. . Exhibit 10.35 COMMERCIAL SECURITY AGREEMENT

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Exhibit 10.35

COMMERCIAL SECURITY AGREEMENT

PRINCIPAL LOAN DATE MATURITY LOAN NO CALL / COLL ACCOUNT OFFICER INITIALS
------------- ---------- ---------- ------------ ----------- ------- ------- --------

$2,000,000.00 05-14-2004 05-14-2006 ▇▇-▇▇▇▇▇▇-▇▇ ▇▇▇▇

References in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or item.
Any item above containing "***" has been omitted due to text length limitations.

GRANTOR: PYRAMID BREWERIES INC. LENDER: FIRST MUTUAL BANK
91 SOUTH ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ WAY BUSINESS BANKING
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇ - ▇▇▇▇▇ ▇▇▇ ▇▇
▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇

THIS COMMERCIAL SECURITY AGREEMENT dated May 14, 2004, is made and executed
between Pyramid Breweries Inc. ("Grantor") and First Mutual Bank ("Lender").

GRANT OF SECURITY INTEREST. For valuable consideration. Grantor grants to Lender
a security interest in the Collateral to secure the Indebtedness and agrees that
Lender shall have the rights stated in this Agreement with respect to the
Collateral, in addition to all other rights which Lender may have by law.

COLLATERAL DESCRIPTION. The word "Collateral" as used in this Agreement means
the following described property, whether now owned or hereafter acquired,
whether now existing or hereafter arising, and wherever located, in which
Grantor is giving to Lender a security interest for the payment of the
Indebtedness and performance of all other obligations under the Note and this
Agreement:

All Inventory, Chattel Paper, Accounts, Equipment and General Intangibles

In addition, the word "Collateral" also includes all the following, whether now
owned or hereafter acquired, whether now existing or hereafter arising, and
wherever located:

(A) All accessions, attachments, accessories, tools, parts, supplies,
replacements of and additions to any of the collateral described herein,
whether added now or later.

(B) All products and produce of any of the property described in this
Collateral section.

(C) All accounts, general intangibles, instruments, rents, monies,
payments, and all other rights, arising out of a sale, lease, consignment
or other disposition of any of the property described in this Collateral
section.

(D) All proceeds (including insurance proceeds) from the sale, destruction,
loss, or other disposition of any of the property described in this
Collateral section, and sums due from a third party who has damaged or
destroyed the Collateral or from that party's insurer, whether due to
judgment, settlement or other process.

(E) All records and data relating to any of the property described in this
Collateral section, whether in the form of a writing, photograph,
microfilm, microfiche, or electronic media, together with all of Grantor's
right, title, and interest in and to all computer software required to
utilize, create, maintain, and process any such records or data on
electronic media.

Despite any other provision of this Agreement, Lender is not granted, and will
not have, a nonpurchase money security interest in household goods, to the
extent such a security interest would be prohibited by applicable law. In
addition, if because of the type of any Property, Lender is required to give a
notice of the right to cancel under Truth in Lending for the Indebtedness, then
Lender will not have a security interest in such Collateral unless and until
such a notice is given.

RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a
right of setoff in all Grantor's accounts with Lender (whether checking,
savings, or some other account). This includes all accounts Grantor holds
jointly with someone else and all accounts Grantor may open in the future.
However, this does not include any ▇▇▇ or ▇▇▇▇▇ accounts, or any trust accounts
for which setoff would be prohibited by law. Grantor authorizes Lender, to the
extent permitted by applicable law, to charge or setoff all sums owing on the
Indebtedness against any and all such accounts, and, at Lender's option, to
administratively freeze all such accounts to allow Lender to protect Lender's
charge and setoff rights provided in this paragraph.

GRANTOR'S REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COLLATERAL. With
respect to the Collateral, Grantor represents and promises to Lender that:

PERFECTION OF SECURITY INTEREST. Grantor agrees to take whatever actions
are requested by Lender to perfect and continue Lender's security interest
in the Collateral. Upon request of Lender, Grantor will deliver to Lender
any and all of the documents evidencing or constituting the Collateral, and
Grantor will note Lender's interest upon any and all chattel paper and
instruments if not delivered to Lender for possession by Lender. This is a
continuing Security Agreement and will continue in effect even though all
or any part of the Indebtedness is paid in full and even though for a
period of time Grantor may not be Indebted to Lender.

NOTICES TO LENDER. Grantor will promptly notify Lender in writing at
Lender's address shown above (or such other addresses as Lender may
designate from time to time) prior to any (1) change in Grantor's name; (2)
change in Grantor's assumed business name(s); (3) change in the management
of the Corporation Grantor; (4) change in the authorized signer(s); (5)
change in Grantor's principal office address; (6) Change in Grantor's state
of organization; (7) conversion of Grantor to a new or different type of
business entity; No change in Grantor's name or state of organization will
take effect until after Lender has received notice.

NO VIOLATION. The execution and delivery of this Agreement will not violate
any law or agreement governing Grantor or to which Grantor is a party, and
its certificate or articles of incorporation and bylaws do not prohibit any
term or condition of this Agreement.

ENFORCEABILITY OF COLLATERAL. To the extent the Collateral consists of
accounts, chattel paper, or general intangibles, as defined by the Uniform
Commercial Code, the Collateral is enforceable in accordance with its
terms, is genuine, and fully complies with all applicable laws and
regulations concerning form, content and manner of preparation and
execution, and all persons appearing to be obligated on the Collateral have
authority and capacity to contract and are in fact obligated as they appear
to be on the Collateral. At the time any account becomes subject to a
security interest in favor of Lender, the account shall be a good and valid
account representing an bonafide indebtedness incurred by the account
debtor, for merchandise held subject to delivery instructions or previously
shipped or delivered pursuant to a contract of sale, or for services
previously performed by Grantor with or for the account debtor. So long as
this Agreement remains in effect. Grantor shall not, without Lender's prior
written consent, ** See Page 5 compromise, settle, adjust, or extend
payment under or with regard to any such Accounts. There shall be no
setoffs or counterclaims against any of the Collateral, and no agreement
shall have been made under which any deductions or discounts may be claimed
concerning the Collateral except those disclosed to Lender in writing.

LOCATION OF THE COLLATERAL. Except in the ordinary course of Grantor's
business, Grantor agrees to keep the Collateral (or to the extent the
Collateral consists of intangible property such as accounts or general
intangibles, the records concerning the Collateral) at Grantor's address
shown above or at such other locations as are acceptable to Lender. Upon
Lender's request, Grantor will deliver to Lender in form satisfactory to
Lender a schedule of real properties and Collateral locations relating to
Grantor's operations, including without limitation the following: (1) all
real property Grantor owns or is purchasing; (2) all real property Grantor
is renting or leasing; (3) all storage facilities Grantor owns, rents,
leases, or uses; and (4) all other properties where Collateral is or may be
located.

COMMERCIAL SECURITY AGREEMENT
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and encumbrances except for the lien of this Agreement. No financing
statement covering any of the Collateral is on file in any public office
other than those which reflect the security interest created by this
Agreement or to which Lender has specifically consented. Grantor shall
defend Lender's rights in the Collateral against the claims and demands of
all other persons.

REPAIRS AND MAINTENANCE. Grantor agrees to keep and maintain, and to cause
others to keep and maintain, the Collateral in good order, repair and
condition at all times while this Agreement remains in effect. Grantor
further agrees to pay when due all claims for work done on, or services
rendered or material furnished in connection with the Collateral so that no
lien or encumbrance may ever attach to or be filed against the Collateral.

INSPECTION OF COLLATERAL. Lender and Lender's designated representatives
and agents shall have the right at all reasonable times to examine and
inspect the Collateral wherever located.

TAXES, ASSESSMENTS AND LIENS. Grantor will pay when due all taxes,
assessments and liens upon the Collateral, its use or operation, upon this
Agreement, upon any promissory note or notes evidencing the Indebtedness,
or upon any of the other Related Documents. Grantor may withhold any such
payment or may elect to contest any lien if Grantor is in good faith
conducting an appropriate proceeding to contest the obligation to pay and
so long as Lender's interest in the Collateral is not jeopardized in
Lender's sole opinion. If the Collateral is subjected to a lien which is
not discharged within fifteen (15) days, Grantor shall deposit with Lender
cash, a sufficient corporate surety bond or other security satisfactory to
Lender in an amount adequate to provide for the discharge of the lien plus
any interest, costs, attorneys' fees or other charges that could accrue as
a result of foreclosure or sale of the Collateral. In any contest Grantor
shall defend itself and Lender and shall satisfy any final adverse judgment
before enforcement against the Collateral. Grantor shall name Lender as an
additional obligee under any surety bond furnished in the contest
proceedings. Grantor further agrees to furnish Lender with evidence that
such taxes, assessments, and governmental and other charges have been paid
in full and in a timely manner. Grantor may withhold any such payment or
may elect to contest any lien if Grantor is in good faith conducting an
appropriate proceeding to contest the obligation to pay and so long as
Lender's interest in the Collateral is not jeopardized.

COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS. Grantor shall comply promptly
with all laws, ordinances, rules and regulations of all governmental
authorities, now or hereafter in effect, applicable to the ownership,
production, disposition, or use of the Collateral, including all laws or
regulations relating to the undue erosion of highly-erodible land or
relating to the conversion of wetlands for the production of an
agricultural product or commodity. Grantor may contest in good faith any
such law, ordinance or regulation and withhold compliance during any
proceeding, including appropriate appeals, so long as Lender's interest in
the Collateral, in Lender's opinion, is not jeopardized.

HAZARDOUS SUBSTANCES. Grantor represents and warrants that the Collateral
never has been, and never will be so long as this Agreement remains a lien
on the Collateral, used in violation of any Environmental Laws or for the
generation, manufacture, storage, transportation, treatment, disposal,
release or threatened release of any Hazardous Substance. The
representations and warranties contained herein are based on Grantor's due
diligence in investigating the Collateral for Hazardous Substances. Grantor
hereby (1) releases and waives any future claims against Lender for
indemnity or contribution in the event Grantor becomes liable for cleanup
or other costs under any Environmental Laws, and (2) agrees to indemnify
and hold harmless Lender against any and all claims and losses resulting
from a breach of this provision of this Agreement. This obligation to
indemnify shall survive the payment of the indebtedness and the
satisfaction of this Agreement.

