by Sellers to Buyer pursuant to
      Section 2.2(b) through (d), Sellers shall submit the applicable supporting
      documentation set forth in Exhibit C attached hereto, unless otherwise
      agreed by the parties. With respect to the invoice submitted pursuant to
      Section 2.2(a), Sellers shall submit such supporting documentation within
      twenty (20) days of Signing. Buyer may, upon reasonable advance notice to
      Sellers and during Sellers' usual business hours, examine or have Buyer's
      independent public accountants examine Sellers' books and records related
      to any invoice delivered pursuant to Section 2.2 and Section 2.4. Buyer
      may, in good faith, dispute amounts invoiced under Section 2.2 and Section
      2.4 by paying such invoice and thereafter raising the dispute after the
      Closing Date and within one hundred twenty (120) days after the Closing
      Date or, in the case of invoices provided pursuant to the third or fourth
      sentence of Section 2.2(d), the receipt of such invoice. In the event that
      Buyer disputes any invoiced amount, Buyer shall notify Seller in writing
      that Buyer disputes the accuracy or appropriateness of such invoiced
      amount and specify the particular respects by balance sheet line item in
      which Buyer believes that such invoiced amount is inaccurate or
      inappropriate. The parties shall negotiate in good faith to resolve any
      such dispute and shall exchange any documentation reasonably required to
      assist in such resolution.

            If Sellers agree with Buyer that the results of Buyer's review of
      such invoices properly indicates that that Buyer has been overcharged (net
      of any undercharges disclosed by such examination), Sellers shall pay
      Buyer the amount of the net overcharge, plus interest at the Interest Rate
      between the date of payment and thirty (30) days prior to the date of
      payment of the overcharge. In the event Sellers do not agree with Buyer's
      calculation, the parties shall negotiate in good faith to resolve any such
      dispute and shall exchange any documentation reasonably required to assist
      in such resolution. In the event that the parties cannot agree on the
      proper amount of the disputed calculation, the parties agree to select a
      mutually acceptable firm of nationally recognized independent public
      accountants to determine disputed amounts. If the parties cannot agree on
      an acceptable firm, each party shall submit the name of its independent
      public accountant, who shall mutually select the nationally recognized
      independent public accountants to resolve the dispute. (The firm chosen by
      the parties or their representatives to resolve the dispute shall be
      referred to herein as the "Accountants"). The parties agree to submit
      disputed items to the Accountants, pursuant to procedures established by
      the Accountants, whose determination shall be binding on the parties. In
      the event that the amount in the aggregate invoiced to Buyer exceeds by
      ten percent (10%) or more the amount owed to Sellers in the aggregate, as
      finally determined by the Accountant, the Sellers shall bear the cost of
      the review and determination by the Accountant. In all other cases, Buyer
      shall bear such costs.

            2.3 TRANSFER TAXES.

            All sales tax and assignment or transfer fees and taxes (exclusive
of federal or state taxes on or measured by income) payable in connection with
the transactions contemplated hereby shall be paid one-half by Sellers and
one-half by Buyer.

                                       10

<PAGE>

            2.4. ADDITIONAL COSTS.

            If the Closing occurs after manufacture of commercial Enbrel at the
Facility has begun, and Greenwich or a Seller has incurred costs associated with
such manufacture prior to the Closing, and such costs cannot, in Sellers'
opinion, be included within the book value of the Net Assets payable by Buyer
hereunder in accordance with GAAP, such costs shall nevertheless be deemed to be
included within Net Assets payable by Buyer in accordance with the terms hereof.
Buyer shall have the dispute and audit rights set forth in Section 2.2(e) with
respect to any such costs.

                                  ARTICLE III.

                                    CLOSING

            3.1. THE CLOSING.

            Unless this Agreement shall have been terminated in accordance with
the terms hereof, on the terms and subject to the conditions of this Agreement,
the closing of the sale and purchase of the Shares and the Assets and the
consummation of the other transactions contemplated hereby (the "Closing") shall
take place at the offices of American Home Products Corporation, Five Giralda
Farms, Madison, New Jersey 07940 on (a) the later of (i) January 3, 2002 (it
being understood that the parties intend to work together to have the Closing
deemed effective January 1, 2002); or (ii) the next succeeding business day on
which the last to be fulfilled or waived of the conditions set forth in Article
9 shall be fulfilled or waived in accordance with this Agreement or (b) at such
other time, date or place as the parties may mutually agree upon in writing (the
"Closing Date"). At the Closing, the parties to this Agreement will exchange
funds, certificates and other documents specified in this Agreement. For
purposes of this Agreement, the Closing will be treated as if it occurred at
12:01 a.m. on the Closing Date.

            3.2. DELIVERIES BY BUYER

            At the Closing, Buyer shall deliver, or cause to be delivered, to
Sellers the following:

            (a) the amounts specified in Sections 2.1 and 2.2 hereof,
respectively, to be paid at Closing, payable by wire transfer of immediately
available funds on the Closing Date to an account specified in writing by
Sellers, with such notice of such account to be delivered to Buyer no less than
two (2) business days prior to the Closing Date;

            (b) the certificate by an officer of Buyer required to be delivered
pursuant to Section 9.2(c) hereof;

            (c) a certificate, signed by an authorized officer of Buyer,
certifying (i)

                                       11

<PAGE>

Buyer's due organization and the fact that Buyer is current in payment of its
franchise taxes, (ii) the corporate resolutions of Buyer authorizing the
transactions contemplated by this Agreement, and (iii) the incumbency of
officers of Buyer executing this Agreement and the other agreements, instruments
or certificates delivered upon the Closing; and

            (d) such other instruments and documents, in form and substance
reasonably acceptable to Buyer and Sellers, as may be reasonably necessary to
effect the Closing.

            3.3. DELIVERIES BY SELLERS.

            At the Closing, Sellers shall deliver to Buyer the following:

            (a) certificates representing the Shares duly endorsed for transfer
to Buyer or accompanied by stock powers duly executed in blank;

            (b) the certificate by officers of Sellers required to be delivered
pursuant to Section 9.3(c) hereof;

            (c) a certificate, signed by authorized officers of Sellers,
certifying (i) the due organization and good standing of Sellers, (ii) the
corporate resolutions of Sellers authorizing the transactions contemplated by
this Agreement, and (iii) the incumbency of officers of Sellers executing this
Agreement and the other agreements, instruments or certificates delivered upon
the Closing;

            (d) the stock books, stock ledgers, minute books and corporate seals
of Greenwich;

            (e) all consents and approvals of third parties (including
Governmental Agencies) that are required to transfer the Shares;

            (f) a Foreign Investment in Real Property Tax Act Affidavit pursuant
to Section 1445(b)(2) of the Code duly executed by Holdings, which affidavit
shall indicate that no federal withholding shall be required;

            (g) such other instruments and documents, in form and substance
reasonably acceptable to Buyer and Sellers, as may be reasonably necessary to
effect the Closing; and

            (h) letters of resignation executed by the directors and officers of
Greenwich.

            3.4. FURTHER ASSURANCES.

            From time to time, at Buyer's or Sellers' request, whether at or
after the Closing Date, Buyer or Sellers, as the case may be, shall execute and
deliver such further instruments of conveyance, transfer and assignment,
cooperate and assist in providing information for making and completing
regulatory filings, and take such other actions as Buyer or Sellers, as the case

                                       12

<PAGE>

may be, may reasonably require of the other party to more effectively assign,
convey and transfer to such party the Shares, as contemplated by this Agreement.

                                  ARTICLE IV.

                   REPRESENTATIONS AND WARRANTIES OF SELLERS

            Sellers hereby represent and warrant to Buyer as follows (except to
the extent that any representations or warranties are affected by conduct of
Buyer, its employees, agents or advisors, and Sellers are not aware of such
conduct):

            4.1 ORGANIZATION.

            (a) Greenwich is a corporation duly organized, validly existing and
      in good standing under the laws of Delaware. Greenwich has the requisite
      corporate power and authority to own, operate or lease the properties that
      it purports to own, operate or lease and to carry on its business as it is
      now being conducted and is duly licensed or qualified as a foreign
      corporation and is in good standing in each domestic or foreign
      jurisdiction in which the nature of the business conducted by it or the
      character or location of the properties owned or leased by it makes such
      licensing or qualification necessary.

            (b) Each of Sellers is a corporation duly organized, validly
      existing and in good standing under the laws of the State of Delaware.

            (c) Holdings is not, and as of the Closing shall not be, a "foreign
      person" as defined in Section 1445 of the Code and any related
      regulations.

            4.2. CAPITALIZATION OF GREENWICH.

            The authorized and issued capital stock of Greenwich consists of one
thousand (1,000) shares of common stock, no par value per share, all of which
are validly issued, outstanding, fully paid and non-assessable. All of the
Shares are owned by Holdings, free and clear of any security interests, liens,
claims, pledges, rights of first refusal or other encumbrances of any nature
whatsoever. There are no outstanding rights of first refusal or offer,
preemptive rights, options, warrants, conversion rights, stock purchase rights
or other agreements, either directly or indirectly, for the purchase or
acquisition from Greenwich or the Sellers of any securities of Greenwich.
Greenwich is not a party or subject to any agreement or understanding and, to
the knowledge of Greenwich or the Sellers, there is no agreement or
understanding between any Persons that affects or relates to the voting or
giving of written consents with respect to any securities of Greenwich or the
voting by any director of Greenwich.

            4.3. CORPORATE AUTHORITY. Each of the Sellers has the full corporate
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance by
Sellers of the Agreement have been duly authorized by all requisite corporate
action of Sellers. This Agreement has been duly

                                       13

<PAGE>

executed and delivered by Sellers, and (assuming due execution and delivery by
Buyer) this Agreement constitutes a valid and binding obligation of Sellers,
enforceable in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally or by general equitable principles.

            4.4. NO VIOLATION. Except as disclosed in Section 4.4 of the
Disclosure Schedule, the execution, delivery and performance by Sellers of this
Agreement do not and will not contravene or conflict with (a) in any material
respect any Applicable Laws (assuming compliance with the applicable
requirements of the HSR Act), (b) the articles or certificate of incorporation
or by-laws of Sellers or Greenwich, (c) in any material respect any mortgage,
deed of trust, lease, note, contract, agreement, bond, indenture, license,
permit, or trust to which Sellers or Greenwich are or any one of them is a
party, or (d) in any material respect, any judgment, order, writ, injunction,
consent decree or decree of any court, Governmental Authority, administrative
agency or arbitrator to which Sellers or Greenwich are or any one of them is a
party;

that in any case would prevent or be violated by or under which there would be a
default as a result of, the execution, delivery and performance by either of the
Sellers of this Agreement and the consummation of the transactions contemplated
hereby. Except as disclosed in Section 4.4 of the Disclosure Schedule, and
assuming material compliance with any applicable requirements of the HSR Act, no
material consent, approval, or authorization of or declaration or filing with
any Person or Governmental Agency is required for the valid execution, delivery
and performance by Sellers of the Agreement and the consummation by Sellers of
the transactions contemplated hereby.

