EXHIBIT 10.1

EXCHANGE AND RECAPITALIZATION AGREEMENT

THIS EXCHANGE AND RECAPITALIZATION AGREEMENT ("Agreement"), dated as of June 30, 2004, and signed at 8:00 p.m., Seattle, Washington time on June 30, 2004 between Redhook Ale Brewery, Incorporated, a Washington corporation having an office at 14300 NE 145th Street, Woodinville, Washington 98072 ("Redhook"), and Anheuser-Busch, Incorporated, a Missouri corporation having an office at One Busch Place, St. Louis, Missouri 63118 ("ABI").

W I T N E S S E T H:

WHEREAS, ABI or its designee currently holds 1,289,872 shares of Series B Preferred Stock, par value $0.005 per share, of Redhook ("Series B Preferred Stock") and 953,470 shares of Common Stock, par value $0.005 per share, of Redhook ("Common Stock").

WHEREAS, ABI and Redhook desire that, upon the terms and conditions hereinafter provided, ABI shall transfer all shares of Series B Preferred Stock to Redhook in exchange for Redhook's issuance and delivery to ABI of an additional 1,808,243 shares of Common Stock and a payment by Redhook to ABI, such transfer, exchange and payment to qualify as a tax-free recapitalization under IRC Section 368(a)(1)(E).

NOW, THEREFORE, in consideration of the premises and the covenants hereinafter contained and intending to be legally bound hereby, it is agreed as follows:

I. DEFINITIONS

"ABI Competitor" shall mean any person that, together with the Affiliates of such Person, has annual alcohol beverage sales of $100,000,000 or more in North America (such number to be adjusted annually in proportion to changes in the Consumer Price Index from the date hereof).

"Affiliate" shall mean, with respect to any Person, (i) each Person that, directly or indirectly, owns or controls, whether beneficially, or as a trustee, guardian or other fiduciary, 5% or more of the Stock having ordinary voting power in the election of directors of such Person, or (ii) each Person that controls, is controlled by or is under common control with such Person or any Affiliate of such Person. For the purpose of this definition, "control" of a Person shall mean the possession, directly or indirectly, of the power to direct or cause the direction of its management or policies, whether through the ownership of voting securities, by contract or otherwise. The term "Affiliated" shall have meanings correlative to the foregoing.

"A-BC" shall mean Anheuser-Busch Companies, Inc., a Delaware corporation and the parent corporation of ABI.

"Business Day" shall mean a day of the year on which banks are not required or authorized to close in the States of Missouri, New York and Washington.

"CBA" shall mean Craft Brands Alliance LLC.

"CBA Distribution Agreement shall mean the Master Distributor Agreement between Craft Brands Alliance LLC and ABI dated July 1, 2004, as such agreement may be amended, supplemented or otherwise modified from time to time in accordance with the terms thereof.

"Charges" shall mean all federal, state, county, city, municipal, local, foreign or other governmental (including, without limitation, PBGC) taxes, levies, assessments, charges, liens, claims or encumbrances upon or relating to (i) Redhook's or any of its Subsidiaries' employees, payroll, income or gross receipts, (ii) Redhook's or any of its Subsidiaries' ownership or use of any of its assets, or (iii) any other aspect of Redhook's or any of the Subsidiaries' business.

"Closing" shall have the meaning set forth in Section 2.2.

"Closing Date" shall have the meaning set forth in Section 2.2.

"Common Stock" shall initially mean the common stock, par value $0.005 per share, of Redhook and shall thereafter mean any shares of any class or classes of capital stock resulting from any reclassification or reclassifications thereof or otherwise issued and which have no preference in respect of dividends or of amounts payable in the event of voluntary or involuntary liquidation, dissolution or winding up of Redhook and which are not subject to redemption by Redhook.

"Confidential Information" shall have the meaning set forth in Section 8.10.

"Distribution Agreement" shall mean the Master Distributor Agreement between Redhook and ABI, dated as of the Closing Date and substantially in the form attached hereto as Exhibit A, as such agreement may be amended, supplemented or otherwise modified from time to time in accordance with the terms thereof.

"Environmental Laws" shall mean all federal, state and local laws, statutes, ordinances and regulations, now or hereafter in effect, and in each case as amended or supplemented from time to time, and any judicial or administrative interpretation thereof, including any applicable judicial or administrative order, consent decree or judgment, relative to the applicable property, relating to the regulation and protection of human health, safety, the environment and natural resources (including, without limitation, ambient air, surface water, groundwater, wetlands, land surface or subsurface strata, wildlife, aquatic species and vegetation). Environmental Laws include but are not limited to the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended (42 U.S.C. ss.9601 ET SEQ.) ("CERCLA"); the Hazardous Material Transportation Act, as amended (49 U.S.C. ss.1801 ET SEQ.); the Federal Insecticide, Fungicide, and Rodenticide Act, as amended (7 U.S.C. ss.136 ET SEQ.); the Resource Conservation and Recovery Act, as amended (42 U.S.C. ss.6901 ET SEQ.) ("RCRA"); the Toxic Substance Control Act, as amended (15 U.S.C. ss.2601 ET SEQ.); the Clean Air Act, as amended (42 U.S.C. ss.740 ET SEQ.); the Federal Water Pollution Control Act, as amended (33 U.S.C. ss.1251 ET SEQ.); the Occupational Safety and Health Act, as amended (29 U.S.C. ss.651 ET SEQ.) ("OSHA"); and the Safe Drinking Water Act, as amended (42 U.S.C. ss.300f ET SEQ.), and all analogous state and local counterparts or equivalents and any transfer of ownership notification or approval statutes.

"ERISA" shall mean the Employee Retirement Income Security Act of 1974 (or any successor legislation thereto), as amended from time to time and any regulations promulgated thereunder.

"ERISA Affiliate" shall mean, with respect to Redhook, any trade or business (whether or not incorporated) under common control with Redhook and which, together with Redhook, are treated as a single employer within the meaning of Section 414 (b), (c), (m) or (o) of the IRC.

"Facility" shall have the meaning set forth in Section 4.10.

"Fiscal Year" shall mean the calendar year. Subsequent changes of the fiscal year of Redhook shall not change the meaning of the term "Fiscal Year," unless ABI shall consent in writing to such changes.

"Fully Diluted Basis" shall mean that, for purposes of calculating any Person's percentage ownership of the Common Stock, all convertible or exchangeable securities shall be deemed to have been converted and exchanged into the shares of Common Stock into which they are convertible and exchangeable and all employee stock options with an exercise price of not more than $2.165 per share shall be assumed to be exercised into the shares of Common Stock into which they, pursuant to their terms, may then or thereafter upon the passage of time be exercised.

"GAAP" shall mean generally accepted accounting principles in the United States of America as in effect from time to time.

"Governmental Authority" shall mean any nation or government, any state or other political subdivision thereof, and any agency, department or other entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.

"Group" shall mean any Group as defined by Sections 13(d)(3) and 14(d)(2) of the Securities Exchange Act.

"Hazardous Material" shall mean any substance, chemical, compound, product, solid, gas, liquid, waste, byproduct, pollutant, contaminant or material which is hazardous or toxic, and includes, without limitation, (a) asbestos, polychlorinated biphenyls and petroleum (including crude oil or any fraction thereof) and (b) any such material classified or regulated as "hazardous," "dangerous" or "toxic" or like terms pursuant to the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. ss.ss.9601 ET SEQ., Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976 and Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. ss.ss.6901 ET SEQ., Federal Water Pollution Control Act, as amended by the Clean Water Act of 1977, 33 U.S.C. ss.ss.1251 ET SEQ., Clean Air Act of 1966, as amended, 42 U.S.C. ss.ss.7401 ET SEQ., Toxic Substances Control Act of 1976, 15 U.S.C. ss.ss.2601 ET SEQ., or Hazardous Materials Transportation Act, 49 U.S.C. App. ss.ss.1801 ET SEQ. and all analogous state and local counterparts or equivalents.

"Independent Directors" shall mean those members of the Board of Directors of Redhook that are deemed to be independent of Redhook under the rules promulgated by NASDAQ Stock Market, Inc.

"Initial Registration Rights Agreement" shall mean the Registration Rights Agreement dated as of October 18, 1994 between Redhook and ABI, as such agreement has been amended and supplemented to the date hereof.

"Investment Agreement" shall mean the Investment Agreement dated as of October 18, 1994 between Redhook and ABI, as such agreement has been amended and supplemented to the date hereof.

"Involuntary Acquisition" shall mean, with respect to any Person, the purchase or acquisition of Stock by such Person as a result of any stock split, dividend, distribution, rights offering by Redhook or any Subsidiary of Redhook, recapitalization of Redhook, reclassification or other change in the terms of the Stock, or conversion or exchange of, or adjustment in the conversation or exchange ratio of any exercisable, convertible or exchangeable security held by such Person or any other Person.

"IRC" shall mean the Internal Revenue Code of 1986, as amended, and any successor thereto.

"IRS" shall mean the Internal Revenue Service, or any successor thereto.

"Lien" shall mean any mortgage or deed of trust, pledge, hypothecation, assignment, deposit arrangement, lien, charge, claim, security interest, easement or encumbrance, or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, any lease or title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, and the filing of, or agreement to give, any financing statement perfecting a security interest under the Uniform Commercial Code or comparable law of any jurisdiction).

"Material Adverse Effect" shall mean a material adverse effect on the business, assets, operations, affairs or financial or other condition of Redhook and its Subsidiaries taken as a whole.

"Material Contracts" shall mean (i) all of Redhook's contracts, agreements, leases or other instruments to which Redhook is a party or by which Redhook or its properties are bound, which involves payments by or to Redhook of more than $500,000, (ii) all of Redhook's loan agreements, bank lines of credit agreements, indentures, mortgages, deeds of trust, pledge and security agreements, factoring agreements, conditional sales contracts, letters of credit or other debt instruments, (iii) all operating or capital leases for equipment to which Redhook is a party which involves aggregate payments by or to Redhook of more than $500,000, (iv) all noncompetition and similar agreements to which Redhook is a party, (v) all guarantees by Redhook, (v) all contracts and agreements between Redhook and the wholesalers of its products, (vi) all contracts relating to the license of trademarks or other intellectual property, other than non-exclusive licenses of which Redhook is the licensee, and (vii) all contracts relating to the brewing or distribution of malt beverage products and (viii) all other contracts, oral or written, that Redhook considers to be material to the business, assets, operations, prospects or financial or other condition of Redhook and its Subsidiaries taken as a whole.