MAINTENANCE OF CASUALTY INSURANCE. Grantor shall procure and maintain all
risks insurance, including without limitation fire, theft and liability
coverage together with such other insurance as Lender may require with
respect to the Collateral, in form, amounts, coverages and basis reasonably
acceptable to Lender and issued by a company or companies reasonably
acceptable to Lender. Grantor, upon request of Lender, will deliver to
Lender from time to time the policies or certificates of insurance in form
satisfactory to Lender, including stipulations that coverages will not be
cancelled or diminished without at least thirty (30) days' prior written
notice to Lender and not including any disclaimer of the insurer's
liability for failure to give such a notice. Each insurance policy also
shall include an endorsement providing that coverage in favor of Lender
will not be impaired in any way by any act, omission or default of Grantor
or any other person. In connection with all policies covering assets in
which Lender holds or is offered a security interest, Grantor will provide
Lender with such loss payable or other endorsements as Lender may require.
If Grantor at any time fails to obtain or maintain any insurance as
required under this Agreement, Lender may (but shall not be obligated to)
obtain such insurance as Lender deems appropriate, including if Lender so
chooses "single interest insurance," which will cover only Lender's
interest in the Collateral.

APPLICATION OF INSURANCE PROCEEDS. Grantor shall promptly notify Lender of
any loss or damage to the Collateral. Lender may make proof of loss if
Grantor fails to do so within fifteen (15) days of the casualty. All
proceeds of any insurance on the Collateral, including accrued proceeds
thereon, shall be held by Lender as part of the Collateral. If Lender
consents to repair or replacement of the damaged or destroyed Collateral,
Lender shall, upon satisfactory proof of expenditure, pay or reimburse
Grantor from the proceeds for the reasonable cost of repair or restoration.
If Lender does not consent to repair or replacement of the Collateral,
Lender shall retain a sufficient amount of the proceeds to pay all of the
Indebtedness, and shall pay the balance to Grantor. Any proceeds which have
not been disbursed within six (6) months after their receipt and which
Grantor has not committed to the repair or restoration of the Collateral
shall be used to prepay the Indebtedness.

INSURANCE RESERVES. Lender may require Grantor to maintain with Lender
reserves for payment of insurance premiums, which reserves shall be created
by monthly payments from Grantor of a sum estimated by Lender to be
sufficient to produce, at least fifteen (15) days before the premium due
date, amounts at least equal to the insurance premiums to be paid. If
fifteen (15) days before payment is due, the reserve funds are
insufficient, Grantor shall upon demand pay any deficiency to Lender. The
reserve funds shall be held by Lender as a general deposit and shall
constitute a non-interest-bearing account which Lender may satisfy by
payment of the insurance premiums required to be paid by Grantor as they
become due. Lender does not hold the reserve funds in trust for Grantor,
and Lender is not the agent of Grantor for payment of the insurance
premiums required to be paid by Grantor. The responsibility for the payment
of premiums shall remain Grantor's sole responsibility.

INSURANCE REPORTS. Grantor, upon request of Lender, shall furnish to Lender
reports on each existing policy of insurance showing such information as
Lender may reasonably request including the following: (1) the name of the
insurer; (2) the risks insured; (3) the amount of the policy; (4) the
property insured; (5) the then current value on the basis of which
insurance has been obtained and the manner of determining that value; and
(6) the expiration date of the policy. In addition, Grantor shall upon
request by Lender (however not more often than annually) have an
independent appraiser satisfactory to Lender determine, as applicable, the
cash value or replacement cost of the Collateral.

FINANCING STATEMENTS. Grantor authorizes Lender to file a UCC financing
statement, or alternatively, a copy of this Agreement to perfect Lender's
security interest. At Lender's request, Grantor additionally agrees to sign
all other documents that are necessary to perfect, protect, and continue
Lender's security interest in the Property. Grantor will pay all filing
fees, title transfer fees, and other fees and costs involved unless
prohibited by law or unless Lender is required by law to pay such fees and
costs. Grantor irrevocably appoints Lender to execute documents necessary
to transfer title if there is a default. Lender may file a copy of this
Agreement as a financing statement. If Grantor changes Grantor's name or
address, or the name or address of any person granting a security interest
under this Agreement changes, Grantor will promptly notify the Lender of
such change.

GRANTOR'S RIGHT TO POSSESSION AND TO COLLECT ACCOUNTS. Until default and except
as otherwise provided below with respect to accounts, Grantor may have
possession of the tangible personal property and beneficial use of all the
Collateral and may use it in any lawful manner not inconsistent with this
Agreement or the Related Documents, provided that Grantor's right to possession
and beneficial use shall not apply to any Collateral where possession of the
Collateral by Lender is required by law to perfect Lender's security interest in
such Collateral. Until otherwise notified by Lender, Grantor may collect any of
the Collateral consisting of accounts. At any time and Event of

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will secure payment of these amounts. Such right shall be in addition to all
other rights and remedies to which Lender may be entitled upon Default.

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

PAYMENT DEFAULT. Grantor fails to make any payment when due under the
Indebtedness.

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

DEFAULT IN FAVOR OF THIRD PARTIES. Should Borrower or any Grantor default
under any loan, extension of credit, security agreement, purchase or sales
agreement, or any other agreement, in favor of any other creditor or person
that may materially affect any of Grantor's property or Grantor's or any
Grantor's ability to repay the Indebtedness or perform their respective
obligations under this Agreement or any of the Related Documents.

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

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

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

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

EVENTS AFFECTING GUARANTOR. Any of the preceding events occurs with respect
to any guarantor, endorser, surety, or accommodation party of any of the
Indebtedness or guarantor, endorser, surety, or accommodation party dies or
becomes incompetent or revokes or disputes the validity of, or liability
under, any Guaranty of the Indebtedness.

ADVERSE CHANGE. A material adverse change occurs in Grantor's financial
condition, or Lender believes the prospect of payment or performance of the
Indebtedness is impaired.

CURE PROVISIONS. If any default, other than a default in payment is curable
and if Grantor has not been given a notice of a breach of the same
provision of this Agreement within the preceding twenty-four (24) months,
it may be cured if Grantor, after receiving written notice from Lender
demanding cure of such default: (1) cures the default within fifteen (15)
days; or (2) if the cure requires more than fifteen (15) days, immediately
initiates steps which Lender deems in Lender's sole discretion to be
sufficient to cure the default and thereafter continues and completes all
reasonable and necessary steps sufficient to produce compliance as soon as
reasonably practical.

RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under this
Agreement, at any time thereafter, Lender shall have all the rights of a secured
party under the Washington Uniform Commercial Code. In addition and without
limitation, Lender may exercise any one or more of the following rights and
remedies:

ACCELERATE INDEBTEDNESS. Lender may declare the entire Indebtedness,
including any prepayment penalty which Grantor would be required to pay,
immediately due and payable, without notice of any kind to Grantor.

ASSEMBLE COLLATERAL. Lender may require Grantor to deliver to Lender all or
any portion of the Collateral and any and all certificates of title and
other documents relating to the Collateral. Lender may require Grantor to
assemble the Collateral and make it available to Lender at a place to be
designated by Lender. Lender also shall have full power to enter upon the
property of Grantor to take possession of and remove the Collateral. If the
Collateral contains other goods not covered by this Agreement at the time
of repossession, Grantor agrees Lender may take such other goods, provided
that Lender makes reasonable efforts to return them to Grantor after
repossession.

SELL THE COLLATERAL. Lender shall have full power to sell, lease, transfer,
or otherwise deal with the Collateral or proceeds thereof in Lender's own
name or that of Grantor. Lender may sell the Collateral at public auction
or private sale. Unless the Collateral threatens to decline speedily in
value or is of a type customarily sold on a recognized market. Lender will
give Grantor, and other persons as required by law, reasonable notice of
the time and place of any public sale, or the time after which any private
sale or any other disposition of the Collateral is to be made. However, no
notice need be provided to any person who, after Event of Default occurs,
enters into and authenticates an agreement waiving that person's right to
notification of sale. The requirements of reasonable notice shall be met if
such notice is given at least ten (10) days before the time of the sale or
disposition. All expenses relating to the disposition of the Collateral,
including without limitation the expenses of retaking, holding, insuring,
preparing for sale and selling the Collateral, shall become a part of the
Indebtedness secured by this Agreement and shall be payable on demand, with
interest at the Note rate from date of expenditure until repaid.

APPOINT RECEIVER. Lender shall have the right to have a receiver appointed
to take possession of all or any part of the Collateral, with the power to
protect and preserve the Collateral, to operate the Collateral preceding or
pending foreclosure or sale, and to collect the Rents from the Collateral
and apply the proceeds, over and above the cost of the receivership,
against the Indebtedness. The receiver may serve without bond if permitted
by law. Lender's right to the appointment of a receiver shall exist whether
or not the apparent value of the Collateral exceeds the Indebtedness by a
substantial amount. Employment by Lender shall not disqualify a person from
serving as a receiver.

COLLECT REVENUES, Apply Accounts. Lender, either itself or through a
receiver, may collect the payments, rents, Income, and revenues from the
Collateral. Lender may at any time in Lender's discretion transfer any
Collateral into Lender's own name or that of Lender's nominee and receive
the payments, rents, income, and revenues therefrom and hold the same as
security for the Indebtedness or apply it to payment of the Indebtedness in
such order of preference as Lender may determine. Insofar as the Collateral
consists of accounts, general intangibles, insurance policies, instruments,
chattel paper, choses in action, or similar property, Lender may demand,
collect, receipt for, settle, compromise, adjust, ▇▇▇ for, foreclose, or
realize on the Collateral as Lender may determine, whether or not
Indebtedness or Collateral is then due. For these purposes, Lender may, on
behalf of and in the name of Grantor, receive, open and dispose of mail
addressed to Grantor; change any address to which mail and payments are to
be sent; and endorse notes, checks, drafts, money orders, documents of
title, instruments and items pertaining to payment, shipment, or storage of
any Collateral. To facilitate collection, Lender may notify account debtors
and obligors on any Collateral to make payments directly to Lender.

OBTAIN DEFICIENCY. If Lender chooses to sell any or all of the Collateral,
Lender may obtain a judgment against Grantor for any deficiency remaining
on the Indebtedness due to Lender after application of all amounts received
from the exercise of the rights provided in this Agreement. Grantor shall
be liable for a deficiency even if the transaction described in this
subsection is a sale of accounts or chattel paper.

