Document:

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                                                                   EXHIBIT 10.20

                                                             MS Loan No 04-17356

                  GUARANTY OF RECOURSE OBLIGATIONS OF BORROWER

      FOR VALUE RECEIVED, and to induce MORGAN STANLEY MORTGAGE CAPITAL INC., a
New York corporation, having its principal place of business at c/o ARCap
Servicing, Inc., 5605 North MacArthur Boulevard, Suite 950, Irving, Texas 75038
("Lender"), to lend to PYRAMID GILMAN STREET PROPERTY, LLC, a Delaware limited
liability company, having its principal place of business at c/o Pyramid
Breweries, Inc., Attention. Chief Financial Officer, 91 S Royal Brougham Way,
Seattle, Washington 98134 ("Borrower"), the principal sum of Seven Million Eight
Hundred Fifty Thousand and 00/100 Dollars ($7,850,000 00) (the "Loan"),
evidenced by a certain promissory note (the "Note") and secured by a certain
Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture
Filing (the "Security Instrument"), as described in Exhibit A attached hereto
and made a part hereof, and by other documents executed in connection therewith
(the "Other Security Documents")

      1.    The undersigned, PYRAMID BREWERIES, INC, a Washington corporation,
having an address at 91 S Royal Brougham Way, Seattle, Washington 98134,
Attention. Chief Financial Officer (hereinafter referred to as "Guarantor"),
hereby absolutely and unconditionally guarantees to Lender the prompt and
unconditional payment of the Guaranteed Recourse Obligations of Borrower
(hereinafter defined)

      2.    It is expressly understood and agreed that this is a continuing
guaranty and that the obligations of Guarantor hereunder are and shall be
absolute under any and all circumstances, without regard to the validity,
regularity or enforceability of the Note, the Security Instrument, or the Other
Security Documents, a true copy of each of said documents Guarantor hereby
acknowledges having received and reviewed

      3.    The term "Debt" as used in this Guaranty of Recourse Obligations of
Borrower (this "Guaranty") shall mean the principal sum evidenced by the Note
and secured by the Security Instrument, or so much thereof as may be outstanding
from time to time, together with interest thereon at the rate of interest
specified in the Note and all other sums other than principal or interest which
may or shall become due and payable pursuant to the provisions of the Note, the
Security Instrument or the Other Security Documents

      4.    The term "Guaranteed Recourse Obligations of Borrower" as used in
this Guaranty shall mean all obligations and liabilities of Borrower for which
Borrower shall be personally liable pursuant to Article 11 of the Note.

      5.    Any indebtedness of Borrower to Guarantor now or hereafter existing
(including, but not limited to, any rights to subrogation Guarantor may have as
a result of any payment by Guarantor under this Guaranty), together with any
interest thereon, shall be, and such indebtedness is, hereby deferred, postponed
and subordinated to the prior payment in full of the Debt. Until payment in full
of the Debt (and including interest accruing on the Note after the commencement
of a proceeding by or against Borrower under the Bankruptcy Reform Act of

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1978, as amended, 11 U.S.C Sections 101 et seq , and the regulations adopted
and promulgated pursuant thereto (collectively, the "Bankruptcy Code") which
interest the parties agree shall remain a claim that is prior and superior to
any claim of Guarantor notwithstanding any contrary practice, custom or ruling
in cases under the Bankruptcy Code generally), Guarantor agrees not to accept
any payment or satisfaction of any kind of indebtedness of Borrower to Guarantor
and hereby assigns such indebtedness to Lender, including the right to file
proof of claim and to vote thereon in connection with any such proceeding under
the Bankruptcy Code, including the right to vote on any plan of reorganization
Further, if Guarantor shall comprise more than one person, firm or corporation,
Guarantor agrees that until such payment in full of the Debt, (a) no one of them
shall accept payment from the others by way of contribution on account of any
payment made hereunder by such party to Lender, (b) no one of them will take any
action to exercise or enforce any rights to such contribution, and (c) if any
Guarantor should receive any payment, satisfaction or security for any
indebtedness of Borrower to any of Guarantor or for any contribution by the
others of Guarantor for payment made hereunder by the recipient to Lender, the
same shall be delivered to Lender in the form received, endorsed or assigned as
may be appropriate for application on account of, or as security for, the Debt
and until so delivered, shall be held in trust for Lender as security for the
Debt