"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
Section 4001 (a)(3) of ERISA, and to which Redhook, any of its Subsidiaries or any ERISA Affiliate is making, is obligated to make, has made or been obligated to make, contributions on behalf of participants who are or were employed by any of them.

"Original Distribution Agreement" shall mean the Master Distributor Agreement between Redhook and ABI dated October 18, 1994, as amended or modified.

"PBGC" shall mean the Pension Benefit Guaranty Corporation or any successor thereto.

"Pension Plan" shall mean an employee pension benefit plan, as defined in Section (3)(2) of ERISA (other than a Multiemployer Plan), which is not an individual account plan, as defined in Section 3(34) of ERISA, and which Redhook, any of its Subsidiaries or, if a Title IV Plan, any ERISA Affiliate maintains, contributes to or has an obligation to contribute to on behalf of participants who are or were employed by any of them.

"Person" shall mean any individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization, association, corporation, institution, public benefit corporation, entity or government (whether federal, state, county, city, municipal or otherwise, including, without limitation, any instrumentality, division, agency, body or department thereof).

"Plan" shall mean, with respect to Redhook or any ERISA Affiliate, at any time, an employee benefit plan, as defined in Section 3(3) of ERISA, which Redhook or any of its Subsidiaries maintains, contributes to or has an obligation to contribute to on behalf of participants who are or were employed by any of them.

"Purchaser" shall have the meaning assigned to it in Section 5.3 (c).

"Purchasing Contract" shall mean that letter agreement between ABI and Redhook dated November 21, 2002.

"Qualified Plan" shall mean an employee pension benefit plan, as defined in Section 3(2) of ERISA, which is intended to be tax-qualified under
Section 401 (a) of the IRC, and which Redhook, any of its Subsidiaries or any ERISA Affiliate maintains, contributes to or has an obligation to contribute to on behalf of participants who are or were employed by any of them.

"Qualified Takeover Defense Plan" shall mean any shareholder rights plan or provision of the articles of incorporation or bylaws of Redhook or any Subsidiary of Redhook or other contract, security or arrangement in each case applicable to and intended to deter or delay, or with the

reasonably anticipated consequences of deterring or delaying, the acquisition of a specified percentage of Redhook's voting stock or the merger, consolidation or share exchange of Redhook with or into any other Person that, except in the event of an acquisition or proposed acquisition by any Person of an aggregate percentage of the outstanding Common Stock or other securities of Redhook having ordinary voting power in the election of directors of Redhook specified therein or the merger, consolidation or share exchange of Redhook with or into any other Person, does not provide holders of Stock of Redhook with economic, voting or other substantive rights and that, except in the event of an acquisition or proposed acquisition by ABI or its Affiliates of an aggregate percentage of the outstanding Common Stock or other securities of Redhook having ordinary voting power in the election of directors of Redhook specified therein or the merger, consolidation or share exchange of Redhook with or into ABI or its Affiliates, provides ABI or its Affiliates with the same rights generally provided to other holders of Stock. The terms of a Qualified Takeover Defense Plan shall not be applicable to, and no rights under a Qualified Takeover Defense Plan shall arise as a result of, (a) the acquisition or purchase by ABI or its Affiliates of Stock if such purchase or acquisition does not result in ABI or its Affiliates holding in excess of 35% in aggregate of the outstanding Common Stock, (b) any Involuntary Acquisition by ABI or its Affiliates, (c) any increase in the percentage ownership of ABI or its Affiliates of the Common Stock resulting from the cancellation, retirement or acquisition by Redhook or any Subsidiary of Redhook of any Stock, (d) any purchase or acquisition of Stock by ABI or its Affiliates if the respective entity disposes of shares of Common Stock equal to the number of shares so purchased or acquired within 10 Business Days of the date of such purchase or acquisition, or (e) any other action by ABI or its Affiliates if ABI or its Affiliates eliminate the consequences of such action within 10 Business Days of the date that it has occurred.

"Registration Rights Agreement" shall mean the Registration Rights Agreement by and between Redhook and ABI, dated as of the Closing Date and substantially in the form attached hereto as Exhibit B, as such agreement may be amended, supplemented or otherwise modified from time to time in accordance with the terms thereof.

"Representatives" shall have the meaning set forth in Section 8.10.

"Securities Act" shall mean the Securities Act of 1933, as amended.

"Securities Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.

"Stock" shall mean all shares, options, warrants, general or limited partnership interests, rights, participations or other equivalents (regardless of how designated) of or in a corporation, partnership or equivalent entity whether voting or nonvoting, including, without limitation, common stock, preferred stock, or any other "equity security" (as such term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the Securities and Exchange Commission under the Securities Exchange Act).

"Subsidiary" shall mean, with respect to any Person, (a) any corporation of which an aggregate of more than 50% of the outstanding Stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether, at the time, Stock of any other class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time, directly or indirectly, owned legally or beneficially by such Person and/or one or more Subsidiaries of such Person, and (b) any partnership or other entity in which such Person and/or one or more Subsidiaries of such Person shall have an interest (whether in the form of voting or participation in profits or capital contribution) of more than 50%.

"Termination Date" shall mean any date on which (i) the Distribution Agreement is duly terminated or expires pursuant to its terms, (ii) the CBA Distribution Agreement is duly terminated or expires pursuant to its terms or
(iii) the products of Redhook are excluded from the CBA Distribution Agreement pursuant to its terms.

"Title IV Plan" shall mean a Pension Plan, other than a Multiemployer Plan, which is covered by Title IV of ERISA.

"Transaction Documents" shall mean this Agreement, the Distribution Agreement, the Registration Rights Agreement, the Purchasing Contract and Redhook's guaranty of CBA's obligations under the CBA Distribution Agreement.

"Widmer" shall mean Widmer Brothers Brewing Company.

II. THE EXCHANGE OF EQUITY SECURITIES

2.1. EXCHANGE OF EQUITY SECURITIES. Subject to the terms and conditions set forth in this Agreement, ABI agrees to transfer and deliver to Redhook 1,289,872 shares of Series B Preferred Stock and in exchange therefor Redhook agrees to issue and deliver to ABI 1,808,243 shares of Common Stock. In addition, Redhook shall pay to ABI $2,000,000 on or before December 1, 2004.

2.2. CLOSING. The closing of the exchange described in Section 2.1 (the "Closing") shall take place at the offices of Riddell Williams PS, 1001 4th Avenue Plaza, Suite 4500, Seattle Washington 98154 commencing at 10:00 a.m., local time, on July 1, 2004 or such other date and time as Redhook and ABI may mutually determine (the "Closing Date").

On the Closing Date, ABI shall deliver to Redhook certificates representing the Series B Preferred Stock and Redhook shall deliver to ABI certificates representing the Common Stock to be acquired by ABI hereunder registered in such names and in such denominations as ABI requests. Promptly upon receipt of the certificates for the Series B Preferred Stock, Redhook shall cancel all shares of Series B Preferred Stock and shall not reissue or transfer any such shares.

2.3. LEGENDS. Each certificate representing the shares acquired by ABI at the Closing shall bear a legend substantially in the following form:

THE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 ("THE ACT") AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN EXEMPTION THEREFROM.

The legend described in this Section 2.3 and any legend on any certificate acquired by ABI prior hereto shall be removed promptly, and Redhook shall issue to ABI a new certificate without such legend with respect to which
(i) a prospectus meeting the requirements of Section 10 of the Securities Act is available or (ii) ABI has provided to Redhook an opinion of counsel, satisfactory in the reasonable judgment of Redhook, that the public sale, transfer or assignment thereof may be made without registration under the Securities Act.

III. ABI'S REPRESENTATIONS AND WARRANTIES

ABI makes the following representations and warranties to Redhook, each and all of which shall survive the execution and delivery of this Agreement and the Closing:

3.1. CORPORATE EXISTENCE. ABI is a corporation duly organized, validly existing and in good standing under the laws of the State of Missouri.

3.2. CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. The execution, delivery and performance by ABI of this Agreement, the other Transaction Documents to which it is a party and all instruments and documents to be delivered by ABI hereunder and thereunder and the consummation of the other transactions contemplated by any of the foregoing: (i) are within ABI's corporate power; (ii) have been duly authorized by all necessary corporate action on the part of ABI; (iii) are not in contravention of any provision of ABI's articles of incorporation or bylaws; (iv) will not violate any law or regulation, or any order or decree of any court or government instrumentality;
(v) will not conflict with or result in the breach or termination of, constitute a default under or accelerate any performance required by, any indenture, mortgage, deed of trust, lease, agreement or other instrument to which ABI is a party or by which ABI or any of its property is bound; (vi) will not result in the creation or imposition of any Lien upon any of the property of ABI; and
(vii) do not require the consent or approval of, or any filing with, any Governmental Authority or any other Person. This Agreement has been duly executed and delivered by ABI and constitutes a legal, valid and binding obligation of ABI, enforceable against it in accordance with its terms, subject, as to the enforceability thereof, to the effect of any applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors' rights generally and to the effect of general principles of equity. At the Closing Date, the other Transaction Documents to which ABI is a party will have been duly executed and delivered by ABI and each will then constitute a legal, valid and binding obligation of ABI, enforceable against it in accordance with its terms, subject, as to the enforceability thereof, to the effect of any applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors' rights generally and to the effect of general principles of equity.

3.3 ABSENCE OF LIENS ON THE SERIES B PREFERRED STOCK. ABI has good title to the Series B Preferred Stock, free and clear of all Liens and upon delivery to Redhook of the certificates therefor in accordance with the terms hereof, ABI shall no longer own any interest in the Series B Preferred Stock.

IV. REDHOOK'S REPRESENTATIONS AND WARRANTIES

Redhook makes the following representations and warranties to ABI, each and all of which shall survive the execution and delivery of this Agreement and the Closing:

4.1. AUTHORIZED AND OUTSTANDING SHARES OF CAPITAL STOCK. The authorized capital stock of Redhook consists of 50,000,000 shares of Common Stock, par value $0.005 per share, of which 6,271,006 shares are issued and outstanding as of April 30, 2004 and 8,757,143 shares of Preferred Stock, $0.005 par value per share, of which 1,289,872 shares of Series B Preferred Stock are issued and outstanding. All of the issued and outstanding shares of Redhook are validly issued, fully paid and non-assessable. Except as set forth on Schedule 4.1 (b),
(i) there is no existing option, warrant, call, commitment or other agreement to which Redhook is a party requiring, and there are no convertible securities of Redhook outstanding which upon conversion would require, the issuance of any additional shares of Stock of Redhook or other securities convertible into shares of equity securities of Redhook, other than the Series B Preferred Stock, and (ii) other than the Transaction Documents, there are no agreements to which Redhook is a party or, to the best knowledge of Redhook, to which Redhook is not a party, in each case, among, between or with any of the stockholders of Redhook with respect to the voting or transfer of the Stock of Redhook or with respect to any other aspect of Redhook's affairs. Schedule 4.1 (b) sets forth a complete, correct and accurate statement of the option terms, exercise price and identity of the optionee with respect to each outstanding stock option or other stock incentive of Redhook. Except pursuant to the terms of the Series B Preferred Stock, Redhook is not a party to any agreement or instrument requiring Redhook to repurchase or redeem equity securities.