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proceedings (including efforts to modify or vacate any automatic stay or
injunction), appeals, and any anticipated post-judgment collection
services. Grantor also shall pay all court costs and such additional fees
as may be directed by the court.

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

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

CHOICE OF VENUE. If there is a lawsuit, Grantor agrees upon Lender's
request to submit to the jurisdiction of the courts or King County, State
of Washington.

PREFERENCE PAYMENTS. Any monies Lender pays because of an asserted
preference claim in Grantor's bankruptcy will become a part of the
Indebtedness and, at Lender's option, shall be payable by Grantor as
provided in this Agreement.

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

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

POWER OF ATTORNEY. Grantor hereby appoints Lender as Grantor's irrevocable
attorney-in-fact for the purpose of executing any documents necessary to
perfect, amend, or to continue the security interest granted in this
Agreement or to demand termination of filings of other secured parties.
Lender may at any time, and without further authorization from Grantor,
file a carbon, photographic or other reproduction of any financing
statement or of this Agreement for use as a financing statement. Grantor
will reimburse Lender for all expenses for the perfection and the
continuation of the perfection of Lender's security interest in the
Collateral.

WAIVER OF CO-OBLIGOR'S RIGHTS. If more than one person is obligated for the
Indebtedness, Grantor irrevocably waives, disclaims and relinquishes all
claims against such other person which Grantor has or would otherwise have
by virtue of payment of the Indebtedness or any part thereof, specifically
including but not limited to all rights of indemnity, contribution or
exoneration.

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

SUCCESSORS AND ASSIGNS. Subject to any limitations stated in this Agreement
on transfer of Grantor's interest, this Agreement shall be binding upon and
inure to the benefit of the parties, their successors and assigns. If
ownership of the Collateral becomes vested in a person other than Grantor,
Lender, without notice to Grantor, may deal with Grantor's successors with
reference to this Agreement and the Indebtedness by way of forbearance or
extension without releasing Grantor from the obligations of this Agreement
or liability under the Indebtedness.

SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations,
warranties, and agreements made by Grantor in this Agreement shall survive
the execution and delivery of this Agreement, shall be continuing in
nature, and shall remain in full force and effect until such time as
Grantor's Indebtedness shall be paid in full.

TIME IS OF THE ESSENCE. Time is of the essence in the performance of this
Agreement.

WAIVE JURY. ALL parties to this Agreement hereby waive the right to any
jury trial in any action, proceeding, or counterclaim brought by any party
against any other party.

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

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

BORROWER. The word "Borrower" means Pyramid Breweries Inc. and includes all
co-signers and co-makers signing the Note.

COLLATERAL. The word "Collateral" means all of Grantor's right, title and
interest in and to all the Collateral as described in the Collateral
Description section of this Agreement.

DEFAULT. The word "Default" means the Default set forth in this Agreement
in the section titled "Default".

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

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

GRANTOR. The word "Grantor" means Pyramid Breweries Inc..

GUARANTY. The word "Guaranty" means the guaranty from guarantor, endorser,
surety, or accommodation party to Lender, including without limitation a
guaranty of all or part of the Note.

HAZARDOUS SUBSTANCES. The words "Hazardous Substances" mean materials that,
because of their quantity, concentration or physical,

COMMERCIAL SECURITY AGREEMENT
LOAN NO: ▇▇-▇▇▇▇▇▇-▇▇ (CONTINUED) PAGE 5

agreements, guaranties, security agreements, mortgages, deeds of trust,
security deeds, collateral mortgages, and all other instruments, agreements
and documents, whether now or hereafter existing, executed in connection
with the Indebtedness.

GRANTOR HAS READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS COMMERCIAL SECURITY
AGREEMENT AND AGREES TO ITS TERMS. THIS AGREEMENT IS DATED MAY 14, 2004.

GRANTOR:

PYRAMID BREWERIES INC.

By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, CFO & SECRETARY
OF PYRAMID BREWERIES INC.

(ILLEGIBLE DATA)

** except in the ordinary course of its business, and where doing so would not
cause a

PROMISSORY NOTE

PRINCIPAL LOAN DATE MATURITY LOAN NO CALL / COLL ACCOUNT OFFICER INITIALS
------------- ---------- ---------- ------------ ----------- ------- ------- --------

$2,000,000.00 05-14-2004 05-14-2006 ▇▇-▇▇▇▇▇▇-▇▇ ▇▇▇▇

BORROWER: PYRAMID BREWERIES INC. LENDER: FIRST MUTUAL BANK
91 SOUTH ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ WAY BUSINESS BANKING
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇ - ▇▇▇▇▇ ▇▇▇ ▇▇
▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇

PRINCIPAL AMOUNT: $2,000,000.00 INITIAL RATE: 4.250% DATE OF NOTE: May 14, 2004

PROMISE TO PAY. Pyramid Breweries Inc. ("Borrower") promises to pay to First
Mutual Bank ("Lender"}, or order, in lawful money of the United States of
America, the principal amount of Two Million & 00/100 Dollars ($2,000,000.00) or
so much as may be outstanding, together with interest on the unpaid outstanding
principal balance of each advance. Interest shall be calculated from the date of
each advance until repayment of each advance.

PAYMENT. Borrower will pay this loan in one payment of all outstanding principal
plus all accrued unpaid interest on May 14, 2006. In addition, Borrower will pay
regular monthly payments of all accrued unpaid interest due as of each payment
date, beginning July 1, 2004, with all subsequent interest payments to be due on
the same day of each month after that. Unless otherwise agreed or required by
applicable law, payments will be applied first to any accrued unpaid interest;
then to principal; and then to any late charges. The annual interest rate for
this Note is computed on a 365/360 basis; that is, by applying the ratio of the
annual interest rate over a year of 360 days, multiplied by the outstanding
principal balance, multiplied by the actual number of days the principal balance
is outstanding. Borrower will pay Lender at Lender's address shown above or at
such other place as Lender may designate in writing.

VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from
time to time based on changes in an independent index which is the prime rate as
published in "The Wall Street Journal" (the "Index"). The Index is not
necessarily the lowest rate charged by Lender on its loans. If the Index becomes
unavailable during the term or this loan, Lender may designate a substitute
index after notice to Borrower. Lender will tell Borrower the current Index rate
upon Borrower's request. The interest rate change will not occur more often than
each day following a change in the prime rate as published in The Wall Street
Journal. Borrower understands that Lender may make loans based on other rates as
well. The Index currently is 4.000% per annum. The interest rate to be applied
to the unpaid principal balance of this Note will be at a rate of 0.250
percentage points over the Index, resulting in an initial rate of 4.250% per
annum. NOTICE: Under no circumstances will the interest rate on this Note be
more than the maximum rate allowed by applicable law.

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

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

INTEREST AFTER DEFAULT. Upon default, including failure to pay upon final
maturity, Lender, at its option, may, if permitted under applicable law,
increase the variable interest rate on this Note to 18.000% per annum. The
interest rate will not exceed the maximum rate permitted by applicable law.

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

PAYMENT DEFAULT. Borrower fails to make any payment when due under this
Note.

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

DEFAULT IN FAVOR OF THIRD PARTIES. Borrower or any Grantor defaults under
any loan, extension of credit, security agreement, purchase or sales
agreement, or any other agreement, in favor of any other creditor or person
that may materially affect any of Borrower's property or Borrower's ability
to repay this Note or perform Borrower's obligations under this Note or any
of the related documents.

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

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

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

EVENTS AFFECTING GUARANTOR. Any of the preceding events occurs with respect
to any guarantor, endorser, surety, or accommodation party of any of the
indebtedness or any guarantor, endorser, surety, or accommodation party
dies or becomes incompetent, or revokes or disputes the validity of, or
liability under, any guaranty of the indebtedness evidenced by this Note.
In the event of a death, Lender, at its option, may, but shall not be
required to, permit the guarantor's estate to assume unconditionally the
obligations arising under the guaranty in a manner satisfactory to Lender,
and, in doing so, cure any Event of Default.

ADVERSE CHANGE. A material adverse change occurs in Borrower's financial
condition, or Lender believes the prospect of payment or performance of
this Note is impaired.

CURE PROVISIONS. If any default, other than a default in payment is curable
and if Borrower has not been given a notice of a breach of the same
provision of this Note within the preceding twenty-four (24) months, it may
be cured if Borrower, after receiving written notice from Lender demanding
cure of such default: (1) cures the default within fifteen (15) days; or
(2) if the cure requires more than fifteen (15) days, immediately initiates
steps which Lender deems in Lender's sole discretion to be sufficient to
cure the default and thereafter continues and completes all reasonable and
necessary steps sufficient to produce compliance as soon as reasonably
practical.

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

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

JURY WAIVER. Lender and Borrower hereby waive the right to any jury trial in any
action, proceeding, or counterclaim brought by either Lender or Borrower against
the other.

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

PROMISSORY NOTE
LOAN NO: ▇▇-▇▇▇▇▇▇-▇▇ (CONTINUED) PAGE 2

Washington. This Note has been accepted by Lender in the State of Washington.

CHOICE OF VENUE. If there is a lawsuit, Borrower agrees upon Lender's request to
submit to the jurisdiction of the courts of King County, State of Washington.

DISHONORED ITEM FEE. Borrower will pay a fee to Lender of $22.00 If Borrower
makes a payment on Borrower's loan and the check or preauthorized charge with
which Borrower pays is later dishonored.

RIGHT OF SETOFF. To the extent permitted by applicable law. Lender reserves a
right of setoff in all Borrower's accounts with Lender (whether checking,
savings, or some other account). This includes all accounts Borrower holds
jointly with someone else and all accounts Borrower may open in the future.
However, this does not include any ▇▇▇ or ▇▇▇▇▇ accounts, or any trust accounts
for which setoff would be prohibited by law. Borrower authorizes Lender, to the
extent permitted by applicable law, to charge or setoff all sums owing on the
indebtedness against any and all such accounts, and, at Lender's option, to
administratively freeze all such accounts to allow Lender to protect Lender's
charge and setoff rights provided in this paragraph.

COLLATERAL. Borrower acknowledges this Note is secured by the following
collateral described in the security instrument listed herein: inventory,
chattel paper, accounts, equipment and general intangibles described in a
Commercial Security Agreement dated May 14, 2004.