            4.5 LITIGATION.

            Except as disclosed in Section 4.5 of the Disclosure Schedule
attached hereto, as of the date hereof, there is no in rem proceeding with
respect to the Assets or any action, suit, dispute or governmental,
administrative, arbitration or regulatory proceeding pending or, to Sellers'
knowledge, threatened against Greenwich.

            4.6. FINANCIAL STATEMENTS; ABSENCE OF CERTAIN CHANGES OR EVENTS.

            (a) Sellers and Greenwich have delivered to Buyer (a) unaudited
      balance sheets of Greenwich as of December 31, 2000 and (b) an unaudited
      balance sheet of Greenwich as of September 30, 2001. All the foregoing
      financial statements are herein referred to as the "Greenwich Balance
      Sheets." The account balances (assets and liabilities) of the Greenwich
      Balance Sheets have been determined in accordance with GAAP on a basis
      consistent with Sellers' accounting practices for capital projects and
      fairly present the Net Assets of Greenwich as of the dates indicated. All
      of the assets primarily related to the Project and the Facility are assets
      of Greenwich and not of Seller, or any other Affiliate of Seller.
      Greenwich has no liabilities or obligations of any nature (absolute,
      contingent or otherwise) that are required by GAAP to be included in the
      Greenwich Balance Sheet and that are not fully reflected or reserved
      against therein, except liabilities or obligations incurred since the date
      of the Greenwich Balance Sheet in

                                       14

<PAGE>

      the ordinary course of business. Greenwich is not a guarantor, indemnitor,
      surety or other obligor of any indebtedness for borrowed money of any
      other Person.

            (b) Except for transactions specifically contemplated in this
      Agreement, since September 30, 2001 and except for actions taken in the
      ordinary course of business, neither Greenwich nor any of its officers or
      directors in their representative capacities on behalf of Greenwich have:

                  (i) taken any action or entered into or agreed to enter into
            any transaction, agreement or commitment other than in the ordinary
            course of business;

                  (ii) granted any increase in the compensation of employees;

                  (iii) suffered any change having a Material Adverse Effect;

                  (iv) borrowed or agreed to borrow any funds except
            intercompany transactions;

                  (v) except to the extent related to the construction of the
            Facility, purchased or sold, transferred or otherwise disposed of
            any of its material properties or Assets (real, personal or mixed,
            tangible or intangible);

                  (vi) made any change in accounting methods or practices or
            internal control procedure;

                  (vii) issued any capital stock or other securities; or

                  (viii) agreed, whether in writing or otherwise, to take any
            action described in this Section 4.6 (b).

            4.7. TITLE TO PROPERTIES; ABSENCE OF LIENS.

            (a) Section 4.7 of the Disclosure Schedule lists all Real Property
      and includes a legal description thereof. Greenwich represents and
      warrants that it (1) has fee simple title to the Real Property and (2) has
      good title to all of the Personal Property, in the case of clauses (1) and
      (2), free and clear of any Encumbrances, except for the following, which
      are referred to collectively as "Permitted Encumbrances":

                  (i) Encumbrances set forth in Section 4.7(a) of the Disclosure
            Schedule;

                  (ii) Encumbrances of record;

                  (iii) Encumbrances related to the Phase B construction project
            or otherwise caused by Buyer;

                                       15

<PAGE>

                  (iv) Encumbrances for taxes, assessments or governmental
            charges (including, without limitation, any assessments relating to
            the Real Property), or mechanics', workmen's, materialmen's or
            similar liens, in each case that are (A) not delinquent or (B) which
            are being contested in good faith and are listed on Section
            4.7(a)(iii) of the Disclosure Schedule.

                  (v) Encumbrances that are reflected in the following: Title
            Policy No. 5312-669278 dated September 27, 1999 issued by Fidelity
            National Title Insurance Company of New York; and

                  (vi) Encumbrances that an accurate survey of the Real Property
            would disclose; provided, however, that any such Encumbrance
            described in this clause (vi) shall not constitute a Permitted
            Encumbrance if (x) such Encumbrance is not shown or disclosed on
            that survey of the Real Property entitled "Plan of Land in West
            Greenwich and Coventry Rhode Island surveyed for American Home
            Products Corporation by Marrier Surveying Inc. August 1999" and (y)
            such Encumbrance has or would reasonably be expected to have, a
            Material Adverse Effect.

                  Greenwich has no leasehold interest in any real property
            related to the Facility nor has Greenwich leased (as lessor) or
            pledged all or any part of the Assets, except in connection with the
            Phase B Ground Lease, License and Indemnity Agreement, Easement
            Agreement and the EDC Ground Lease.

            (b) The Real Property contains approximately seventy-three (73)
      acres and the Facility on the Real Property contains a total of at least
      two hundred thousand (200,000) square feet of floor area. To Sellers'
      knowledge, except as shown in a survey referred to in Section (a) above,
      all buildings, structures and other material improvements, including, but
      not limited to, any driveways, garages, parking areas and stalls, fences,
      overhangs, storage, docking and loading areas, landscaped areas and sewer
      systems, and all means of access to the Real Property are located
      completely within the boundary lines of the Real Property and do not
      encroach upon or under the property of any other Person in any material
      respect. Except as disclosed in Section 4.7(b) of the Disclosure Schedule,
      no improvements constructed on the property of any other Person encroaches
      upon or under the Real Property in a manner that would be reasonably
      likely to cause a Material Adverse Effect. To Sellers' knowledge, except
      as shown on the survey referred to in Section 4.7(a) above, there is no
      other Person or any property of any other Person that encroaches upon the
      Real Property such that any such encroachments, either alone or in the
      aggregate, would be reasonably likely to have a Material Adverse Effect.
      The Real Property abuts a public way or a private way to which the Buyer
      shall have both pedestrian and vehicular access and such private way is
      duly laid out or accepted as such by the city or town in which the Real
      Property is located.

            (c) Upon consummation of the transactions contemplated hereby,
      Buyer, by purchasing the Shares, will have acquired fee simple title to
      the Real Property, the Personal Property, and all other Assets owned by
      Greenwich free and clear of all

                                       16

<PAGE>

      Encumbrances other than Permitted Encumbrances (and other than
      Encumbrances or other defects in title attributable to facts or
      circumstances related to, or actions taken by, Buyer).

            4.8. CONDITION OF PHYSICAL ASSETS; INTELLECTUAL PROPERTY.

            (a) Except as disclosed in Section 4.8 of the Disclosure Schedule,
      to Sellers' knowledge, the buildings, structures, and improvements on the
      Real Property (including the Facility) and the Personal Property (in the
      aggregate) are in good working order, normal wear and tear excepted,
      taking into account that the Facility remains under construction and no
      representation is being given as to the operational effectiveness of the
      Facility. No costs referred to in Section 2.4 have been incurred to date,
      and assuming a Closing of January 3, 2001, no such costs are reasonably
      foreseeable prior to Closing.

            (b) Greenwich does not own any registered trademarks, tradenames,
      copyrights or patents, nor does a Seller own any such intellectual
      property rights primarily related to the Assets.

            4.9. EMPLOYEE MATTERS. (a) Section 4.9(a) of the Disclosure Schedule
      sets forth the name, title and present salary of each present employee of
      Greenwich listed on the payroll for the Facility as of the date hereof
      ("Facility Employees"). Except as set forth in Section 4.9(a) of the
      Disclosure Schedule, neither Greenwich nor Sellers are a party to or bound
      by any collective bargaining or other labor agreement with respect to the
      Facility Employees, and there are no labor unions or other organizations
      representing or, to the knowledge of the Sellers, purporting to represent
      or attempting to represent, any Facility Employees.

            (b) Neither the Sellers nor any of their Affiliates are currently
      required to contribute to any Multiemployer Plan, nor have they been
      assessed liability for any Multiemployer Plan. The Sellers are not subject
      to and do no reasonably expect to incur any withdrawal liability under
      Title IV of ERISA which Sellers or their Affiliates will not be able to
      satisfy.

            (c) Sellers maintain the Sellers' Savings Plan which is intended to
      be tax-qualified under Section 401(a) of the Code (and the trust related
      thereto) and such Plan is intended to be tax exempt under Section 501(a)
      of the Code. The Sellers' Savings Plan has a favorable determination
      letter from the Internal Revenue Service covering the Tax Reform Act of
      1986 and, to the knowledge of Sellers, such letter has not been revoked
      nor has such Plan been amended in any respect or any actions taken or
      operational defects occurred since the receipt of such letter which would
      result in the disqualification of Sellers' Savings Plan by the Internal
      Revenue Service.

            (d) Except for any routine contributions owed by Greenwich on behalf
      of the Transferred Employees to one or more of Sellers' Employee Benefit
      Plans for a period preceding the Closing Date, and except as set forth in
      Article VIII, Buyer shall not incur any liability with respect to the
      Sellers' Employee Benefit Plans as a result of (i) the

                                       17

<PAGE>

      Transferred Employees' cessation of participation in such Sellers'
      Employee Benefit Plans on the Closing Date, (ii) any claims under such
      Sellers' Employee Benefit Plans arising on, prior to, or after the Closing
      Date, (iii) any failure by the Sellers, Greenwich, any ERISA Affiliate of
      a Seller or Greenwich, or any third party to comply with any provision of
      ERISA or the Code or any other Applicable Law; or (iv) the imposition of
      any term under a Sellers' Employee Benefit Plan which is triggered by the
      consummation of the transactions described in this Agreement.

            4.10. COMPLIANCE WITH LAW. Except as disclosed in Section 4.10 of
the Disclosure Schedule attached hereto, (a) the operation of the Facility is
being conducted in compliance with, and the Real Property and all Assets comply
with all Applicable Laws, as of the date hereof, except for violations, if any,
which singly or in the aggregate have not had, and would not reasonably be
expected to have, a Material Adverse Effect, (b) to the knowledge of Sellers,
the operation of the Facility has been conducted in compliance with, and the
Real Property and all Assets have complied with, all Applicable Laws, from
September 24, 1999 up to the date hereof, except for violations, if any, which
singly or in the aggregate have not had, and would not reasonably be expected to
have, a Material Adverse Effect. Except as disclosed in Section 4.10 of the
Disclosure Schedule, all Applicable Permits required in connection with the
operation of the Facility as currently operated, have been obtained and are in
full force and effect and are being complied with in all material respects,
except for such failures which singly or in the aggregate have not had, and
would not reasonably be expected to have, a Material Adverse Effect.

            4.11. CONTRACTS AND COMMITMENTS. (a) Section 4.11(a) of the
Disclosure Schedule attached hereto sets forth a complete and accurate list of
each contract, agreement, understanding, arrangement or commitment relating to
the Facility or the Assets outstanding as of the date hereof to which Sellers or
Greenwich is a party and which:

                  (i) imposes a right of first refusal, option or other
      restriction with respect to any Asset; or

                  (ii) is or contains a lease, license (other than software,
      shrinkwrap licenses), joint venture agreement, partnership agreement or
      similar contract or arrangement, or confidentiality agreement;

                  (iii) is or contains a non-competition agreement or other
      agreement which limits the freedom of Sellers or Greenwich to own,
      operate, sell, transfer, pledge, or otherwise dispose of or encumber any
      Asset or that would bind any other assets of Buyer now or in the future;

                  (iv) is a contract involving more than $100,000 in payments or
      receipts annually, except for purchase orders entered into in connection
      with the construction of the Facility or entered into in the ordinary
      course of business; or

                  (v) is a contract that guarantees any indebtedness of any
      other Person in excess of $100,000 in the aggregate.