4.2. AUTHORIZATION AND ISSUANCE OF EQUITY SECURITIES. The Common Stock to be acquired by ABI hereunder has been duly authorized by all necessary corporate action on the part of Redhook. Upon delivery to ABI of certificates therefor in accordance with the terms hereof, the Common Stock to be issued to ABI hereunder will be validly issued and fully paid and nonassessable, free and clear of all Liens and preemptive rights. The shares of Common Stock to be acquired by ABI hereunder, together with the 953,470 shares of Common Stock acquired by ABI prior hereto, represent 31.0% of the outstanding shares of Common Stock on the Closing Date, calculated on a Fully Diluted Basis.

4.3. SECURITIES LAWS. The offer, issuance, sale and delivery of the Common Stock as provided in this Agreement are exempt from the registration and prospectus delivery requirements of the Securities Act and all applicable state securities laws, and are otherwise in compliance with such laws.

4.4. CORPORATE EXISTENCE: COMPLIANCE WITH LAW.

(a) Redhook (i) is a corporation duly organized, validly existing and in good standing under the laws of the State of Washington; (ii) is duly qualified as a foreign corporation and in good standing under the laws of each jurisdiction where its ownership or lease of property or the conduct of its business requires such qualification (except for jurisdictions in which such failure to so qualify or to be in good standing would not have a Material Adverse Effect); (iii) has the requisite corporate power and authority and the legal right to own, pledge, mortgage or otherwise encumber and operate its properties, to lease the property it operates under lease, and to conduct its business as now, heretofore and proposed to be conducted; (iv) has all material licenses, permits, consents or

approvals from or by, and has made all material filings with, and has given all material notices to, all Governmental Authorities having jurisdiction or other Persons, to the extent required for such ownership, operation and conduct (including all alcohol beverage control licenses issued by Governmental Authorities to the extent required in each state in which Redhook does business); (v) is in compliance with its articles of incorporation and bylaws; and (vi) is in compliance with all applicable provisions of law except failures to comply that, singly or in the aggregate, would not have a Material Adverse Effect.

(b) At the Closing, CBA (i) will be a limited liability company duly organized, validly existing and in good standing under the laws of the State of Oregon; (ii) will be duly qualified and in good standing under the laws of each jurisdiction where its ownership or lease of property or the conduct of its business requires such qualification (except for jurisdictions in which such failure to so qualify or to be in good standing would not have a Material Adverse Effect); (iii) will have the requisite power and authority and the legal right to own, pledge, mortgage or otherwise encumber and operate its properties, to lease the property it operates under lease, and to conduct its business as now, heretofore and proposed to be conducted; (iv) will have all material licenses, permits, consents or approvals from or by, and has made all material filings with, and has given all material notices to, all Governmental Authorities having jurisdiction or other Persons, to the extent required for such ownership, operation and conduct (including all alcohol beverage control licenses issued by Governmental Authorities to the extent required in each state in which CBA does business); (v) will be in compliance with its organizational documents and all agreements between it and Redhook or Widmer, ; and (vi) will be in compliance with all applicable provisions of law except failures to comply that, singly or in the aggregate, would not have a material adverse effect on the business, assets, operations, affairs or financial or other condition of CBA. The agreements between CBA, Redhook, Widmer and ABI relating to the establishment and operation of CBA are legal, valid and binding obligations of CBA, enforceable against it in accordance with its terms, subject, as to the enforceability thereof, to the effect of any applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors' rights generally and to the effect of general principles of equity.

4.5. SUBSIDIARIES. Except as set forth on Schedule 4.5, Redhook does not control, directly or indirectly, nor does Redhook have any direct or indirect equity participation in, any corporation, partnership, trust or other business association.

4.6. CORPORATE POWER; AUTHORIZATION: ENFORCEABLE OBLIGATIONS. The execution, delivery and performance by Redhook of this Agreement, the other Transaction Documents to which it is a party and all instruments and documents to be delivered by Redhook hereunder and thereunder, the issuance and exchange of the Common Stock, and the consummation of the other transactions contemplated by any of the foregoing: (i) are within Redhook's corporate power; (ii) have been duly authorized by all necessary or proper corporate action on the part of Redhook; (iii) are not in contravention of any provision of Redhook's articles of incorporation or bylaws; (iv) will not violate any law or regulation, or any order or decree of any court or governmental instrumentality; (v) will not conflict with or result in the breach or termination of, constitute a default under or accelerate any performance required by, any indenture, mortgage, deed of trust, lease, agreement or other instrument to which Redhook is a party or by which Redhook or any of its property is bound; (vi)

will not result in the creation or imposition of any Lien upon any of the property of Redhook; (vii) do not require the consent or approval of, or any filing with, any Governmental Authority or any other Person (except to the extent previously obtained or made) and (viii) will not obligate Redhook to issue any Stock to any other Person or provide any Person with the right to acquire Stock from Redhook (including pursuant to the terms of the Redhook rights agreement). The consummation of the transactions described herein do not require approval by the stockholders of Redhook. This Agreement has been duly executed and delivered by Redhook and constitutes the legal, valid and binding obligation of Redhook, enforceable against it in accordance with its terms, subject, as to the enforceability thereof, to the effect of any applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors' rights generally and to the effect of general principles of equity. At the Closing Date, the other Transaction Documents shall have been duly executed and delivered by Redhook, and each shall then constitute a legal, valid and binding obligation of Redhook to the extent it is a party thereto, enforceable. The Closing shall not impair or affect the validity of the Purchasing Contract and the Purchasing Contract is a legal, valid and binding obligation of Redhook, enforceable against it in accordance with its terms, subject, as to the enforceability thereof, to the effect of any applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors' rights generally and to the effect of general principles of equity. There are no restrictions on the corporate power or authority of Redhook that are not disclosed in the Articles of Incorporation or the By-Laws, Washington corporate law and the listing standards of the Nasdaq Stock Market, Inc. There are no other facts, documents, or agreements that may or could restrict or limit the terms or enforceability of the Transaction Documents. Redhook has, and at the time of the Closing shall have, no setoffs, counterclaims, recoupments or defenses to the enforcement of any of its obligations thereunder. The agreements between Redhook, Widmer and CBA relating to the establishment and operation of CBA are legal, valid and binding obligations of Redhook, enforceable against it in accordance with its terms, subject, as to the enforceability thereof, to the effect of any applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors' rights generally and to the effect of general principles of equity. Subject to the exceptions set forth in Supply, Distribution and Licensing Agreement between CBA and Redhook, Redhook has provided CBA with the exclusive right to sell and market its malt beverage products in the states in which CBA operates.

4.7. FINANCIAL STATEMENTS.

(a) All of the following balance sheets and statements of income, retained earnings and cash flows of Redhook have been, except as noted therein, prepared in conformity with GAAP consistently applied throughout the periods involved and present fairly the financial position of Redhook in each case as at the dates thereof, and the results of operations and cash flows for the periods then ended (as to the unaudited interim financial statements, subject to normal year-end audit adjustments not material in amount):

(i) the unaudited balance sheet of Redhook as at March 31, 2004, and the related statements of income, retained earnings and cash flows for the three months ending on such date; and

(ii) the audited balance sheets of Redhook as at December 31, 2003, as at December 31, 2002 and as at December 31, 2001, and the related statements of income, retained earnings and cash flows for the year then ended, with the opinion thereon of Ernst & Young LLP.

(b) Redhook has no obligations, contingent or otherwise, including, without limitation, liabilities for Charges, long-term leases or unusual forward or long-term commitments which are not reflected in the balance sheets of Redhook, other than those that are both incurred in the ordinary course of business and are immaterial in amount.

4.8. OWNERSHIP OF PROPERTY.

(a) Redhook owns good and marketable fee simple title to all of the real estate owned (subject to only those Liens disclosed on such Schedule
4.8 (a) and those Liens that would not have a material adverse effect on the use of or sale of the property by Redhook and would not, singly or in the aggregate, have a Material Adverse Effect), and good and marketable title to, or valid leasehold interests in, all of its other properties and assets. Each lease of real estate is a valid and binding agreement of Redhook, enforceable against Redhook in accordance with its terms and, to the knowledge of Redhook, is a valid and binding agreement of each other party to such lease, enforceable against such other parties in accordance with its terms. Redhook is not in default of its obligations under any lease and has not delivered or received any notice of default under any such lease, nor has any event occurred which, with the giving of notice, the passage of time or both, would constitute a default on the part of Redhook under any such lease. To Redhook's knowledge, no other party is in default under any such lease.

(b) All real estate and improvements owned, leased, used or occupied by Redhook have adequate connections to all necessary utilities and conform with all applicable zoning, building, subdivision and other requirements of any Governmental Authority and all restrictive covenants affecting such real estate and improvements except any such failures to conform that, singly or in the aggregate, would not have a Material Adverse Affect.

4.9 MATERIAL CONTRACTS. Schedule 4.9 contains a true, correct and complete list and description of all Material Contracts, whether oral or written, and any amendments or supplements thereto or extensions thereof, and Redhook has made available to ABI for its review complete, current and accurate copies of each Material Contract including any amendments or supplements thereto or extensions thereof or has completely, currently and accurately described the terms of any oral agreement, amendment, supplement or extension. Each Material Contract is a valid and binding agreement of Redhook enforceable against Redhook in accordance with its terms, and Redhook does not have any knowledge that any Material Contract is not a valid and binding agreement against the other parties thereto. Redhook has fulfilled all obligations required pursuant to each Material Contract to have been performed by Redhook on its part. Redhook is not in default or breach, nor to Redhook's knowledge is any third party in default or breach, under or with respect to any Material Contract and Redhook is not in default or breach of any contract between ABI and Redhook.