LINE OF CREDIT. This Note evidences a revolving line of credit. Advances under
this Note may be requested either orally or in writing by Borrower or as
provided in this paragraph. Lender may, but need not. require that all oral
requests be confirmed in writing. All communications, instructions, or
directions by telephone or otherwise to Lender are to be directed to Lender's
office shown above. The following person currently is authorized to request
advances and authorize payments under the line of credit until Lender receives
from Borrower, at Lender's address shown above, written notice of revocation of
his or her authority: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇. Borrower agrees to be liable for all sums
either: (A) advanced in accordance with the instructions of an authorized person
or (B) credited to any of Borrower's accounts with Lender. The unpaid principal
balance owing on this Note at any time may be evidenced by endorsements on this
Note or by Lender's internal records, including daily computer print-outs.
Lender will have no obligation to advance funds under this Note if: (A) Borrower
or any guarantor is in default under the terms of this Note or any agreement
that Borrower or any guarantor has with Lender, including any agreement made in
connection with the signing of this Note; (B) Borrower or any guarantor ceases
doing business or is insolvent; (C) any guarantor seeks, claims or otherwise
attempts to limit, modify or revoke such guarantor's guarantee of this Note or
any other loan with Lender; or (D) Borrower has applied funds provided pursuant
to this Note for purposes other than those authorized by Lender.

PENALTY FOR NOT REPORTING FINANCIAL INFORMATION TIMELY. If the Financial
Information which is described in more detail in the Business Loan Agreement or
Commercial Guaranty is not received within ninety (90) days of the due date, the
Lender reserves the right to increase the current Note rate by one-half percent
(0.50%) per annum, until the required Financial Information is received.

ANNUAL LINE OF CREDIT CLEANUP. Borrower agrees to pay line of credit to $0.00
for 30 consecutive days at least once per loan year. (12-month period commencing
on the date of this Note).

AUTOMATIC PAYMENT REQUIREMENT. Borrower agrees to make the monthly loan payments
under the terms of the Promissory Note from a First Mutual Bank deposit account
as long as there is an outstanding balance owed under the terms of the
Promissory Note or in the event the Promissory Note evidences a line of credit.

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

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

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

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

BORROWER:

PYRAMID BREWERIES INC.

By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, CFO & SECRETARY
OF PYRAMID BREWERIES INC.

(ILLEGIBLE DATA)

BUSINESS LOAN AGREEMENT (ASSET BASED)

PRINCIPAL LOAN DATE MATURITY LOAN NO CALL / COLL ACCOUNT OFFICER INITIALS
------------- ---------- ---------- ------------ ----------- ------- ------- --------

$2,000,000.00 05-14-2004 05-14-2006 ▇▇-▇▇▇▇▇▇-▇▇ ▇▇▇▇

References in the shaded area are for Lender's use only and do not limit
the applicability of this document to any particular loan or item.
Any item above containing "***" has been omitted due to text length limitations.

THIS BUSINESS LOAN AGREEMENT (ASSET BASED) dated May 14, 2004, is made and
executed between Pyramid Breweries Inc. ("Borrower") and First Mutual Bank
("Lender") on the following terms and conditions. Borrower has received prior
commercial loans from Lender or has applied to Lender for a commercial loan or
loans or other financial accommodations, including those which may be described
on any exhibit or schedule attached to this Agreement ("Loan"). Borrower
understands and agrees that: (A) In granting, renewing, or extending any Loan,
Lender is relying upon Borrower's representations, warranties, and agreements as
set forth in this Agreement; (B) the granting, renewing, or extending of any
Loan by Lender at all times shall be subject to Lender's sole judgment and
discretion; and (C) all such Loans shall be and remain subject to the terms and
conditions of this Agreement.

TERM. This Agreement shall be effective as of May 14, 2004, and shall continue
in full force and effect until such time as all of Borrower's Loans in favor of
Lender have been paid in full, including principal, interest, costs, expenses,
attorneys' fees, and other fees and charges, or until such time as the parties
may agree in writing to terminate this Agreement.

ADVANCE AUTHORITY. The following person currently is authorized to request
advances and authorize payments under the line of credit until Lender receives
from Borrower, at Lender's address shown above, written notice of revocation of
his or her authority: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇.

LINE OF CREDIT. Lender agrees to make Advances to Borrower from time to time
from the date of this Agreement to the Expiration Date, provided the aggregate
amount of such Advances outstanding at any time does not exceed the Borrowing
Base. Within the foregoing limits, Borrower may borrow, partially or wholly
prepay, and reborrow under this Agreement as follows:

CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligation to make any
Advance to or for the account of Borrower under this Agreement is subject
to the following conditions precedent, with all documents, instruments,
opinions, reports, and other items required under this Agreement to be in
form and substance satisfactory to Lender:

(1) Lender shall have received evidence that this Agreement and all
Related Documents have been duly authorized, executed, and delivered
by Borrower to Lender.

(2) Lender shall have received such opinions of counsel, supplemental
opinions, and documents as Lender may request.

(3) The security interests in the Collateral shall have been duly
authorized, created, and perfected with first lien priority and shall
be in full force and effect.

(4) All guaranties required by Lender for the credit facility(ies)
shall have been executed by each Guarantor, delivered to Lender, and
be in full force and effect.

(5) Prior to the initial Advance, Lender, at its option and for its
sole benefit, shall have conducted an audit of Borrower's Accounts,
books, records, and operations, and Lender shall be satisfied as to
their condition.

(6) Borrower shall have paid to Lender all fees, costs, and expenses
specified in this Agreement and the Related Documents as are then due
and payable.

MAKING LOAN ADVANCES. Advances under this credit facility, as well as
directions for payment from Borrower's accounts, may be requested orally or
in writing by authorized persons. Lender may, but need not, require that
all oral requests be confirmed in writing. Each Advance shall be
conclusively deemed to have been made at the request of and for the benefit
of Borrower (1) when credited to any deposit account of Borrower maintained
with Lender or (2) when advanced in accordance with the instructions of an
authorized person. Lender, at its option, may set a cutoff time, after
which all requests for Advances will be treated as having been requested on
the next succeeding Business Day.

MANDATORY LOAN REPAYMENTS. If at any time the aggregate principal amount of
the outstanding Advances shall exceed the applicable Borrowing Base,
Borrower, immediately upon written or oral notice from Lender, shall pay to
Lender an amount equal to the difference between the outstanding principal
balance of the Advances and the Borrowing Base. On the Expiration Date,
Borrower shall pay to Lender in full the aggregate unpaid principal amount
of all Advances then outstanding and all accrued unpaid interest, together
with all other applicable fees, costs and charges, if any, not yet paid.

LOAN ACCOUNT. Lender shall maintain on its books a record of account in
which Lender shall make entries for each Advance and such other debits and
credits as shall be appropriate in connection with the credit facility.
Lender shall provide Borrower with periodic statements of Borrower's
account, which statements shall be considered to be correct and
conclusively binding on Borrower unless Borrower notifies Lender to the
contrary within thirty (30) days after Borrower's receipt of any such
statement which Borrower deems to be incorrect.

COLLATERAL. To secure payment of the Primary Credit Facility and performance of
all other Loan, obligations and duties owed by Borrower to Lender, Borrower (and
others, if required) shall grant to Lender Security Interests in such property
and assets as Lender may require. Lender's Security Interests in the Collateral
shall be continuing liens and shall include the proceeds and products of the
Collateral, including without limitation the proceeds of any insurance. With
respect to the Collateral, Borrower agrees and represents and warrants to
Lender:

PERFECTION OF SECURITY INTERESTS. Borrower agrees to execute all documents
perfecting Lender's Security Interest and to take whatever actions are
requested by Lender to perfect and continue Lender's Security Interests in
the Collateral. Upon request of Lender, Borrower will deliver to Lender any
and all of the documents evidencing or constituting the Collateral, and
Borrower will note Lender's interest upon any and all chattel paper and
instruments if not delivered to Lender for possession by Lender.
Contemporaneous with the execution of this Agreement, Borrower will execute
one or more UCC financing statements and any similar statements as may be
required by applicable law, and Lender will file such financing statements
and all such similar statements in the appropriate location or locations.
Borrower hereby appoints Lender as its irrevocable attorney-in-fact for the
purpose of executing any documents necessary to perfect or to continue any
Security Interest. Lender may at any time, and without further
authorization from Borrower, file a carbon, photograph, facsimile, or other
reproduction of any financing statement for use as a financing statement.
Borrower will reimburse Lender for all expenses for the perfection,
termination, and the continuation of the perfection of Lender's security
interest in the Collateral. Borrower promptly will notify Lender before any
change in Borrower's name including any change to the assumed business
names of Borrower. Borrower also promptly will notify Lender before any
change in Borrower's Social Security Number or Employer Identification
Number. Borrower further agrees to notify Lender in writing prior to any
change in address or location of Borrower's principal governance office or
should Borrower merge or consolidate with any other entity.

COLLATERAL RECORDS. Borrower does now, and at all times hereafter shall,
keep correct and accurate records of the Collateral, all of which records
shall be available to Lender or Lender's representative upon demand for
inspection and copying at any reasonable time. With respect to the
Accounts, Borrower agrees to keep and maintain such records as Lender may
require, including without limitation information concerning Eligible
Accounts and Account balances and agings. Records related to Accounts
(Receivables) are or will be located at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇. The above is an accurate and complete list of all
locations at which Borrower keeps or maintains business records concerning
Borrower's collateral.

COLLATERAL SCHEDULES. Concurrently with the execution and delivery of this
Agreement, Borrower shall execute and deliver to Lender schedules of
Accounts and schedules of Eligible Accounts in form and substance
satisfactory to the Lender. Thereafter supplemental schedules shall be
delivered according to the following schedule: With respect to Eligible
Accounts, schedules shall be delivered 30 days after month end.

REPRESENTATIONS AND WARRANTIES CONCERNING ACCOUNTS. With respect to the
Accounts, Borrower represents and warrants to Lender: (1) Each Account
represented by Borrower to be an Eligible Account for purposes of this
Agreement conforms to the requirements of the definition of an Eligible
Account: (2) All Account information listed on schedules delivered to
Lender will be true and correct, subject to immaterial variance; and (3)
Lender, its assigns, or agents shall have the right at any time and at
Borrower's expense to inspect, examine, and audit Borrower's records and to
confirm with Account Debtors the accuracy of such Accounts.