      6.    Guarantor agrees that, with or without notice or demand, Guarantor
will reimburse Lender, to the extent that such reimbursement is not made by
Borrower, for all expenses (including counsel fees) incurred by Lender in
connection with the collection of the Guaranteed Recourse Obligations of
Borrower or any portion thereof or with the enforcement of this Guaranty

      7.    All moneys available to Lender for application in payment or
reduction of the Debt may be applied by Lender in such manner and in such
amounts and at such time or times and in such order and priority as Lender may
see fit to the payment or reduction of such portion of the Debt as Lender may
elect

      8.    Guarantor hereby waives notice of the acceptance hereof,
presentment, demand for payment, protest, notice of protest, or any and all
notice of non-payment, non-performance or non-observance, or other proof, or
notice or demand, whereby to charge Guarantor therefor

      9.    Guarantor further agrees that the validity of this Guaranty and the
obligations of Guarantor hereunder shall in no way be terminated, affected or
impaired (a) by reason of the assertion by Lender of any rights or remedies
which it may have under or with respect to either the Note, the Security
Instrument, or the Other Security Documents, against any person obligated
thereunder or against the owner of the Property (as defined in the Security
Instrument), or (b) by reason of any failure to file or record any of such
instruments or to take or perfect any security intended to be provided thereby,
or (c) by reason of the release or exchange of any property covered by the
Security Instrument or other collateral for the Loan, or (d) by reason of
Lender's failure to exercise, or delay in exercising, any such right or remedy
or any right or remedy Lender may have hereunder or in respect to this Guaranty,
or (e) by reason of the commencement of a case under the Bankruptcy Code by or
against any person obligated under the Note, the Security Instrument or the
Other Security Documents, or the death of any Guarantor, or (f) by reason of any
payment made on the Debt or any other indebtedness arising

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under the Note, the Security Instrument or the Other Security Documents, whether
made by Borrower or Guarantor or any other person, which is required to be
refunded pursuant to any bankruptcy or insolvency law, it being understood that
no payment so refunded shall be considered as a payment of any portion of the
Debt, nor shall it have the effect of reducing the liability of Guarantor
hereunder. It is further understood, that if Borrower shall have taken advantage
of, or be subject to the protection of, any provision in the Bankruptcy Code,
the effect of which is to prevent or delay Lender from taking any remedial
action against Borrower, including the exercise of any option Lender has to
declare the Debt due and payable on the happening of any default or event by
which under the terms of the Note, the Security Instrument or the Other Security
Documents, the Debt shall become due and payable, Lender may, as against
Guarantor, nevertheless, declare the Debt due and payable and enforce any or all
of its rights and remedies against Guarantor provided for herein.

      10.   Guarantor further covenants that this Guaranty shall remain and
continue in full force and effect as to any modification, extension or renewal
of the Note, the Security Instrument, or any of the Other Security Documents,
that Lender shall not be under a duty to protect, secure or insure any security
or lien provided by the Security Instrument or other such collateral, and that
other indulgences or forbearance may be granted under any or all of such
documents, all of which may be made, done or suffered without notice to, or
further consent of, Guarantor.