4.10. ENVIRONMENTAL PROTECTION.

Except as would not, singly or in the aggregate, have a Material Adverse Effect,

(1) Redhook and all real property owned, leased or otherwise operated by Redhook (each, a "Facility") comply in material respects with any applicable Environmental Law;

(2) Redhook has not, and has no knowledge of any other person who has, caused any release, threatened release or disposal of any Hazardous Material at any Facility, and the Facilities are not adversely affected by any release, threatened release or disposal of a Hazardous Material originating or emanating from any other property; and

(3) There are no investigations, judicial or administrative proceedings, pending litigation or, to Redhook's knowledge, threatened investigations, proceedings or litigation affecting or relating to Redhook or the Facilities relating to Environmental Laws or Hazardous Materials.

4.11. LABOR MATTERS. There are no strikes or other labor disputes against Redhook pending or, to Redhook's knowledge, threatened. Hours worked by and payments made to employees of Redhook have not been in violation of the Fair Labor Standards Act or any other applicable law dealing with such matters. All payments due from Redhook on account of employee health and welfare insurance have been paid or accrued as a liability on the books of Redhook. Redhook does not have any obligation under any collective bargaining agreement or similar agreement. There is no organizing activity involving Redhook pending or, to Redhook's knowledge, threatened by any labor union or group of employees. There are no representation proceedings pending or threatened with the National Labor Relations Board, and no labor organization or group of employees of Redhook has made a pending demand for recognition. There are no complaints or charges against Redhook pending or, to Redhook's knowledge, threatened to be filed with any federal, state, local or foreign court, governmental agency or arbitrator based on, arising out of, in connection with, or otherwise relating to the employment or termination of employment by Redhook of any individual. There are no collective bargaining agreements or other labor agreements covering any employees of Redhook.

4.12. TAXES. All federal, state, local and foreign tax returns, reports and statements required to be filed by Redhook have been timely filed with the appropriate Governmental Authority or Redhook has received extensions for such filings, and all such returns, reports and statements are complete and accurate. All Charges and other impositions shown thereon to be due and payable have been paid prior to the date on which any fine, penalty, interest or late charge may be added thereto for nonpayment thereof, or any such fine, penalty, interest, late charge or loss has been paid. Proper and accurate amounts have been withheld by Redhook from its employees for all periods in full and complete compliance with the tax, social security and unemployment withholding provisions of applicable federal, state, local and foreign law and such withholdings have been timely paid to the respective governmental.

4.13. NO LITIGATION. No action, claim or proceeding is now pending or, to the knowledge of Redhook, threatened against Redhook, at law, in equity or otherwise, before any court, board, commission, agency or instrumentality of any federal, state, or local government or of any agency

or subdivision thereof, or before any arbitrator or panel of arbitrators that would result in a Material Adverse Effect. To the knowledge of Redhook, no state of facts exist which is reasonably likely to give rise to any such action, claim or proceeding that would result in a Material Adverse Event. There is no action, suit, proceeding, inquiry, arbitration, hearing, notice of hearing or investigation pending or, to the knowledge of Redhook, threatened against Redhook or its officers or employees by the federal Alcohol and Tobacco Tax and Trade Bureau, by the State of Washington, any other state in which Redhook does business or any agency of any such state.

4.14. BROKERS. No broker or finder acting on behalf of Redhook brought about the consummation of the transactions contemplated pursuant to this Agreement, and Redhook has no obligation to any Person, in respect of any finder's or brokerage fees in connection with the transactions contemplated by this Agreement. Redhook is solely responsible for the payment of all fees of brokers or finders acting on behalf or at the request of Redhook.

4.15. EMPLOYMENT AGREEMENTS. Except for the agreements that are attached or incorporated by reference into Redhook's Annual Report on Form 10-K for the year ended December 31, 2003, there are no employment, consulting or management agreements between Redhook and any other Person.

4.16. PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES. Redhook owns all licenses, patents, patent applications, copyrights, service marks, trademarks, trademark applications, trade dress, trade secrets, trade names and other intellectual property rights necessary to continue to conduct its business as heretofore conducted by it, now conducted by it and proposed to be conducted by it. Redhook conducts its businesses without infringement, unfair competition or dilution or claim of infringement, unfair competition or dilution of any license, patent, copyright, service mark, trademark, trade name, trade secret or other intellectual property right of others. There is no infringement or claim of infringement by others of any material license, patent, copyright, service mark, trademark, trade name, trade dress, trade secret or other intellectual property right of Redhook.

4.17. FULL DISCLOSURE. No information contained in this Agreement, the filings made by Redhook with the Securities and Exchange Commission or any other Transaction Document or any written statement prepared by Redhook or its representatives furnished by or on behalf of Redhook pursuant to or in connection with the terms of this Agreement or any other Transaction Document contains any untrue statement of a material fact or, when taken as a whole, omits to state a material fact necessary to make the statements contained herein or therein not misleading in light of the circumstances under which they were made.

4.18. NO MATERIAL ADVERSE EFFECT. No event has occurred since December 31, 2003 that has had, or is reasonably likely to have, a Material Adverse Effect.

4.19. ERISA.

(a) Redhook has no ERISA Affiliates.

(b) Each of the Qualified Plans and the trusts maintained pursuant thereto are exempt from federal income taxation under Section 501 of the IRC, and nothing has occurred with respect to the operation of such Qualified Plans which could cause the loss of such qualification or exemption or the imposition of any liability, penalty or tax under ERISA or the IRC.

(c) All contributions (including all employer contributions and employee salary reduction contributions) required to have been made under any of the Plans or by law (without regard to any waivers granted under Section 412 of the IRC), to any funds or trusts established thereunder or in connection therewith have been made by the due date thereof (including any valid extension), and all contributions for any period ending on or before the Closing Date which are not yet due will have been paid or accrued on or prior to the Closing Date.

(d) There is no material violation of ERISA with respect to the filing of applicable reports, documents and notices regarding the Plans or any tax-exempt trust related to any of the Plans with the Secretary of Labor and the Secretary of the Treasury or the furnishing of such documents to the participants or beneficiaries of the Plans.

(e) There are no pending actions, claims or lawsuits which have been asserted or instituted against the Plans, the assets of any of the trusts under such Plans or the plan sponsor or the plan administrator, or against any fiduciary of the Plans with respect to the operation of such Plans (other than routine benefit claims), nor does Redhook have knowledge of facts which could form the basis for any such claim or lawsuit.

(f) The Plans have been maintained, in all material respects, in accordance with their terms and with all provisions of ERISA and other applicable federal and state laws and regulations, and neither Redhook nor any "party in interest" or "disqualified person" with respect to the Plans has engaged in a "prohibited transaction" within the meaning of Section 4975 of the IRC or Section 406 of ERISA. No fiduciary has any liability for breach of fiduciary duty or any other failure to act or comply in connection with the administration or investment of the assets of any Plan.

(g) No Pension Plan has an accumulated funding deficiency as defined in Section 412 of the IRC. Redhook does not have any existing or potential liability for a complete or partial withdrawal from a Multiemployer Plan.

(h) No "reportable event" as defined in ERISA section 4143 has occurred with respect to any Plan.

                  (i) Redhook does not maintain any retiree medical plan.

4.20     SECURITIES FILINGS.

         (a) Redhook has filed in a timely  matter all the material  required to

be filed by it pursuant to Section 13, 14 or 15 (d) of the Securities Exchange Act. All reports filed by Redhook conformed in all material respects to the requirements of the Securities Exchange Act, and none of such documents contained an untrue statement of material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

(b) Redhook has adequate and effective disclosure controls and procedures and internal controls over financial reporting, as each such term is defined by the Securities Exchange Act.

(c) Redhook is in full compliance with the Securities Exchange Act, as amended by the Sarbanes-Oxley Act of 2002, and the regulations applicable to companies whose securities are listed on the Nasdaq Stock Market and, to its knowledge, there have been no material violations of those policies or regulations by its officers and employees.

4.21 RELATED PARTY TRANSACTIONS. No employee, officer, stockholder or director of Redhook or member of his or her immediate family is indebted to Redhook, nor is Redhook indebted (or committed to make loans or extend or guarantee credit) to any of them, other than (i) for payment of salary for services rendered, (ii) reimbursement for reasonable expenses incurred on behalf of Redhook, and (iii) for other standard employee benefits made generally available to all employees (including stock option agreements outstanding under any stock option plan approved by the Board of Directors of Redhook). To the best of Redhook's knowledge, none of such persons has any direct or indirect ownership interest in any Person with which Redhook is affiliated or with which Redhook has a business relationship, or any Person that competes with Redhook, except that employees, stockholders, officers, or directors of Redhook and members of their immediate families may own stock in publicly traded companies that may compete with Redhook. To the best of Redhook's knowledge, no officer, director, or stockholder or any member of their immediate families is, directly or indirectly, interested in any material contract with Redhook (other than such contracts as relate to any such person's ownership of capital stock or other securities of Redhook). This representation and warranty shall not apply to any arrangements between Redhook and A-BC, ABI or any employee or officer of A-BC or ABI.

4.22 BOOKS AND RECORDS. The books of account, minute books, stock record books, and other records of Redhook, all of which have been made available to ABI, are complete and correct and have been maintained in accordance with sound business practices and the requirements of Section 13(b)(2) of the Securities Exchange Act, including the maintenance of an adequate system of internal controls. The minute books of Redhook contains accurate and complete records of all meetings held of, and corporate action taken by, the shareholders, the Boards of Directors, and committees of the Boards of Directors of Redhook, and no meeting of any such shareholders, Board of Directors, or committee has been held for which minutes have not been prepared and are not contained in such minute books.

V. COVENANTS

5.1. Redhook covenants and agrees that, unless duly waived by ABI, from and after the date hereof:

(a) PERMITTED ACQUISITIONS OR INVESTMENTS. Redhook shall not, and shall not permit any of its Subsidiaries to, directly or indirectly in any transaction or related series of transactions, acquire or invest in, whether for cash, debt, Stock, or other property or assets or by

guaranty of any obligation, (i) any assets or business related to the production or distribution of malt beverage products the aggregate purchase price of which in any such transaction or related series of transactions exceeds 50% of the book value of Redhook's assets on the date of such acquisition or investment immediately before giving effect thereto, or (ii) any assets or business not related to the production or distribution of malt beverage products the aggregate purchase price of which in any such transactions or related series of transactions exceeds 10% of the book value of Redhook's assets on the date of such acquisition or investment immediately before giving effect thereto. Redhook shall not acquire any alcohol or non-alcohol malt beverage brand or the assets or Stock of any producer of alcohol malt beverages unless it delivers to ABI a written plan providing for the exclusive distribution of such malt beverages by ABI that is satisfactory to ABI.