BUSINESS LOAN AGREEMENT (ASSET BASED)
LOAN NO: ▇▇-▇▇▇▇▇▇-▇▇ (CONTINUED) PAGE 2

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

LOAN DOCUMENTS. Borrower shall provide to Lender the following documents
for the Loan: (1) the Note; (2) Security Agreements granting to Lender
security interests in the Collateral; (3) financing statements and all
other documents perfecting Lender's Security Interests; (4) evidence of
insurance as required below; (5) together with all such Related Documents
as Lender may require for the Loan: all in form and substance satisfactory
to Lender and Lender's counsel.

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

FEES AND EXPENSES UNDER THIS AGREEMENT. Borrower shall have paid to Lender
all fees, costs, and expenses specified in this Agreement and the Related
Documents as are then due and payable.

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

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

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

ORGANIZATION. Borrower is a corporation for profit which is, and at all
times shall be, duly organized, validly existing, and in good standing
under and by virtue of the laws of the State of Washington Borrower has the
full power and authority to own its properties and to transact the business
in which it is presently engaged or presently proposes to engage. Borrower
maintains an office at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
Unless Borrower has designated otherwise in writing, the principal office
is the office at which Borrower keeps its books and records including its
records concerning the Collateral. Borrower will notify Lender prior to any
change in the location of Borrower's state of organization or any change in
Borrower's name. Borrower shall do all things necessary to preserve and to
keep in full force and effect its existence, rights and privileges, and
shall comply with all regulations, rules, ordinances, statutes, orders and
decrees of any governmental or quasi-governmental authority or court
applicable to Borrower and Borrower's business activities.

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

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

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

LEGAL EFFECT. This Agreement constitutes, and any instrument or agreement
Borrower is required to give under this Agreement when delivered will
constitute legal, valid, and binding obligations of Borrower enforceable
against Borrower in accordance with their respective terms.

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

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

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

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

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

BINDING EFFECT. This Agreement, the Note, all Security Agreements (if any),
and all Related Documents are binding upon the signers thereof, as well as
upon their successors, representatives and assigns, and are legally
enforceable in accordance with their respective terms.

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

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

FINANCIAL RECORDS. Maintain its books and records in accordance with GAAP,
applied on a consistent basis, and permit Lender to examine and audit
Borrower's books and records at all reasonable times.

FINANCIAL STATEMENTS. Furnish Lender with the following:

ANNUAL STATEMENTS. As soon as available, but in no event later than
one-hundred-twenty (120) days after the end of each fiscal year,
Borrower's balance sheet and income statement for the year ended,
audited by a certified public accountant satisfactory to Lender.

INTERIM STATEMENTS. As soon as available, but in no event later than
thirty (30) days after the end of each fiscal quarter, Borrower's
balance sheet and profit and loss statement for the period ended,
prepared by Borrower.

BUSINESS LOAN AGREEMENT (ASSET BASED)
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ADDITIONAL REQUIREMENTS.

ACCOUNTS RECEIVABLE AGING REPORT. As soon as available, but in no
event later than thirty (30) days after the end of each month,
Borrower's Accounts Receivable Aging Report, aged by invoice date,
prepared by Borrower.

BORROWING CERTIFICATE. As soon as available, but in no event later
than thirty (30) days after the end of each month. Borrowing
Certificate for the period ended, prepared by Borrower.

CUSTOMER LISTING. Borrower to provide annual detailed customer
listing.

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

ADDITIONAL INFORMATION. Furnish such additional information and statements,
as Lender may request from time to time.

INSURANCE. Maintain fire and other risk insurance, public liability
insurance, and such other insurance as Lender may require with respect to
Borrower's properties and operations, in form, amounts, coverages and with
insurance companies acceptable to Lender. Borrower, upon request of Lender,
will deliver to Lender from time to time the policies or certificates of
insurance in form satisfactory to Lender, including stipulations that
coverages will not be cancelled or diminished without at least thirty (30)
days prior written notice to Lender. Each insurance policy also shall
include an endorsement providing that coverage in favor of Lender will not
be impaired in any way by any act, omission or default of Borrower or any
other person. In connection with all policies covering assets in which
Lender holds or is offered a security interest for the Loans, Borrower will
provide Lender with such lender's loss payable or other endorsements as
Lender may require.

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

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

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

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

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

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

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

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

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

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

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

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

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

CONTINUITY OF OPERATIONS. (1) Engage in any business activities
substantially different than those in which Borrower is presently engaged,
(2) cease operations, liquidate, merge, transfer, acquire or consolidate
with any other entity, change its name, dissolve or transfer or sell
Collateral out of the ordinary course of business, or

AGREEMENTS. Borrower will not enter into any agreement containing any
provisions which would be violated or breached by the performance of
Borrower's obligations under this Agreement or in connection herewith.

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

BUSINESS LOAN AGREEMENT (ASSET BASED)
LOAN NO: ▇▇-▇▇▇▇▇▇-▇▇ (CONTINUED) PAGE 4

Guarantor, or in the value of any Collateral securing any Loan; or (D) any
Guarantor seeks, claims or otherwise attempts to limit, modify or revoke such
Guarantor's guaranty of the Loan or any other loan with Lender.

RIGHT OF SETOFF. To the extent permitted by applicable law. Lender reserves a
right of setoff in all Borrower's accounts with Lender (whether checking,
savings, or some other account). This includes all accounts Borrower holds
jointly with someone else and all accounts Borrower may open in the future.
However, this does not include any ▇▇▇ or ▇▇▇▇▇ accounts, or any trust accounts
for which setoff would be prohibited by law. Borrower authorizes Lender, to the
extent permitted by applicable law, to charge or setoff all sums owing on the
Indebtedness against any and all such accounts, and, at Lender's option, to
administratively freeze all such accounts to allow Lender to protect Lender's
charge and setoff rights provided in this paragraph.

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

PAYMENT DEFAULT. Borrower fails to make any payment when due under the
Loan.

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

DEFAULT IN FAVOR OF THIRD PARTIES. Borrower or any Grantor defaults under
any loan, extension of credit, security agreement, purchase or sales
agreement, or any other agreement, in favor of any other creditor or person
that may materially affect any of Borrower's or any Grantor's property or
Borrower's or any Grantor's ability to repay the Loans or perform their
respective obligations under this Agreement or any of the Related
Documents.

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

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

EVENTS AFFECTING GUARANTOR. Any of the preceding events occurs with respect
to any Guarantor of any of the Indebtedness or any Guarantor dies or
becomes incompetent, or revokes or disputes the validity of, or liability
under, any Guaranty of the Indebtedness. In the event of a death, Lender,
at its option, may, but shall not be required to, permit the Guarantor's
estate to assume unconditionally the obligations arising under the guaranty
in a manner satisfactory to Lender, and, in doing so, cure any Event of
Default.

ADVERSE CHANGE. A material adverse change occurs in Borrower's financial
condition, or Lender believes the prospect of payment or performance of the
Loan is impaired.

RIGHT TO CURE. If any default, other than a default on Indebtedness, is
curable and if Borrower or Grantor, as the case may be, has not been given
a notice of a similar default within the preceding twenty-four (24) months,
it may be cured if Borrower or Grantor, as the case may be, after receiving
written notice from Lender demanding cure of such default: (1) cure the
default within fifteen (15) days; or (2) if the cure requires more than
fifteen (15) days, immediately initiate steps which Lender deems in
Lender's sole discretion to be sufficient to cure the default and
thereafter continue and complete all reasonable and necessary steps
sufficient to produce compliance as soon as reasonably practical.

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

ADDITIONAL REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants that
Financial Statements as described herein also means any and all tax returns
provided to Lender by Borrower or Guarantor.

PENALTY FOR NOT REPORTING FINANCIAL INFORMATION TIMELY. If the Financial
Information which is described in more detail in the Business Loan Agreement or
Commercial Guaranty is not received within ninety (90) days of the due date, the
Lender reserves the right to increase the then current Note rate by one-half
percent (0.50%) per annum, until the required Financial Information is received.

ANNUAL LINE OF CREDIT CLEANUP. Borrower agrees to pay line of credit to $0.00
for 30 consecutive days at least once per loan year (12-month period commencing
on the date of this Note).

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

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

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

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

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

BUSINESS LOAN AGREEMENT (ASSET BASED)
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CHOICE OF VENUE. If there is a lawsuit, Borrower agrees upon Lender's
request to submit to the jurisdiction of the courts of King County, State
of Washington.

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

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

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

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

SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Borrower understands and agrees
that in extending Loan Advances, Lender is relying on all representations,
warranties, and covenants made by Borrower in this Agreement or in any
certificate or other instrument delivered by Borrower to Lender under this
Agreement or the Related Documents. Borrower further agrees that regardless
of any investigation made by Lender, all such representations, warranties
and covenants will survive the extension of Loan Advances and delivery to
Lender of the Related Documents, shall be continuing in nature, shall be
deemed made and redated by Borrower at the time each Loan Advance is made,
and shall remain in full force and effect until such time as Borrower's
Indebtedness shall be paid in full, or until this Agreement shall be
terminated in the manner provided above, whichever is the last to occur.

TIME IS OF THE ESSENCE. Time is of the essence in the performance of this
Agreement.

WAIVE JURY. All parties to this Agreement hereby waive the right to any
jury trial in any action, proceeding, or counterclaim brought by any party
against any other party.

ACCOUNT. The word "Account" means a trade account, account receivable,
other receivable, or other right to payment for goods sold or services
rendered owing to Borrower (or to a third party grantor acceptable to
Lender).

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

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

BORROWER. The word "Borrower" means Pyramid Breweries Inc. and includes all
co-signers and co-makers signing the Note.

BORROWING BASE. The words "Borrowing Base" mean, as determined by Lender
from time to time, the lesser of (1) $2,000,000.00 or (2) 75.000% of the
aggregate amount of Eligible Accounts (not to exceed in corresponding Loan
amount based on Eligible Accounts $2,000,000.00).

BUSINESS DAY. The words "Business Day" mean a day on which commercial banks
are open in the State of Washington.

COLLATERAL. The word "Collateral" means all property and assets granted as
collateral security for a Loan, whether real or personal property, whether
granted directly or indirectly, whether granted now or in the future, and
whether granted in the form of a security interest, mortgage, collateral
mortgage, deed of trust, assignment, pledge, crop pledge, chattel mortgage,
collateral chattel mortgage, chattel trust, factor's lien, equipment trust,
conditional sale, trust receipt, lien, charge, lien or title retention
contract, lease or consignment intended as a security device, or any other
security or lien interest whatsoever, whether created by law, contract, or
otherwise. The word Collateral also includes without limitation all
collateral described in the Collateral section of this Agreement.