                                       18

<PAGE>

The contracts, agreements, understandings, arrangements, and commitments set
forth on Section 4.11(a) of the Disclosure Schedule are hereinafter collectively
referred to as the "Material Contracts".

            (b) Each Material Contract is a valid and binding agreement of
Sellers or Greenwich, as the case may be. There is no material default by the
Sellers or Greenwich or, to the knowledge of the Sellers, by any third party,
under any Material Contract. A true and complete copy of each Material Contract
will be made available to Buyer and as of the Closing will have been made
available to Buyer.

            4.12. BROKERS AND INTERMEDIARIES. Neither the Sellers nor their
Affiliates or any of them has employed or dealt with any broker or finder in
connection with the transactions contemplated by this Agreement which would be
entitled to a broker's or finder's, or similar fee or commission in connection
therewith or upon the consummation thereof.

            4.13. LICENSES AND PERMITS. Section 4.13 of the Disclosure Schedule
attached hereto correctly describes each material Applicable Permit, together
with the name of the Governmental Authority issuing such license or permit (the
"Material Permits"). Except as set forth in Section 4.13 of the Disclosure
Schedule, to Sellers' knowledge, such Material Permits are valid and in full
force and effect.

            4.14. ENVIRONMENTAL MATTERS.

            To the knowledge of Sellers, each of the representations and
warranties set forth in subsections (a) through (e) of this Section 4.14 is true
and correct with respect to the Assets, except to the extent that the facts and
circumstances giving rise to any such failure to be so true and correct would
not reasonably be expected to have a Material Adverse Effect.

            (a) Except as set forth in Section 4.14(a) of the Disclosure
Schedule, no Hazardous Materials are present in, on, or under the Real Property,
including, without limitation, the soil and groundwater thereunder;

            (b) Except as set forth in Section 4.14(b) of the Disclosure
Schedule, the Real Property and all operations and facilities at the Real
Property as operated since September 24, 1999 have been in compliance in all
material respects with all Environmental Laws, and all governmental approvals,
Applicable Permits and licenses required under Environmental Laws for the Real
Property and all operations and facilities of the Real Property as operated
since September 24, 1999 have been obtained and are in full force and effect and
are being complied with in all material respects;

            (c) Except as set forth in Section 4.14 (c) of the Disclosure
Schedule, neither the Sellers, Greenwich nor any of their Affiliates have
received any written governmental complaint, notice of violation, alleged
violation, or investigation or notice of potential liability or of potential
responsibility regarding environmental protection matters or permit compliance
with regard to the Real Property which either singly or in the aggregate would
constitute a Material Adverse Effect;

                                       19

<PAGE>

            (d) Except as set forth in Section 4.14(d) of the Disclosure
Schedule, Hazardous Materials have not been generated, stored, transported,
treated or disposed of on the Real Property or transferred from the Real
Property to any other location except in compliance in all material respects
with all Environmental Laws in effect at the time of such activities, and

            (e) Except as set forth in Section 4.14(e) of the Disclosure
Schedule, since September 24, 1999 there have been no governmental,
administrative actions or judicial proceedings pending or threatened under any
Environmental Laws to which the Sellers or Greenwich are named or to be named as
a party with respect to the Real Property or any Hazardous Materials transferred
from the Real Property, nor have there been any consent decrees or other
decrees, consent orders, administrative orders or other orders, under any
Environmental Law with respect to any of the Real Property.

Anything in this Agreement to the contrary notwithstanding, this Section 4.14
and Section 4.5 hereof shall be the exclusive representation and warranty of
Sellers under this Agreement relating to environmental matters.

            4.15. TAXES.

            (a) On or prior to the date hereof, Sellers and Greenwich have
      properly completed and filed on a timely basis and in the correct form all
      Returns with respect to Greenwich or the Assets required to be filed on or
      prior to the date hereof (taking into account any extensions) that a
      reasonable person would deem material. As of the time of filing, the
      foregoing Returns correctly reflected, in all respects that a reasonable
      person would deem material, the facts regarding income, business, assets,
      operations, activities, status or other matters therein or any other
      information required to be shown thereon. In particular, and without in
      any manner limiting the foregoing, none of the foregoing Returns contains
      any position which is or would subject Greenwich, a Seller, or Buyer to
      penalties under section 6662 of the Code (or any corresponding provision
      of state, local or foreign tax law).

            (b) With respect to all amounts in respect of Taxes imposed upon
      Greenwich, or for which Sellers or Greenwich are or could be liable
      related to the Assets, with respect to all taxable periods (or portions
      thereof) ending on or before the Signing or the Closing Date, as
      applicable, all material applicable tax laws and agreements have been
      fully complied with, and all such amounts required to be paid to taxing
      authorities or others on or before the date hereof have been fully and
      timely paid.

            (c) Except as set forth on Section 4.15(c) of the Disclosure
      Schedule, (i) other than with respect to Returns for which AHP files on a
      consolidated, combined or unitary basis, no issues have been raised (and
      are currently pending) by any taxing authority in connection with any
      Returns of Greenwich or Sellers related to the Assets, (ii) other than
      with respect to Returns for which AHP files on a consolidated, combined or
      unitary basis, no extensions or waivers of statutes of limitation with
      respect to any Returns of Greenwich or Sellers related to the Assets have
      been given by or requested by Greenwich

                                       20

<PAGE>

      or Sellers, and (iii) there are no liens for Taxes (other than Permitted
      Encumbrances) upon the Assets.

            4.16. DISCLAIMER. Except as expressly set forth in this Agreement,
SELLERS MAKE NO REPRESENTATIONS OR WARRANTIES (WHETHER EXPRESS OR IMPLIED) OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR USE OR OTHERWISE IN REGARD
TO THE ASSETS.

            4.17. DISCLOSURE IN SCHEDULES. Any disclosure contained in any
section of the Disclosure Schedule to this Agreement shall, should the
disclosure be relevant to any other section of the Disclosure Schedule to this
Agreement, be deemed to be disclosed with respect to that other Schedule to the
Agreement where such disclosure and its significance would be reasonably obvious
to the party to whom the disclosure is made. Certain information set forth in
the Schedules is included solely for informational purposes and may not be
required to be disclosed pursuant to this Agreement. The disclosure of any
information shall not be deemed to constitute an acknowledgment that such
information is required to be disclosed in connection with the representations
and warranties made by Sellers in this Agreement or is material, nor shall such
information be deemed to establish a standard of materiality.

                                   ARTICLE V

                    REPRESENTATIONS AND WARRANTIES OF BUYER

      Buyer represents and warrants to Sellers that:

            5.1. ORGANIZATION. Buyer is a corporation duly organized and validly
existing under the laws of the State of Washington and has paid all excise taxes
required by the Washington Department of Revenue.

            5.2. CORPORATE AUTHORITY. Buyer has full corporate power and
authority to enter into the Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance by Buyer of this
Agreement have been duly authorized by all requisite corporate action on the
part of Buyer. This Agreement has been duly executed and delivered by Buyer, and
(assuming due execution and delivery by Sellers) this Agreement constitutes a
valid and binding obligation of Buyer, enforceable in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally or by
general equitable principles.

            5.3. NO VIOLATION. The execution, delivery and performance by Buyer
of this Agreement do not and will not contravene or conflict with:

            (a) assuming compliance with the applicable requirements of the HSR
Act, in any material respect, any Applicable Laws;

            (b) the articles or certificate of incorporation or by-laws of
Buyer;

                                       21

<PAGE>

            (c) in any material respect, any mortgage, deed of trust, lease,
note, contract, agreement, bond, indenture, license, permit or trust to which
Buyer or any of its Affiliates is a party; or

            (d) in any material respect, any judgment, order, writ, injunction
or decree of any court, governmental body, Governmental Authority, or
arbitrator, to which Buyer or any of its Affiliates is a party, that, in any
case, would prevent or be violated by, or under which there would be a default
as a result of, the execution, delivery and performance by Buyer of this
Agreement and the consummation of the transactions contemplated hereby. Assuming
compliance with any applicable requirements of the HSR Act, no material consent,
approval or authorization of or declaration or filing with any Person or
Governmental Authority is required for the valid execution, delivery and
performance by Buyer of this Agreement and the consummation of the transactions
contemplated hereby.

            5.4. FINANCIAL ABILITY TO PERFORM. As of the Closing Date, the Buyer
will have sufficient funds to pay the Purchase Price on the terms and conditions
contemplated by this Agreement. The Buyer acknowledges and agrees that the
Buyer's performance of its obligations under this Agreement is not in any way
contingent upon the availability of financing to the Buyer.

            5.5. BROKERS AND INTERMEDIARIES. Neither the Buyer nor its
Affiliates or any of them has employed any broker or finder in connection with
the transactions contemplated by this Agreement which would be entitled to a
broker's or finder's, or similar fee or commission in connection therewith or
upon the consummation thereof.

            5.6 DUE DILIGENCE. Prior to the Closing, Sellers and Greenwich shall
afford to Buyer, its employees, accountants, counsel and other representatives
full access to (a) all of the Assets, books, Contracts, commitments, records and
other document of Greenwich, and (b) all books, contracts, commitments, records
and other documents of Sellers that are reasonably necessary for Buyer to
evaluate and undertake the transaction contemplated by this Agreement. Sellers
and Greenwich shall, prior to Closing, furnish promptly to Buyer all other
information concerning the business, Assets, records and Facility Employees as
Buyer may reasonably request for such purpose. In connection with such due
diligence, as well as Buyer's participation in the operation of the Steering
Committee and its management of the Assets (including the Facility) Buyer will,
as of Closing, have performed a comprehensive due diligence investigation of the
Assets and obtained a thorough understanding of the operation of the Assets. In
the course of these activities, nothing has come to the attention of Buyer as of
the Signing (that Sellers do not have actual knowledge of) that there is a
material inaccuracy in any representation or warranty of Sellers contained
herein and Buyer shall disclose to Sellers any such findings between Signing and
Closing (that Sellers do not have actual knowledge of). Provided that Buyer has
not breached the representation and warranty set forth above in this Section
5.6, no investigation conducted pursuant to this Section 5.6 or prior to the
Closing shall be deemed to modify any representation or warranty made by Sellers
or Greenwich herein or any obligation of Sellers or Greenwich hereunder.

                                       22

<PAGE>

                                   ARTICLE VI

                    CONDUCT OF BUSINESS PENDING THE CLOSING

            6.1. OPERATION OF FACILITY PRIOR TO THE CLOSING DATE.

            Sellers agree that, between the date hereof and the Closing, except
as (i) contemplated by this Agreement, (ii) permitted by the prior consent of
Buyer or as permitted pursuant to Section 6.2 hereof, (iii) a result of actions
directly or indirectly under the authority or supervision of the Site Manger so
long as the Site Manager is an employee of Buyer or its Affiliates, or (iv)
pursuant to the approval or instructions of the Steering Committee:

            (a) Sellers shall cause Greenwich to use commercially reasonable
efforts to maintain the Assets in their as-is condition, reasonable wear and
tear excepted (it being understood that the facility is under ongoing
construction). Sellers shall cause Greenwich to continue the construction of the
facility in the ordinary course of business.

