1 EXHIBIT 10.38 THIRD AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT This third amendment to amended and restated credit agreement ("Amendment"), dated as of February 22, 1999, is made and entered into by and between REDHOOK ALE BREWERY,...

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EXHIBIT 10.38

THIRD AMENDMENT
TO AMENDED AND RESTATED CREDIT AGREEMENT

This third amendment to amended and restated credit agreement
("Amendment"), dated as of February 22, 1999, is made and entered into by and
between REDHOOK ALE BREWERY, INCORPORATED, a Washington corporation
("Borrower"), and U.S. BANK NATIONAL ASSOCIATION, a national banking
association, successor by merger to U. S. Bank of Washington, National
Association ("U.S. Bank"). Words and phrases with initial capital letters have
the meanings given to them in Article I of this Amendment.

R E C I T A L S :

A. On or about June 5, 1995, U.S. Bank and Borrower entered into that
certain amended and restated credit agreement (together with all amendments,
supplements, exhibits, and modifications thereto, the "Credit Agreement"),
whereby U.S. Bank agreed to make loans and advances of credit to Borrower on the
terms and conditions set forth therein.

B. Borrower and U.S. Bank have entered into two amendments to the Credit
Agreement, dated as of July 25, 1996, and September 15, 1997, respectively,
whereby U.S. Bank extended the Commitment Period of the Revolving Loan.

C. In accordance with the terms of an October 22, 1998, commitment
letter, Borrower and U.S. Bank have agreed to modify the terms of the Revolving
Loan and to extend the Commitment Period to July 1, 2001. The purpose of this
Amendment is to set forth the terms and conditions of U.S. Bank's and Borrower's
agreements.

NOW, THEREFORE, in consideration of the mutual covenants and conditions
set forth herein, the parties agree as follows:

Article I. DEFINITIONS AND AMENDMENT

1.1 Defined Terms. As used in this Amendment, words and phrases with
initial capital letters shall have the meanings given to them in the Credit
Agreement, except as otherwise defined herein, or as the context otherwise
requires.

1.2 Modified and Additional Defined Terms. Section 1.1 of the Credit
Agreement is modified to amend in their entirety (if presently defined in
Section 1.1 of the Credit Agreement) or add (if not presently defined in Section
1.1 of the Credit Agreement) the following defined terms:

"Acquisition Loan" has the meaning set forth in Section 2.7 herein and
includes all modifications and renewals of any Acquisition Loan.

"Acquisition Note" has the meaning set forth in Section 2.8 herein and
includes all modifications, renewals, and replacement of any Acquisition Note.

"Amortization Term" has the meaning set forth in Section 2.10 herein.

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"Borrowing Notice" has the meaning set forth in Section 4.2 herein.

"Borrowing Period" has the meaning set forth in Section 2.5(b) herein.

"Cash Flow" means, for any period, Net Income, plus depreciation and
amortization, plus Interest Expense, plus increases in deferred tax accounts,
plus other non-cash expenses, less extraordinary gains from any sale of
Borrower's assets to the extent such sales are not in the ordinary course of
Borrower's business, less increases in noncurrent assets not funded with new
equity, new long-term Consolidated Indebtedness or Borrower's own cash that was
available at the beginning of such period, and less dividends and distributions
paid to Borrower's shareholders, in each case, for or during such period.

"Conversion Notice" has the meaning set forth in Section 2.7 herein.

"Debt Service" means, for any period, the sum of Interest Expense for
such period plus the sum of scheduled payments of principal for such period,
whether or not made, with respect to Consolidated Indebtedness of Borrower,
including any scheduled payments under leases that are or should be capitalized
pursuant to GAAP.

"Funded Debt" means, as of the date of measurement, the Consolidated
interest-bearing Indebtedness of Borrower.

"Funded Debt Ratio" means the ratio, determined as of the last day of
each fiscal quarter of Borrower, beginning with the fiscal quarter ending March
31, 1999, of Funded Debt to Cash Flow (calculated on a rolling four-quarter
basis as of the last day of each fiscal quarter of Borrower).

"Interest Period" means, as to any LIBOR Rate Borrowing, a period of
one, two, three, six, or twelve months commencing on the date the LIBOR
Borrowing Rate becomes applicable thereto; provided, however, that (a) the first
day of each Interest Period must be a Business Day; (b) no Interest Period shall
be selected which would extend beyond the expiration of the Borrowing Period
applicable to such LIBOR Rate Borrowing or beyond the maturity date of the
Acquisition Loan or Term Loan, as applicable; (c) any Interest Period which
would otherwise expire on a day which is not a Business Day shall be extended to
the next succeeding Business Day, unless the result of such extension would be
to extend such Interest Period into another calendar month in which event the
Interest Period shall end on the immediately preceding Business Day; (d) any
Interest Period that begins on the last Business Day of a calendar month (or on
a day for which there is no numerically corresponding day in the calendar month
at the end of such Interest Period) shall end on the last Business Day of a
calendar month; and (e) no Interest Period shall extend beyond a date on which
Borrower is required to make a scheduled payment of principal unless the
aggregate principal amount of Prime Rate Borrowings and LIBOR Rate Borrowings
with Interest Periods expiring on or before such date equals or exceeds the
amount required to be paid on such date.

"LIBOR Borrowing Rate" means the LIBOR Rate plus the applicable margin
determined in accordance with Section 4.1 herein.

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"LIBOR Rate" means, for any Interest Period, the average offered rate
for deposits in United States Dollars (rounded upwards, if necessary, to the
nearest one-sixteenth of one percent) for delivery of such deposits on the first
day of such Interest Period, for the number of months therein, which appears on
Telerate Page 3750 as of 11:00 a.m., London time (or such other time as of which
such rate appears) on the day that is two Business Days preceding the first day
of such Interest Period; or the rate for such deposits determined by U.S. Bank
at such time based on such other published service of general application as
shall be selected by U.S. Bank for such purposes; provided, that if U.S. Bank is
unable to determine the rate in the foregoing manner, U.S. Bank may determine
that the LIBOR Rate is equal to the rates offered to U.S. Bank for deposits in
United States Dollars (rounded upwards, if necessary, to the nearest
one-sixteenth of one percent) in the interbank Eurodollar market at such time
for delivery on the first day of such Interest Period for the number of months
therein; and provided, further, that in any case the LIBOR Rate shall be
adjusted to take into account the maximum reserves required to be maintained for
Eurocurrency liabilities by banks during each such Interest Period as specified
in Regulation D of the Board of Governors of the Federal Reserve System or any
successor regulation.

"LIBOR Rate Borrowing" means any Loan or portion of a Loan that accrues
interest at a LIBOR Borrowing Rate, as selected by Borrower. The minimum amount
of each LIBOR Rate Borrowing shall be $500,000.

"Loans" means any loan made by U.S. Bank to Borrower pursuant to this
Agreement or any of the other Loan Documents, as well as all renewals and
modifications of, or amendments to, any Loan.

"Loan Documents" means this Agreement, the Notes, the Security
Agreement, the Existing Loan Documents, and the Commitment Letter, together with
all other agreements, instruments, and documents arising out of or relating to
this Agreement or the Loans, and includes all renewals and modifications
thereof.

"Notes" means any note evidencing a Loan, as well as all renewals,
replacements, and amendments of any Note.

"Prime Borrowing Rate" means the Prime Rate.

"Security Agreement" means that certain security agreement executed and
delivered by Borrower under the terms of the Third Amendment, and includes all
amendments, renewals, and modifications of the Security Agreement.

"Telerate Page 3750" means the display designated as such on
Teleratesystem Incorporated (or such other page as may replace page 3750 on that
service for the purpose of displaying London interbank offered rates of major
banks for United States Dollar deposits).

"Term Loan" has the meaning set forth in Section 3.1 herein and includes
all modifications and renewals of the Term Loan.

"Term Note" has the meaning set forth in Section 3.2 herein and includes
all modifications, replacement, and renewals of the Term Note.

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"Third Amendment" means that certain third amendment to amended and
restated credit agreement, dated as of February 22, 1999, by and between
Borrower and U.S. Bank, and includes all amendments, supplements, exhibits, and
modifications to the Third Amendment.

"U.S. Bank" means U.S. Bank National Association, a national banking
association, successor by merger to U. S. Bank of Washington, National
Association, and its successors and assigns.

1.3 Deleted Defined Terms. Section 1.1 of the Credit Agreement is hereby
amended by the deletion of the following defined terms:

(a) "IBOR Borrowing Rate;"

(b) "IBOR Rate;"

(d) "Incremental Rate;"

(e) "Revolving Term Loan;" and

(f) "Revolving Term Note."

1.4 LIBOR Rate. The Credit Agreement is hereby amended by replacing each
defined term that includes the abbreviation "IBOR" with "LIBOR," such that
references to the defined terms "IBOR Borrowing Rate," "IBOR Rate," and "IBOR
Rate Borrowing" now are read as "LIBOR Borrowing Rate," "LIBOR Rate," and "LIBOR
Rate Borrowing."

1.5 Incorporation of Recitals and Exhibits. The foregoing recitals are
incorporated into this Amendment by reference. All references to "Exhibits"
contained herein are references to exhibits attached to this Amendment, the
terms and conditions of which are made a part of this Amendment for all
purposes.

1.6 Amendment. The Credit Agreement and the other Loan Documents are
hereby amended as set forth herein. Except as specifically provided herein, all
of the terms and conditions of the Credit Agreement and each of the other Loan
Documents shall remain in full force and effect throughout the terms of the
Loans and any extensions or renewals thereof.

Article II. REVOLVING LOAN AND ACQUISITION LOANS

2.1 Revolving Loan. Article II of the Credit Agreement is hereby amended
in its entirety to read as follows:

ARTICLE II. REVOLVING LOAN

2.1 Revolving Loan Commitment. Subject to and upon the terms and
conditions set forth herein and in reliance upon the representations,
warranties, and covenants of Borrower contained herein or made pursuant
hereto, U.S. Bank

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will advance funds to Borrower from time to time during the period ending on
July 1, 2001 ("Commitment Period"), in an aggregate amount not exceeding at
any one time $10,000,000, less the aggregate amount of all Acquisition Loans
then outstanding ("Revolving Loan"). Borrower may borrow, repay without
penalty or premium (except as provided in Section 4.12 hereof), and reborrow
hereunder, either the full amount of the Revolving Loan or any lesser sum.

2.2 Use of Proceeds. The proceeds of the Revolving Loan shall be used by
Borrower for general corporate purposes, including financing of Capital
Expenditures in accordance with the terms of this Agreement; provided that,
and subject to the other limitations set forth in Articles VII and VIII of
this Agreement, usage of the Revolving Loan for an acquisition of all or
substantially all of the assets of a brewery or an investment in the capital
stock of a brewery is limited to $10,000,000 per occurrence and $10,000,000
in the aggregate, without U.S. Bank's prior written consent. Notwithstanding
anything to the contrary in this Section 2.2, Borrower shall not use any
proceeds of the Revolving Loan to repay any Acquisition Loan.

2.3 Revolving Note. The Revolving Loan shall be evidenced by a
promissory note in the form attached to the Third Amendment as Exhibit A
("Revolving Note").