(b) SALES OF ASSETS.

(i) Redhook shall not, and shall not permit any Subsidiary of Redhook to, sell, lease, transfer, convey or otherwise dispose of assets in any transaction or related series of transactions, which assets have an aggregate book value exceeding 30% of the aggregate book value of Redhook's assets on the date of such sale, lease, transfer, conveyance or disposition immediately before giving effect thereto; PROVIDED, HOWEVER, that the foregoing shall not prohibit any bona fide sale-leaseback transaction in which all leases entered into by Redhook or any Subsidiary of Redhook in connection with such transaction are capital leases as determined in accordance with GAAP.

(ii) Redhook and its Subsidiaries shall not sell, transfer, convey, license, pledge or otherwise dispose of any trademark or trade name acquired or owned by any of them after the date hereof if 15% or more of the revenues of Redhook and its consolidated Subsidiaries for the preceding Fiscal Year were attributable to sales of products using such trademark or trade name.

(iii) Redhook shall not dispose of any of its interest in CBA.

(c) BOOKS AND RECORDS. Redhook shall, and shall cause its Subsidiaries to, keep adequate records and books of account with respect to their business activities, in which proper entries, reflecting all of their financial transactions, are made in accordance with GAAP consistently applied.

(d) FINANCIAL AND BUSINESS INFORMATION.

(i) PROJECTIONS. Redhook will deliver to ABI, together with appropriate supporting details, within 30 days prior to the beginning of each Fiscal Year (and Redhook, at its option, may deliver such information to its other security holders contemporaneously therewith):

(A) a projected consolidated balance sheet of Redhook and its Subsidiaries, for each month of such Fiscal Year;

(B) projected consolidated and consolidating cash flow statements of Redhook and its Subsidiaries, including summary details of cash disbursements (including for capital expenditures), for each month of such Fiscal Year; and

(C) projected consolidated and consolidating income statements of Redhook and its Subsidiaries for each quarter of such Fiscal Year;

(ii) OTHER INFORMATION. Redhook will deliver to ABI such other information with respect to Redhook's business, financial condition or prospects as ABI may, from time to time, reasonably request; provided that ABI shall be entitled to no information concerning the specific brewing processes and formulae used by Redhook to brew its malt beverage products.

(e) COMMUNICATION WITH ACCOUNTANTS. Redhook authorizes ABI to communicate directly with its independent certified public accountants and tax advisors, authorizes those accountants to disclose to ABI any and all financial statements and other supporting financial documents and schedules including copies of any management letter with respect to the business, financial condition and other affairs of Redhook and any of its Subsidiaries and those advisors to disclose to ABI any information requested by ABI concerning the tax filings or reports made by Redhook and any of its Subsidiaries. Redhook shall not interfere or attempt to restrain any such communications or disclosures and at the request of ABI from time to time shall issue written instructions or authorizations to its accountants or advisors to facilitate such communications or disclosures.

(f) TAX COMPLIANCE. Redhook shall pay all transfer, excise or similar taxes (not including income or franchise taxes) in connection with the issuance, sale, delivery or transfer by Redhook to ABI of the Common Stock or the transfer of Series B Preferred Stock by ABI to Redhook hereunder. Additionally, Redhook shall indemnify and save ABI from all such taxes.

(g) CAPITAL STRUCTURE.

(i) Notwithstanding any other provision of this
Section 5.1(g), Redhook shall not issue, sell or transfer or agree to issue, sell or transfer any of its authorized but not outstanding shares of Stock, except, (A) issuances of Common Stock pursuant to any stock split, reverse stock split or stock dividend or pursuant to the exercise of any option or warrant or the conversion of any convertible security either now outstanding or otherwise permitted by this Section, (B) prior to January 1, 2006 issuances of Common Stock not exceeding 20% of the Common Stock on the date of the Closing and for each successive two year period thereafter issuances of Common Stock not exceeding 20% of the outstanding Common Stock on the first day of such period,
(C) issuances of Common Stock to ABI as required hereby, (D) issuances of Stock by Redhook pursuant to any Qualified Takeover Defense Plan, and (E) issuances of Stock by Redhook to employees or directors for compensatory purposes, pursuant to any employee or director stock option or other stock incentive plan approved in accordance with the requirements set forth in Section 5.1(h).

(ii) Redhook shall not amend its certificate of incorporation or bylaws (other than an amendment the sole effect of which is to increase its authorized capital stock) without the written approval of ABI.

(iii) Redhook shall not issue any Stock to any Person with more than one vote per share or with a class vote on any matter.

(iv) Redhook shall not issue or sell or agree to issue or sell any Stock to any Person engaged in the business of brewing, producing or distributing malt or any alcoholic beverages in North America or South America or to any Person known by Redhook to be an Affiliate of any such Person other than to (A) to any Person who is a wholesaler of the products of ABI or (B) to ABI.

(v) Without providing ABI with at least 10 days' advance written notice thereof, Redhook shall not issue or sell shares of Stock, the effect of which would be to decrease the aggregate percentage ownership of the Common Stock registered in the name of ABI and its designees to under 20% of the outstanding Common Stock.

(vi) Redhook shall not, pursuant to any agreement or the terms of any Stock issued by Redhook, give to any Person or Persons the right to name or designate more than one member of the board of directors of Redhook.

(viii) Redhook shall not cause or permit any Subsidiary of Redhook to issue any Stock to any Person other than to Redhook or to any other Subsidiary of Redhook.

(h) TRANSACTIONS WITH AFFILIATES.

(i) Redhook shall not and shall not permit any Subsidiary of Redhook to enter into or be a party to any transaction with any Affiliate of Redhook or such Subsidiary unless such transaction is (i) upon fair and reasonable terms that are fully disclosed to ABI and are no less favorable to Redhook or such Subsidiary than would be obtained in a comparable arm's-length transaction with a Person not an Affiliate of Redhook or such Subsidiary, and (ii) has been approved by a majority of the Independent Directors of the Board of Directors of Redhook or a committee of the Board of Directors composed entirely of Independent Directors.

(ii) Redhook shall not enter into, amend, modify or waive any provision of any agreement with an executive officer or director of Redhook (or any Affiliate thereof) without the approval by a majority of the Independent Directors of the Board of Directors or a committee of the Board of Directors of Redhook composed entirely of Independent Directors. Redhook shall establish and maintain a committee of the board of directors, composed entirely of Independent Directors, and such committee shall determine the compensation (including salary, bonus and stock incentives) for each executive officer of Redhook. Redhook shall not amend the terms of any stock option or other stock incentive or create any stock incentive plan except as approved by such committee.

(i) MAINTENANCE OF EXISTENCE AND CONDUCT OF BUSINESS. Redhook shall and shall cause each of its Subsidiaries to: (i) continue to conduct its business in the brewing of malt beverages substantially as now conducted or as otherwise permitted hereunder and shall not engage in any material respect in any business other than the producing and distributing of malt beverages, and, consistent with past practice, operation of the restaurants located at its breweries; (ii) comply in

all material respects with all applicable laws, rules, regulations and orders of any Governmental Authority; (iii) duly and timely make all filings and take such other action as may be required by any Governmental Authority in connection with the transactions described in the Transaction Documents; and (iv) assure that none of its products are adulterated or misbranded within the meaning of the federal Food, Drug and Cosmetic Act, as amended, and cause all of its products to comply with the applicable provisions of the Code of Federal Regulations.

(j) DISTRIBUTION OF REDHOOK PRODUCTS. Redhook shall not distribute products in the United States other than through ABI, CBA or other wholesalers to the extent permitted by Section 11.05 of the Distribution Agreement. If Redhook desires to investigate the production, sale, distribution or licensing the production of any malt beverage product in any country outside of the United States of America, Redhook shall notify ABI and shall provide ABI with all information reasonably requested by ABI in connection with such arrangement. Redhook shall give ABI a period of at least 90 days to make a proposal to Redhook pursuant to which ABI would serve as a master distributor in such country, and Redhook shall not conduct negotiations or discussions with any other party during such 90 day period. Upon the end of such 90 day period, Redhook shall be permitted to select any entity to brew or distribute the products of Redhook in any such country, except that Redhook shall not be permitted to select an ABI Competitor or any Affiliate thereof for such purpose.

(k) FINANCIAL AND OTHER INFORMATION.

(i) MONTHLY STATEMENTS. Redhook shall deliver to ABI as soon as practicable after the end of each month, but in any event within 30 days thereafter: (A) an unaudited consolidated balance sheet of Redhook and its Subsidiaries as at the end of such month, (B) unaudited consolidated statements of income, retained earnings and changes in financial position of Redhook and its Subsidiaries for such month and for the portion of such year ending with such month, and (C) a sales report for such month, which report will show sales by product, by distributor and whether by bottle or draft in each state in which Redhook sells its products, in each case for such month and for the portion of the Fiscal Year ending with such month and showing a comparison of such year to date sales results with those of the previous year, including growth figures for each product on a state by state basis but which need not show sales to CBA.

(ii) QUARTERLY INFORMATION. Redhook shall deliver to ABI as soon as practicable after the end of each of the first three quarterly fiscal periods in each Fiscal Year of Redhook, but in any event within 45 days thereafter, (A) an unaudited consolidated balance sheet of Redhook and its Subsidiaries as at the end of such quarter, and (B) unaudited consolidated statements of income, retained earnings and changes in financial position of Redhook and its Subsidiaries for such quarter and (in the case of the second and third quarters) for the portion of the Fiscal Year ending with such quarter. Such statements shall be (1) prepared in accordance with GAAP consistently applied, (2) in reasonable detail and (3) certified by the principal financial or accounting officer of Redhook as presenting fairly the financial condition, results of operation, and cash flows of Redhook and its consolidated Subsidiaries in accordance with GAAP consistently applied (subject to normal year-end audit adjustments not material in amount).

(iii) ANNUAL INFORMATION. Redhook will deliver to ABI as soon as practicable after the end of each fiscal year of Redhook, but in any event within 90 days thereafter, (A) an audited consolidated balance sheet of Redhook and its Subsidiaries as at the end of such year, and (B) audited consolidated statements of income, retained earnings and changes in financial position of Redhook and its Subsidiaries for such year, setting forth in each case in comparative form the figures for the previous year. Such statements shall be (1) prepared in accordance with GAAP consistently applied, (2) in reasonable detail, and (3) certified as presenting fairly the financial condition, results of operation and cash flows of Redhook and its consolidated Subsidiaries in accordance with GAAP consistently applied by Ernest & Young L.L.P. or such other firm of independent certified public accountants selected by Redhook that is acceptable in the reasonable judgment of ABI.