            (b) Sellers shall cause Greenwich to operate the Facility in
compliance with all Applicable Laws in all material respects.

            (c) Sellers shall cause Greenwich not to do the following except in
the ordinary course of business:

                  (i) enter into a legally binding commitment to sell, transfer,
            pledge or lease (as lessor) any asset that is or would be, had such
            asset not been sold or transferred, an Asset (or commit to do any of
            the foregoing) if such asset had a fair market value in excess of
            One Million Dollars ($1,000,000);

                  (ii) impose or permit to be imposed any Encumbrances, other
            than Permitted Encumbrances, upon the Shares or any of the Assets;

                  (iii) make any change in the amount of salary or other
            compensation of any Facility Employee;

                  (iv) Enter into any employment or severance agreement with any
            Facility Employee, or enter into any collective bargaining
            agreements or arrangements for the benefit of Facility Employees,
            except as may be required pursuant to existing agreements or
            Applicable Law;

                  (v) amend or otherwise change Greenwich's certificate of
            incorporation or by-laws;

                  (vi) issue, sell, contract to issue or sell, pledge, dispose
            of, grant, encumber or authorize the issuance, sale, pledge,
            disposition, grant or Encumbrance of (i) any shares of capital stock
            of Greenwich, or (ii) any options,

                                       23

<PAGE>

            warrants, convertible securities or other rights of any kind to
            acquire any shares of such capital stock, or any other ownership
            interest (including, without limitation, any phantom interest) of
            Greenwich;

                  (vii) reclassify, combine, split, subdivide, redeem, purchase
            or otherwise acquire, directly or indirectly, any of Greenwich's
            capital stock or other securities;

                  (viii) acquire (including, without limitation, by merger,
            consolidation, or acquisition of stock or assets) any corporation,
            partnership, other business organization or division thereof or any
            material amount of assets not related to the ongoing construction of
            the Facility;

                  (ix) incur any indebtedness for borrowed money or issue any
            debt securities or guarantee the payment obligations for borrowed
            money of any third party Person,;

                  (x) take any action, other than reasonable and usual actions
            in the ordinary course of business and consistent with past
            practice, with respect to accounting methods, policies or procedures
            (including, without limitation, procedures with respect to the
            payment of accounts payable and collection of accounts receivable);

                  (xi) make any Tax election or settle or compromise any Tax
            liability;

                  (xii) enter into any contract not related to the Project or
            the Facility, except any contract entered into in the ordinary
            course of business and consistent with past practice;

                  (xiii) authorize any single capital expenditure by Greenwich
            not related to the Project or the Facility which is in excess of one
            hundred thousand dollars ($100,000) or capital expenditures not
            related to the Project or the Facility which are, in the aggregate,
            in excess of five hundred thousand dollars ($500,000);

                  (xiv) agree to do any of the foregoing in this Section 6.1(c).

            6.2. PERMITTED ACTIONS.

            (a) Between the date hereof and the Closing Date, Buyer and Sellers,
      together with their respective Affiliates, shall retrofit Suite A of the
      Facility to accommodate the commercial manufacture of Enbrel, to perform
      the initial validation runs for Enbrel and to commence commercial
      production of Enbrel. Further, the parties have determined that, in lieu
      of building out Suite A-3, they will undertake the "Greenwich Project",
      pursuant to which Greenwich shall construct the administration building
      and parking facility planned to be located on the Real Property. (The
      retrofit of Suite A and the Greenwich Project are hereinafter collectively
      referred to as the "Project".) The Project shall be

                                       24

<PAGE>

      overseen by a Steering Committee, whose objective is to recognize and
      utilize the strengths and competencies of each party to perform the
      Project. All costs incurred by Sellers or Greenwich in performing their
      obligations under this Section 6.2(a) shall be reflected in the book value
      of the Net Assets even if not appropriate under GAAP to be included
      because such Greenwich Project is discontinued at the direction of the
      Steering Committee or the Buyer.

            (b) If not formed before the Signing, a Steering Committee shall be
      formed following the date hereof, which shall have six (6) members, with
      Buyer and Sellers each having the right to appoint three (3) members (the
      "Steering Committee"). The Steering Committee shall oversee the Project
      through the Closing Date and shall have the following powers and duties:

                  (i)   The Steering Committee shall approve an annual budget
                        for the Facility, including a capital budget;

                  (ii)  the Steering Committee shall approve in advance any
                        capital expenditures by any third party or by Sellers
                        associated with the fill and finish of bulk drug
                        substance Enbrel manufactured at the Facility;

                  (iii) the Steering Committee shall meet on at least a
                        quarterly basis or more frequently as necessary, and
                        decisions of the Steering Committee shall be made by
                        consensus. The Steering Committee shall endeavor to
                        reach a consensus on all matters within its authority
                        which are in dispute within a period of ten (10) days
                        after receiving notification from either Buyer or
                        Sellers that such dispute has been referred to the
                        Steering Committee for resolution. If such a resolution
                        cannot be reached in that time period (or earlier at the
                        election of either party), the matter shall be referred
                        to the Chief Operating Officer of Buyer and the
                        President of AHP's Wyeth-Ayerst Division, or their
                        designees, for resolution in a period of ten (10) days
                        (or such other time period agreed by the parties)
                        through good faith discussions, or if still unresolved,
                        the parties shall endeavor in good faith to promptly
                        agree upon a binding third party dispute resolution
                        mechanism intended promptly and fairly to resolve the
                        matter in dispute.

                  (iv)  The Steering Committee shall be disbanded upon the
                        Closing Date.

            (c) Sellers shall be permitted to cause Greenwich to transfer to
      Holdings by way of a distribution or otherwise all cash and cash
      equivalents held by Greenwich from time to time up to and including the
      Closing Date. In the event all such cash or cash equivalents are not
      transferred to Sellers at Closing, Sellers shall include such cash or cash
      equivalents in the invoice to be provided by Sellers to Buyer as soon as
      practicable

                                       25

<PAGE>

      after the Closing, pursuant to Section 2.2(c) of this Agreement.

            (d) Buyer may perform or have performed a construction cost audit of
      the Project. Sellers shall pay the costs of any such audit that occurs
      prior to Closing and include such cost in the book value of the Net Assets
      whether or not appropriate under GAAP to be included.

            (e) Buyer may perform or have performed a cost segregation analysis
      and state tax analysis of the Project. Sellers shall pay the costs of any
      such analyses that occur prior to Closing and include such costs in the
      book value of the Net Assets.

            (f) Buyer may take actions prior to Closing in order to facilitate
      the smooth transition of ownership and operation of Greenwich Holdings to
      Buyer. Such actions may include, but are not limited to, hiring of support
      and administrative staff and implementation of systems and processes
      consistent with those of Buyer. Any costs of such actions that are
      incurred by Sellers prior to Closing shall be included in the book value
      of the Net Assets whether or not appropriate under GAAP to be included.

            6.3. ACCOUNTING RECORDS.

            The accounting records supporting all expenditures of Greenwich
shall include a classification of expenditures into the following categories:

            (a) Construction and make-ready Costs; (such costs shall further be
      supported by detailed listing of individual assets and related costs);

            (b) Facility testing costs (including all costs to test and validate
      the manufacturing processes and systems including the costs of performing
      the test production runs);

            (c) FDA filing costs (including all costs of preparing and filing
      the facility license application with the FDA);

            (d) FDA conformance runs (the cost of producing the lots of Enbrel
      that will be used to support the FDA filing);

            (e) Catalytica Facility validation costs; and

            (f) Start-up and operating costs (all costs incurred following
      completion of the FDA conformance runs).

                                       26

<PAGE>

                                  ARTICLE VII

                             ADDITIONAL AGREEMENTS

            7.1. ANCILLARY AGREEMENTS.

            Simultaneous with the Signing, AHP and Buyer will enter into the
Collaboration Agreement, the Technology Transfer Agreement, [*]. Between Signing
and Closing, it is anticipated that a Seller and Buyer will enter into a
transition services agreement for certain services related to the operation of
the Facility.

            7.2 ACCESS TO INFORMATION AND CONFIDENTIALITY.

            (a) During the period commencing on the date hereof and continuing
      through the Closing Date and, provided that the Closing occurs, for a
      period of at least six (6) years after the Closing Date or, with respect
      to any Taxes, the applicable statute of limitations, with respect to books
      and records reasonably deemed by Sellers to be necessary in connection
      with (i) the preparation or examination of Tax Returns, (ii) the Excluded
      Assets and Liabilities, and (iii) financial reporting, Buyer shall afford
      to the Sellers and to Sellers' accountants, counsel, and other
      representatives, reasonable access to all of the Assets, books, Contracts,
      commitments, records, facilities, technical and personnel information,
      and, during such period, shall furnish reasonably promptly to Sellers all
      documents and information concerning the Assets and Transferred Employees
      as Sellers may reasonably request; provided that the above activities do
      not interfere unreasonably with the conduct of the business of Buyer and
      provided further that Buyer shall not be required to disclose any
      documents or information related to Transferred Employees that would
      violate any Applicable Law.

            (b) Any information that Buyer discloses to Sellers, or to which
      Sellers have access, as a result of Section 7.2(a) above shall be deemed
      "Buyer Confidential Information" if such information (i) is designated as
      "Confidential" in writing at the time of any written disclosure or (ii)
      even if not so identified as "Confidential", would reasonably be
      identified or understood by Sellers as the confidential or proprietary
      information of Buyer. Buyer Confidential Information shall not, however,
      include:

            (1) information which was already known by the Sellers at the time
            of its disclosure hereunder, as evidenced by Sellers' written
            records;

            (2) information disclosed to Sellers by a third party lawfully in
            possession of such information and not under an obligation of
            nondisclosure to Buyer in respect thereof;

* Confidential Treatment Requested.

                                       27

<PAGE>

            (3) information which at the time of disclosure is or subsequently
            becomes patented, published or otherwise part of the public domain,
            except by breach of this Agreement by Sellers;

            (4) information developed by Sellers independently of information
            obtained from Buyer; or

            (5) information which is required to be disclosed by law, regulation
            or the order of a judicial or administrative authority; provided,
            however, that Sellers (A) give Buyer prompt written notice prior to
            disclosure by Sellers to permit Buyer to seek a protective order or
            other similar order with respect to Buyer Confidential Information,
            and (B) thereafter disclose only the minimum Buyer Confidential
            Information required to be disclosed in order to comply, whether or
            not a protective order or other similar order is obtained by Buyer.

      Unless Sellers have obtained Buyer's prior written consent, Sellers shall
      hold confidential all Buyer Confidential Information, shall not disclose
      it to any third party, and shall use it only for purposes consistent with
      this Agreement. The provisions of this Section 7.2(b) shall survive the
      expiration or termination of this Agreement or the Closing, whichever
      occurs first, for a period of four (4) years from the each such disclosure
      of Confidential Information; provided, however, that with respect to Buyer
      Confidential Information related to the Facility Employees, the provisions
      of this Section 7.2(b) shall survive indefinitely; and provided further
      that this Agreement shall not be deemed to alter any prior confidentiality
      obligations among the parties, including those related to Enbrel or the
      manufacture thereof.