      11.    As a further inducement to Lender to make the Loan and in
consideration thereof, Guarantor further covenants and agrees (a) that in any
action or proceeding brought by Lender against Guarantor on this Guaranty,
Guarantor shall and does hereby waive trial by jury, (b) Guarantor will maintain
a place of business or an agent for service of process in California (the
"Property State") and give prompt notice to Lender of the address of such place
of business and of the name and address of any new agent appointed by it, as
appropriate, (c) the failure of Guarantor's agent for service of process to give
it notice of any service of process will not impair or affect the validity of
such service or of any judgment based thereon, (d) if, despite the foregoing,
there is for any reason no agent for service of process of Guarantor available
to be served, and if Guarantor at that time has no place of business in the
Property State then Guarantor irrevocably consents to service of process by
registered or certified mail, postage prepaid, to it at its address given in or
pursuant to the first paragraph hereof, Guarantor hereby waiving personal
service thereof, (e) that within thirty days after such mailing, Guarantor so
served shall appear or answer to any summons and complaint or other process and
should Guarantor so served fail to appear or answer within said thirty-day
period, said Guarantor shall be deemed in default and judgment may be entered by
Lender against the said party for the amount as demanded in any summons and
complaint or other process so served, (f) Guarantor initially and irrevocably
designates Paul J Means, Esq. with offices on the date hereof at Miller, Starr
& Regalia, 1331 N California Boulevard, Fifth Floor, Walnut Creek, California
94596, to receive for and on behalf of Guarantor service of process in the
Property State with respect to this Guaranty, (g) with respect to any claim or
action arising hereunder, Guarantor (i) irrevocably submits to the nonexclusive
jurisdiction of the courts of the State where the Property is located and the
United States District Court located in the county in which the Property is
located, and appellate courts from any thereof, and (ii) irrevocably waives any
objection which it may have at any time to the laying on venue of any suit,
action or proceeding arising out of or relating to this Security Instrument
brought in any such court, irrevocably waives any claim that any such suit,

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action or proceeding brought in any such court has been brought in an
inconvenient forum, and (h) nothing in this Guaranty will be deemed to preclude
Lender from bringing an action or proceeding with respect hereto in any other
jurisdiction.

      12.   This is a guaranty of payment and not of collection and upon any
default of Borrower under the Note, the Security Instrument or the Other
Security Documents, Lender may, at its option, proceed directly and at once,
without notice, against Guarantor to collect and recover the full amount of the
liability hereunder or any portion thereof, without proceeding against Borrower
or any other person, or foreclosing upon, selling, or otherwise disposing of or
collecting or applying against any of the mortgaged property or other collateral
for the Loan Guarantor hereby waives the pleading of any statute of limitations
as a defense to the obligation hereunder.

      13.   Each reference herein to Lender shall be deemed to include its
successors and assigns, to whose favor the provisions of this Guaranty shall
also inure. Each reference herein to Guarantor shall be deemed to include the
heirs, executors, administrators, legal representatives, successors and assigns
of Guarantor, all of whom shall be bound by the provisions of this Guaranty.

      14.   If any party hereto shall be a partnership, the agreements and
obligations on the part of Guarantor herein contained shall remain in force and
application notwithstanding any changes in the individuals composing the
partnership and the term "Guarantor" shall include any altered or successive
partnerships but the predecessor partnerships and their partners shall not
thereby be released from any obligations or liability hereunder.

      15.   Guarantor (and its representative, executing below, if any) has full
power, authority and legal right to execute this Guaranty and to perform all its
obligations under this Guaranty.

      16.   All understandings, representations and agreements heretofore had
with respect to this Guaranty are merged into this Guaranty which alone fully
and completely expresses the agreement of Guarantor and Lender.

      17.   This Guaranty may be executed in one or more counterparts by some or
all of the parties hereto, each of which counterparts shall be an original and
all of which together shall constitute a single agreement of Guaranty. The
failure of any party hereto to execute this Guaranty, or any counterpart hereof,
shall not relieve the other signatories from their obligations hereunder.

      18.   This Guaranty may not be modified, amended, waived, extended,
changed, discharged or terminated orally or by any act or failure to act on the
part of Lender or Borrower, but only by an agreement in writing signed by the
party against whom enforcement of any modification, amendment, waiver,
extension, change, discharge or termination is sought.

      19.   This Guaranty shall be deemed to be a contract entered into pursuant
to the laws of the Property State and shall in all respects be governed,
construed, applied and enforced in accordance with applicable federal law and
the laws of the Property State, without reference or giving effect to any choice
of law doctrine.

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      20.   Each Guarantor hereby waives and agrees not to assert or take
advantage of any defense based upon.

      (a)   The incapacity, lack of authority, death or disability of Borrower,
any other Guarantor or any other person or entity.