2.4 Revolving Loan Interest Rates. Subject to Section 4.9 herein,
Borrower shall pay interest on the principal amount outstanding under the
Revolving Loan from time to time at a per annum rate of interest equal to
the applicable Prime Borrowing Rate for any Prime Rate Borrowing, and at the
applicable LIBOR Borrowing Rate for any LIBOR Rate Borrowing, pursuant to
the other terms and conditions hereof and subject to adjustment as set forth
in Section 4.1 of this Agreement.

2.5 Repayment of Revolving Loan.

(a) Until the Revolving Loan shall have been paid in full, Borrower
shall pay in arrears to U.S. Bank an amount equal to all accrued interest on
the Revolving Loan on the first day of the first month following the initial
advance under the Revolving Loan and on the same day of each month
thereafter.

(b) Borrower shall repay each advance that is in an amount of $100,000
or more within 120 days of its disbursement ("Borrowing Period"). Within the
Borrowing Period, Borrower may repay any advance that was made in an amount
of $100,000 or more by converting it to an Acquisition Loan as provided in
Section 2.7 of this Agreement. Borrower shall pay U.S. Bank all outstanding
principal, accrued interest, and other charges with respect to the Revolving
Loan on July 1, 2001.

2.6 Revolving Loan Fee. Borrower shall pay U.S. Bank a nonrefundable fee
of $50,000 for the Revolving Loan, of which $25,000 shall be

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paid concurrently with the execution of the Third Amendment and, unless U.S.
Bank's obligation to make advances under the Revolving Loan has been
terminated and all outstanding principal, accrued interest, and other
charges with respect to the Revolving Loan have been paid before July 1,
1999, the remaining $25,000 shall be paid on or before July 1, 1999.

2.7 Acquisition Loans. Subject to and upon the terms and conditions set
forth herein, and in reliance by U.S. Bank upon the representations,
warranties, and covenants of Borrower contained herein or made pursuant
hereto, Borrower may elect to convert any advance under the Revolving Loan
to a term loan ("Acquisition Loan"), by giving U.S. Bank at least ten
Business Days' written notice prior to the expiration of the Borrowing
Period ("Conversion Notice"). The Conversion Notice shall state (a) the date
and amount of the advance that Borrower has elected to convert to an
Acquisition Loan; (b) the effective date of the conversion to an Acquisition
Loan (which must be no later than the expiration of the Borrowing Period),
and (c) an Amortization Term of up to 120 months for the requested
Acquisition Loan. Borrower may elect to convert advances under the Revolving
Loan to Acquisition Loans only so long as no Default or Event of Default
exists and in amounts of not less than $100,000.

2.8 Acquisition Notes. Each Acquisition Loan shall be evidenced by a
promissory note substantially in the form attached to the Third Amendment as
Exhibit B ("Acquisition Note"). Each Acquisition Note shall state the
principal amount of the Acquisition Loan evidenced by the Acquisition Note,
shall be dated as of the effective date of the Acquisition Loan, and shall
provide for the Acquisition Note's maturity on the date five years after the
date of the first required principal and interest payment.

2.9 Acquisition Loan Interest Rates. Subject to Section 4.9 herein,
Borrower shall pay interest from the date of the Acquisition Note on the
principal amount thereof remaining unpaid from time to time at a per annum
rate of interest equal to the applicable Prime Borrowing Rate for any Prime
Rate Borrowing, and at the applicable LIBOR Borrowing Rate for any LIBOR
Rate Borrowing, pursuant to the other terms and conditions hereof and
subject to adjustment as set forth in Section 4.1 of this Agreement.

2.10 Repayment of Acquisition Loans.

(a) With respect to each Acquisition Loan, commencing on the first day
of the first month following the date of the Acquisition Note evidencing
such Loan, and continuing on the first day of each month thereafter,
Borrower shall pay U.S. Bank all accrued interest on the principal balance
of the Acquisition Loan.

(b) With respect to each Acquisition Loan, in addition to the interest
payments required in Section 2.10(a), Borrower shall make monthly payments
of principal to U.S. Bank in 60 equal, consecutive installments of principal
sufficient

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to repay the initial principal balance of such Acquisition Loan over the
amortization period, not to exceed 120 months, that Borrower selected for
the Acquisition Loan in its Conversion Notice ("Amortization Term").
Borrower's monthly principal payments with respect to each Acquisition Loan
shall commence on the first day of the first month following the date of the
Acquisition Note evidencing such Loan, and shall continue on the first day
of each month thereafter.

(c) Borrower shall pay U.S. Bank all outstanding principal, accrued
interest, and other charges with respect to an Acquisition Loan on the date
five years after the date of the first required principal and interest
payment with respect to such Loan, whether or not and regardless of when
made. Borrower understands and agrees that a substantial portion of the
principal balance will be outstanding and unpaid on the maturity date of any
Acquisition Loan for which Borrower has selected an Amortization Term of
more than 60 months.

2.11 Acquisition Loan Fee. Concurrently with Borrower's delivery of any
Conversion Notice to U.S. Bank, Borrower shall pay a nonrefundable fee for
the requested Acquisition Loan equal to 0.25 percent of the requested
Acquisition Loan's principal balance.

2.2 Renewal Revolving Note. Concurrently with the execution of this
Amendment, Borrowing shall execute and deliver to U.S. Bank a renewal promissory
note in the form attached hereto as Exhibit A ("Renewal Revolving Note"). The
Renewal Revolving Note shall be made in substitution for, but not in payment of
the renewal revolving note dated as of September 15, 1997, which shall be marked
"renewed" and retained by U.S. Bank until the Revolving Loan has been paid in
full and U.S. Bank's commitment to make advances under the Revolving Loan has
terminated. Upon execution of this Amendment, the Renewal Revolving Note shall
be a "Revolving Note" for all purposes of the Credit Agreement and the other
Loan Documents.

Article III. TERM LOAN

Article III of the Credit Agreement is hereby amended in its entirety to
read as follows:

ARTICLE III. TERM LOAN

3.1 Term Loan. Prior to the date of the Third Amendment and on the terms
and conditions of this Agreement, U.S. Bank made a term loan to Borrower in
the initial principal amount of $10,000,000 and with an outstanding
principal balance, as of the date of the Third Amendment, of $8,250,000, the
repayment of which, as well as other terms and conditions, are subject to
this Agreement, as amended ("Term Loan").

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3.2 Term Note. The Term Loan is evidenced by and repayable with interest
in accordance with the terms of a promissory note in the form attached to
the Third Amendment as Exhibit C (the "Term Note").

3.3 Interest Rates. Subject to Section 4.9 herein, Borrower shall pay
interest on the principal amount of the Term Loan remaining unpaid from time
to time at a per annum rate of interest equal to the applicable Prime
Borrowing Rate for any Prime Rate Borrowing, and at the applicable LIBOR
Borrowing Rate for any LIBOR Rate Borrowing, pursuant to the other terms and
conditions of this Agreement and subject to adjustment as set forth in
Section 4.1 of this Agreement.

3.4 Repayment.

(a) Borrower shall pay in arrears to U.S. Bank an amount equal to all
accrued interest on the Term Loan; such monthly payments of interest
commenced on July 1, 1996, and shall continue on the first day of each month
thereafter.

(b) In addition to the interest payments required in Section 3.4(a),
Borrower shall make monthly payments of principal to Lender in 60 equal,
consecutive installments of $37,500, such monthly installments commenced on
July 1, 1997, and shall continue on the first day of each month thereafter
until June 5, 2002, at which time the entire principal and any accrued and
unpaid interest on the Term Loan shall be paid in full.

Article IV. GENERAL PROVISIONS APPLICABLE TO THE LOANS

4.1 Interest Rates. Section 4.1 of the Credit Agreement is hereby
amended in its entirety to read as follows:

4.1 Interest Rates.

(a) Subject to the terms of this Section 4.1 and Section 4.9, and during
the period commencing with the date of the Third Amendment and ending on
June 5, 1999, the interest rates for the Loans shall be adjusted based on
the Capital Ratio, as established for any preceding fiscal quarter of
Borrower by the financial statements delivered to U.S. Bank pursuant to
Section 6.1(a) of this Agreement, whether as initially submitted or as
revised, as set forth in the following matrix:

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DATE OF THIRD AMENDMENT TO JUNE 6, 1999
--------------------------------------------------------------------------------

CAPITAL RATIO PRIME BORROWING RATE LIBOR BORROWING RATE
--------------------------------------------------------------------------------------------

Less than or equal to Prime LIBOR Rate
0.5:1.0 Rate plus 1 percent
(100 basis points)
--------------------------------------------------------------------------------------------
Less than or equal to Prime LIBOR Rate
1.0:1.0 and greater than Rate plus 1.25 percent
0.5:1.0 (125 basis points)
--------------------------------------------------------------------------------------------
Less than or equal to Prime LIBOR Rate
1.25:1.0 and greater than Rate plus 1.75 percent
1.0:1.0 (175 percent basis points)
--------------------------------------------------------------------------------------------
Greater than Prime Rate Not
1.25:1.0 plus 2.5 percent Available
(250 basis points) After Default
(Default Rate)
--------------------------------------------------------------------------------------------

(b) Subject to the terms of this Section 4.1 and Section 4.9, for the
period commencing on June 6, 1999, and continuing thereafter, (i) the interest
rates for the Term Loan shall be adjusted based on the Capital Ratio on the
terms and as set forth in Section 4.1(a) herein, and (ii) the interest rates for
the Revolving Loan and the Acquisition Loans shall be adjusted based on the
Funded Debt Ratio, as established for any preceding fiscal quarter of Borrower
by the financial statements delivered to U.S. Bank pursuant to Section 6.1(a) of
this Agreement, whether as initially submitted or as revised, as set forth in
the following matrix:

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JUNE 6, 1999, AND THEREAFTER
--------------------------------------------------------------------------------

REVOLVING LOANS ACQUISITION LOANS
-----------------------------------------------------------------------------
PRIME
FUNDED DEBT RATIO BORROWING LIBOR PRIME LIBOR BORROWING RATE
RATE BORROWING RATE BORROWING RATE
----------------------------------------------------------------------------------------------------

Less than or equal to Prime LIBOR Rate Prime Rate LIBOR Rate
2.25:1.0 Rate plus 1 percent plus 0.25 percent plus 1.25 percent
(100 basis (25 basis points) (125 basis points)
points)
----------------------------------------------------------------------------------------------------
Less than or equal to Prime LIBOR Rate Prime Rate LIBOR Rate
3.0:1.0 and greater Rate plus 1.25 percent plus 0.25 percent plus 1.5 percent
than 2.25:1.0 (125 basis (25 basis points (150 basis points)
points)
----------------------------------------------------------------------------------------------------
Less than or equal to Prime LIBOR Rate Prime Rate LIBOR Rate
3.75:1.0 and greater Rate plus 1.5 percent plus 0.25 percent plus 1.75 percent
than 3.0 :1.0 (150 basis (25 basis points (175 basis points)
points)
----------------------------------------------------------------------------------------------------
Greater than Prime LIBOR Rate Prime Rate LIBOR Rate
3.75:1.0 Rate plus 2.0 percent plus 0.25 percent plus 2.25 percent
(200 basis (25 basis points (225 basis points)
points)
----------------------------------------------------------------------------------------------------

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(c) Any adjustment of the Prime Borrowing Rate provided for in this
Section 4.1 shall be effective as of the first day of the month following
the month in which U.S. Bank receives Borrower's financial statements
establishing a ratio in a new range of Capital Ratios or Funded Debt Ratios,
as the case may be, for the immediately preceding fiscal quarter. Any
adjustment of the LIBOR Borrowing Rate provided for in this Section 4.1
shall be effective as of the first day following the Interest Periods that
expire after the month in which U.S. Bank receives Borrower's financial
statements establishing a ratio in a new range of Capital Ratios or Funded
Debt Ratios, as the case may be, for the immediately preceding fiscal
quarter.