(iv) FILINGS. Redhook will deliver to ABI, promptly upon their becoming available, one copy of each report, notice or proxy statement sent by Redhook to its stockholders generally, and of each regular or periodic report (pursuant to the Securities Exchange Act) and any registration statement, prospectus or other writing (including, without limitation, by electronic means) pursuant to the Securities Act filed by Redhook with (i) the Securities and Exchange Commission, or (ii) any securities exchange or the NASDAQ Stock Market on which shares of Common Stock of Redhook are listed or quoted. Prior to filing or making publicly available any such report, notice, proxy statement, registration statement, prospectus or other writing which references or makes any disclosure concerning ABI or its business, Redhook shall provide ABI a reasonable opportunity to review such report, notice, proxy statement, registration statement, prospectus or other writing and shall not make any such reference or disclosure to ABI or its business to which ABI reasonably objects. Redhook shall timely file all material required to be filed by it pursuant to Section 13, 14 or 15 (d) of the Securities Exchange Act. All reports filed by Redhook shall conform in all material respects to the requirements of the Securities Exchange Act, and none of such documents shall contain an untrue statement of material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

(v) OWNERSHIP PERCENTAGE. From time to time, ABI shall be permitted to request that Redhook determine the percentage ownership of the outstanding Common Stock held by ABI or any other Person specified by ABI, and Redhook shall promptly (but in any event no later than five Business Days after such request is made) and accurately provide ABI with a written determination of the percentage ownership of the outstanding Common Stock of ABI or such other Person, as of the date such request is made with such verification and detail as reasonably requested by ABI.

(vi) NASDAQ LISTING. Redhook shall not voluntarily delist or terminate the listing or quotation of the Common Stock on the NASDAQ Stock Market.

(l) ACCESS TO BOOKS AND RECORDS. Redhook shall permit representatives of ABI to visit and inspect, at no charge to ABI, any of the properties of Redhook and its Subsidiaries, to examine the corporate books and make copies or extracts therefrom and to discuss the affairs, finances and accounts of Redhook and its Subsidiaries with the principal officers or employees of Redhook, all at such reasonable times, upon reasonable notice and as often as ABI may reasonably

request; provided that ABI shall be entitled to no information concerning the specific brewing processes or formulae used by Redhook to brew its malt beverage products.

(m) EXCHANGE OF STOCK CERTIFICATES. Redhook will, at its expense, promptly upon surrender by ABI of any certificates representing shares of Common Stock at the corporate offices of Redhook, execute and deliver to ABI a new certificate or certificates in any denominations specified by ABI for an aggregate number of shares of Common Stock equal to the number of shares of such stock represented by the certificates surrendered.

(n) LOST, STOLEN, DESTROYED OR MUTILATED STOCK CERTIFICATES. Upon receipt of evidence reasonably satisfactory to Redhook of the loss, theft, destruction or mutilation of any certificate for shares of Common Stock and, in the case of loss, theft or destruction, upon delivery of an indemnity reasonably satisfactory to Redhook (which, at the option of ABI, may be an undertaking by ABI to so indemnify Redhook), or, in the case of mutilation, upon surrender and cancellation thereof, Redhook will issue to ABI a new certificate of like tenor for a number of shares of Common Stock equal to the number of shares of such stock represented by the certificate lost, stolen, destroyed or mutilated.

(o) AUDITORS. Redhook shall not change its independent certified public accounting firm except to an independent certified public accounting firm acceptable in the reasonable judgment of ABI.

(p) COLLECTIVE BARGAINING AGREEMENTS. Redhook acknowledges that Redhook shall have complete responsibility and authority concerning recognition of collective bargaining units within its employees or those of its Subsidiaries, the determination as to whether to enter into collective bargaining agreements or labor agreements with its employees or those of its Subsidiaries, and the terms of any such agreement.

(q) REPRESENTATION OF ABI ON THE BOARD OF DIRECTORS. ABI shall be entitled to designate two individuals as directors of Redhook, and except as provided in this section, Redhook shall cause the number of members on the Board of Directors not to exceed 7. The Board of Directors of Redhook shall recommend to the shareholders of Redhook the election of such individuals. If the shareholders do not elect such individuals, within 30 days after the meeting of the shareholders the board of directors of Redhook shall amend the Bylaws of Redhook to increase the number of members on the Board of Directors to nine and appoint such individuals to the Board of Directors to fill these vacancies. ABI shall be entitled to designate a individual to be a member of each committee of the Board of Directors, except (i) with respect to a committee on which the individual is not permitted to be a member under applicable law or the requirements of any exchange or market on which the securities of Redhook are listed or quoted or (ii) with respect to a committee formed to review or determine transactions or proposed transactions between ABI and Redhook.

(r) CBA. Redhook shall not enter into any agreements relating to the establishment or operation of CBA, amend, waive or fail to enforce any provision of any such agreement or agree to admit any new member into CBA. Redhook shall comply with its obligations under all agreements relating to the establishment or operation of CBA and shall not consent or

cause the merger, consolidation, termination or dissolution of CBA or the transfer by CBA of all or substantially all of its assets. Redhook shall not permit CBA to acquire any alcohol or non-alcohol malt beverage brand or the assets or Stock of any producer of alcohol malt beverages unless CBA delivers to ABI a written plan providing for the exclusive distribution of such malt beverages by ABI that is satisfactory to ABI.

(s) DISTRIBUTION FEES. Within 30 days after the Closing, Redhook shall pay to ABI the amount by which the product of (i) the number of case equivalents of products sold by Redhook (including Widmer products brewed and sold by Redhook), on and after June 1, 2004, but prior to the effective date of the CBA Distribution Agreement, and (ii) $0.50 exceeds the margin to which ABI is entitled to retain or receive under the Original Distribution Agreement arising out of sales on and after June 1, 2004, but prior to the effective date of the CBA Distribution Agreement.

5.2. TERMINATION OF CERTAIN COVENANTS. The obligations of Redhook and ABI set forth in Section 5.1(a), (b)(i), (ii), (c)-(e), (g), (h), (k), (l), (o) and (q) and Section 5.3 shall terminate on the date on which ABI and its Affiliates do not hold, in aggregate, 5% or more of the outstanding Common Stock (unless caused by a breach or default by Redhook under any Transaction Document). The obligations of Redhook and ABI set forth in Section 5.1(j) shall terminate on the Termination Date. The obligations of Redhook and ABI set forth in Section 5.1(i) shall terminate on the later of (i) the Termination Date, and
(ii) the date on which ABI and its Affiliates do not hold, in aggregate, 5% or more on the outstanding Common Stock. Section 5.1(b)(iii) and Section 5.1(r) shall terminate on the date on which ABI or its Affiliates do not distribute the products of CBA.

5.3 TRANSFERS OF SECURITIES.

(a) Prior to any sale, transfer or conveyance by ABI of any shares of Common Stock, ABI shall provide Redhook with written notice of its determination to sell, transfer or convey such shares, and Redhook shall, within five Business Days of receipt of such notice, give ABI written notice informing ABI as to whether it desires to negotiate the purchase of such shares of Common Stock. Promptly upon ABI's receipt of a written notice delivered by Redhook indicating a desire to negotiate the purchase and sale of such shares of Common Stock, Redhook and ABI shall negotiate in good faith the terms governing the purchase and sale of such shares of Common Stock. In the event that ABI and Redhook do not, within 30 days of ABI's receipt of the written notice from Redhook, agree upon the terms governing the purchase and sale of such shares of Common Stock or in the event that Redhook does not deliver to ABI written notice indicating a desire to negotiate the purchase of such shares of Common Stock within such five day period, ABI may attempt to sell, transfer or convey such shares of Common Stock to any other Person, but shall not sell, transfer or convey such shares to any other party for cash, without giving Redhook a 15 day right of first refusal concerning the same. In the event that ABI does not sell, transfer or convey such shares or enter into an agreement to sell, transfer or convey such shares within 90 days, ABI may not sell, transfer or convey such shares without compliance with the notice and negotiation provisions of this
Section 5.3(a).

(b) The provisions of Section 5.3(a) shall not apply to any sale, transfer or conveyance of shares by ABI (i) in a registered public offering pursuant to the terms of the Registration Rights Agreement, (ii) in connection with a tender or exchange offer made by any Person or Group other than ABI or its Affiliates, (iii) as a result of any merger, consolidation or share exchange of Redhook with or into any other Person or (iv) to any Affiliate of ABI.

(c) In the event of a Termination Date, ABI shall be entitled to solicit and negotiate offers from any Person ("Purchaser") to purchase all or substantially all of the assets of Redhook or all of the outstanding securities of Redhook or to merge or consolidate into or with Redhook or to have Redhook merge or consolidate into it. At the request of ABI, Redhook shall provide to the Purchaser any information reasonably requested by Purchaser in connection with its determination whether or not to extend an offer to purchase such assets or securities or to enter into such merger or consolidation transaction, subject only to agreement by Purchaser to preserve the confidentiality of such information in a form satisfactory in the reasonable judgment of Redhook. At the direction of ABI, the board of directors shall create a committee composed entirely of Independent Directors and direct such committee to review any offer made by the Purchaser to purchase all or substantially all of the assets of Redhook or all of the outstanding securities of Redhook or to enter into any merger or consolidation transaction with Redhook and to make recommendations with respect to such offer to the Board of Directors. The committee shall be authorized to engage an investment banking firm and other advisors to assist it in such review and such recommendation and to incur any other expenses deemed advisable by it in connection with such review and recommendation. At the option of ABI, ABI may publicize and disclose any offer made by a Purchaser. Nothing herein shall require the members of the Board of Directors to take any action that would violate their fiduciary duties to Redhook or its shareholders.

5.4 EFFECT ON OTHER AGREEMENTS. The parties agree that upon the consummation of the transactions described herein, the rights and obligations of the parties under the Investment Agreement, the Original Distribution Agreement and the Initial Registration Rights Agreement, as supplemented and amended to the date hereof, shall be terminated and of no further force and effect, but that any liabilities of Redhook accrued thereunder prior to the Closing shall survive the Closing. The parties agree that upon the consummation of the transactions described herein the shares of Series B Preferred Stock shall be cancelled and of no further force and effect. The parties also agree that the Purchase Contract shall survive the Closing and that, in addition to the other provisions therein providing for the termination thereof, ABI shall be permitted to terminate the Purchase Contract in the event of a Termination Event.