      (b)   The failure of Lender to commence an action against Borrower or any
other Guarantor or to proceed against or exhaust any security held by Lender at
any time or to pursue any other remedy whatsoever at anytime.

      (c)   Lack of notice of default, demand of performance or notice of
acceleration to Borrower, any other Guarantor or any other party with respect to
the Loan or the Guaranteed Recourse Obligations of Borrower.

      (d)   The consideration for this Guaranty.

      (e)   Any acts or omissions of Lender that vary, increase or decrease the
risk on any Guarantor.

      (f)   Any statute of limitations affecting the liability of any Guarantor
hereunder, the liability of Borrower or any Guarantor under the Loan Documents,
or the enforcement hereof, to the extent permitted by law.

      (g)   The application by Borrower of the proceeds of the Loan for purposes
other than the purposes represented by Borrower to Lender or intended or
understood by Lender or Guarantor.

      (h)   Lender's election, in any proceeding instituted under the Federal
Bankruptcy Code, of the application of Section 1111(b) (2) of the Federal
Bankruptcy Code or any successor statute.

      (i)   Any borrowing or any grant of a security interest under Section 364
of the Federal Bankruptcy Code.

      (j)   An election of remedies by Lender, even though that election of
remedies, such as a nonjudicial foreclosure (or UCC sale) with respect to
security (whether such security is real property or personal property), for a
guaranteed obligation, has destroyed the guarantor's rights of subrogation and
reimbursement against any Guarantor by the operation of Section 580d of the
California Code of Civil Procedure or otherwise.

      (k)   Any right to a fair value hearing with respect to the Property under
California Code of Civil Procedure Section 580a or otherwise to determine the
size of any deficiency under the Loan following a trustee's sale with respect to
the Property.

      (l)   All tights and defenses that Guarantor may have because Borrower's
debt is secured by real property This means, among other things:

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            (i) Lender may collect from Guarantor without first foreclosing on
      any real or personal property collateral pledged by Borrower

            (ii) If Lender forecloses on any real property collateral pledged by
      Borrower:

                  (A) The amount of the debt may be reduced only by the price
            for which that collateral is sold at the foreclosure sale, even if
            the collateral is worth more than the sale price.

                  (B) Lender may collect from Guarantor even if Lender, by
            foreclosing on the real property collateral, has destroyed any right
            Guarantor may have to collect from Borrower.

      This is an unconditional and irrevocable waiver of any rights and defenses
Guarantor may have because Borrower's debt is secured by real property. These
rights and defenses include, but are not limited to, any rights or defenses
based upon Section 580a, 580b, 580d, or 726 of the California Code of Civil
Procedure.

      (m)   Without limiting the generality of the foregoing, any and all
benefits which might otherwise be available to it under California Civil Code
Sections 2809, 2810, 2819, 2839, 2845 through 2847, 2849, 2850, 2899 and
3433, and California Code of Civil Procedure Sections 580a, 580b, 580d and 726.

      (n)   Any defense based upon any statute or rule of law which provides
that the obligation of a surety must be neither larger in amount nor in other
respects more burdensome than that of the principal.

      (o)   Any claim or other rights which Guarantor may now have or hereafter
acquire against Borrower or any other guarantor of all or any of the obligations
of Guarantor hereunder that arise from the existence or performance of
Guarantor's obligations under this Guaranty or any of the other Loan Documents,
including, without limitation, any right of subrogation, reimbursement,
exoneration, contribution or indemnification, any right to participate in any
claim or remedy of Lender against Borrower or any collateral which Lender now
has or hereafter acquires, whether or not such claim, remedy or right arises in
equity or under contract, statute or common law, by any payment made hereunder
or otherwise, including, without limitation, the right to take or receive from
Borrower, directly or indirectly, in cash or other property or by setoff or in
any other manner, payment or security on account of such claim or other rights.

      (p)   Any duty on the part of Lender to disclose to Guarantor any facts
Lender may now or hereafter know about Borrower, regardless of whether Lender
has reason to believe that any such facts materially increase the risk beyond
that which Guarantor intends to assume, or has reason to believe that such facts
are unknown to Guarantor, or has a reasonable opportunity to communicate such
facts to Guarantor, since Guarantor acknowledges that Guarantor is fully
responsible for being and keeping informed of the financial condition of
Borrower and of all circumstances bearing on the risk of nonperformance of any
obligations hereby guaranteed.