(d) If any audit of Borrower's annual financial statements by
independent certified public accountants does not confirm the Capital Ratio
or the Funded Debt Ratio, as the case may be, reflected in any of that
fiscal year's quarterly financial statements delivered by Borrower to U.S.
Bank, then the interest rates shall be automatically adjusted to the
applicable interest rates set forth in the matrix retroactive to the first
day of the month following the month in which U.S. Bank received a quarterly
financial statement of Borrower subsequently corrected by such audit.
Following any retroactive adjustment of interest rates, if Borrower (i) owes
additional interest to U.S. Bank, Borrower will pay such interest
immediately upon demand by U.S. Bank, or (ii) has paid more interest than
would have accrued at the adjusted rates, U.S. Bank will refund to Borrower
such excess, immediately upon Borrower's demand.

4.2 Manner of Borrowing. Section 4.2 of the Credit Agreement is hereby
amended in its entirety to read as follows:

4.2 Manner of Borrowing.

(a) Whenever Borrower desires to use the LIBOR Borrowing Rate, Borrower
shall give U.S. Bank irrevocable notice (either in writing or orally and
promptly confirmed in writing) between 8:00 a.m. and 1:00 p.m. (Seattle,
Washington time) two Business Days prior to the desired effective date of
the LIBOR Borrowing Rate ("Borrowing Notice"). Any oral Borrowing Notice
shall be given by, and any written Borrowing Notice or confirmation of an
oral Borrowing Notice shall be signed by ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, or ▇▇▇▇ ▇▇▇▇▇▇▇, each of whom is authorized to request Loans,
until written notice by Borrower of the revocation of such authority is
received by U.S. Bank. Each Borrowing Notice shall specify the requested
effective date of the LIBOR Borrowing Rate, the Interest Period, the amount
of the LIBOR Rate Borrowing, and whether Borrower is requesting a new
advance at the LIBOR Borrowing Rate, conversion of all or any portion of the
Prime Rate Borrowing to a LIBOR Rate Borrowing, or a new Interest Period for
an outstanding LIBOR Rate Borrowing. Notwithstanding any other term of this
Agreement, Borrower may elect the LIBOR Borrowing Rate to apply to Loans or
portions thereof only in the minimum principal amount of $500,000. In the
event Borrower has not given U.S. Bank a Borrowing Notice two Business Days
in advance of the expiration of any Interest Period of Borrower's intent to
convert a LIBOR Rate Borrowing to a new LIBOR Rate Borrowing at the
expiration of such Interest Period, then such LIBOR Rate Borrowing shall
automatically, at the expiration of such Interest Period, be deemed to be a
Prime Rate Borrowing.

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(b) Borrower may obtain LIBOR Borrowing Rate quotes from U.S. Bank
between 8:00 a.m. and 1:00 p.m. (Seattle, Washington time) on any Business
Day. Borrower may request an advance, conversion of any portion of a Prime
Rate Borrowing to a LIBOR Rate Borrowing or a new Interest Period for an
existing LIBOR Rate Borrowing, at such rate only by giving U.S. Bank notice
in accordance with the provisions of this Section 4.2 before 1:00 p.m.
(Seattle, Washington time) on such day. Each Borrowing Notice shall be
irrevocable. Each Borrowing Notice requesting a new advance or conversion of
an advance to an Acquisition Loan (as opposed to an interest rate renewal or
interest rate conversion) shall be deemed to constitute a representation and
warranty by Borrower that, as of the date of the Borrowing Notice, (i) the
statements set forth in Article VIII are true and correct, (ii) no material
adverse change in Borrower's financial condition, except as previously
disclosed to U.S. Bank in writing, has occurred subsequent to December 31,
1997, and (iii) no Default or Event of Default has occurred and is
continuing.

(c) Any Loans made pursuant to this Section 4.2 shall be conclusively
presumed to have been made to or for the benefit of Borrower when made in
accordance with such a request from an authorized Person and direction for
disposition or when such Loan is deposited to the credit of the account of
Borrower with U.S. Bank or is transmitted to any other bank with directions
to credit the same to the account of Borrower at such bank, regardless of
whether Persons other than those authorized hereunder to make requests for
Loans have authority to draw against any such account. Borrower acknowledges
that U.S. Bank cannot effectively determine whether a particular request for
an advance under a Loan is valid, authorized, or authentic. It is
nevertheless important to Borrower that it has the privilege of making
requests for advances under the Loans in accordance with this Section 4.2.
Therefore, to induce U.S. Bank to lend funds in response to such requests
and in consideration for U.S. Bank's agreement to receive and consider such
requests, Borrower assumes all risks of the validity, authenticity, and
authorization of such requests, whether or not the individual making such
requests has authority to request advances under the Loans and whether or
not the aggregate sum owing exceeds the maximum principal amount permitted
to be outstanding under such Loan. U.S. Bank shall not be responsible under
principles of contract, tort, or otherwise for the amount of an authorized
or invalid advance under a Loan, except for its negligence or willful
misconduct; rather, Borrower agrees to repay any sums with interest as
provided herein.

Article V. NEGATIVE COVENANTS

5.1 Tangible Net Worth. Section 7.15 of the Credit Agreement is hereby
amended in its entirety to read as follows:

7.15 Tangible Net Worth. Permit Consolidated Tangible Net Worth at any
time during the terms of the Loans to be less than $65,000,000.

5.2 Debt Service Coverage. Section 7.17 of the Credit Agreement is
hereby amended in its entirety to read as follows:

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7.17 Debt Service Coverage. Permit the ratio of (a) the sum of Cash Flow
for the immediately preceding four fiscal quarters of Borrower, plus, to the
extent accounted for during such period, $3,362,000 (representing Borrower's
"special valuation provision"), to (b) Debt Service for the immediately
preceding four fiscal quarters of Borrower to be less than (x) 1.05:1 during
any fiscal quarter of Borrower ending before July 1, 2001, and (y) 1.25:1
during any fiscal quarter of Borrower thereafter.

Article VI. CONDITIONS PRECEDENT

U.S. Bank shall have no obligation to modify the terms of the Loans as
provided in this Amendment unless the following conditions have been fulfilled
to the satisfaction of U.S. Bank:

(a) U.S. Bank shall have received this Amendment and the Renewal
Revolving Note, duly executed and delivered by Borrower.

(b) All corporate proceedings of Borrower and its Subsidiaries shall be
satisfactory in form and substance to U.S. Bank, and U.S. Bank shall have
received all information and copies of all documents, including records of
all corporate proceedings, that U.S. Bank has requested in connection
therewith, such documents where appropriate to be certified by proper
corporate authorities or Governmental Bodies. Borrower shall provide U.S.
Bank with the following documents prior to or upon the execution of this
Amendment:

(i) Copies of the articles of incorporation of Borrower,
together with all amendments thereto, certified by Borrower to be true and
complete; and

(ii) An incumbency certificate confirming the continued validity
of existing resolutions of the directors of Borrower in the form attached to
this Amendment as Exhibit D.

(d) U.S. Bank shall have received a commitment to issue a modification
endorsement to title policy number H713928, insuring U.S. Bank's first lien
under the Deed of Trust and otherwise in form and substance satisfactory to
U.S. Bank.

(e) U.S. Bank shall have received, duly executed and delivered by
Borrower, a security agreement substantially in the form attached hereto as
Exhibit F, granting to U.S. Bank a first priority and exclusive security
interest in personal property of Borrower as more particularly described
therein.

(f) U.S. Bank shall have received, duly executed and delivered by
Borrower, such financing statements or other instruments, in form and
substance satisfactory to

-12-
13

U.S. Bank, that U.S. Bank may deem appropriate to perfect its security
interests in any Collateral.

(g) U.S. Bank shall have received the loan fee that is payable under
Section 2.1 of this Amendment.

(h) There shall not then exist any Default or Event of Default hereunder
as of the date hereof.

(i) All representations and warranties of Borrower contained herein or
made in writing in connection herewith shall be true and correct as of the
date hereof.

(j) There shall have been no material adverse change in the financial
condition of Borrower subsequent to September 30, 1998.

Article VII. GENERAL PROVISIONS

7.1 Year 2000. Borrower has reviewed and assessed its business
operations and computer systems and applications to address the "Year 2000
Problem" (that is, that computer applications and equipment used by the
Borrower, directly or indirectly through third parties, may be unable to
properly perform date-sensitive functions before, during and after January 1,
2000). Borrower reasonably believes that the Year 2000 Problem will not result
in a material adverse change in Borrower's business condition (financial or
otherwise), operations, properties or prospects or ability to repay the
Revolving Loan or any Acquisition Loan to U.S. Bank. Borrower is in the process
of implementing the plan to remediate Year 2000 Problems and will complete
implementation of such plan with respect to any material Year 2000 Problems, and
testing thereof, by September 30, 1999. Borrower agrees that this representation
will be true and correct on and shall be deemed made by Borrower on each date
Borrower requests any advance under any of the Loans or delivers any information
to U.S. Bank. Borrower will promptly deliver to U.S. Bank such information
relating to this representation as U.S. Bank requests from time to time If this
representation is false or misleading in any material respect, an Event of
Default shall have occurred and U.S. Bank shall be entitled to exercise its
remedies under Section 9.2 of the Credit Agreement, but only with respect to the
Revolving Note and any one or more of the Acquisition Notes. The occurrence of
an Event of Default under this Section 7.1 shall not entitle U.S. Bank to
declare the unpaid principal balance of the Term Note to be immediately due and
payable or to have any other effect on the Term Note's terms and conditions.

7.2 Notices. The name of the Person to whom notices to U.S. Bank must be
given and the address of such Person is changed to:

U.S. Bank National Association
▇▇▇▇▇ ▇.▇. ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇

-13-
14

7.3 Representations and Warranties. Borrower hereby represents and
warrants to U.S. Bank that, to the best knowledge and belief of Borrower, as of
the date of this Amendment, there exists no Default or Event of Default. All
representations and warranties of Borrower contained in the Credit Agreement and
the other Loan Documents, or otherwise made in writing in connection therewith,
are true and correct as of the date of this Amendment. Borrower acknowledges and
agrees that all of Borrower's Indebtedness to U.S. Bank is payable without
offset, defense, or counterclaim.

7.4 Guaranties. The parties hereby acknowledge and agree that all
guaranties now existing or hereafter obtained by U.S. Bank shall remain in full
force and effect, are valid and enforceable in accordance with their terms, and
are not subject to offset, defense, or counterclaim.

7.5 Counterparts. This Amendment may be executed in one or more
counterparts, each of which shall constitute an original agreement, but all of
which together shall constitute one and the same agreement.

7.6 STATUTORY NOTICE. ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY,
EXTEND CREDIT, OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT
ENFORCEABLE UNDER WASHINGTON LAW.

IN WITNESS WHEREOF, U.S. Bank and Borrower have caused this Amendment to
be duly executed by their respective duly authorized officers or agents as of
the date first above written.