ELIGIBLE ACCOUNTS. The words "Eligible Accounts" mean at any time, all of
Borrower's Accounts which contain selling terms and conditions acceptable
to Lender. The net amount of any Eligible Account against which Borrower
may borrow shall exclude all returns, discounts, credits, and offsets of
any nature. Unless otherwise agreed to by Lender in writing, Eligible
Accounts do not include:

(1) Accounts with respect to which the Account Debtor is employee or
agent of Borrower.

(2) Accounts with respect to which the Account Debtor is a subsidiary
of, or affiliated with Borrower or its shareholders, officers, or
directors.

(3) Accounts with respect to which goods are placed on consignment,
guaranteed sale, or other terms by reason of which the payment by the
Account Debtor may be conditional.

(4) Accounts with respect to which the Account Debtor is not a
resident of the United States, except to the extent such Accounts are
supported by insurance, bonds or other assurances satisfactory to
Lender.

(5) Accounts with respect to which Borrower is or may become liable to
the Account Debtor for goods sold or services rendered by the Account
Debtor to Borrower.

(6) Accounts which are subject to dispute, counterclaim, or setoff.

(7) Accounts with respect to which the goods have not been shipped or
delivered, or the services have not been rendered, to the Account
Debtor.

(8) Accounts with respect to which Lender, in its sole discretion,
deems the creditworthiness or financial condition of the Account
Debtor to be unsatisfactory.

(9) Accounts of any Account Debtor who has filed or has had filed
against it a petition in bankruptcy or an application for relief under
any provision of any state or federal bankruptcy, insolvency, or
debtor-in-relief acts; or who has had appointed a trustee, custodian,
or receiver for the assets of such Account Debtor; or who has made an
assignment for the benefit of creditors or has become insolvent or
fails generally to pay its debts (including its payrolls) as such
debts become due.

(10) Accounts with respect to which the Account Debtor is the United
States government or any department or agency of the United States.

BUSINESS LOAN AGREEMENT (ASSET BASED)
LOAN NO: ▇▇-▇▇▇▇▇▇-▇▇ (CONTINUED) PAGE 6

(11) Accounts which have not been paid in full within 90 days from the
invoice date. The entire balance of any Account of any single Account
Debtor will be ineligible whenever the portion of the Account which
has not been paid within 90 days from the invoice date is in excess of
10.000% of the total amount outstanding on the Account.

(12) See additional requirements for this Line of Credit in the
Customer Borrowing Plan Assigned Accounts Receivable.

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

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

EXPIRATION DATE. The words "Expiration Date" mean the date of termination
of Lender's commitment to lend under this Agreement.

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

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

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

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

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

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

LENDER. The word "Lender" means First Mutual Bank, its successors and
assigns.

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

NOTE. The word "Note" means the Note executed by Pyramid Breweries Inc. in
the principal amount of $2,000,000.00 dated May 14, 2004, together with all
renewals of, extensions of, modifications of, refinancings of,
consolidations of, and substitutions for the note or credit agreement.

PRIMARY CREDIT FACILITY. The words "Primary Credit Facility" mean the
credit facility described in the Line of Credit section of this Agreement.

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

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

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

BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN
AGREEMENT (ASSET BASED) AND BORROWER AGREES TO ITS TERMS. THIS BUSINESS LOAN
AGREEMENT (ASSET BASED) IS DATED MAY 14, 2004.

BORROWER:

PYRAMID BREWERIES INC.

By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, CFO & SECRETARY
OF PYRAMID BREWERIES INC.

LENDER:

FIRST MUTUAL BANK

By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------
AUTHORIZED SIGNER

(ILLEGIBLE DATA)

ADDENDUM TO BUSINESS LOAN AGREEMENT (ASSET BASED) AND RELATED DOCUMENTS

THIS ADDENDUM TO BUSINESS LOAN AGREEMENT (ASSET BASED) AND RELATED
DOCUMENTS (the "Addendum") is made this 14th day of May, 2004, and is
incorporated into and shall be deemed to amend and supplement the Business Loan
Agreement (Asset Based) of the same date (the "Loan Agreement"), between Pyramid
Breweries, Inc. (the "Borrower") and First Mutual Bank ("Lender") and the
Related Documents (as that term is defined in the Loan Agreement). Terms defined
in the Loan Agreement shall have the same meanings when used in this Addendum.
Any conflict between the provisions of the Related Documents and the Addendum
shall be resolved in favor of the Addendum. The covenants and agreements of this
Addendum, shall be incorporated into and shall amend and supplement the
covenants and agreements of the Loan Agreement and Related Documents as if this
Addendum were a part of the Loan Agreement and Related Documents and all
references to the Related Documents shall mean the Related Documents as so
amended and supplemented.

ADDITIONAL AGREEMENTS

In addition to the covenants and agreements made in the Loan Agreement and
the Related Documents, Borrower and Lender further covenant and agree as
follows;

1. COLLATERAL

The Collateral for the Loan shall consist of the Borrower's assets
described in the Commercial Security Agreement dated as of May 14, 2004, made by
Borrower, as grantor, and Lender.

2. GUARANTIES

There are no guaranties required for the Loan.

3. HAZARDOUS SUBSTANCES

Lender acknowledges that Borrower uses and stores Hazardous Substances in
the ordinary course of its business and that use and storage of Hazardous
Substances by Borrower in the ordinary course of its business in compliance with
Environmental Laws shall not constitute an Event of Default under the Loan
Agreement or other Related Documents.

4. OTHER AGREEMENTS

The Section titled "Other Agreements" in the Loan Agreement is amended by
inserting the word "material" after the word "other" and before the word
"agreements".

ADDENDUM TO BUSINESS LOAN AGREEMENT PAGE 1
[/addendum to loan agreement 5-04] 05/13/04

5. CONTINUITY OF OPERATIONS

The Section titled "Continuity of Operations" in the Loan Agreement is
amended by deleting all of subpart (3) thereof relating to dividends. Lender
hereby acknowledges and consents to Borrower's acquisition of Portland Brewing
Company.

6. CHANGE IN OWNERSHIP

The Section titled "Change in Ownership" in the Loan Agreement and in the
Promissory Note is hereby deleted.

7. ANNUAL LINE OF CREDIT CLEANUP

The Section titled "Annual Line of Credit Cleanup" in the Loan Agreement
and in the Promissory Note is amended by replacing "calendar year" with "loan
year (the 12 month period commencing on the date of this Agreement)", Loan year
as defined in the Note.

8. ELIGIBLE ACCOUNTS

The definition of "Eligible Accounts" is amended by adding at the end of
subpart (5): "are netted to the extent of any liability owed to the Account
Debtor".

9. APPLICATION OF INSURANCE PROCEEDS

Lender agrees that Borrower may retain all insurance proceeds for loss or
damage to Collateral in an amount of $100,000 or less provide no Event of
Default then exists.

10. INSURANCE RESERVES

Lender agrees that Lender may not require reserves for insurance unless and
until an Event of Default occurs.

11. GRANTOR'S RIGHT TO POSSESSION AND TO COLLECT ACCOUNTS

Lender agrees that Lender will not notify account debtors to make payments
directly to Lender unless an Event of Default then exists.

12. REASONABLE NOTICE PRIOR TO ENTRY ON TO PREMISE/INSPECTION

Whenever, under the terms of the Loan Agreement or any other Related
Document, Lender shall have the right to enter on to Borrower's property or
inspect Borrower's property, books and records, Lender agrees to give Borrower
reasonable prior notice of such event provided Borrower is not in Default.

ADDENDUM TO BUSINESS LOAN AGREEMENT PAGE 2
[/addendum to loan agreement 5-04] 05/13/04

13. DISCLOSURE SCHEDULE

Attached hereto is a schedule setting forth certain disclosures of Borrower
with respect to the representations and warranties set forth in the Loan
Agreement and Related Documents.

This Addendum 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.

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.

[The remainder of this page intentionally left blank.]

ADDENDUM TO BUSINESS LOAN AGREEMENT PAGE 3
[/addendum to loan agreement 5-041] 05/13/04

IN WITNESS WHEREOF, Lender and Borrower have caused this Addendum to be
duly executed by the respective duly authorized signatories, as of the date
first above written.

FIRST MUTUAL BANK

By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: SR. VICE PRESIDENT

PYRAMID BREWERIES INC., a Washington
corporation

By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: CFO

ADDENDUM TO BUSINESS LOAN AGREEMENT PAGE 4
[/addendum to loan agreement 5-04] 05/13/04

DISCLOSURE SCHEDULE
TO FIRST MUTUAL BANK BUSINESS LOAN AGREEMENT (ASSET BASED)

1. ORGANIZATION

2. ASSUMED BUSINESS NAMES

3. AUTHORIZATION

4. FINANCIAL INFORMATION

5. LEGAL EFFECT

6. PROPERTIES

7. HAZARDOUS SUBSTANCES

8. LITIGATION AND CLAIMS

9. LITIGATION AND CLAIMS

10. TAXES

11. LIEN PRIORITY

12. BINDING EFFECT

ADDENDUM TO BUSINESS LOAN AGREEMENT PAGE 5
[/addendum to loan agreement 5-04] 05/13/04

CORPORATE RESOLUTION TO BORROW / GRANT COLLATERAL / SUBORDINATE DEBT

PRINCIPAL LOAN DATE MATURITY LOAN NO CALL/COLL ACCOUNT OFFICER INITIALS
------------- ---------- ---------- ------------ --------- ------- ------- --------

$2,000,000.O0 05-l4-2004 03-31-2006 77-100239.01 ▇▇▇▇

References in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or item.
Any Item above containing **** has been ommitted due to text length limitations

CORPORATION: PYRAMID BREWERIES INC. LENDER: FIRST MUTUAL BANK
91 SOUTH ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ WAY BUSINESS BANKING
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇ - ▇▇▇▇▇ ▇▇▇ ▇▇
▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇

WE, THE UUNDERSIGNED, DO HEREBY CERTIFY THAT:

THE CORPORATION'S EXISTENCE. The complete and correct name of the Corporation is
Pyramid Breweries Inc. ("Corporation"). The Corporation is a corporation for
profit which is, and at all times shall be, duly organized, validly existing,
and in good standing under and by virtue of the laws of the State of Washington.
The Corporation has the full power and authority to own its proportion and to
transact the business in which it is presently engaged or presently proposed to
engage. The Corporation maintains an office at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇. Unless the Corporation has designated otherwise in writing,
the principal office is the office at which the Corporation keeps its books and
records. The Corporation will notify Lendor prior to any change in the location
of The Corporation's state of organization or any change in The Corporation's
name. The Corporation shall do all things necessary to preserve and to keep in
full force and effect its existence, rights and privileges, and shall comply
with all regulations, rules, ordinances, statutes, orders and decrees of any
governmental or quasi-governmental authority or court applicable to the
Corporation and The Corporation's business activities.