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      IN WITNESS WHEREOF, Guarantor has duly executed this Guaranty as of
January 27, 2005

                                       GUARANTOR:

                                       PYRAMID BREWERIES, INC,
                                       a Washington corporation

                                       By: /s/ James K. Hilger
                                          --------------------------------------
                                       Name: James K. Hilger
                                       Title. CFO

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                                    EXHIBIT A

                  (DESCRIPTION OF NOTE AND SECURITY INSTRUMENT)

      1.    Promissory Note (the "Note") dated January 27, 2005 by Borrower in
favor of Lender in the original principal amount of the Loan.

      2.    Deed of Trust, Assignment of Leases and Rents, Security Agreement
and Fixture Filing dated January 27, 2005 by Borrower in favor of Lender, which
secures the Note.

                                       8<PAGE>
                                                                   Exhibit 10.24

             2005 OFFICER INCENTIVE COMPENSATION PLAN (OICP) POLICY

PURPOSE/PROGRAM OBJECTIVE

This program is a performance based incentive program for certain Company
officers. The program's main purpose is to drive improvement in the company's
overall business performance (performance as measured by EBITDA after
maintenance CAPEX).

SCOPE/ELIGIBILITY CRITERIA

The following Company officers are currently eligible (as of 1/1/05) for the
OICP:

      1.    Chief Executive Officer (CEO)

      2.    Chief Financial Officer (CFO) / VP-Finance

      3.    VP-Sales

      4.    VP-Alehouse Operations

      5.    VP-Brewery Operations

      6.    Controller, Chief Accounting Officer

All bonuses will be earned and paid annually. Participants will need to be on
the payroll at the end of the year or at the close in order to get paid. New
hires into any of these positions will participate on a pro-rata basis,
beginning with the first month after hire. The compensation committee will
approve the introduction of any new participants/new hires to the plan and the
actual awards to all eligible participants.

PERFORMANCE INCENTIVE PLAN (PIP)

The Officer Incentive Compensation Plan (OICP) pays to officers (positions
listed above) a bonus under the PIP in the form of an incentive pool. The PIP
incentive pool will be calculated on a four tier basis based on performance
goals approved by the Compensation Committee:

      -     1) No PIP payments if the management team fails to achieve the
            Budgeted Adjusted EBITDA target for 2005;

      -     2) 15% of the pre-PIP Adjusted EBITDA up to the Total Adjusted
            EBITDA target if the Management team meets or exceeds the Budgeted
            Adjusted EBITDA target, plus;

      -     3) 25% of any excess pre-PIP Adjusted EBITDA above the Total
            Adjusted EBITDA target, up to the Adjusted EBITDA target, plus;

      -     4) 50% of any excess pre-PIP Adjusted EBITDA above the Adjusted
            EBITDA target.

      All capital expenditures except those that are a part of the Alehouse
      Expansion strategy are deducted from EBITDA to get to the Adjusted EBITDA
      number. However, if the company is faced with a major capital expenditure
      in any year (e.g. the purchase of a new filler), an allowance or
      alternative mechanism has been created to account for this type of
      expenditure for incentive compensation purposes. If a CAPEX request is
      (a)greater than the threshold amount approved by the Compensation
      Committee, (b) is associated with a single project, and (c) is normally
      capitalizable under GAAP, then management can explore two options: (1)
      secure an external lease for the project, or (2) propose an internal lease
      arrangement to the BOD for consideration. IF the BOD determines that it
      will "loan" the money to management, the cost of the loan will be deducted
      from EBITDA to arrive at Adjusted EBITDA for purposes of incentive
      compensation. The terms and conditions of the inside or outside lease will
      be negotiated at the time the issue presents itself.

      Any asset sales in excess of the threshold amount approved by the
      Compensation Committee will not be included in the calculation of Adjusted
      EBITDA for incentive purposes, and the impact of such sales will be
      reviewed and agreed upon in setting future goals.