REDHOOK ALE BREWERY, INCORPORATED

By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Executive Vice
President and Chief Financial Officer

U.S. BANK NATIONAL ASSOCIATION

By: /s/ ▇▇▇▇ ▇▇▇▇
---------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Assistant
Vice President

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15

By execution of this Amendment, the undersigned Guarantor
approves of the changes to the Credit Agreement set forth herein, agrees to be
bound by Section 7.4 herein, reaffirms its Guaranty, and acknowledges and agrees
that its obligations under its Guaranty are not subject to any defense, offset,
or counterclaim.

REDHOOK OF NEW HAMPSHIRE, INC.

By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Executive Vice
President

-15-
16

EXHIBIT A
to Third Amendment to Amended and Restated Credit Agreement

RENEWAL REVOLVING NOTE

$10,000,000 February 22, 1999

For value received, the undersigned, REDHOOK ALE BREWERY, INCORPORATED,
a Washington corporation ("Borrower"), promises to pay to the order of U.S. BANK
NATIONAL ASSOCIATION, successor by merger to U. S. Bank of Washington, National
Association ("U.S. Bank"), at its principal place of business, at ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, or such other place or places as the
holder hereof may designate in writing, the principal sum of Ten Million Dollars
($10,000,000) or so much thereof as advanced by U.S. Bank in lawful immediately
available money of the United States of America, in accordance with the terms
and conditions of that certain amended and restated credit agreement dated as of
June 5, 1995, by and between Borrower and U.S. Bank (together with all
supplements, exhibits, modifications, and amendments thereto, including the
third amendment to amended and restated credit agreement ("Third Amendment") of
even date herewith, the "Credit Agreement"). Borrower also promises to pay
interest on the unpaid principal balance hereof, commencing as of the date
hereof, in like money in accordance with the terms and conditions and at the
rate or rates provided for in the Credit Agreement. All principal, interest, and
other charges are due and payable in full on July 1, 2001.

Borrower and all endorsers, sureties, and guarantors hereof jointly and
severally waive presentment for payment, demand, notice of nonpayment, notice of
protest, and protest of this Note, and all other notices in connection with the
delivery, acceptance, performance, default, dishonor, or enforcement of the
payment of this Note except such notices as are specifically required by this
Note or by the Credit Agreement, and they agree that the liability of each of
them shall be unconditional without regard to the liability of any other party
and shall not be in any manner affected by any indulgence, extension of time,
renewal, waiver, or modification granted or consented to by U.S. Bank. Borrower
and all endorsers, sureties, and guarantors hereof (1) consent to any and all
extensions of time, renewals, waivers, or modifications that may be granted by
U.S. Bank with respect to the payment or other provisions of this Note and the
Credit Agreement; (2) consent to the release of any property now or hereafter
securing this Note with or without substitution; and (3) agree that additional
makers, endorsers, guarantors, or sureties may become parties hereto without
notice to them and without affecting their liability hereunder.

This Note is made in substitution for, but not in payment of, that
certain renewal revolving note dated as of September 15, 1997, is the Renewal
Revolving Note referred to in the Third Amendment, is a "Revolving Note" for
purposes of the Credit Agreement and as such is entitled to all of the benefits
and obligations specified in the Credit Agreement, including but not limited to
any Collateral and any conditions to making advances hereunder. This Note is
secured by the lien of the Deed of Trust encumbering real and personal property
in King County, Washington, dated August 9, 1993, and recorded with the Division
of Records and Elections of King County, Washington, on August 10, 1993, under
recording No. 9308101757, to which

-1-
17

reference is hereby made for a description of the nature and extent of the
security provided thereby and the rights and limitations of rights of U.S. Bank
and of Borrower in respect of such security. Terms defined in the Credit
Agreement are used herein with the same meanings. Reference is made to the
Credit Agreement for provisions for the repayment of this Note and the
acceleration of the maturity hereof.

REDHOOK ALE BREWERY, INCORPORATED

By:
------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Executive Vice President
and Chief Financial Officer

-2-
18

EXHIBIT B
to Third Amendment to Amended and Restated Credit Agreement

ACQUISITION NOTE

$
-------------------- -------------, ----

For value received, the undersigned, REDHOOK ALE BREWERY, INCORPORATED,
a Washington corporation ("Borrower"), promises to pay to the order of U.S. BANK
NATIONAL ASSOCIATION ("U.S. Bank"), at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇, or such other place or places as the holder hereof may designate in
writing, the principal sum of _______________ Dollars ($___________) in lawful
immediately available money of the United States of America, in accordance with
the terms and conditions of that certain amended and restated credit agreement
dated as of June 5, 1995, by and between Borrower and U.S. Bank (together with
all supplements, exhibits, modifications, and amendments thereto, including the
third amendment to amended and restated credit agreement ("Third Amendment"),
dated as of February 22, 1999, the "Credit Agreement"). Borrower also promises
to pay interest on the unpaid principal balance hereof, commencing as of the
date hereof, in like money in accordance with the terms and conditions and at
the rate or rates provided for in the Third Amendment and the Credit Agreement.
All principal, interest, and other charges are due and payable in full on
_____________, ____.

This Note is one of the Acquisition Notes referred to in the Credit
Agreement, is a "Note" for all purposes of the Credit Agreement and as such is
entitled to all of the benefits and obligations specified in the Credit
Agreement, including but not limited to any Collateral and any conditions to
making advances hereunder. This Note is secured by the lien of the Deed of Trust
encumbering real and personal property in King County, Washington, dated August
9, 1993, and recorded with the Division of Records and Elections of King County,
Washington, on August 10, 1993, under recording No. 9308101757, to which
reference is hereby made for a description of the nature and extent of the
security provided thereby and the rights and limitations of rights of U.S. Bank
and of Borrower in respect of such security. Terms defined in the Credit
Agreement

-1-
19

are used herein with the same meanings. Reference is made to the Credit
Agreement for provisions for the repayment of this Note and the acceleration of
the maturity hereof.

REDHOOK ALE BREWERY, INCORPORATED

By:
----------------------------------------
Title:
-------------------------------------

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20

EXHIBIT C
To Third Amendment to Amended and Restated Credit Agreement

REVOLVING TERM NOTE

$10,000,000 June 5, 1995

For value received, the undersigned, REDHOOK ALE BREWERY, INC., a
Washington corporation ("Borrower"), promises to pay to the order of U. S. BANK
OF WASHINGTON, NATIONAL ASSOCIATION ("U. S. Bank"), at its principal place of
business, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, or such other place
or places as the holder hereof may designate in writing, the principal sum of
Ten Million Dollars ($10,000,000) or so much thereof as advanced by U. S. Bank
in lawful, immediately available money of the United States of America, in
accordance with the terms and conditions of that certain amended and restated
credit agreement of even date herewith by and between Borrower and U. S. Bank
(together with all supplements, exhibits, amendments and modifications thereto,
the "Credit Agreement"). Borrower also promises to pay interest on the unpaid
principal balance hereof, commencing as of the first date of an advance
hereunder, in like money in accordance with the terms and conditions, and at the
rate or rates provided for in the Credit Agreement. All principal, interest, and
other charges are due and payable in full on June 5, 1997; provided that the
maturity date may be extended to June 5, 2002, in accordance with Section 3.5 of
the Credit Agreement.

Borrower and all endorsers, sureties, and guarantors hereof jointly and
severally waive presentment for payment, demand, notice of nonpayment, notice of
protest, and protest of this Note, and all other notices in connection with the
delivery, acceptance, performance, default, dishonor, or enforcement of the
payment of this Note except such notices as are specifically required by this
Note or by the Credit Agreement, and they agree that the liability of each of
them shall be unconditional without regard to the liability of any other party
and shall not be in any manner affected by any indulgence, extension of time,
renewal, waiver, or modification granted or consented to by U. S. Bank. Borrower
and all endorsers, sureties, and guarantors hereof (1) consent to any and all
extensions of time, renewals, waivers, or modifications that may be granted by
U. S. Bank with respect to the payment or other provisions of this Note and the
Credit Agreement; (2) consent to the release of any property now or hereafter
securing this Note with or without substitution; and (3) agree that additional
makers, endorsers, guarantors, or sureties may become parties hereto without
notice to them and without affecting their liability hereunder.

This Note is the Revolving Term Note referred to in the Credit
Agreement, which is in substitution, but not in payment of the Existing Note,
and as such is entitled to all of the benefits and obligations specified in the
Credit Agreement, including but not limited to any Collateral and any conditions
to making advances hereunder. This Note is secured by a deed of trust covering
real and personal property located in King County, Washington, dated August 9,

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21

1993, and recorded with the Division of Records and Elections of King County,
Washington on August 10, 1993, under recording number 9308101757, to which
reference is hereby made for a description of the nature and extent of the
security provided thereby and the rights and limitations of rights of U.S. Bank
and of Borrower in respect of such security. Terms defined in the Credit
Agreement are used herein with the same meanings. Reference is made to the
Credit Agreement for provisions for the repayment of this Note and the
acceleration of the maturity hereof.

REDHOOK ALE BREWERY, INC.

By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Executive Vice President and
Chief Financial Officer

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22

EXHIBIT D

To Third Amendment to Amended and Restated Credit Agreement

CERTIFICATE AS TO AUTHORIZING RESOLUTIONS
AND INCUMBENCY CERTIFICATE

The undersigned hereby certifies that he is the Secretary of Redhook Ale
Brewery, Incorporated, a Washington corporation ("Company"), that as such he is
authorized to execute this Certificate on behalf of the Company, and that:

(a) annexed hereto as Exhibit A is a true an correct copy of the
resolutions duly adopted by written consent of the Board of Directors of the
Company;

(b) such resolutions have been entered in the minute book of the
Company, have not been modified or rescinded, and remain in full force and
effect; and

(c) the following persons whose names, titles and signatures appear
below are now duly qualified to hold their respective offices as of the date
hereof:

Name Signature Office
---- --------- ------

▇▇▇▇ ▇▇▇▇▇▇▇ /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ President
------------------------------------------------

Executive Vice President and Chief
▇▇▇▇▇▇▇ ▇. ▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ Financial Officer
------------------------------------------------

DATED this 22nd day of February, 1999.

/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Secretary

EXHIBIT A

ADOPTION OF RESOLUTIONS FOR CREDIT AGREEMENT

RESOLVED that the President and Executive Vice President (Chief
Financial Officer) of the Corporation are, or either one of them is,
authorized to borrow money or obtain credit in the name of and on behalf
of the Corporation from time to time from U.S. Bank National Association
("U.S. Bank"), including, without limitation, the revolving loan to be
extended through July 1, 2001, by U.S. Bank to the Corporation pursuant
to the terms of a proposed third amendment to Amended and Restated
Credit Agreement between the Corporation and U.S. Bank, expected to be
dated on or about December 28, 1998.

RESOLVED, FURTHER, that the President and Executive Vice President
(Chief Financial Officer) of the Corporation are, or either one of them
is, authorized to execute and deliver in the name of an on behalf of the
Corporation to U.S. Bank promissory notes, real property mortgages,
deeds of trust, amendments to deeds of trust, loan or letter of credit
agreements, security agreements, pledge agreements, unconditional
guaranties, general guaranties guaranteeing the indebtedness of others
to U.S. Bank, and powers of attorney authorizing U.S. Bank to execute in
the name of this Corporation notes showing U.S. Bank as payee. All such
general guaranties guaranteeing the indebtedness of others hereby are
deemed to benefit the Corporation, directly or indirectly.