            (c) During the period commencing on the Signing and continuing
      through the Closing Date, Sellers (i) will give and will cause Greenwich
      to give to Buyer, its counsel, financial advisors, auditors and other
      authorized representatives reasonable access to all of the offices,
      properties, books, records, Contracts, commitments, facilities, technical
      information, and personnel of Sellers or Greenwich relating to the Assets,
      (ii) will permit and facilitate any reasonable interview process for
      potential continued employment of the Facility Employees with Buyer, and
      (iii) will give and will cause Greenwich to give to Buyer reasonable
      access to Greenwich's engineering and other Facility Employees to provide
      planning and technical assistance related to Buyer's intended use of the
      Assets after the Closing as Buyer may reasonably request.

            7.3 REGULATORY FILINGS.

            Each of the parties hereto will furnish to the other party hereto
such necessary information and reasonable assistance as such other party may
reasonably request in connection with its preparation of necessary filings or
submissions to any Governmental Authority. Buyer and Sellers each agree to file
any information required by the HSR Act as soon as reasonably practicable after
the date hereof and each agrees promptly to supplement such information and
promptly use commercially reasonable efforts to effect compliance with the
conditions specified

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<PAGE>

in Article 9 hereof and shall cooperate with one another to furnish promptly to
Governmental Authorities any additional information reasonably requested by them
in connection with such filings. Neither party shall be required, however, to
divest or outlicense products or assets or change its business or intended use
of the Facility if doing so is a condition of obtaining approval under the HSR
Act or other governmental approvals of the transaction contemplated by this
Agreement. Each of the parties shall use commercially reasonable good faith
efforts to eliminate any concerns on the part of federal or state antitrust
authorities, including, without limitation, cooperating in good faith with any
government investigation, including prompt production of documents and
information demanded by a second request for documents and of witnesses if
requested. Each party will consult and cooperate with the other party and will
consider in good faith the view of the other party in connection with any
analysis, appearance, presentation, memorandum, brief, opinion or proposal made
or submitted in connection with any action, request or investigation under or
relating to the HSR Act or any other national, federal or state antitrust,
competition or fair trade law.

            7.4 COMMERCIALLY REASONABLE EFFORTS.

            Each of the parties hereto shall use commercially reasonable efforts
to fulfill or obtain the fulfillment of the conditions of the Closing,
including, without limitation, the execution and delivery of all agreements
contemplated hereunder to be so executed and delivered.

            7.5 NOTICES OF CERTAIN EVENTS.

            Sellers shall promptly notify Buyer, and Buyer shall promptly notify
Sellers, as the case may be, of:

            (a) any notice or other communication from any Person alleging that
the consent of such Person is or may be required in connection with the
transactions contemplated by this Agreement;

            (b) any notice or other communication from any Governmental
Authority in connection with the transactions contemplated by this Agreement;
and

            (c) any actions, suits, claims, investigations or proceedings
commenced or, to the best of the notifying party's knowledge threatened against,
relating to or involving or otherwise affecting Sellers, Buyer, the Shares or
the Assets that, if pending on the date of this Agreement, would have been
required to have been disclosed hereunder or that relate to the consummation of
the transactions contemplated by this Agreement.

            7.6 START-UP AND OPERATION OF THE FACILITY.

            During the period of Sellers' ownership of the Shares, and
thereafter for such transition period as may be agreed to by the parties (which
period shall not be longer than the period set forth in the Technology Transfer
Agreement), a reasonable number of Buyer and Sellers and Sellers' Affiliates
personnel shall be involved in all aspects of start-up and operation

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<PAGE>

of the Facility as are agreed by the parties, and shall also have access to all
engineering, manufacturing, quality assurance, quality control, regulatory, and
all other documentation related to the Facility and the Enbrel product(s)
manufactured at the Facility to facilitate Sellers' and its Affiliates'
knowledge and understanding of manufacturing commercial quantities of Enbrel;
provided, however, that the above activities do not interfere unreasonably with
the business of Buyer, and provided further that, during the term of either
party's ownership of the Shares, and consistent with the terms hereunder, such
party will have ultimate decision making authority with respect to day-to-day
operations of the Facility.

            7.7 CAPITAL IMPROVEMENT CONTRACTS.

            Sellers shall allow Buyer to (a) review and approve each contract
entered into after the Signing involving capital improvements to the Facility
which would reasonably be expected to result in payments by or on behalf of
Sellers or Greenwich greater than Three Million Dollars ($3,000,000) in the
aggregate, (b) review and consult with Sellers on all contracts involving the
Facility and its operation of duration greater than one (1) year which would
reasonably be expected to require payments by or on behalf of Sellers or
Greenwich in an amount greater than Two Hundred Fifty Thousand Dollars
($250,000) in the aggregate under such contract and (c) review and approve each
contract involving the fill and finish of Enbrel produced at the Facility. Buyer
shall be a party to each such contract under clause (c) of this Section 7.7, and
to the extent practicable, Sellers shall name or shall cause Greenwich to name
Buyer a third party beneficiary under each such contract under clauses (a) and
(b) of this Section 7.7.

            7.8 BUYER PERSONNEL COSTS.

            Technical assistance provided by Buyer to Sellers related to the
Enbrel manufacturing process shall be governed by the Technology Transfer
Agreement.

            7.9 STAFFING.

            For periods prior to the Closing, and then following the Closing,
Sellers and Buyers shall enter into the respective [*]. Between the Signing and
the Closing Date, Buyer and Sellers shall consult with each other in good faith
on all hires at or relating to the Facility for the position of manager and
above and for key technical positions. Neither Sellers nor Greenwich shall hire
any such prospective employee whose titles are Manager or above who is likely to
become a Transferred Employee if Buyer has a good faith reasonable objection to
such employee that does not violate any Applicable Law.

            7.10 FACILITY USE.

            Buyer will have complete access to the Facility through the Closing
Date, subject to standard safety and security procedures, to facilitate Buyer's
participation in the Project. As

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between the parties, Buyer shall have the final authority with respect to
decisions related to Phase B, including general timelines relating thereto, and
with respect to conceptual design, basic engineering and detailed engineering.
Such general timelines for Phase B shall be conducted in a manner which does not
materially impact the schedule for the retrofit of Suite A.

            7.11 TRANSFER OF SELLER EMPLOYEES.

            Buyer acknowledges that as of the Signing, there are approximately
[*] of Sellers or their Affiliates working at the Facility. Such employees are
not deemed to be Facility Employees, and will not be deemed to be Transferred
Employees at the Closing. Notwithstanding the proceeding sentence, the parties
agree that coincident with, or prior to Closing, Sellers may transfer the number
of persons (having the job titles indicated) preliminarily set forth in Section
7.11(a) of the Disclosure Schedule (which such Disclosure Schedule may be
updated until Closing) from the Facility to one or more of Sellers'
biopharmaceutical manufacturing facilities to ensure their successful
construction, start-up and operation (collectively, the "Sellers Employees").
The total number of Seller Employees shall not, under any circumstances, exceed
[*] percent ([*]%) of the total number of Facility Employees at the time of the
Signing. Sellers shall, not later than the Closing, provide Buyer written notice
of each such Seller Employee, and in all cases, shall give Buyer at least [*]
months' written notice of the transfer of each Seller Employee, in order to
allow Buyer sufficient time to recruit and to train replacement personnel at the
Facility; provided, however, that upon Buyer's written consent, such consent not
to be unreasonably withheld, such written notice period may be shortened.

            Seller Employees shall not become Transferred Employees pursuant to
Section 8.1(a) hereof, but shall remain or become employees of one of the
Sellers or their Affiliates. Seller Employees shall remain on the payroll of
Sellers and be covered by Sellers' Employee Benefit Plans and insurance
coverage, including workers compensation, after the Closing. Seller Employees
shall remain employed at the Facility until the earlier of the date Seller
Employees are no longer needed upon mutual agreement between Buyer and Seller,
or the end of the written notice period. If any Seller Employees are performing
activities or services at the Facility that contribute to the operation of the
Facility or the manufacture of Enbrel at the Facility, Buyer shall reimburse
Seller for the full allocated costs associated with the Seller Employees after
the Closing Date [*].

            7.12 ASSIGNMENT OF BUYER EMPLOYEES

                  [*]. In addition, prior to Closing, Buyer may assign one or
more of its employees to the Facility to ensure the successful transition of the
business. Buyer may also, after being notified by Sellers of the identity of
Seller Employees in Section 7.11, hire replacement workers. Buyer's employees
assigned to work at the Facility, and replacement workers Buyer hires to work
with Seller Employees prior to Closing (collectively "Buyer

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<PAGE>

Transition Employees") shall remain on or be assigned to the payroll of Buyer
and shall not be covered by Sellers' Employee Benefit Plans and insurance
coverage, including workers compensation. If any Buyer Transition Employees are
performing activities or services at the Facility that contribute to the
operation of the Facility or the manufacture of Enbrel at the Facility, Sellers
shall reimburse Buyer for the full allocated costs associated with the Buyer
Transition Employees prior to the Closing Date [*].

            7.13 TRANSFER OF PERMITS; CONTRACTS .

            Before and, to the extent necessary after, the Closing, Sellers
shall use, and shall cause Greenwich to use, commercially reasonable efforts to
assist Buyer (without any obligation to make any payment of consideration) in
effectuating transfer or reissuance of Applicable Permits required for operation
of the Facility under any Environmental Laws or other Applicable Laws and
Sellers shall use, and shall cause Greenwich to use, commercially reasonable
efforts (without any obligation to make any payment of consideration) to obtain
any necessary consents to assignment of the Contracts from Sellers or Greenwich
to Buyer.

            7.14 TAX MATTERS

            (a) AHP shall have the exclusive authority and obligation to prepare
      and execute on behalf of Greenwich and timely file all Returns with
      respect to Greenwich or the Assets for any taxable period ending on or
      prior to the Closing Date. Buyer shall have the exclusive authority and
      obligation to prepare and timely file all Returns with respect to
      Greenwich or the Assets for all other taxable periods.

            (b) AHP shall be responsible for the timely payment of all Taxes
      imposed on or with respect to Greenwich or the Assets for all taxable
      periods ending on or prior to the Closing Date, including without
      limitation (a) any federal income Tax liability imposed on Sellers or
      Greenwich resulting from the Section 338(h)(10) Election, as defined in
      Section 7.14(e)(i) below, and (b) any state, local, or foreign tax imposed
      on Sellers or Greenwich attributable to an election under the state, local
      or foreign law similar to the election available under Section 338(h)(10)
      of the Code; provided, however, that if a state, local or foreign
      jurisdiction does not have provisions similar to the election available
      under Section 338(h)(10) of the Code, Sellers shall be liable for any Tax
      based on income imposed on Sellers by such state, local and/or foreign
      jurisdiction resulting from the transaction contemplated by this
      Agreement. Buyer shall be responsible for the timely payment of all Taxes
      imposed on or with respect to Greenwich or the Assets for all other
      taxable periods, except to the extent otherwise expressly set forth
      herein. With respect to any taxable period beginning before and ending
      after the Closing Date (an "Overlap Period"), Taxes shall be apportioned
      between Sellers and Buyer as follows: (x) in the case of Taxes other than
      income, sales and use and withholding Taxes, on a per

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<PAGE>

      diem basis; and (y) in the case of income, sales and use and withholding
      Taxes, as determined as though the taxable period ended on the Closing
      Date. The parties agree to consult in good faith regarding the calculation
      of such Taxes and apportionment.