RESOLUTIONS ADOPTED. At a meeting of the Directors of the Corporation, or if the
Corporation is a close corporation having no Board of Directors than at a
meeting of the Corporation's shareholders, duly called and held on May 14, 2004,
at which a quorum was present and voting, or by other duly authorized action in
lieu of a meeting, the resolutions set forth in this Resolution were adopted.

OFFICER. The following named person is an officer of Pyramid Breweries Inc.

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

▇▇▇▇▇ ▇. ▇▇▇▇▇▇ CFO & Secretary Y X /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------

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

BORROW MONEY. To borrow as a cosigner or otherwise, from time to time from
Lender, on such terms as may be agreed upon between the Corporation and
Lender, such sum or sums of money as in his or her judgement should be
borrowed, without limitation.

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

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

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

SUBORDINATION. To subordinate, in all respects, any and all present and
future indebtedness, obligations, liabilities, claims, rights, and demands
of any kind which may be owed, now or hereafter, from any person or entity
to the Corporation to all present and future indebtedness, obligations,
liabilities, claims, rights, and demands of any kind which may be owed,
now or hereafter, from such person or entity to Lender ("Subordinated
indebtedness"), together with subordination by the Corporation of any and
all security interests of any kind, whether now existing or hereafter
acquired, securing payment or performance of Subordinated indebtedness; all
on such subordination terms as may be agreed upon between the Corporation's
Officers and Lender and in such amounts so in his or her judgement should
be subordinated.

NEGOTIATE ITEMS. To draw, endorse, and discount with Lender all drafts,
trade acceptions, promissory notes, or other evidences of indebtedness
payable to or belonging to the Corporation or in which the Corporation may
have an interest, and either to receive cash for the same or to cause such
proceeds to the credited to the Corporation's account with Lender, or to
cause such other disposition of the proceeds derived therefrom as no or one
may deem advisable.

FURTHER ACTS. In the assets of lines of credit, to designate additional or
alternative individuals as being authorized to request advances under such
lines, and in all asset, to do and perform such other acts and things, to
pay and all fees and costs, and to execute and deliver such other documents
and agreements, including agreements waiving the right to a trial by jury,
as the officer may in his or her discretion deem reasonably necessary or
proper in order to carry into effect the provisions of this Resolution. The
following person currently is authorized to request advances and authorize
payments under the line of credit until Lender receives from the
Corporation at Lender's address shown above, written notice of revocation
of his or her authority: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇.

ASSUMED BUSINESS NAMES. The Corporation has filed or recorded all documents or
fillings required by law related to all assumed business names used by the
Corporation. Excluding the name of the Corporation, the following is a
complete list of all assumed business names under which the Corporation does
business: NONE.

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

REGISTERED AGENT FOR SERVICE. The Corporation shall, at all times, have an
appointed registered agent for service. Said registered agent shall be described
in the organizational documents of the Corporation. Corporation hereby agrees
that the registered agent will not at any time during the loan, be changed
without the prior written consent and acknowledgement of Lender. If Corporation
fails to obtain Lender's consent to change the registered agent described in the
organizational documents of said Corporation, and that agent is changed without
Lender's knowledge, Corporation agrees that Lender's legal service to the agent
described in the organizational documents of said Corporation will be considered
as legal serivce to Corporation without exception.

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

SHAREHOLDER APPROVAL. At a special meeting of the shareholders of the
Corporation, duly called and held (or by consent of the shareholders in
accordance with the laws of the State of Washington), not less than the required
percentage of shareholders adopted or consented to all the resolutions set forth
in this Resolution.

CORPORATE RESOLUTION TO BORROW / GRANT COLLATERAL / SUBORDINATE DEBT
LOAN NO: ▇▇-▇▇▇▇▇▇-▇▇ (CONTINUED) PAGE 2

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

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

IN TESTIMONY WHEREOF, We have hereunto set our hand and attest that the
signature set opposite the name listed above is his or her genuing signature.

We each have read all the provisions of this Resolution, and we each personally
and on behalf of the Corporation certify that all statements and representations
made in this Resolution are true and correct. This Corporate Resolution to
Borrow/Grant Collateral/Subordinate Debt is dated May 14, 2004.

CERTIFIED TO AND ATTESTED BY:

/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, CFO & SECRETARY OF
PYRAMID BREWERIES INC.

/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, CEO OF PYRAMID
BREWERIES INC.

NOTE: If the officer signing this Resolution is designated by the foregoing
document as one of the officers authorized to act on the Corporation's behalf,
it is advised to have this Resolution signed by atleast one non authorized
officer of the Corporation.

(ILLEGIBLE DATA)

CHANGE IN TERMS AGREEMENT

PRINCIPAL LOAN DATE MATURITY LOAN NO CALL / COLL ACCOUNT OFFICER INITIALS
------------- ---------- ---------- ------------ ----------- ------- ------- --------

$2,500,000.00 05-14-2004 03-31-2007 ▇▇-▇▇▇▇▇▇-▇▇ ▇▇▇▇

BORROWER: PYRAMID BREWERIES INC. LENDER: FIRST MUTUAL BANK
▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ PO BOX 1647
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇

PRINCIPAL AMOUNT: $2,500,000.00 INITIAL RATE: 8.500% DATE OF AGREEMENT: MARCH 7, 2006

DESCRIPTION OF EXISTING INDEBTEDNESS. A Promissory Note dated May 14, 2004 in
the original principal amount of $2,000,000.00, together with all renewals of,
extensions of, modifications of, refinancings of, consolidations of, and
substitutions for the note or credit agreement. The Promissory Note evidences a
revolving line of credit.

DESCRIPTION OF CHANGE IN TERMS. The maximum principal amount available under
this Line of Credit is increased to $2,500,000.00.

The maturity date of the Promissory Note is extended to March 31, 2007.

The interest rate to be applied to the unpaid principal balance of the Note will
be at a rate of 1.00% over the Index.

The Business Loan Agreement dated February 9, 2005 is modified as follows:

MINIMUM EBITDA. Maintain minimum cumulative EBITDA as follows:

Six months ending June 30, 2006 $ 650,000.00
Nine months ending September 30, 2006 $1,750,000.00
Twelve months ending December 31, 2006 $2,100,000.00

Borrower agrees to pay Line of Credit to $0.00 for 30 consecutive days at least
once per calendar year.

STANDBY LETTER OF CREDIT. A Standby Letter of Credit in the amount of
$345,000.00, which will be secured by this Line of Credit, will be issued in
conjunction with this increase. The amount available under the Line of Credit
will be reduced by $345,000.00, to be used solely for draws in partial or full
under Letter of Credit #124, dated March 10, 2006, and issued by First Mutual
Bank in favor of California First Leasing Corporation, whose address is ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇. At no such time will the funds,
in the amount of $345,000.00, be available until the Letter of Credit is
cancelled.

CONTINUING VALIDITY. Except as expressly changed by this Agreement, the terms of
the original obligation or obligations, including all agreements evidenced or
securing the obligation(s), remain unchanged and in full force and effect.
Consent by Lender to this Agreement does not waive Lender's right to strict
performance of the obligation(s) as changed, nor obligate Lender to make any
future change in terms. Nothing in this Agreement will constitute a satisfaction
of the obiigation(s). It is the intention of Lender to retain as liable parties
all makers and endorsers of the original obligation(s), including accommodation
parties, unless a party is expressly released by Lender in writing. Any maker or
endorser, including accommodation makers, will not be released by virtue of this
Agreement. If any person who signed the original obligation does not sign this
Agreement below, then all persons signing below acknowledge that this Agreement
is given conditionally, based on the representation to Lender that the
non-signing party consents to the changes and provisions of this Agreement or
otherwise will not be released by it. This waiver applies not only to any
initial extension, modification or release, but also to all such subsequent
actions.

PRIOR TO SIGNING THIS AGREEMENT, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS
OF THIS AGREEMENT. BORROWER AGREES TO THE TERMS OF THE AGREEMENT.

BORROWER:

PYRAMID BREWERIES INC.

BY:
---------------------------------
▇▇▇▇▇ ▇▇▇▇, VICE PRESIDENT OF
FINANCE OF PYRAMID
BREWERIES INC.

(ILLEGIBLE DATA)

DISBURSEMENT REQUEST AND AUTHORIZATION

PRINCIPAL LOAN DATE MATURITY LOAN NO CALL / COLL ACCOUNT OFFICER INITIALS
------------- ---------- ---------- ------------ ----------- ------- ------- --------

$2,500,000.00 05-14-2004 03-31-2007 ▇▇-▇▇▇▇▇▇-▇▇ ▇▇▇▇

LOAN TYPE. This is a Variable Rate Nondisclosable Revolving Line of Credit Loan
to a Corporation for $2,500,000.00 due on March 31, 2007. The reference rate
(prime rate as published by "The Wall Street Journal", currently 7.500%) is
added to the margin of 1.000%, resulting in an initial rate of 8.500.

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

[ ] PERSONAL, FAMILY, OR HOUSEHOLD PURPOSES OR PERSONAL INVESTMENT.

[X] BUSINESS (INCLUDING REAL ESTATE INVESTMENT).

SPECIFIC PURPOSE. The specific purpose of this loan is: Working Capital.

DISBURSEMENT INSTRUCTIONS. Borrower understands that no loan proceeds will be
disbursed until all of Lender's conditions for making the loan have been
satisfied. Please disburse the loan proceeds of $2,500,000.00 as follows:

UNDISBURSED FUNDS: $2,057,584.09
OTHER DISBURSEMENTS: $ 410,515.91
$410,515.91 Current Principal Balance
TOTAL FINANCED PREPAID FINANCE CHARGES: $ 31,900.00
$25,000.00 Line Modification Fee
$6,900.00 Letter of Credit Fee
-------------
NOTE PRINCIPAL: $2,500,000.00

FINANCIAL CONDITION. BY SIGNING THIS AUTHORIZATION, BORROWER REPRESENTS AND
WARRANTS TO LENDER THAT THE INFORMATION PROVIDED ABOVE IS TRUE AND CORRECT AND
THAT THERE HAS BEEN NO MATERIAL ADVERSE CHANGE IN BORROWER'S FINANCIAL CONDITION
AS DISCLOSED IN BORROWER'S MOST RECENT FINANCIAL STATEMENT TO LENDER. THIS
AUTHORIZATION IS DATED MARCH 7, 2006.