RESOLVED, FURTHER, that the President and Executive Vice President
(Chief Financial Officer) of the Corporation are, or either one of them
is, authorized to grant to U.S. Bank a security interest in those assets
of the Corporation that said officer shall consider necessary or
expedient to secure payment and performance of liabilities and
obligations of the Corporation to U.S. Bank of every kind and
description, direct or indirect, absolute or contingent, due or to
become due, now existing or hereafter arising; and in furtherance
thereof perform any and all acts in the name of the Corporation as
necessary, including, but not limited to:

(a) endorsing, signing and delivering to U.S. Bank promissory
notes, security agreements, chattel paper, and all other
documents, instruments, and agreements issued or executed by
others and owned by the Corporation; and

(b) executing in the name of the Corporation and delivering to
U.S. Bank security agreements, chattel paper, financing
statements, general collateral agreements, and such agreements
of any and every character as U.S. Bank shall require in
relation to the Corporation's discounting,

transferring, pledging, or granting security interests in
assets of the Corporation or in which the Corporation has an
interest or in relation to U.S. Bank's collection and sale
thereof.

RESOLVED, FURTHER, that the President and Executive Vice President
(Chief Financial Officer) of the Corporation are, or either one of them
is, authorized to designate additional alternate individuals as being
authorized to request advances under the revolving loan extended by U.S.
Bank to the Corporation 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 documents and agreements as they may in their discretion
deem reasonably necessary or proper in order to carry into effect the
provisions of these resolutions. The following persons are authorized to
request advances and authorize payments under the revolving loan until
U.S. Bank receives written notice of revocation of their authority: ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ or ▇▇▇▇▇ ▇▇▇▇▇▇.

RESOLVED, FURTHER, that these resolutions shall constitute a continuing
authority to the designated person or persons to act on behalf of the
Corporation, and the powers and authority herein granted shall continue
until revoked by the Corporation, with formal written notice of such
revocation given to U.S. Bank.

RESOLVED, FURTHER, that the Secretary of the Corporation is hereby
authorized to certify and deliver to U.S. Bank a true copy of the
foregoing resolutions.

RESOLVED, FURTHER, that these resolutions shall be retroactive and act
as a ratification of the execution of all said documents, if any, that
may have been executed before the date of adoption of these resolutions.

EXHIBIT E
to Third Amendment to Amended and Restated Credit Agreement

Recording Requested By And
When Recorded Return To:

U.S. Bank National Association
▇▇▇▇▇ ▇.▇. ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇

SECOND AMENDMENT TO DEED OF TRUST
(WOODINVILLE BREWERY)

Grantor: REDHOOK ALE BREWERY, INCORPORATED, a Washington corporation

Trustee: COMMONWEALTH LAND AND TITLE INSURANCE COMPANY

Beneficiary: U.S. BANK NATIONAL ASSOCIATION, successor by merger to U. S.
Bank of Washington, National Association

Reference Number of Amended Document: 9308101757

Abbreviated Legal Description: Portion of SW Quarter of SE Quarter of S15,
TS26N, R5E, ▇.▇., in King County, Washington.

Assessor's Property Tax Parcel: 152605-9042-000; 152605-9042-001;
152605-9042-002; 152605-9042-003; 152605-9121-03;
AND 1562605-9121-02

A. On or about August 9, 1993, Grantor executed that certain
deed of trust recorded in the real property records of King County, Washington,
on August 10, 1993 under recording number 9308101757 ("Deed of Trust"),
encumbering the real property described in the Deed of Trust. In this Amendment,
words and phrases with initial capital letters shall have the meanings given to
them in the Deed of Trust, unless otherwise defined herein or the context
otherwise requires.

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26

B. Grantor and Beneficiary are parties to that certain amended and
restated credit agreement dated as of June 5, 1995, as amended by the first
amendment to amended and restated credit agreement dated as of July 25, 1996,
the second amendment to amended and restated credit agreement dated as of
September 15, 1997, and the third amendment to amended and restated credit
agreement of even date herewith ("Third Amendment") (as so amended, the "Credit
Agreement").

C. Subject to the terms and conditions of the Third Amendment,
Beneficiary and Grantor agreed to modify the terms of the revolving loan and to
extend the revolving loan's commitment period.

NOW, THEREFORE, the parties to this Amendment agree as follows:

1. The Deed of Trust is hereby amended to reflect that the Credit
Agreement has been amended by the Third Amendment, and that:

(a) The definition of the term "Note" is hereby amended in its entirety
to read as follows:

NOTE. The word "Note" means any note evidencing a loan made by
Beneficiary to Grantor pursuant to the amended and restated credit agreement
between Grantor and Beneficiary dated as of June 5, 1995, or made pursuant
to any amendment, supplement, or modification to such credit agreement,
including without limitation the renewal revolving note dated as of February
22, 1999, in the principal amount of $10,000,000, the revolving term note
dated as of June 5, 1995 in the principal amount of $10,000,000, and any
acquisition note made payable by Grantor to Beneficiary. Any of the Notes
may contain a variable interest rate.

(b) The Indebtedness shall include Grantor's liability for waste on the
premises or to any of the improvements, including without limitation Grantor's
liability arising from its failure to comply with the requirements set forth on
page 2 of the Deed of Trust under the heading "Nuisance, Waste," or for wrongful
retention of any rents and other income arising from or related to the premises,
insurance proceeds, or condemnation awards, and the cost of any appraisal of the
Property, whether or not obtained in any action for a deficiency judgment.

(c) Notwithstanding anything to the contrary in the Deed of Trust or any
of the Related Documents, Grantor's obligation to indemnify and hold Beneficiary
harmless in accordance with the terms of that certain certificate and indemnity
regarding hazardous substances of even date herewith, shall not be secured by
the lien of the Deed of Trust.

(d) The obligations and liabilities of Grantor for waste on the premises
or to any improvements or for wrongful retention of any rents, or other income
arising from or related to the premises, insurance proceeds, or condemnation
awards shall

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27

survive any termination, satisfaction, assignment, entry of judgment or
foreclosure, delivery of trustee's deed in a nonjudicial foreclosure proceeding,
or delivery of a deed in lieu of foreclosure.

(e) All notices, requests, consents, demands, approvals, and other
communications under the Deed of Trust, the Credit Agreement, or any of the
Related Documents shall be deemed to have been duly given, made, or served if
made in writing and delivered personally, via facsimile, or mailed by first
class mail, postage prepaid, as follows:

(i) If to Grantor:

Redhook Ale Brewery, Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇

(ii) If to Beneficiary:

U.S. Bank National Association
▇▇▇▇▇ ▇.▇. ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇

(iii) If to Guarantor:

Redhook of New Hampshire, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇

The designation of the persons to be so notified or the address of such
persons for the purposes of such notice may be changed from time to time by
similar notice in writing, except that any communication with respect to a
change of address shall be deemed to be given or made when received by the party
to whom such communication was sent.

2. Except as specifically provided for herein, all of the terms and
conditions of the Deed of Trust shall remain in full force and effect, and the
priority of the Deed of Trust shall not be affected by this Amendment or any of
the modifications to any of the Notes or Related Documents.

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28

IN WITNESS WHEREOF, Grantor and Beneficiary have executed this Amendment
to be effective as of February 22, 1999.

GRANTOR:

REDHOOK ALE BREWERY, INCORPORATED, a Washington
corporation

By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------------------------
Its: Executive Vice President
and Chief Financial Officer

BENEFICIARY:

U.S. BANK NATIONAL ASSOCIATION,
successor by merger to U.S. Bank of
Washington National Association

By: /s/ ▇▇▇▇ ▇▇▇▇
-------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Assistant Vice President

State of Washington )
) ss.
County of King )

I certify that I know or have satisfactory evidence that _______________
is the person who appeared before me, and said person acknowledged that he/she
signed this instrument, on oath stated that he/she was authorized to execute the
instrument and acknowledged it as the ________________________ of Redhook Ale
Brewery, Incorporated, to be the free and voluntary act of such party for the
uses and purposes mentioned in the instrument.

Dated: February __, 1999.

----------------------------------------
Notary Public for Washington

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

----------------------------------------
Residing at:
----------------------------
My appointment expires:
-----------------

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29

State of Washington )
) ss.
County of King )

I certify that I know or have satisfactory evidence that ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
is the person who appeared before me, and said person acknowledged that he
signed this instrument, on oath stated that he was authorized to execute the
instrument and acknowledged it as the Assistant Vice President of U.S. Bank
National Association to be the free and voluntary act of such party for the uses
and purposes mentioned in the instrument.

Dated: February __, 1999.

----------------------------------------
Notary Public for Washington

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

----------------------------------------
Residing at:
----------------------------
My appointment expires:
-----------------

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30

EXHIBIT F
to Third Amendment to Amended and Restated Credit Agreement

SECURITY AGREEMENT

This security agreement ("Agreement") is made and entered into as of
February 22, 1999, by REDHOOK ALE BREWERY, INCORPORATED, a Washington
corporation ("Borrower"), for the benefit of U.S. BANK NATIONAL ASSOCIATION, a
national banking association ("U.S. Bank"). Words and phrases with initial
capital letters have the meanings given to them in Article I of this Agreement.

R E C I T A L S :

A. On or about June 5, 1995, Borrower and U.S. Bank entered into that
certain amended and restated credit agreement (together with all supplements,
exhibits, and amendments thereto, referred to as the "Credit Agreement"),
whereby U.S. Bank agreed to make loans and advances of credit to Borrower on the
terms and conditions set forth therein. Concurrently with the execution of this
Agreement, Borrower and U.S. Bank entered into the third amendment to amended
and restated credit agreement ("Third Amendment") whereby U.S. Bank and Borrower
agreed to modify the terms of the Loans.

B. Borrower's grant to U.S. Bank of a security interest in all of its
assets as security for the Secured Obligations is among the agreed upon
modifications to the Loans.

NOW, THEREFORE, in order for U.S. Bank to modify the Loans in accordance
with the terms of the Third Amendment, Borrower agrees as follows:

ARTICLE I. DEFINITIONS

Unless otherwise defined herein, terms defined in the Credit Agreement
shall have the same meanings when used herein. For the purposes of this
Agreement, the following terms shall have the following meanings:

"Account" means any right to payment for goods sold or leased or for
services rendered that is not evidenced by an Instrument or Chattel Paper,
whether or not it has been earned by performance.

"Account Debtor" means the party who is obligated on or under any
Account, Chattel Paper, or General Intangible.

"Assignee Deposit Account" shall have the meaning set forth in Section
5.7 hereof.

"Chattel Paper" means all interest of Borrower in writings that evidence
both a monetary obligation and a security interest in or a lease of specific
goods, including any group of writings consisting of both a security agreement
or a lease and an Instrument or series of Instruments.

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31

"Collateral" means all property, real, personal, and mixed, tangible and
intangible, wherever located, now owned or hereafter acquired by Borrower, or in
which Borrower has or later obtains an interest, including but not limited to
Accounts, Chattel Paper, Deposit Accounts, Documents, Equipment, Financial
Assets, General Intangibles, Goods, Instruments, Inventory, Investment Property,
Trademarks, and Vehicles, and all products, profits, rents, and proceeds of such
property. As used in this Agreement, "Collateral" shall not include any property
owned by any Subsidiary of Borrower.