            (c) Except as otherwise provided in this Section 7.14(c), AHP shall
      have the exclusive authority to control any audit or examination by any
      taxing authority, initiate any claim for refund, amend any Return, and
      contest, resolve and defend against any assessment for additional Taxes,
      notice of tax deficiency or other adjustment of Taxes ("Tax
      Controversies") with respect to Greenwich or the Assets for any taxable
      period ending on or prior to the Closing Date. Buyer shall have the
      exclusive authority over Tax Controversies with respect to Greenwich or
      the Assets for all other taxable periods and Tax Controversies which (x)
      arise after the Closing Date and (y) relate to Taxes for which Buyer has
      paid Sellers under Article 2 hereof as Net Assets or otherwise..
      Notwithstanding the foregoing, with respect to any Overlap Period and with
      respect to any Tax Controversies that could possibly affect the Tax
      liability of both (a) Buyer or its Affiliates and (b) one or more Sellers
      or their Affiliates):

                  (i)   no party shall, without the prior written consent of the
                        other parties, which consent shall not be unreasonably
                        withheld or delayed, enter into any settlement of any
                        contest or otherwise compromise any issue that affects
                        or may affect the Tax liability of the other parties or
                        any of their Affiliates;

                  (ii)  with respect to any Overlap Period, any additional Taxes
                        determined to be payable and any refund of Taxes shall
                        be apportioned as provided in Section 7.14(b) hereof;
                        and

                  (iii) the parties agree to consult in good faith regarding any
                        Tax Controversies with respect to Greenwich or the
                        Assets, including to provide each other draft copies of
                        proposed audit adjustments and other documents with
                        respect to Tax Controversies for review and comment.

            (d) Notwithstanding anything to the contrary contained in this
      Section 7.14, Buyer shall be liable for all Taxes (including Taxes arising
      from Tax Controversies) other than Income Taxes, which constitute either
      Facility Costs or amounts of Net Assets and shall pay such Taxes to the
      appropriate taxing authorities or to Sellers in accordance with the
      provisions of Sections 2.2 or 11.2 hereof, as the case may be.

            (e) Section 338(h)(10) election.

                  (i)   Sellers represent that they filed a consolidated income
                        tax return with Greenwich for the taxable year
                        immediately preceding the current taxable year and that
                        Sellers are eligible to make an election under section
                        338(h)(10) of the Code (and any comparable

                                       33

<PAGE>

                        election under state, local or foreign law) (the
                        "338(h)(10) Election") with respect to Greenwich.

                  (ii)  Buyer and Sellers shall jointly make an election under
                        section 338(h)(10) of the Code (and any comparable
                        election under state, local or foreign tax law) with
                        respect to the acquisition of Greenwich by Buyer. Buyer
                        and Sellers shall cooperate fully with each other in the
                        making of such election. Not withstanding any language
                        contained in this Agreement, Sellers and Buyer agree
                        that for Tax purposes, all monies or consideration paid
                        under this Agreement by Buyer are for the express
                        purpose of purchasing the Shares.

                  (iii) Buyer shall initially prepare a complete IRS Form 8023
                        (and any comparable forms required to be filed under
                        state, local or foreign tax laws) and any additional
                        data or materials required to be attached to Form 8023
                        pursuant to the Treasury Regulations promulgated under
                        Section 338 of the Code (the "Section 338 Forms"). AHP
                        shall deliver to Buyer, no later than one hundred twenty
                        (120) days prior to the date the Section 338 Forms are
                        required to be filed, such documents and other
                        information as reasonably requested by Buyer to complete
                        the Section 338 Forms. Buyer shall deliver said forms to
                        AHP for review no later than sixty (60) days prior to
                        the date the Section 338 Forms are required to be filed.
                        In the event AHP objects to the manner in which the
                        Section 338 Forms have been prepared, AHP shall notify
                        Buyer within thirty (30) days of receipt of the Section
                        338 Forms of such objection, and the parties shall
                        endeavor within the next fifteen (15) days in good faith
                        to resolve such dispute. If the parties are unable to
                        resolve such dispute within said fifteen (15) day
                        period, Buyer and AHP shall submit such dispute to an
                        independent accounting firm chosen in the manner
                        described in Section 2.2(e) above (the "Allocation
                        Arbiter") selected by Buyer and AHP. Promptly, but not
                        later than fifteen (15) days after its acceptance of
                        appointment hereunder, the Allocation Arbiter will
                        determine (based solely on presentations of Buyer and
                        AHP and not by independent review) only those matters in
                        dispute and will render a written report as to the
                        disputed matters and the resulting preparation of the
                        Section 338 Forms shall be conclusive and binding upon
                        the parties.

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<PAGE>

                                  ARTICLE VIII

                      AGREEMENTS WITH RESPECT TO EMPLOYEES

                              AND EMPLOYEE MATTERS

            8.1 BUYER'S OBLIGATIONS TO EMPLOYEES.

            (a) Effective on the Closing Date, Buyer shall be obligated to
      continue the employment of all Facility Employees (except Seller
      Employees) at [*] salary [*] such Facility Employee immediately prior to
      the Closing Date (hereinafter referred to as "Transferred Employees")
      (assuming Seller's compliance with Section 7.2(c)(ii)), subject to Buyer's
      ability to discontinue employment of Transferred Employees pursuant to
      Sections 8.1(h) and (l) below. [*]. All Transferred Employees shall be
      entitled to participate in the benefit plans, programs and arrangements of
      Buyer on the day after the Closing Date as set forth below.

            (b) Buyer maintains a defined contribution 401(k) plan on behalf of
      its employees ("Buyer's Tax-Deferred Savings Plan"). Buyer agrees that
      effective immediately after the Closing Date, Buyer shall promptly take
      all action necessary to extend coverage under Buyer's Tax-Deferred Savings
      Plan to the Transferred Employees who have satisfied such plan's
      eligibility requirements. Buyer shall credit all service completed by
      Transferred Employees with Greenwich or Sellers, as the case may be, prior
      to the Closing Date for eligibility and vesting purposes under Buyer's
      Tax-Deferred Savings Plan. Sellers shall amend its defined contribution
      401(k) savings plan and nonqualified supplemental savings plan ("Sellers'
      Savings Plans") to provide that Transferred Employees shall be fully
      vested in all employer matching contributions as of the Closing Date.
      Sellers agree and acknowledge that the consummation of the transactions
      contemplated by this Agreement will result in, and constitute, a
      distributable event pursuant to Code Section 401(k)(10)(A)(iii) (the
      "Distributable Event") with respect to Sellers' Savings Plans for all
      Transferred Employees. Buyer's Tax-Deferred Savings Plan shall accept
      elective transfers of distributions of benefits, including notes
      representing participant's loans from Sellers' Savings Plan. Sellers shall
      amend its defined benefit pension plan and non-qualified supplemental
      pension plan ("Sellers' Retirement Plans") to provide that service with
      Buyer after the Closing Date shall continue to be credited under Sellers'
      Retirement Plans for purposes of vesting and eligibility for early
      retirement subsidies but not for benefit accrual purposes. Transferred
      Employees shall not be eligible to commence receipt of retirement benefits
      under Sellers' Retirement Plans until they have satisfied the age and
      service requirements under Sellers' Retirement Plans and terminated
      employment with Buyer or any successor thereto.

            (c) Buyer provides to its employees medical (including prescription
      drugs), dental, vacation, life insurance, accidental death and
      dismemberment, spending account plans, short-term disability and long-term
      disability benefit plans ("Buyer's Welfare Plans") for its employees; [*].
      Immediately after the Closing Date, Transferred Employees shall be
      eligible to participate in such Buyer's Welfare Plans in accordance

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<PAGE>

      with the terms of such plans, and employment with Sellers or any
      predecessor shall be taken into account for purposes of determining
      eligibility for participation and benefits under such Buyer's Welfare
      Plans; provided, however, the Transferred Employees shall participate in
      such Buyer's Welfare Plans that are core plans provided to all Buyer's
      employees (and not optional or supplemental plans) (i) without any waiting
      periods, pre-existing condition restrictions or evidence of insurability
      [*]; and (ii) Buyer shall count claims arising on or prior to the Closing
      Date, during the calendar year of the Closing, for purposes of satisfying
      deductibles, out-of-pocket maximums, lifetime maximums, and other similar
      limitations, and (iii) Transferred Employees shall participate in Buyer's
      vacation plan according to the terms set forth in Section 8.1(g) below.
      Prior to the Closing Date, according to a schedule agreed upon by Sellers
      and Buyer, Sellers shall provide Buyer with all of the information
      necessary to facilitate the Transferred Employees' participation in
      Buyer's Welfare Plans on the day after the Closing in accordance with the
      terms of this Agreement, including without limitation information
      regarding claims arising on or prior to the Closing Date. Sellers and
      Buyer shall cooperate as necessary after the Closing to ensure that such
      information is complete and updated.

            (d) Sellers maintain a program of medical and life insurance
      benefits for certain retired employees ("Sellers' Retiree Benefit Plans").
      All Transferred Employees who satisfy the eligibility criteria for
      benefits under Sellers' Retiree Benefit Plans on or prior to the Closing
      Date shall be entitled to benefits from Sellers' Retiree Benefit Plans
      following termination from Buyer or any successor thereto or its
      Affiliates, in accordance with the terms of Sellers' Retiree Benefit
      Plans. However, Transferred Employees shall not be eligible to receive
      medical and life insurance benefits under Sellers' Retiree Benefit Plans
      while the Transferred Employees are eligible for coverage under Buyer's
      Welfare Benefit Plans. Transferred Employees shall receive primary
      coverage under Buyer's retiree welfare plans, if Buyer institutes any such
      plans in the future, ("Buyer's Retiree Welfare Plans") upon termination of
      employment if the Transferred Employees are eligible for coverage under
      Buyer's Retiree Welfare Plans, with Sellers' Retiree Welfare Plans being
      responsible for secondary coverage. Transferred Employees shall
      participate in Buyer's Retiree Welfare Plans, if any, in accordance with
      the terms of such plans (but only to the extent Transferred Employees
      elect to participate therein) and Buyer shall recognize service with
      Sellers or its Affiliates or predecessors for purposes of Buyer's Retiree
      Welfare Plans.

            (e) Sellers agree that any claims for welfare benefits arising on or
      before the Closing Date with respect to any Transferred Employees (or
      their covered dependents or beneficiaries) shall be the responsibility of
      Sellers, and Buyer agrees that any claims arising subsequent to the
      Closing Date with respect to any Transferred Employees (or their covered
      dependents or beneficiaries) shall be the responsibility of Buyer. A claim
      is deemed to have arisen when the event giving rise to the claim occurred
      or, with respect to health coverages, when the related health services
      were rendered. Notwithstanding the foregoing, however, a Transferred
      Employee's claim for long-term disability coverage

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<PAGE>

      shall be deemed to have arisen when the initial claim for such disability
      was submitted if such employee (a) is already on long-term disability
      coverage on the Closing Date, or (b) is on short-term disability coverage
      on the Closing Date.