5.5 PAYMENTS WITH RESPECT TO SYSTEMS COSTS. ABI is engaged in revising the systems and procedures by which the wholesalers of ABI generate and transmit orders to Redhook, Widmer and CBA and by which Redhook and Widmer schedule production of products. ABI expects to incur out of pocket costs and also costs internally allocated to it by the management systems group of ABC. Redhook agrees to pay one-half of such costs, but not to exceed $260,000. During each calendar quarter, ABI shall invoice Redhook for one-half of the costs incurred by ABI therefor during the preceding calendar quarter and within 30 days after receipt of such invoice Redhook shall pay to ABI such amount.

VI. CONDITIONS PRECEDENT

6.1. The obligation of ABI to consummate the transactions described in Section 2.1 hereof is subject to the following:

(a) ABI shall have received a favorable opinion of Riddell Williams P.S. in a form satisfactory to ABI in its reasonable judgment.

(b) ABI shall have received resolutions of the board of directors of Redhook, certified by the Secretary or Assistant Secretary of Redhook, as of the Closing Date, to be duly adopted and in full force and effect on such date, authorizing (i) the consummation of each of the transactions contemplated by this Agreement and (ii) specific officers to execute and deliver this Agreement and each other Transaction Document to which it is a party.

(c) ABI shall have received copies of the Distribution Agreement and the Registration Rights Agreement duly executed by Redhook.

(d) ABI shall have received certificates of the Secretary or an Assistant Secretary of Redhook, dated the Closing Date, as to the incumbency of the officers of Redhook executing this Agreement and the other Transaction Documents.

(e) All of the representations and warranties of Redhook contained herein or in the other Transaction Documents shall be correct on and as of the date made and as of the Closing Date as though made on and as of the Closing Date, Redhook shall have complied with all of its obligations hereunder or thereunder to be satisfied on or prior to the Closing Date, and ABI shall have received a certificate dated as of the Closing Date executed by an executive officer of Redhook to that effect.

(f) All licenses, permits, consents or approvals from or by, and all filings with and all notices to, all Governmental Authorities having jurisdiction, to the extent required for ABI and Redhook to consummate the transaction described herein and the other transactions contemplated by the Transaction Documents, shall have been received or made.

(g) There shall have been no material adverse change in the business, assets, operations, prospects or financial or other condition of Redhook since the date hereof.

(h) No United States or state governmental authority or other agency or commission thereof or any court of the United States or state court of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered, and there shall not be threatened, instituted or pending before any United States or state governmental authority or other agency or commission thereof or any court of the United States or state court of competent jurisdiction, any statute, rule, regulation, litigation, proceeding, injunction or other order (whether temporary, preliminary or permanent) that has or would have the effect of making the consummation of the transactions described herein illegal, prohibiting consummation of such transactions, seeking damages in connection with such transactions, or otherwise seeking to challenge such transaction or impose limitations on the ability of ABI to hold the Common Stock to be acquired hereunder or to exercise its rights under any Transaction Document.

(i) Redhook, Widmer Brothers Brewing Company and ABI shall have entered into agreements establishing CBA with terms and conditions satisfactory to ABI and all governmental consents and licenses necessary for the operations of CBA shall have been obtained.

(j) ABI shall have received such additional information and materials concerning Redhook as ABI may reasonably request.

6.2. CONDITIONS OF REDHOOK WITH RESPECT TO THE CLOSING. The obligation of Redhook to issue and deliver the Common Stock pursuant to Section 2.1 hereof is subject to the following conditions:

(a) Redhook shall have received copies of the Distribution Agreement and the Registration Rights Agreement duly executed by ABI.

(b) All of the representations and warranties of ABI contained herein and in the other Transaction Documents shall be correct on and as of the date made and as of the Closing Date as though made on and as of the Closing Date, ABI shall have complied with all of its obligations hereunder or thereunder to be satisfied on or prior to the Closing Date, and Redhook shall have received a certificate dated as of the Closing Date executed by an officer of ABI to that effect.

(c) Redhook shall have received certificates of the Secretary or an Assistant Secretary of ABI, dated the Closing Date, as to the incumbency of the officers of ABI executing this Agreement, the Distribution Agreement, and any certificate or other document to be delivered pursuant hereto or thereto.

(d) All licenses, permits, consents or approvals from or by, and all filings with and all notices to, all Governmental Authorities having jurisdiction, to the extent required for ABI and Redhook to consummate the transaction describe herein and the other transactions contemplated by the Transaction Documents, shall have been received or made.

(e) No United States or state governmental authority or other agency or commission thereof or any court of the United States or state court of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered, and there shall not be threatened, instituted or pending before any United States or state governmental authority or other agency or commission thereof or any court of the United States or state court of competent jurisdiction, any statute, rule, regulation, litigation, proceeding, injunction or other order (whether temporary, preliminary or permanent) that has or would have the effect of making the consummation of the transactions described herein illegal, prohibiting consummation of such transactions, seeking damages in connection with such transactions, prohibiting consummation of such transactions or otherwise seeking to challenge such transaction or impose limitations on the ability of Redhook to exercise its rights under any Transaction Document.

6.3. TERMINATION.

(a) Subject to Section 6.3(b), the parties hereto may terminate this Agreement as provided below:

(i) ABI and Redhook may terminate this Agreement by mutual written consent at any time prior to the Closing.

(ii) ABI may terminate this Agreement by giving written notice to Redhook at any time prior to the Closing (A) in the event that Redhook has breached any covenant, representation or warranty contained in this Agreement, or (B) if the Closing shall not have occurred on or before August 31, 2004 by reason of the failure of any condition precedent under Section 6.1 hereof (unless the failure results primarily from ABI itself breaching any representation, warranty or covenant contained in this Agreement or in any other Transaction Document).

(iii) Redhook may terminate this Agreement by giving written notice to ABI at any time prior to the Closing (A) in the event that ABI has breached any covenant, representation or warranty contained in this Agreement or (B) if the Closing shall not have occurred on or before August 31, 2004 by reason of the failure of any condition precedent under Section 6.2 hereof (unless the failure results primarily from Redhook itself breaching any representation, warranty or covenant contained in this Agreement or in any other Transaction Document).

(b) In the event of a termination of this Agreement as described in this Article VI, all rights and obligation of each party hereunder shall terminate without any liability of either party to the other except for any liability of either party arising out of any breach of this Agreement; provided however, that Article VII and Section 8.1, 8.2, 8.4, 8.5, 8.6, 8.7, 8.8, 8.9, 8.10, 8.12, 8.13, 8.14, 8.15 and 8.17 shall survive termination.

VII. INDEMNIFICATION

(a) Redhook agrees to indemnify and hold harmless ABI, its corporate Affiliates and its and their officers, directors and employees from and against any liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, costs, attorneys' fees, expenses and disbursements of any kind which may be imposed upon, incurred by or asserted against them, such officers, directors and employees in any manner relating to or arising out of
(i) any untrue representation, breach of warranty or failure to perform any covenants by Redhook contained herein or in any other Transaction Document to which Redhook is a party or in any certificate or document delivered pursuant hereto or thereto, (ii) any Environmental Law applicable to Redhook, (iii) any liability of Redhook or its Subsidiaries that is not explicitly assumed by the indemnified party hereunder or in any other Transaction Document, (iv) any liability to or claim of any former, present or future shareholder of Redhook or other third party made on behalf of Redhook or on their own behalf, arising out of the consummation or disclosure of the transactions described in the Transaction Documents, and (v) the status of any employee or designee of ABI as a director of Redhook.

(b) ABI agrees to indemnify and hold harmless Redhook and its officers, directors and employees from and against any liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, costs, attorneys' fees, expenses and disbursements of any kind which may be imposed upon, incurred by or asserted against Redhook and such officers, directors and employees in any matter relating to or arising out of any untrue representation, breach of

warranty or failure to perform any covenants by ABI contained herein or in any other Transaction Document to which ABI is a party or in any certificate or document delivered pursuant hereto or thereto.

(c) The foregoing indemnification provisions are in addition to, and not in derogation of, any statutory, equitable or common law remedy ABI, Redhook and their respective officers, directors and employees may have for breach or representation, warranty or covenant.

(d) Notwithstanding the foregoing provisions, the rights of indemnity of Redhook, ABI, the corporate Affiliates of ABI and their respective officers, directors, employees and designees arising out of the Distribution Agreement or any certificate or document delivered pursuant thereto shall be governed by the terms of the Distribution Agreement.

VIII. MISCELLANEOUS

8.1. NOTICES. Whenever it is provided herein that any notice, demand, request, consent, approval, declaration or other communication shall or may be given to or served upon any of the parties by another, or whenever any of the parties desires to give or serve upon another any such communication with respect to this Agreement, each such notice, demand, request, consent, approval, declaration or other communication shall be in writing and either shall be delivered in person with receipt acknowledged or by registered or certified mail, return receipt requested, postage prepaid, or by telecopy and confirmed by telecopy answer back addressed as follows:

If to Redhook at:

Redhook Ale Brewery, Incorporated
14300 NE 145th Street
Woodinville, Washington 98072

Attention: President
Telecopy Number: (425) 485-0761

with a copy to:

Riddell Williams, P.S.
1001 Fourth Avenue Plaza, Suite 4500
Seattle, Washington 98154

Attention: Douglass A. Raff Telecopy Number: (206) 389-1708

If to ABI at:

Anheuser-Busch, Incorporated

One Busch Place
St. Louis, Missouri 63118 Attention: Vice President- Business and Wholesaler System Development Telecopy Number: (314) 765-9167

with a copy to:

Anheuser-Busch Companies, Inc.

One Busch Place
St. Louis, Missouri 63118 Attention: Vice President and General Counsel Telecopy Number: (314) 577-0776

The parties agree to send such notices to such other address as may be substituted by notice given as herein provided. The giving of any notice required hereunder may be waived in writing by the party entitled to receive such notice. Every notice, demand, request, consent, approval, declaration or other communication hereunder shall be deemed to have been duly given or served on the date on which personally delivered, with receipt acknowledged, telecopied and confirmed by telecopy answerback, or three Business Days after the same shall have been deposited with the United States mail.