"Deposit Account" means a demand, time, savings, passbook, or like
account maintained with a bank, savings and loan association, credit union, or
like organization, other than an account evidenced by a certificate of deposit.

"Document" means all of Borrower's right, title, and interest in or to
any document of title as defined in RCW 62A.1-201 and any receipt of the kind
described in RCW 62A.7-201(2).

"Equipment" means all of Borrower's right, title, and interest in and to
Goods that are used or bought for use primarily in business and that are not
included within the definition of Inventory, including but not limited to all
machinery, equipment, furnishings, fixtures, vehicles, tools, supplies, and
other equipment of any kind and nature and all additions, substitutions, and
replacements of any of the foregoing, together with all attachments, components,
parts, accessories, improvements, upgrades, and accessories installed thereon or
affixed thereto.

"Event of Default" means an occurrence of an Event of Default as defined
in the Credit Agreement.

"Financial Assets" means all of Borrower's right, title, and interest in
and to any financial asset as defined in RCW 62A.8-102.

"General Intangibles" means all personal property (including things in
action) other than Goods, Accounts, Chattel Paper, Documents, Financial Assets,
Instruments, Investment Property, and money, including but not limited to all
Trademarks, insurance proceeds, patents, copyrights, trade names, trade secrets,
goodwill, registration, license rights, licenses, permits, corporate and other
business records, rights to refunds or indemnification, and all other intangible
personal property of Borrower of every kind and nature.

"Goods" means all things that are movable or that are fixtures, not
including money, Documents, Financial Assets, Instruments, Accounts, Chattel
Paper, Investment Property, or General Intangibles.

"Instrument" means any negotiable instrument or other writing that
evidences a right to the payment of money and is not itself a security agreement
or lease and is of a type that is in the ordinary course of business transferred
by delivery with any necessary endorsement or assignment.

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32

"Inventory" means all Goods held by Borrower for sale or lease,
furnished or to be furnished by Borrower under any contract of service, or held
by Borrower as raw materials, work in progress, or materials used or consumed in
Borrower's business.

"Investment Property" means all of Borrower's right, title, and interest
in and to any investment property as defined in RCW 62A.9-115.

"Secured Obligations" means any past, present, or future Indebtedness of
Borrower to U.S. Bank, and includes but is not limited to (a) any indebtedness,
obligation, or liability of any kind arising in any way of Borrower to U.S.
Bank, now existing or hereafter created, under the Credit Agreement, the Notes,
or the other Loan Documents, including any refinancing, renewal, replacement,
extension, amendment, or substitution of such indebtedness, (b) any liability or
obligation of Borrower hereunder, (c) the obligations of Borrower under any
guaranty executed by Borrower and delivered to U.S. Bank, whereby Borrower
guarantees the Indebtedness of any Person other than Borrower to U.S. Bank, and
(d) any cost, expense, or liability, including but not limited to reasonable
attorney fees, that may be incurred and advances that may be made by U.S. Bank
in any way in connection with any of the foregoing or any security therefor.

"Trademark" means (a) any trademark, trade name, corporate name, company
name, business name, fictitious business name, trade style, service ▇▇▇▇, logo
or other source or business identifier, and the goodwill associated therewith,
now existing or hereafter adopted or acquired, (b) any registration or recording
of any Trademark, and any application in connection therewith, whether in the
United States Patent and Trademark Office or in any similar office or agency of
the United States or of any state of the United States, or any other country or
any political subdivision of another country or otherwise, and (c) all renewals
of any Trademark.

"Vehicle" means any car, truck, trailer, construction or earth-moving
equipment, or other vehicle covered by a certificate of title of any state,
including but not limited to any tires or other appurtenances to any Vehicle.

ARTICLE II. GRANT OF SECURITY INTEREST

As security for the payment and satisfaction of the Secured Obligations,
Borrower hereby grants to U.S. Bank a continuing security interest in and
assigns to U.S. Bank all of Borrower's right, title, and interest in the
Collateral and all products, profits, rents, and proceeds thereof.

ARTICLE III. COVENANTS OF BORROWER

Borrower shall fully perform each of the following covenants:

3.1 Obligations to Pay.

(a) Borrower shall pay to U.S. Bank, in timely fashion and in full, all
amounts payable by Borrower to U.S. Bank, pursuant to the Credit Agreement, the
Notes, and the other Loan Documents; and

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33

(b) Borrower shall pay and reimburse U.S. Bank for all expenditures
including reasonable attorney fees and legal expenses in connection with the
exercise by U.S. Bank of any of its rights or remedies under the Credit
Agreement or the other Loan Documents.

3.2 Performance. Borrower shall fully perform in a timely fashion every
covenant, agreement, and obligation set forth in the Credit Agreement and the
other Loan Documents.

3.3 Further Documentation. At its own expense, Borrower shall execute
and deliver any financing statement, any renewal, substitution, or correction
thereof, or any other document; shall procure any document; and shall take such
further action as U.S. Bank reasonably may require in obtaining the full
benefits of this Agreement.

3.4 Filing Fees. Borrower shall pay all costs of filing any financing,
continuation, or termination statement with respect to the security interests
granted herein.

3.5 Pledges. Borrower shall deliver and pledge to U.S. Bank, endorsed or
accompanied by instruments of assignment or transfer satisfactory to U.S. Bank,
any Instruments, Investment Property, Documents, General Intangibles, or Chattel
Paper that U.S. Bank may specify from time to time.

3.6 Maintenance of Records. Borrower shall keep and maintain at its own
cost and expense satisfactory and complete records of the Collateral including
but not limited to a record of all payments received and all credits granted
with respect to the Collateral and all other dealings with the Collateral.
Borrower shall deliver and turn over to U.S. Bank all books and records
pertaining to the Collateral at any time after the occurrence and during the
continuation of an Event of Default, if so demanded by U.S. Bank.

3.7 Disposition of Collateral. Except for the sale of Equipment that was
used in Borrower's location at ▇▇▇▇▇▇▇ Avenue North, Seattle, Washington, or in
the ordinary course of Borrower's business or as otherwise allowed in the Credit
Agreement, Borrower shall not sell or transfer any of the Collateral or release,
compromise, or settle any obligation or material receivable due to Borrower.

3.8 Indemnification. Borrower agrees to pay, and to indemnify U.S. Bank
and hold U.S. Bank harmless from, all liabilities, costs, and expenses including
but not limited to reasonable legal fees and expenses with respect to or
resulting from (a) any delay in paying any excise, sales, or other taxes that
may be payable or determined to be payable with respect to any of the
Collateral, (b) any delay by Borrower in complying with any requirement of law
applicable to any of the Collateral, or (c) any of the transactions contemplated
by this Agreement. In any reasonable suit, proceeding, or action brought by U.S.
Bank to enforce payment of any sum owing on any Account or to enforce any
provisions of any Account, Borrower will indemnify U.S. Bank and hold U.S. Bank
harmless from all expense, loss, or damage suffered by reason of any defense,
setoff, counterclaim, recoupment, or reduction allowed with respect to the
Account to the extent arising out of a breach by Borrower of any

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34

obligation under the Account or arising out of any other agreement,
indebtedness, or liability at any time owing to or in favor of such Account
Debtor or its successors from Borrower.

3.9 Limitations on Amendments, Modifications, Terminations, Waivers, and
Extensions of Contracts and Agreements Giving Rise to Accounts. Except, in each
case, in the ordinary course of Borrower's business or consistent with industry
practice, Borrower will not (a) amend, modify, terminate, waive, or extend any
provision of any agreement giving rise to an Account in any manner that could
reasonably be expected to have a material adverse effect on the aggregate value
of the Accounts as Collateral or (b) fail to exercise promptly and diligently
every material right that it may have under each agreement giving rise to an
Account, other than any right of termination.

3.10 Limitations on Discounts, Compromises, and Extensions of Accounts.
Borrower will not grant any extension of the time of payment of any of the
Accounts; compromise, compound, or settle the same for less than the full amount
thereof; release, wholly or partially, any Person liable for the payment
thereof; or allow any credit or discount whatsoever thereon, except, in each
case, in the ordinary course of Borrower's business or consistent with industry
practice.

3.11 Further Identification of Collateral. Borrower will furnish to U.S.
Bank, upon its reasonable request, statements and schedules further identifying
and describing the Collateral and such other reports in connection with the
Collateral as U.S. Bank may reasonably request.

3.12 Notices. Borrower will advise U.S. Bank promptly in reasonable
detail at its address set forth in Section 7.9 of the occurrence of any event
that could reasonably be expected to have a material adverse effect on the
Collateral or on the liens created hereunder, including any lien (other than
liens created hereby or permitted under the Credit Agreement) on or claim
asserted against any of the Collateral.

3.13 Changes in Locations, Name, Etc. Borrower will not (a) change the
location of its chief executive office/chief place of business or remove its
books and records from the locations specified on Schedule II to this Agreement,
(b) except in the ordinary course of Borrower's business and consistent with
prior practice, permit any of the Inventory or Equipment (excluding Vehicles) to
be kept at locations other than those listed on Schedule II, or (c) change its
name, identity, or structure to such an extent that any financing statement
filed by U.S. Bank in connection with this Agreement would become seriously
misleading, unless it shall have given U.S. Bank at least ten days' prior
written notice thereof.

3.14 Trademarks.

(a) Borrower (either itself or through licensees) will, in a manner
consistent with prior practice, (i) continue to use its Trademarks in order to
maintain such Trademarks in full force, free from any claim of abandonment for
nonuse that would materially decrease the aggregate value of the Trademarks,
(ii) maintain the quality of products and services offered under such
Trademarks, (iii) employ such Trademarks with the appropriate notice of
registration, (iv) not adopt or use any ▇▇▇▇ that is confusingly similar to or a
colorable imitation of such

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35

Trademarks unless U.S. Bank shall have obtained a perfected security interest in
such ▇▇▇▇ pursuant to this Agreement, and (v) not (and not permit any licensee
or sublicensee thereof to) do any act or knowingly omit to do any act whereby
any currently-used Trademark may become invalidated.

(b) Borrower will notify U.S. Bank immediately if it knows, or has
reason to know, of (i) any application or registration relating to any Trademark
material to its business that may become abandoned or dedicated, or (ii) any
adverse determination or development (including but not limited to the
institution of, or any adverse determination or development in, any proceeding
in the United States Patent and Trademark Office or any court or tribunal in any
country) regarding Borrower's ownership of any material Trademark or its right
to register, keep, or maintain the same.

(c) Whenever Borrower, either by itself or through any agent, employee,
licensee, or designee, shall file an application for the registration of any
material Trademark with the United States Patent and Trademark Office, Borrower
shall report such filing to U.S. Bank within 30 days after the last day of the
calendar month in which such filing occurs. Borrower shall execute and deliver
to U.S. Bank all agreements, instruments, powers of attorney, documents, and
papers that U.S. Bank may request to evidence U.S. Bank's security interest in
any Trademark and in the goodwill and general intangibles of Borrower relating
to or represented by the Trademark. Borrower hereby constitutes U.S. Bank its
attorney-in-fact to execute and file all such writings for the foregoing
purposes, with all acts of such attorney being hereby ratified and confirmed;
and such power, being coupled with an interest, is irrevocable until all Secured
Obligations are paid in full.