            (f) Sellers shall be responsible for any legally-mandated
      continuation of health care coverage for Facility Employees and/or their
      covered dependents who have a loss of health care coverage due to a
      "qualifying event" (as defined in Section 4980B of the Code or any
      successor thereto and the regulations thereunder) that occurs on or prior
      to the Closing Date, including any Facility Employee or covered dependent
      who is receiving health care coverage under COBRA on the Closing Date.
      Buyer shall be responsible for any legally-mandated continuation of health
      care coverage for Transferred Employees and/or their covered dependents
      who have a loss of health coverage due to a qualifying event that occurs
      after the Closing Date as described in Exhibit F.

            (g) Effective as of the Closing Date, all service completed by
      Transferred Employees with the Sellers, Greenwich or a predecessor thereof
      on or prior to the Closing Date shall be recognized by Buyer for purposes
      of determining the Transferred Employees' [*]. [*]. Sellers shall, within
      a reasonable time prior to Closing, provide Buyer with a schedule of
      accrued vacation time and completed service for each Transferred Employee.

            (h) Buyer shall be free to terminate the employment of any
      Transferred Employee in accordance with Buyer's policies and practices
      generally applicable to all of its employees, as well as Applicable Laws.
      Buyer shall be responsible for severance liabilities, in accordance with
      the severance policy set forth in Exhibit F, attached hereto, only to
      Transferred Employees who meet the following criteria whose employment is
      terminated by Buyer after the Closing Date:

                  (i)   [*]

                  (ii)  [*]

            Severance payments hereunder shall include [*]. [*]. Such extension
      shall represent the first six (6) months of any COBRA continuation
      coverage.

            (i) Sellers maintain spending account plans for the benefit of their
      employees ("Sellers' Spending Account Plans"). For a period of ninety (90)
      days following the Closing Date, Transferred Employees who are
      participants in Sellers' Spending Accounts Plans shall be permitted to
      submit claims for expenses incurred during the plan year on or prior to
      the Closing Date. At the end of the ninety (90)-day period, Sellers shall
      cause the account balances remaining in the accounts of Transferred
      Employees to be transferred in cash to the spending account plans of Buyer
      ("Buyer's Spending Account Plans"). Following such transfer, Buyer (or one
      of its Affiliates) shall be responsible for all liabilities for
      Transferred Employees under Buyer's Spending Account Plans and shall be

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<PAGE>

      entitled to all funds forfeited from such plans.

            (j) If, after the Closing, a bonus plan established by Sellers for
      Facility Employees prior to Closing is still in effect, Buyer shall assume
      liability for payments to Transferred Employees under such bonus plan that
      have not yet been made as of Closing and shall make all such payments in
      accordance with the plan. At the conclusion of such bonus plan, Buyer
      shall then be free to implement a different bonus plan for Transferred
      Employees.

            (k) Buyer shall not have taken any action on the Closing Date or
      within ninety (90) days on or after the Closing Date the result of which
      would be to effectuate a "plant closing" or "mass layoff" as those terms
      are defined in the WARN Act. Buyer shall assume all liabilities arising
      under any state law related to severance for actions taken on or after
      Closing.

            (l) No provision of this Agreement shall create any third party
      beneficiary or other rights to any Facility Employee or Transferred
      Employee (including any beneficiary or dependent thereof) or any other
      Persons in respect of continued employment with Buyer, with Sellers or any
      of their Affiliates and no provisions of this Agreement shall create any
      rights in any such persons in respect of any benefits which may be
      provided, directly or indirectly, under any benefit plans, programs or
      arrangements which may be operated or maintained by either Buyers or any
      of its Affiliates. Notwithstanding anything herein seemingly to the
      contrary, subject to the provisions of this Article VIII, no provision of
      this Agreement shall constitute a limitation on the right of Buyer or any
      of its Affiliates, in its sole discretion, to terminate any Transferred
      Employee at will, to modify the terms of employment or salary of any
      Transferred Employee, or to change the terms of any of Buyer's Welfare
      Plans or other employee benefit plans.

            (m) [*]

            (n) All Transferred Employees shall become eligible to enroll in
      Buyer's employee stock purchase plan during the next open enrollment
      period following the Closing.

                                  ARTICLE IX.

                                   CONDITIONS

            9.1. CONDITIONS TO OBLIGATION OF EACH PARTY TO EFFECT THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.

            The obligation of each party to effect the transactions contemplated
by this

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<PAGE>

Agreement shall be subject to the fulfillment by such party or written waiver by
the other party at or prior to the Closing Date of the following conditions:

            (a) all governmental and other consents and approvals, if any,
necessary to permit the consummation of the transactions contemplated by this
Agreement shall have been obtained and any waiting period (and any extension
thereof) applicable to the consummation of the Agreement under the HSR Act or
under other Applicable Laws shall have expired or been terminated; and

            (b) no preliminary or permanent injunction or other order, decree or
ruling issued by a court of competent jurisdiction or by a Governmental
Authority nor any Applicable Law shall be in effect as of the Closing Date that
would restrain or otherwise prevent the consummation of the transactions
contemplated by this Agreement.

            9.2. CONDITIONS TO THE OBLIGATION OF SELLERS.

            The obligation of Sellers to effect the transactions contemplated by
this Agreement is subject to the fulfillment by Buyer or written waiver by
Sellers at or prior to the Closing Date of the following conditions:

            (a) Buyer shall have performed in all material respects each
obligation and agreement and complied in all material respects with each
covenant to be performed and complied with by it hereunder at or prior to the
Closing Date, including without limitation Buyer's delivery obligations as set
forth in Section 3.2; and

            (b) the representations and warranties of Buyer in this Agreement
shall be true and correct in all material respects as of the Closing Date with
the same force and effect as though made at such time except (i) for changes
expressly permitted by this Agreement and (ii) to the extent that any
representation and warranty is made as of a specified date (other than Signing),
in which case such representation and warranty shall be true in all material
respects as of such date and (iii) for results of actions directly or indirectly
under the authority or supervision of the Plant Manager so long as the Plant
Manager is an employee of Buyer or its Affiliates; and

            (c) Buyer shall have furnished to Sellers a certificate, dated as of
the Closing Date, signed by a duly authorized officer of Buyer to the effect
that all conditions set forth in Sections 9.2(a) and (b) above have been
satisfied.

            9.3. CONDITIONS TO THE OBLIGATION OF BUYER.

            The obligation of Buyer to effect the transactions contemplated by
this Agreement is subject to the fulfillment by Sellers or written waiver by
Buyer at or prior to the Closing Date of the following conditions:

            (a) Sellers shall have performed in all respects each of their
respective obligations and agreements required by this Agreement to be performed
or complied with by

                                       39

<PAGE>

them prior to or at the Closing, including without limitation Sellers' delivery
obligations as set forth in Section 3.3;

            (b) the representations and warranties of Sellers in this Agreement
shall be true and correct in all material respects as of the Closing Date with
the same force and effect as though made at such time except (i) for changes
expressly permitted by this Agreement and (ii) to the extent that any
representation and warranty is made as of a specified date (other than Signing),
in which case such representation and warranty shall be true in all material
respects as of such date; and

            (c) Sellers shall have furnished to Buyer a certificate, dated as of
the Closing Date, signed by a duly authorized officer of each of the Sellers to
the effect that all conditions set forth in Sections 9.3(a) and (b) above have
been satisfied.

                                   ARTICLE X.

                       TERMINATION, AMENDMENT AND WAIVER

            10.1 TERMINATION.

            This Agreement may be terminated at any time prior to the Closing
Date:

            (a) without liability on the part of any party hereto (unless
occasioned by reason of a breach by any party hereto of any of its
representations, warranties or obligations hereunder) by mutual written consent
of Buyer and Sellers;

            (b) subject to Section 7.3 hereof, by Buyer or Sellers if a court of
competent jurisdiction, Governmental Authority, or other regulatory or
administrative agency or commission shall have issued an order, decree or ruling
or taken any other action, in each case permanently restraining, enjoining or
otherwise prohibiting the transactions contemplated by this Agreement, and such
order, decree, ruling or other action shall have become final and nonappealable;
or

            (c) by Buyer or Sellers if the Closing has not been consummated by
[*]; provided, however, that the right to terminate this Agreement under Section
10.1(c) shall not be available to any party whose willful failure to fulfill any
obligation under this Agreement has been the cause of, or resulted in, the
failure of the Closing to occur.

            The date on which this Agreement is terminated pursuant to any of
the foregoing subsections of this Section 10.1 is herein referred to as the
"Termination Date."

            10.2 EFFECT OF TERMINATION.

* Confidential Treatment Requested.

                                       40

<PAGE>

            Except as set forth in Section 7.2 and this Section 10.2 hereof,
upon the termination of this Agreement pursuant to Section 10.1 above, all
further obligations of the parties under this Agreement shall terminate without
further liability of any party to the others, except that nothing herein shall
relieve any party from liability for breach of any provision of, or for any
misrepresentation under this Agreement or be deemed to constitute a waiver of
any available remedy for any such breach or misrepresentation. If this Agreement
is terminated by Buyer in accordance with Section 10.1, Sellers and Greenwich
shall repay all payments made by Buyer to a Seller or Greenwich under this
Agreement on or before the Termination Date. Such repayment shall be made by
wire transfer in immediately available funds, no later than thirty (30) days
after the Termination Date, to an account designated in writing by Buyer.

                                  ARTICLE XI.

                                INDEMNIFICATION

            11.1 INDEMNIFICATION BY SELLER.

            Sellers hereby agree to defend, indemnify and hold harmless Buyer,
its Affiliates and its successors and assigns and their respective officers,
directors, employees, attorneys, consultants and agents (collectively, the
"Buyer Indemnitees") from and against any and all losses, deficiencies,
liabilities, damages, assessments, judgments, costs and expenses, including
reasonable attorneys', consultants', and experts' fees (collectively, "Buyer
Losses"), to the extent caused by, resulting from or arising out of:

            (a) any breach of a representation or warranty hereunder on the part
of Greenwich or either or both Sellers in this Agreement;

            (b) any failure by Greenwich or either or both Sellers to perform or
otherwise fulfill, any undertaking or other agreement or obligation hereunder;

            (c) any Excluded Assets and Liabilities; and/or

            (d) any and all actions, suits, proceedings, claims, and demands
incident to any of the foregoing or such indemnification;

provided, however, that if any claim, liability, demand, assessment, action,
suit or proceeding shall be asserted against a Buyer Indemnitee in respect of
which a Buyer Indemnitee proposes to demand indemnification ("Buyer Indemnified
Claims"), Buyer or such other Buyer Indemnitee shall notify Sellers in writing
thereof as promptly as practicable, provided further, however, that the failure
or delay to so notify Sellers of such a claim shall not reduce or affect
Sellers' obligations with respect thereto except to the extent that Sellers are
prejudiced thereby. Sellers shall have the right promptly upon receipt of such
notice to assume the control of the defense, compromise or settlement of any
such Buyer Indemnified Claims including, at their own expense, employment of
counsel reasonably satisfactory to Buyer; provided, however, that if Sellers
shall have exercised their right to assume such control, Buyer may, in its sole
discretion

                                       41

<PAGE>

and at its expense, employ counsel to represent it (in addition to counsel
employed by Sellers) in any such matter, and in such event counsel selected by
Sellers shall be required to cooperate with such counsel of Buyer, counsel
selected by Buyer shall be required to cooperate with such counsel of Sellers
and each of Buyer and Sellers shall be required to cooperate with such other
party and its counsel in such defense, compromise or settlement. Sellers shall
not settle or compromise any Buyer Indemnified Claim that does not result in a
full release without any obligation of Buyer and Buyer Indemnitees without the
prior written consent of Buyer, which consent shall not be unreasonably withheld
or delayed.