      In the event that Company acquires another company, the Adjusted EBITDA
      targets shall be increased by an amount equal to 10% of the combined
      amount of enterprise value of the acquired company and the transaction
      costs related

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      to the acquisition, pro rated for the year of acquisition. This new amount
      shall then become the new Adjusted EBITDA target for the Company.

There will be no "planned" exclusions to the PIP plan, either positive or
negative. If the economy goes into the tank, or there is another energy crisis,
or the company is faced with unanticipated price increases, management lives
with the terms of the OICP for the year.

The allocation of the PIP bonus pool is as follows:

      -     CEO=30%

      -     VPs (4)=15%

      -     Unallocated (discretionary)=10%

If management incentive earnings exceed a specified level indexed to base
salary, incentive earnings will be given in restricted stock (the actual award
will be a combination of cash and stock in order to cover any tax obligation).
Index amounts are as follows:

      -     CEO=100% of base pay

      -     VPs=50% of base pay

ALTERNATE INCENTIVE COMPENSATION PLAN (AICP)

In the event that the Company is acquired, sold, or merged with another entity
resulting in a change of control, the OICP will provide an Alternate Incentive
Compensation Plan (AICP) to the Company's officers (listed below) that replaces
the PIP. In the event that the Company is acquired, sold, or merged with another
entity in a transaction that results in providing a net return to shareholders
in excess of a minimum target amount approved by the Compensation Committee as
compared to the Company's pre-transaction shareholders, an incentive bonus pool
will be created under the AICP to reward the Company's Officers. The
Compensation Committee will also approve budgeted target amounts. The AICP
incentive pool will be calculated on a three tier basis:

      -     No AICP payments if the net return to shareholders is less than the
            minimum target amount as compared to the Company's pre-transaction
            shareholders;

      -     8% of the net return to shareholders in excess of the minimum target
            amount as compared to the Company's pre-transaction shareholders up
            to a net return of the budgeted target amount as compared to
            pre-transaction shareholders, plus;

      -     10% of the net return to shareholders in excess of the budgeted
            target amount as compared to the Company's pre-transaction
            shareholders until the cumulative amount of the bonus pool reaches a
            maximum of $2.5 million.

The AICP bonus is to be paid in cash to the Officers at the close of a
transaction contemplated above. The AICP is an additional payment to the
officers over and above any employment agreements, severance agreements, stock
option plans, or other existing employee benefit plan in place at the time of
the close of the transaction. However, in the event that an officer (listed
below) has been employed by the Company for a period of less than two years at
the completion of the transaction process, then any severance payments due the
officer under existing severance agreements will be deducted from that officer's
AICP bonus.

Should an officer be terminated without cause during the transaction process,
that officer will be eligible to fully participate in the AICP bonus pool if the
transaction is completed within six months of his termination. After six months,
the officer's share of the AICP bonus pool will be forfeited. In the event that
an officer is terminated for cause or voluntarily leaves the Company prior to
the close of a transaction, that officer shall be ineligible to participate in
the AICP bonus pool and will forfeit his bonus under the plan. Any forfeited
AICP bonus pool monies shall be at the discretion of the Company's Board of
Directors to deploy as it deems appropriate.

The allocation of the AICP bonus pool is as follows:

      -     CEO=27%

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      -     CFO=20%

      -     VPs (3)=15%

      -     Controller=3%

      -     Unallocated (discretionary)=5% to be allocated at the discretion of
            the CEO in consultation with other officers.

ADMINISTRATION GUIDELINE

Annual payment of the PIP will occur after year-end results have been audited
and attested to by the company's outside auditor, and after the compensation
committee has reviewed and approved the incentive awards. Review, approval and
payments of PIP bonuses to occur no later than the fourth Thursday of February
each year. Payments of AICP bonuses will be made concurrently with payments to
pre-transaction shareholders

The compensation committee is responsible for initiating review, approval and
payment of the OICP. The committee may call upon the CEO/CFO, as well as the
Controller, HR Director, or the company's outside auditors in the compilation of
the necessary data.

QUESTIONS

Direct any questions / comments to the CEO.

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