(d) Borrower will take all reasonable and necessary steps, including but
not limited to all reasonable and necessary steps in any proceeding before the
United States Patent and Trademark Office or any similar office or agency in any
other country or any political subdivision thereof to which Borrower has applied
for any Trademark, to maintain and pursue each application, to obtain the
relevant registration, and to maintain each registration of material Trademarks,
including but not limited to filing applications for renewal, affidavits of use,
and affidavits of incontestability.

(e) If any Trademark that is included in the Collateral is infringed,
misappropriated, or diluted by a third party, Borrower shall promptly notify
U.S. Bank after it learns thereof and shall take such action as Borrower
reasonably deems appropriate under the circumstances to protect such Trademark.

3.15 Vehicles. Upon request by U.S. Bank, the application for
certificate of title to any vehicle indicating U.S. Bank's first priority lien
on such Vehicle, and any other necessary documentation, shall be filed in each
office in each jurisdiction that U.S. Bank deems advisable to perfect its lien
on any Vehicle constituting Collateral.

3.16 Insurance. Borrower agrees to insure the Collateral against all
hazards in form and amount consistent with the prior practices of Borrower and
reasonably acceptable to U.S. Bank. If Borrower fails to obtain such insurance,
U.S. Bank shall have the right, but not the obligation, to obtain either
insurance covering both Borrower's and U.S. Bank's interest in the

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Collateral, or insurance covering only U.S. Bank's interest in the Collateral.
Borrower agrees to pay such premium that would be charged for insurance that
Borrower is required to maintain by this Section 3.16. This amount may be added
to the outstanding balance of the Loans, and interest thereon shall be charged
at the rate specified in any applicable Loan Document, or U.S. Bank may demand
immediate payment. Any unpaid insurance premium advanced by U.S. Bank shall be
secured under the terms of this Agreement. U.S. Bank will have no liability
whatsoever for any loss which may occur by reason of the omission or lack of
coverage of any such insurance. Any insurer shall make payable jointly to the
Borrower and U.S. Bank as secured party (or otherwise as its interest may
appear) any loss payments from casualty/property loss insurance covering any of
the Collateral in excess of $100,000.

3.17 Copy of Financing Statement. Borrower agrees that a carbon,
photographic, or other reproduction of a financing statement or this Agreement
is sufficient as a financing statement.

ARTICLE IV. REPRESENTATIONS AND WARRANTIES

Borrower hereby makes the following representations and warranties:

4.1 Title to Collateral. Borrower has good and marketable title to all
the Collateral, free and clear of all liens excepting only the security
interests created pursuant to this Agreement or permitted pursuant to the Credit
Agreement.

4.2 No Impairment of Collateral. None of the Collateral shall be
impaired or jeopardized because of the security interest herein granted.

4.3 Other Agreements. The execution and delivery of this Agreement, the
consummation of the transactions provided for herein, and the fulfillment of the
terms hereof will not result in the breach of any of the terms, conditions, or
provisions of, or constitute a default under, or conflict with, or cause any
acceleration of any obligation under any (a) agreement or other instrument to
which Borrower is a party or by which Borrower is bound or (b) Applicable Law.

4.4 No Approvals. No Governmental Approvals of any nature are required
in connection with the security interests herein granted.

4.5 Authority. Borrower has full power and authority to assign to U.S.
Bank and to grant to U.S. Bank a security interest in the Collateral.

4.6 Location of Records. The address of the office where the books and
records of Borrower are kept concerning the Collateral is set forth on Schedule
II.

4.7 Location of Collateral. The locations of all Inventory and Equipment
of Borrower are described on Schedule II.

4.8 Name. Borrower, but not necessarily any of its Subsidiaries,
conducts its business only under the name "Redhook Ale Brewery, Incorporated."

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37

4.9 Accounts. The amount represented by Borrower to U.S. Bank from time
to time as owing by each Account Debtor or by all Account Debtors in respect of
the Accounts will at such time be the materially correct amount actually owing
by such Account Debtor or Debtors thereunder. No material amount payable to
Borrower under or in connection with any Account is evidenced by any Instrument
or Chattel Paper that has not been delivered to U.S. Bank.

4.10 Chief Executive Office. Borrower's chief executive office and chief
place of business is located at the address set forth on Schedule II.

4.11 Trademarks. Schedule I hereto includes all Trademarks owned by
Borrower in its own name as of the date hereof. To the best of Borrower's
knowledge, the Trademarks are valid, subsisting, unexpired, and enforceable and
have not been abandoned. Except as set forth in Schedule I, none of the
Trademarks is the subject of any licensing or franchise agreement. No holding,
decision, or judgment that would limit, cancel, or question the validity of the
Trademarks has been rendered by any Governmental Body. No action or proceeding
is pending that seeks to limit, cancel, or question the validity of such
Trademarks and that would, if adversely determined, have a material adverse
effect on the aggregate value of the Trademarks.

4.12 Governmental Obligors. No Account Debtor is a Governmental Body.

ARTICLE V. U.S. BANK'S RIGHTS WITH RESPECT
TO THE COLLATERAL

5.1 No Duty on U.S. Bank's Part. U.S. Bank shall not be required (except
at its option upon the occurrence and during the continuation of any Event of
Default) to realize upon any Accounts, Financial Assets, Instruments, Investment
Property, Chattel Paper, or General Intangibles; collect the principal,
interest, or payment due thereon, exercise any rights or options of Borrower
pertaining thereto; make presentment, demand, or protest; give notice of
protest, nonacceptance, or nonpayment; or do any other thing for the protection,
enforcement, or collection of such Collateral. The powers conferred on U.S. Bank
hereunder are solely to protect U.S. Bank's interests in the Collateral and
shall not impose any duty upon U.S. Bank to exercise any such powers. U.S. Bank
shall be accountable only for amounts that U.S. Bank actually receives as a
result of the exercise of such powers; and neither U.S. Bank nor any of its
officers, directors, employees, or agents shall be responsible to Borrower for
any act or failure to act hereunder.

5.2 Negotiations with Account Debtors. During the existence of any Event
of Default, U.S. Bank may, in its sole discretion, extend or consent to the
extension of the time of payment or maturity of any Instruments, Accounts,
Chattel Paper, or General Intangibles.

5.3 Right to Assign. Except as otherwise provided in the Credit
Agreement, U.S. Bank may assign or transfer the whole or any part of the Secured
Obligations and may transfer therewith U.S. Bank's security interests in the
whole or any part of the Collateral; and all obligations, rights, powers, and
privileges herein provided shall inure to the benefit of the assignee and shall
bind the successors and assigns of the parties hereto.

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38

5.4 Duties Regarding Collateral. Beyond the safe custody thereof, U.S.
Bank shall not have any duty as to any Collateral in its possession or control,
or as to any preservation of any rights of or against other parties.

5.5 Collection From Account Debtors. During the existence of any Event
of Default, Borrower shall, upon demand by U.S. Bank (and without any grace or
cure period), notify all Account Debtors to make payment to U.S. Bank of any
amounts due or to become due. Borrower authorizes U.S. Bank to contact the
Account Debtors for the purpose of having all or any of them pay their
obligations directly to U.S. Bank. Upon demand by U.S. Bank, Borrower shall
enforce collection of any indebtedness owed to it by Account Debtors.

5.6 Inspection. U.S. Bank and its designees, from time to time at
reasonable times and intervals, may inspect the Equipment and Inventory and
inspect, audit, and make copies of and extracts from all records and all other
papers in the possession of Borrower.

5.7 Assignee Deposit Account. Upon demand by U.S. Bank, during the
existence of an Event of Default, Borrower will transmit and deliver to U.S.
Bank, in the form received, immediately after receipt, all cash, checks, drafts,
Chattel Paper, Instruments, or other writings for the payment of money including
Investment Property (properly endorsed, where required, so that the items may be
collected by U.S. Bank) that may be received by Borrower at any time. All items
or amounts that are delivered by Borrower to U.S. Bank, or collected by U.S.
Bank from the Account Debtors, shall be deposited to the credit of a Deposit
Account ("Assignee Deposit Account") of Borrower with U.S. Bank, as security for
the payment of the Secured Obligations. Borrower shall have no right to withdraw
any funds deposited in the Assignee Deposit Account. U.S. Bank may, from time to
time in its discretion, and shall, upon the request of Borrower made not more
than twice in any week, apply all or any of the balance, representing collected
funds, in the Assignee Deposit Account, to payment of the Secured Obligations,
whether or not then due, in such order of application, not inconsistent with the
terms of the Credit Agreement and this Agreement, as U.S. Bank may determine;
and U.S. Bank may, from time to time in its discretion, release all or any of
such balance to Borrower.

ARTICLE VI. U.S. BANK'S RIGHTS AND REMEDIES

6.1 General. During the existence of any Event of Default, U.S. Bank may
exercise its rights and remedies in the Credit Agreement and in any other Loan
Documents and any other rights and remedies at law and in equity, simultaneously
or consecutively, all of which rights and remedies shall be cumulative. The
choice of one or more rights or remedies shall not be construed as a waiver or
election barring other rights and remedies. Borrower hereby acknowledges and
agrees that U.S. Bank is not required to exercise all rights and remedies
available to it equally with respect to all the Collateral and that U.S. Bank
may select less than all the Collateral with respect to which the rights and
remedies as determined by U.S. Bank may be exercised.

6.2 Notice of Sale; Duty to Assemble Collateral. In addition to or in
conjunction with the rights and remedies referred to in Section 6.1 hereof:

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39

(a) Written notice mailed to Borrower at the address designated herein
ten days or more prior to the date of public or private sale of any of the
Collateral shall constitute reasonable notice.

(b) If U.S. Bank requests, Borrower will assemble the Collateral and
make it available to U.S. Bank at places that U.S. Bank shall reasonably select,
whether on Borrower's premises or elsewhere.

ARTICLE VII. GENERAL PROVISIONS

7.1 Entire Agreement. This Agreement, together with the Credit Agreement
and the other Loan Documents, sets forth all the promises, covenants,
agreements, conditions, and understandings between the parties hereto with
respect to the subject matter hereof, and supersedes all prior and
contemporaneous agreements and understandings, inducements, or conditions,
express or implied, oral or written, with respect thereto, except as contained
or referred to herein. This Agreement may not be amended, waived, discharged, or
terminated orally, but only by an instrument in writing signed by the party
against whom enforcement of such amendment, waiver, discharge, or termination is
sought.

7.2 Invalidity. If any provision of this Agreement shall for any reason
be held to be invalid or unenforceable, such invalidity or unenforceability
shall not affect any other provision hereunder, but this Agreement shall be
construed as if such invalid or unenforceable provision had never been contained
herein.

7.3 Nonwaiver and Nonexclusive Rights and Remedies.

(a) No right or remedy herein conferred upon or reserved to U.S. Bank is
intended to be to the exclusion of any other right or remedy, but each and every
such right or remedy shall be cumulative and shall be in addition to every other
right or remedy given hereunder and now or hereafter existing at law or in
equity.

(b) No delay or omission by U.S. Bank in exercising any right or remedy
accruing upon an Event of Default shall impair any such right or remedy, or
shall be construed to be a waiver of any such Event of Default, or an
acquiescence therein, nor shall it affect any subsequent Event of Default of the
same or of a different nature.

7.4 Termination of Security Interest. When all the Secured Obligations
have been paid in full, the security interest provided herein shall terminate
and U.S. Bank shall return to Borrower all Collateral then held by U.S. Bank, if
any, and upon written request of Borrower, shall execute, in form for filing,
termination statements of the security interests herein granted. Thereafter, no
party hereto shall have any further rights or obligations hereunder.