            11.2 INDEMNIFICATION BY BUYER. Buyer hereby agrees to defend,
indemnify and hold harmless Sellers, their Affiliates and their successors and
assigns and their respective officers, directors, employees, attorneys,
consultants and agents (collectively, "Seller Indemnitees") from and against any
and all losses, deficiencies, liabilities, damages, assessments, judgments,
costs and expenses, including reasonable attorneys', consultants', and experts'
fees (collectively, "Sellers Losses"), to the extent caused by, resulting from
or arising out of:

            (a) any breach of a representation or warranty hereunder on the part
of Buyer in this Agreement;

            (b) any failure by Buyer to perform or otherwise fulfill, in whole
or in part, any undertaking or agreement or obligation hereunder; and/or

            (c) any and all actions, suits, proceedings, claims and demands
incident to any of the foregoing or such indemnification.

provided, however, that if any claim, liability, demand, assessment, action,
suit or proceeding shall be asserted in respect of which a Seller Indemnitee
proposes to demand indemnification ("Sellers Indemnified Claims"), Sellers or
such other Seller Indemnitee shall notify Buyer in writing thereof as promptly
as practicable, provided further, however, that the failure or delay to so
notify Buyer of such a claim shall not reduce or affect Buyer's obligations with
respect thereto except to the extent that Buyer is prejudiced thereby. Buyer
shall have the right promptly upon receipt of such notice to assume the control
of the defense, compromise or settlement of any such Sellers Indemnified Claims
including, at its own expense, employment of counsel reasonably satisfactory to
Sellers; provided, however, that if Buyer shall have exercised its right to
assume such control, Sellers may, in their sole discretion and at their expense,
employ counsel to represent them (in addition to counsel employed by Buyer) in
any such matter, and in such event counsel selected by Sellers shall be required
to cooperate with such counsel of Buyer, counsel of Buyer shall be required to
cooperate with counsel of Sellers and each of Buyer and Sellers shall be
required to cooperate with such other party and its counsel in such defense,
compromise or settlement. Buyer shall not settle or compromise any Sellers
Indemnified Claim that does not result in a full release without any obligation
of Sellers and Seller Indemnitees without the prior written consent of Sellers,
which consent shall not be unreasonably withheld or delayed.

            11.3 CERTAIN LIMITATIONS.

                                       42

<PAGE>

            (a) Other than Sellers' obligation to indemnify for Buyer Losses
      under Section 11.1(a) of this Agreement arising out of a breach of
      representation or warranty contained in Section 4.2 (capitalization) or
      Section 4.12 (brokers), Sellers' obligation to indemnify for Buyer Losses
      under Section 11.1(a) of this Agreement shall not accrue until the
      aggregate of all such Buyer Losses exceeds [*] Dollars ($[*]) (the "Loss
      Threshold") and then Sellers shall be liable for all such Buyer Losses in
      excess of such initial $[*] and shall be limited to [*] Dollars ($[*]) in
      the aggregate. There shall be no Loss Threshold or limit on liability with
      respect to Sellers' obligations to indemnify under Sections 11.1(b)
      through (d).

            (b) In no event shall any punitive, exemplary, special, indirect,
      incidental or consequential damages whatsoever be recoverable by any
      indemnitee under Article 11 hereof; except that, if punitive, exemplary,
      special, indirect, incidental or consequential damages have been asserted
      by a third party against a Seller Indemnitee or Buyer Indemnitee, the
      indemnifying party shall be liable therefor under the provisions of this
      Article 11.

            (c) Any payment required under this Article 11 paid to any Buyer
      Indemnitee or any Seller Indemnitee, as the case may be, shall be treated
      by the Buyer and the Sellers as an adjustment of the Purchase Price;
      provided, however, that no Buyer Losses indemnified hereunder shall be
      considered payment by Sellers for Net Assets or Facility Costs, and Buyer
      shall have no obligation to pay any amounts to Sellers under Article 2
      with respect to such Buyer Losses.

            (d) This Article 11 sets forth the exclusive rights and remedies of
      Buyer and Sellers for breach of this Agreement or any of the transactions
      contemplated hereby, including, without limitation, the right to obtain
      compensation or otherwise seek indemnity pursuant to any cause of action
      including, but not limited to, a claim for breach of contract, for any
      loss directly or indirectly related to the Facility, including without
      limitation, any Buyer Losses or Sellers Losses, but without prejudice to
      the right of any party hereto to seek specific performance of the other
      party's obligations hereunder.

                                  ARTICLE XII.

                               GENERAL PROVISIONS

            12.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.

            The covenants contained in this Agreement shall survive the Closing
Date without limitation except as expressly set forth herein. The
representations and warranties contained herein shall survive the Closing Date
for a period of [*], except for (i) the representations and warranties contained
in Section 4.15 (taxes), which shall survive until the expiration of the
applicable statute of limitations, and (ii) the representations and warranties
contained in Sections 4.2 (capitalization), 4.3 (corporate authority), 4.12
(brokers and intermediaries), 5.2 (corporate

* Confidential Treatment Requested.

                                       43

<PAGE>

authority) and 5.5 (brokers and intermediaries), which shall survive the Closing
Date without limitation. Buyer's and Sellers' right to make a claim for
indemnification under Section 11.1(a) or Section 11.2(a), respectively for a
breach of any representation or warranty expires upon the expiration of the
applicable period set forth above, it being understood that claims made on or
prior to such expiration date shall survive such expiration date.

            12.2 COOPERATION. Each of the parties hereto shall use commercially
reasonable efforts to take or cause to be taken all actions, to cooperate with
the other party hereto, with respect to all actions, and to do, or cause to be
done all things necessary, proper or advisable to consummate and make effective
the transactions contemplated by this Agreement.

            12.3 WAIVER. Any failure of Sellers to comply with any of their
obligations or agreements herein contained may be waived only in writing by
Buyer. Any failure of Buyer to comply with any of its obligations or agreements
herein contained may be waived only in writing by Sellers.

            12.4 NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given upon receipt of: hand
delivery; certified or registered mail, return receipt requested; or telefax
transmission with confirmation of receipt:

                  (a)      If to Sellers, to:

                           American Home Products Corporation
                           Five Giralda Farms
                           Madison, New Jersey 07940
                           Telefax:   (973) 660-7156
                           Telephone: (973) 660-5000

                           Attention: General Counsel

                  (b)      If to Buyer, to

                           Immunex Corporation
                           51 University Avenue
                           Seattle, Washington 98101
                           Attention: General Counsel
                           Telefax:   (206) 292-9271
                           Telephone: (206) 587-0430

Such names and addresses may be changed by written notice to each person listed
above.

            12.5 GOVERNING LAW AND CONSENT TO JURISDICTION.

            (a) This Agreement shall be governed by and construed in accordance
      with the internal substantive laws and not the choice of law rules of the
      State of New York.

                                       44

<PAGE>

            (b) Any judicial proceeding brought with respect to this Agreement
      must be brought in any court of competent jurisdiction in (i) if brought
      by Buyer, in the State of New York and (ii) if brought by any Seller, in
      the State of Washington. By execution and delivery of this Agreement, each
      party (x) accepts, generally and unconditionally, the exclusive
      jurisdiction of such courts and any related appellate court, and
      irrevocably agrees to be bound by any judgment rendered thereby in
      connection with this Agreement and (y) irrevocably waives any objection it
      may now or hereafter have as to the venue of any such suit, action or
      proceeding brought in such a court or that such court is an inconvenient
      forum.

            THE PARTIES HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING TO
WHICH THEY ARE BOTH PARTIES INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY
WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT.

            12.6 COUNTERPARTS. This Agreement may be executed simultaneously in
two (2) or more counterparts, each of which shall be deemed an original but all
of which together shall constitute one and the same instrument.

            12.7 HEADINGS. The section headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.

            12.8 ENTIRE AGREEMENT. This Agreement, including the Schedules and
Exhibits hereto and the documents referred to herein, embodies the entire
agreement and understanding of the parties hereto in respect of the subject
matter contained herein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter,
including, without limitation, the MOU.

            12.9 AMENDMENT AND MODIFICATION. This Agreement may be amended or
modified only by written agreement of the parties hereto.

            12.10 BINDING EFFECT; BENEFITS. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and assigns; nothing in this Agreement, express or implied, is
intended to confer on any Person other than the parties hereto and their
respective successors and assigns (and, to the extent provided in Sections 11.1
and 11.2, the other Buyer Indemnitees and Seller Indemnitees) any rights,
remedies, obligations or liabilities under or by reason of this Agreement.

            12.11 ASSIGNABILITY. This Agreement and the rights and obligations
hereunder shall not be assignable or transferable by the Buyer or the Sellers
without the prior written consent of the other party hereto; provided, however,
that either party may assign its rights and obligations hereunder, without the
prior written consent of the other party, to an Affiliate of such party or to a
successor of the assigning party's business by reason of merger,

                                       45

<PAGE>

sale of all or substantially all of its assets, or other form of acquisition;
provided that such successor agrees in writing to be bound by this Agreement,
and provided further, however, that no assignment shall limit or affect the
assignor's obligations hereunder. Any attempted assignment in violation of this
Section 12.11 shall be void.

            12.12 SELLERS' KNOWLEDGE.

            When "to the knowledge of Sellers" or similar phrase is used herein
it shall refer to (a) the actual knowledge of any employee of Sellers and the
actual knowledge of the individuals employed by Affiliates of Sellers contained
in Section 12.12 of the Disclosure Schedule after reasonable investigation of
such matters.

            12.13 SEVERABILITY.

            If any provision of this Agreement is held to be invalid or
unenforceable by a court of competent jurisdiction, all other provisions shall
continue in full force and effect.

            12.14 The Parties shall be entitled to specific performance of the
payment terms of this Agreement and the transfer of the Shares, respectively, in
addition to any other remedy at law or equity.

                                       46

<PAGE>

            IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first written above.

                                        AMERICAN HOME PRODUCTS CORPORATION

                                        By: /s/    Kenneth J. Martin
                                           -------------------------------------
                                            Name:  Kenneth J. Martin
                                            Title: Senior Vice President Finance

                                        AHP SUBSIDIARY HOLDING CORPORATION

                                        By: /s/    Timothy T. Slater
                                           -------------------------------------
                                            Name:  Timothy T. Slater
                                            Title: Vice President and
                                                   Assistant Secretary

                                        IMMUNEX CORPORATION

                                        By: /s/    David A. Mann
                                           -------------------------------------
                                            Name:  David A. Mann
                                            Title: Executive Vice President and
                                                   Chief Financial Officer

                                       47

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