BORROWER:

PYRAMID BREWERIES INC.

BY:
---------------------------------
▇▇▇▇▇ ▇▇▇▇, VICE PRESIDENT OF
FINANCE OF PYRAMID
BREWERIES INC.

(ILLEGIBLE DATA)

CORPORATE RESOLUTION TO BORROW / GRANT COLLATERAL / SUBORDINATE DEBT

PRINCIPAL LOAN DATE MATURITY LOAN NO CALL/COLL ACCOUNT OFFICER INITIALS
------------- ---------- ---------- ------------ --------- ------- ------- --------

$2,000,000.O0 05-l4-2004 03-31-2006 77-100239.01 ▇▇▇▇

References in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or item
Any item above containing "***" has been omitted due to text length limitations

CORPORATION: PYRAMID BREWERIES INC. LENDER: FIRST MUTUAL BANK
91 SOUTH ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ WAY BUSINESS BANKING
▇▇▇▇▇▇▇. ▇▇ ▇▇▇▇▇ 400 - ▇▇▇▇▇ ▇▇▇ ▇▇
▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇

I. THE UNDERSIGNED. DO HEREBY CERTIFY THAT:

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

RESOLUTIONS ADOPTED. At a meeting of the Directors of the Corporation, or if the
Corporation is a close corporation having no Board of Directors then at a
meeting of the Corporation's shareholders, duly called and held on November 4,
2005, at which a quorum was present and voting or by other duly authorized
action in lieu of a meeting, the resolutions set forth in this Resolution were
adopted

OFFICER. The following named person is on officer of Pyramid Breweries Inc:

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

▇▇▇▇▇ ▇▇▇▇ Vice President of Y X /s/ ▇▇▇▇▇ ▇▇▇▇
Finance --------------------------------

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

BORROW MONEY. To borrow, as a cosigner or otherwise, from time to time from
Lender, on such terms as may be agreed upon between the Corporation and
Lender, such sum or sums of money as in his or her judgment should be
borrowed, without limitation

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

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

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

SUBORDINATION. To subordinate. in all respects, any and all present and
future indebtedness, obligations, liabilities, claims, rights, and demands
of any kind which may be owed, now or hereafter, from any person or entity
to the Corporation to all present and future indebtedness, obligations,
liabilities, claims, rights, and demands of any kind which may be owed, now
or hereafter, from such person or entity to Lender ("Subordinated
Indebtedness"), together with subordination by the Corporation of any and
all security interests of any kind, whether now existing or hereafter
acquired, securing payment or performance of the Subordinated Indebtedness;
all on such subordination terms as may be agreed upon between the
Corporation's Officers and Lender and in such amounts as in his or her
judgment should be subordinated.

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

FURTHER ACTS. In the case of lines of credit, to designate additional or
alternate Individuals as being authorized to request advances under such
lines, and in all cases, to do and perform such other acts and things, to
pay any end ail fees and costs, and to execute and deliver such other
documents and agreements, including agreements waiving the right to a trial
by jury, as the officer may in his or her discretion deem reasonably
necessary or proper in order to carry into effect the provisions of this
Resolution. The following person currently is authorized to request
advances and authorize payments under the line of credit until Lender
receives from the Corporation, at Lender's address shown above, written
notice of revocation of his or her authority: ▇▇▇▇▇ ▇▇▇▇, VICE PRESIDENT OF
PYRAMID BREWERIES INC.

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

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

REGISTERED AGENT FOR SERVICE. The Corporation shall, at all times, have an
appointed registered agent for service. Said registered agent shall be described
in the organizational documents of the Corporation. Corporation hereby agrees
that the registered agent will not, at any time during the loan, be changed
without the prior written consent and acknowledgment of Lender. If Corporation
fails to obtain Lender's consent to change the registered agent described in the
organizational documents of said Corporation, and that agent is changed without
Lender's knowledge, Corporation agrees that Lender's legal service to the agent
described in the organizational documents of said Corporation will be considered
as legal service to Corporation without exception

CORPORATE RESOLUTION TO BORROW / GRANT COLLATERAL / SUBORDINATE DEBT
LOAN NO: ▇▇-▇▇▇▇▇▇-▇▇ (CONTINUED) PAGE 2

SHAREHOLDER APPROVAL. At a special meeting of the shareholders of the
Corporation, duly called and held for by consent of the shareholders in
accordance with the laws of the State of Washington), not less than the required
percentage of shareholders adopted or consented to all the resolutions set forth
in this Resolution

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

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

IN TESTIMONY WHEREOF, I have hereunto set my hand and attest that the signature
set opposite the name listed above is his or her genuine signature.

I HAVE READ ALL THE PROVISIONS OF THIS RESOLUTION, AND ON BEHALF OF THE
CORPORATION CERTIFY THAT ALL STATEMENTS AND REPRESENTATIONS MADE IN THIS
RESOLUTION ARE TRUE AND CORRECT. THIS CORPORATE RESOLUTION TO BORROW / GRANT
COLLATERAL/SUBORDINATE DEBT IS DATED NOVEMBER 4, 2005.

CERTIFIED TO AND ATTESTED BY:

X /s/ ▇▇▇▇▇ ▇▇▇▇
--------------------------------------
▇▇▇▇▇ ▇▇▇▇, VICE PRESIDENT OF FINANCE
OF PYRAMID BREWERIES INC.

NOTE: If the officer signing this Resolution is designated by the foregoing
document as one of the officers authorized to act on the Corporation's behalf.
It is advisable to have this Resolution signed by all least one non-authorized
officer of the Corporation.

(ILLEGIBLE DATA)

CHANGE IN TERMS AGREEMENT

PRINCIPAL LOAN DATE MATURITY LOAN NO CALL / COLL ACCOUNT OFFICER INITIALS
------------- ---------- ---------- ------------ ----------- ------- ------- --------

$2,000,000.00 05-14-2004 03-31-2006 ▇▇-▇▇▇▇▇▇-▇▇ ▇▇▇▇

References in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or Item.
Any Item above containing "***" has been omitted due to text length limitations.

BORROWER: PYRAMID BREWERIES INC. LENDER: FIRST MUTUAL BANK
91 SOUTH ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ WAY BUSINESS BANKING
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇- ▇▇▇▇▇ ▇▇▇ ▇▇
▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇

PRINCIPAL AMOUNT: $2,000,000.00 INITIAL RATE: 9.000% DATE OF AGREEMENT: NOVEMBER 14, 2005

DESCRIPTION OF EXISTING INDEBTEDNESS. A Promissory Note dated May 14, 2004 in
the original principal amount of $2,000,000.00, together with all renewals of,
extensions of, modifications of, refinancings of, consolidations of, and
substitutions for the note or credit agreement. The promissory note evidences a
revolving line of credit.

DESCRIPTION OF CHANGE IN TERMS. The maturity date of the Promissory Note is
extended to March 31, 2006.

CONTINUING VALIDITY. Except as expressly changed by this Agreement, the terms of
the original obligation or obligations, including all agreements evidenced or
securing the obligation(s), remain unchanged and in full force and effect.
Consent by Lender to this Agreement does not waive Lender's right to strict
performance of the obligation(s) as changed, nor obligate Lender to make any
future change in terms. Nothing in this Agreement will constitute a satisfaction
of the obligation(s). It is the intention of Lender to retain as liable parties
all makers and endorsers of the original obligation(s), including accommodation
parties, unless a party is expressly released by Lender in writing. Any maker or
endorser, including accommodation makers, will not be released by virtue of this
Agreement. If any person who signed the original obligation does not sign this
Agreement below, then all persons signing below acknowledge that this Agreement
is given conditionally, based on the representation to Lender that the
non-signing party consents to the changes and provisions of this Agreement or
otherwise will not be released by it. This waiver applies not only to any
initial extension, modification or release, but also to all such subsequent
actions

PRIOR TO SIGNING THIS AGREEMENT, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS
OF THIS AGREEMENT. BORROWER AGREES TO THE TERMS OF THE AGREEMENT

BORROWER:

PYRAMID BREWERIES INC.

By: /s/ ▇▇▇▇▇ ▇▇▇▇
---------------------------------
▇▇▇▇▇ ▇▇▇▇, VICE PRESIDENT OF
FINANCE OF PYRAMID
BREWERIES INC.

(ILLEGIBLE DATA)

DISBURSEMENT REQUEST AND AUTHORIZATION

PRINCIPAL LOAN DATE MATURITY LOAN NO CALL / COLL ACCOUNT OFFICER INITIALS
--------- ---------- ---------- ------------ ----------- ------- ------- --------

$2,000,000.00 05-14-2004 03-31-2006 ▇▇-▇▇▇▇▇▇-▇▇ ▇▇▇▇

References in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or Item.
Any item above containing "***" has been omitted due to text length limitations.

LOAN TYPE. This is a Variable Rate Nondisclosable Revolving Line of Credit Loan
to a Corporation for $2,000,000.00 due on March 31, 2006. The reference rate
(prime rate as published by "The Wall Street Journal", currently 7.000%) is
added to the margin of 2.000%, resulting in an initial rate of 9.000.

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

[ ] Personal, Family, or Household Purposes or Personal investment.

[X] Business (Including Real Estate Investment).

SPECIFIC PURPOSE. The specific purpose of this loan is: Working Capital.

Undisbursed Funds: $2,000,000.00
-------------
Note Principal: $2,000,000.00

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

PREPAID FINANCE CHARGES PAID IN CASH:
$3,750.00 Extension Fee $3,750.00
---------
TOTAL CHARGES PAID IN CASH: $3,750.00

BORROWER:

PYRAMID BREWERIES INC.

By: /s/ ▇▇▇▇▇ ▇▇▇▇
---------------------------------
▇▇▇▇▇ ▇▇▇▇, VICE PRESIDENT OF
FINANCE OF PYRAMID
BREWERIES INC.

(ILLEGIBLE DATA)

. . Exhibit 10.35 COMMERCIAL SECURITY AGREEMENT

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