7.5 Successors and Assigns. All rights of U.S. Bank hereunder shall
inure to the benefit of its successors and assigns, and all obligations of
Borrower shall be binding upon its successors and assigns.

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40

7.6 U.S. Bank's Appointment as Attorney-in-Fact.

(a) Borrower hereby irrevocably constitutes and appoints U.S. Bank and
any officer or agent thereof, with full power of substitution, as its true and
lawful attorney-in-fact with full irrevocable power and authority in the place
and stead of Borrower and in the name of Borrower or in its own name, from time
to time during the existence of an Event of Default, in U.S. Bank's discretion,
for the purpose of carrying out the terms of this Agreement, to take any and all
appropriate action, and to execute any and all documents and instruments that
may be necessary or desirable to accomplish the purposes of this Agreement; and
without limiting the generality of the foregoing, Borrower hereby gives U.S.
Bank the power and right, on behalf of Borrower, without consent by or notice to
Borrower, to do the following during the existence of an Event of Default:

(i) to transfer to U.S. Bank or to any other Person all or any of the
Collateral, to endorse any Instruments pledged to U.S. Bank, and to fill in
blanks in any transfers of Collateral, powers of attorney, or other
documents delivered to U.S. Bank;

(ii) to pay or discharge taxes and liens levied or placed on or
threatened against the Collateral, to effect any repairs or any insurance
called for by the terms of this Agreement, and to pay all or any part of the
premiums therefor and the costs thereof;

(iii) to take possession of, endorse, and collect any checks, drafts,
notes, acceptances, or other instruments for the payment of moneys due under
any Account, Instrument, or General Intangible or with respect to any other
Collateral and to file any claim or to take any other action or proceeding
in any court of law or equity or otherwise deemed appropriate by U.S. Bank
for the purpose of collecting all such moneys due under any Account,
Financial Assets, Instrument, Investment Property, or General Intangible or
with respect to any other Collateral whenever payable; and

(iv) to direct any party liable for any payment under any of the
Collateral to make payment of all moneys due or to become due thereunder
directly to U.S. Bank or as U.S. Bank shall direct; to ask for, demand,
collect, and receive payment of and receipt for, any and all moneys, claims
and other amounts due or to become due at any time in respect of or arising
out of any Collateral; to sign and endorse any invoices, freight or express
bills, bills of lading, storage or warehouse receipts, drafts against
debtors, assignments, verifications, notices, and other documents in
connection with any of the Collateral; to commence and prosecute any suits,
actions, or proceedings at law or in equity in any court of competent
jurisdiction to collect the Collateral and to enforce any other right in
respect of any Collateral; to defend, settle, compromise, or adjust any
suit, action, or proceeding brought against Borrower with respect to any
Collateral and, in connection therewith, to give such discharge or releases
as U.S. Bank may deem appropriate; to assign any Trademark (along with the
goodwill of the business to which any such Trademark pertains) throughout
the world for such terms, on such

-11-
41
conditions, and in such manner as U.S. Bank shall in its sole discretion
determine; and generally, to sell, transfer, pledge, and make any agreement
with respect to or otherwise deal with any of the Collateral as fully and
completely as though U.S. Bank were the absolute owner thereof for all
purposes; and to do, at U.S. Bank's option and Borrower's expense, at any
time or from time to time, all acts and things that U.S. Bank deems
necessary to protect, preserve or realize upon the Collateral and U.S.
Bank's liens thereon and to effect the intent of this Agreement, all as
fully and effectively as Borrower might do.

(b) Borrower hereby ratifies all that said attorneys shall lawfully do
or cause to be done by virtue of this appointment. This power of attorney is a
power coupled with an interest and shall be irrevocable until all Secured
Obligations are paid in full.

(c) Borrower also authorizes U.S. Bank, at any time and from time to
time, to execute, in connection with the sale provided for in Article VI hereof,
any endorsements, assignments, or other instruments of conveyance or transfer
with respect to the Collateral.

(d) The powers conferred on U.S. Bank hereunder are solely to protect
U.S. Bank's interests in the Collateral and shall not impose any duty upon U.S.
Bank to exercise any such powers. U.S. Bank shall be accountable only for
amounts that it actually receives as a result of the exercise of such powers,
and neither it nor any of its officers, directors, employees, or agents shall be
responsible to Borrower for any act or failure to act hereunder.

7.7 Performance by U.S. Bank of Borrower's Obligations. If Borrower
fails to perform or comply with any of its agreements contained herein and U.S.
Bank, as provided for by the terms of this Agreement, shall itself perform or
comply, or otherwise cause performance or compliance, with such agreement, the
expense of U.S. Bank incurred in connection with such performance or compliance,
together with interest thereon at the rate provided for in the Credit Agreement
upon the occurrence of an Event of Default, shall be payable by Borrower to U.S.
Bank on demand and shall constitute Secured Obligations.

7.8 Governing Law. This Agreement and the rights and obligations of the
parties hereunder shall be construed and enforced in accordance with and shall
be governed by the laws of the state of Washington, without regard to the
state's rules and principles relating to conflicts of law.

7.9 Notices. All notices, requests, consents, demands, approvals, and
other communications hereunder shall be deemed to have been duly given, made, or
served if given, made or served in accordance with the notice provisions of
Section 10.1 of the Credit Agreement.

7.10 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original Agreement, but all of
which together shall constitute one and the same instrument.

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42

IN WITNESS WHEREOF, Borrower and U.S. Bank have caused this Agreement to
be duly executed by their respective duly authorized officers or agents, to be
effective as of February 22, 1999.

REDHOOK ALE BREWERY, INCORPORATED

By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇,
Executive Vice President and
Chief Financial Officer

ACCEPTED BY: U.S. BANK NATIONAL ASSOCIATION,
a national banking association

By: /s/ ▇▇▇▇ ▇▇▇▇
-------------

▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Assistant Vice
President

-13-
43

SCHEDULE I

TRADEMARK REGISTRATIONS

----------------------------------------------------------------------------------------------------------
▇▇▇▇ Country Reg. No. Issued
----------------------------------------------------------------------------------------------------------

▇▇▇▇▇▇▇ BITTER Canada 426,849 May 6, 1994
----------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ November 30, 1994
----------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ BITTER U.S. 1,755,631 MARCH 2, 1993
----------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ BITTER State: New Vol. 90 Pg 26 February 15, 1995
Hampshire
----------------------------------------------------------------------------------------------------------
BLACK HOOK U.S. 1,299,809 OCTOBER 9, 1984
----------------------------------------------------------------------------------------------------------
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ November 30, 1994
----------------------------------------------------------------------------------------------------------
BLACK HOOK State: New Vol. 90 Pg 24 February 15, 1995
Hampshire
----------------------------------------------------------------------------------------------------------
BLACKHOOK ▇▇▇▇▇▇ & DESIGN U.S. 1,296,703 SEPTEMBER 18, 1984
----------------------------------------------------------------------------------------------------------
BLUELINE U.S. 1,892,301 MAY 2, 1995
----------------------------------------------------------------------------------------------------------
DESIGN (▇▇▇▇▇▇▇ BITTER) U.S. 1,409,762 SEPTEMBER 16, 1986
----------------------------------------------------------------------------------------------------------
DESIGN (WINTERHOOK) U.S. 1,493,423 JUNE 21, 1988
----------------------------------------------------------------------------------------------------------
FORECASTERS U.S. 1,929,789 OCTOBER 24, 1995
----------------------------------------------------------------------------------------------------------
RED HOOK Canada 418,500 October 22, 1993
----------------------------------------------------------------------------------------------------------
RED HOOK Hong Kong 2375/93 June 18, 1993
----------------------------------------------------------------------------------------------------------
RED HOOK Japan ▇▇▇▇▇▇▇ November 30, 1993
----------------------------------------------------------------------------------------------------------
RED HOOK South Korea 247,104 August 17, 1992
----------------------------------------------------------------------------------------------------------
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ November 30, 1994
----------------------------------------------------------------------------------------------------------
RED HOOK Singapore 7563/91 August 13, 1991
----------------------------------------------------------------------------------------------------------
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ April 16, 1992
----------------------------------------------------------------------------------------------------------
RED HOOK U.S. 1,253,138 OCTOBER 4, 1983
----------------------------------------------------------------------------------------------------------

-14-
44

-----------------------------------------------------------------------------------------------------
▇▇▇▇ Country Reg. No. Issued
-----------------------------------------------------------------------------------------------------

RED HOOK ALE & DESIGN U.S. 1,332,480 APRIL 23, 1985
-----------------------------------------------------------------------------------------------------
RED HOOK BLUELINE AND DESIGN U.S. 1,802,237 NOVEMBER 2, 1993
-----------------------------------------------------------------------------------------------------
RED HOOK DOUBLE BLACK Japan ▇▇▇▇▇▇▇ May 8, 1998
-----------------------------------------------------------------------------------------------------
RED HOOK ESB State: New Vol 90 Pg 25 February 15, 1995
Hampshire
-----------------------------------------------------------------------------------------------------
RED HOOK ESB AND DESIGN U.S. 1,940,873 DECEMBER 12, 1995
-----------------------------------------------------------------------------------------------------
RED HOOK DOUBLE BLACK ▇▇▇▇▇ U.S. 2,093,507 SEPTEMBER 2, 1997
-----------------------------------------------------------------------------------------------------
TROLLEYMAN U.S. 1,929,788 OCTOBER 24, 1995
-----------------------------------------------------------------------------------------------------
WHEAT HOOK Canada 413,666 June 18, 1993
-----------------------------------------------------------------------------------------------------
WHEAT ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ November 30, 1994
-----------------------------------------------------------------------------------------------------
WHEAT HOOK U.S. 1,682,181 APRIL 7, 1992
-----------------------------------------------------------------------------------------------------
WHEAT HOOK State: New Vol 90 Pg 7 February 15, 1995
Hampshire
-----------------------------------------------------------------------------------------------------
WHEATHOOK and Design State: 18,915 May 10, 1989
Washington
-----------------------------------------------------------------------------------------------------
WINTERHOOK U.S. 1,490,430 MAY 31, 1988
-----------------------------------------------------------------------------------------------------
WINTERHOOK State: ▇▇▇ ▇▇▇▇▇ ▇▇, ▇▇▇▇
▇▇▇▇▇▇▇▇▇
-----------------------------------------------------------------------------------------------------
TRADEMARK APPLICATIONS
-----------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ BITTER, IPA and Design U.S. 75/479,479 May 5, 1998
-----------------------------------------------------------------------------------------------------
ESB Japan 1997-103375 April 3, 1997
-----------------------------------------------------------------------------------------------------
RED HOOK Japan 1997-103376 April 3, 1997
-----------------------------------------------------------------------------------------------------
RED HOOK Logo Community 440966 December 11, 1996
-----------------------------------------------------------------------------------------------------

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45

SCHEDULE II

Address of

Chief executive office: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇

Address of Office where
Books and records are kept: Same as Chief Executive Office

Addresses of locations of
Collateral: Washington

-16-

1 EXHIBIT 10.38 THIRD AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT This third amendment to amended and restated credit agreement ("Amendment"), dated as of February 22, 1999, is made and entered into by and between REDHOOK ALE BREWERY,...

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