8.2. BINDING EFFECT; BENEFITS. Except as otherwise provided herein, this Agreement shall be binding upon and inure to the benefit of the parties to this Agreement and their respective successors and permitted assigns. Nothing in this Agreement, express or implied, is intended or shall be construed to give any person other than the parties to this Agreement or their respective successors or assigns any legal or equitable right, remedy or claim under or in respect of any agreement or any provision contained herein.

8.3. AMENDMENT. Any amendment or waiver of any provision of this Agreement or any other Transaction Document or any consent to any departure therefrom shall not be effective unless the same shall be in writing and signed by Redhook and ABI and shall specifically refer to this Agreement or such Transaction Document. Except as provided in the preceding sentence, no action taken pursuant to this Agreement, including, without limitation, any investigation by or on behalf of any party, shall be deemed to constitute a waiver by the party taking such action of compliance with any representations, warranties, covenants or agreements contained herein. The waiver by any party hereto of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any preceding or succeeding breach, and no failure by either party to exercise any right or privilege hereunder shall be deemed a waiver of such party's rights or privileges hereunder or shall be deemed a waiver of such party's rights to exercise the same at any subsequent time or times hereunder.

8.4. SUCCESSORS AND ASSIGNS: ASSIGNABILITY. Except as provided in the next sentence, neither this Agreement nor any right, remedy, obligation or liability arising hereunder or by reason hereof shall be assignable by either party hereto without the prior written consent of the other party hereto. Any right or remedy, arising hereunder or by reason hereof, shall be assignable by ABI to any direct or indirect subsidiary of A-BC without the prior written consent of Redhook, so long as such Person assumes ABI's obligations hereunder and ABI remains liable for ABI's obligations hereunder. All covenants contained herein shall bind and inure to the benefit of the parties hereto and their respective successors and assigns.

8.5. REMEDIES. ABI and Redhook, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of their rights under this Agreement. Redhook and ABI agree that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by them of the provisions of Article V of this Agreement and hereby agree to waive the defense in any action for specific performance that a remedy at law would be adequate. Each party hereto shall be paid by the other party hereto for any reasonable costs and expenses incurred by it (including reasonable fees and expenses of counsel and whether incurred as a result of negotiations, legal proceedings or otherwise) in connection with the enforcement of its rights under the Transaction Documents against such other party.

8.6. APPLICABLE LAW. This Agreement shall be governed by and construed in accordance with the law of the State of Washington, without regard to the principles thereof regarding conflict of laws.

8.7. SECTION AND OTHER HEADINGS. The section and other headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.

8.8. SEVERABILITY. In the event that any one or more of the provisions contained in this Agreement shall be determined to be invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision or provisions in every other respect and the remaining provisions of this Agreement shall not be in any way impaired.

8.9. COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to be one and the same instrument.

8.10. NONDISCLOSURE OF CONFIDENTIAL INFORMATION. Without the prior written consent of Redhook, any information relating to Redhook provided to ABI in connection with, or as a result of, its acquisition of the Common Stock (including any such received under Article V hereof) which is either confidential, proprietary, or otherwise not generally available to the public (but excluding (a) information ABI has obtained independently or from third-party sources without ABI's knowledge that the source has violated any fiduciary or other duty not to disclose such information, (b) information that otherwise becomes generally available to the public, or (c) information known to ABI other than as a result of its ownership of the securities of Redhook or its designation of directors for Redhook (the "Confidential Information")) will be kept confidential by ABI, using the same standard of care in safeguarding the Confidential Information as ABI employs in protecting its own proprietary information which ABI desires not to disseminate or publish and ABI will instruct its directors, officers, employees, and representatives (collectively, "Representatives") to so keep such Confidential Information confidential. ABI further represents that it will not, and it will instruct its Representatives not to, trade in Common Stock while in possession of material Confidential Information. It is understood (i) that such Representatives shall be informed by ABI of the confidential nature of the Confidential Information and (ii) that such Representatives shall be bound by the provisions of this Section 8.10 as a condition of receiving the Confidential Information. ABI shall not use any such confidential information to produce a malt beverage the formula of which duplicates any formula for a malt beverage produced by Redhook.

8.11. PUBLICITY. Neither ABI nor Redhook shall issue any press release or make any public disclosure regarding the transactions contemplated hereby or their consummation without consulting the other party hereto.

8.12. ENTIRE AGREEMENT. This Agreement and the other Transaction Documents constitute the entire agreement among the parties hereto and supersede any prior understandings, agreements or representations by or among the parties hereto, written or oral, to the extent they are related in any way to the subject matter hereof.

8.13. FEES AND EXPENSES. Each of the parties hereto shall bear its own costs and expenses (including legal fees and expenses) incurred in connection with this Agreement and the transactions contemplated hereby.

8.14. EXHIBITS AND SCHEDULES. The exhibits and schedules identified in this Agreement are incorporated herein by reference and made a part hereof.

8.15. CONDITIONS TO CLOSING. Each party hereto shall use commercially reasonable efforts to satisfy the conditions described in Article VI hereof contemplated to be satisfied by it.

8.16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations of ABI and Redhook hereunder shall survive the Closing and continue in full force and effect forever thereafter (subject to any applicable statute of limitations).

8.17. CONSTRUCTION. Any reference to any federal, state, local or foreign statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. The word "including" shall mean including without limitation. If either party has breached any representation, warranty or covenant contained herein in any respect, the existence of another representation, warranty or covenant related to the same subject matter (regardless of the relative levels of specificity) that the party has not breached shall not detract from or mitigate the breach of the former representation, warranty or covenant.

References to this Agreement shall mean this Exchange Agreement, including all amendments, modifications and supplements and any exhibits or schedules to any of the foregoing, and shall refer to the Agreement as the same may be in effect at the time such reference becomes operative.

Any accounting term used in this Agreement shall have, unless otherwise specifically provided herein, the meaning customarily given such term in accordance with GAAP, and all financial computations hereunder shall be computed, unless otherwise specifically provided herein, in accordance with GAAP consistently applied. That certain terms or computations are explicitly modified by the phrase "in accordance with GAAP" shall in no way be construed to limit the foregoing. The words "herein," "hereof" and "hereunder" and other words of similar import refer to this Agreement as a whole, including the exhibits and schedules hereto, as the same may from time to time be amended, modified or supplemented, and not to any particular section, subsection or clause contained in this Agreement. Wherever from the context it appears appropriate, each term stated in either the singular or plural shall include the singular and the plural, and pronouns stated in the masculine, feminine or neuter gender shall include the masculine, the feminine and the neuter.

(SIGNATURE PAGE FOLLOWS)

IN WITNESS WHEREOF, Redhook and ABI have executed this Agreement as of the day and year first above written.

REDHOOK ALE BREWERY, INCORPORATED

By:/S/ PAUL SHIPMAN
-----------------------------------------------
Title: President and Chief Executive Officer

ANHEUSER-BUSCH, INCORPORATED

By: /S/ JAMES F. HOFFMEISTER
-----------------------------------------------
Title: Vice President-Administration

EXHIBIT 10.2

MASTER DISTRIBUTOR AGREEMENT

BETWEEN

REDHOOK ALE BREWERY, INCORPORATED

AND

ANHEUSER-BUSCH, INCORPORATED

MASTER DISTRIBUTOR AGREEMENT

THIS MASTER DISTRIBUTOR AGREEMENT (the "Agreement") is made as of July 1, 2004 by and between REDHOOK ALE BREWERY, INCORPORATED having its principal place of business at 14300 NE 145th Street, Suite 210, Woodinville, Washington 98072-9045 ("Redhook") and ANHEUSER-BUSCH, INCORPORATED having its principal place of business at One Busch Place, St. Louis, MO 63118 (referred to herein interchangeably as "Master Distributor" or "ABI").

WHEREAS, Redhook brews and markets products in the United States, with the exception of eleven states in which its products are marketed by an affiliate, Craft Brands Alliance LLC.

WHEREAS, ABI and Redhook desire to have ABI serve as Master Distributor of the Products and to coordinate the delivery of the Products to designated wholesalers in the ABI wholesaler network; and

WHEREAS, ABI and Redhook desire Redhook to have responsibility for developing and implementing programs that create demand for, market, promote and advertise the Products in the Territory (as defined herein);

NOW THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth, Redhook and ABI agree as follows:

ARTICLE I
DEFINITIONS

For purposes of this Agreement, capitalized terms not otherwise defined herein shall have the following meanings ascribed thereto:

"ABI COMPETITOR" shall mean any Person that, together with the Affiliates of such Person, has annual alcohol beverage sales of $100,000,000 or more in North America (such number to be adjusted annually in proportion to changes in the Consumer Price Index from the date hereof).

"ABI DISTRIBUTION FACILITY" shall mean the ABI source brewery, warehouse, WSC, third-party warehouse or other suitable location reasonably designated by ABI from which ABI will ship Product to Alliance Wholesalers.

"ADDITIONAL PRICE COMPONENT" shall mean 90% of the difference between the price actually charged to an Alliance Wholesaler by ABI for a Product, and the Fully Loaded Cost for such Product.

"AFFILIATE" shall mean, with respect to any Person, (i) each Person that, directly or indirectly, owns or controls, whether beneficially, or as a trustee, guardian or other fiduciary, 50% or more of the equity securities having ordinary voting power in the election of directors of such Person, or
(ii) each Person that controls, is controlled by or is under common control with such Person or any Affiliate of such Person.

"AFFILIATED WHOLESALER" shall mean any wholesaler of the alcohol beverage products of ABI that distributes the Products in any portion of the Territory pursuant to a distribution agreement between Redhook and such wholesaler.

"ALLIANCE WHOLESALERS" shall mean those malt beverage wholesalers of ABI, including without limitation, ABI branches, which have agreed to purchase the Products from ABI and to distribute the Products in the Territory.

"BARREL" shall be equal to 31 United States gallons.

"COMMENCEMENT DATE" shall mean July 1, 2004.

"CONFIDENTIAL INFORMATION" shall have the meaning assigned to it in
Section 18.01(a).

"COOPERAGE HANDLING CHARGE" shall mean * per Pallet Lift for draft Product during 2004; ATTACHMENT A attached hereto describes the methodology used to modify Cooperage Handling Charge for 2005 and future years.

"FORCE MAJEURE" shall have the meaning assigned to it in Section 16.01.

"FULLY LOADED COST" shall mean for a Product, the sum of:

* CONFIDENTIAL TREATMENT REQUESTED

(a) the Scheduled Price for such Product; plus

(b) the Margin.

"INCOMPATIBLE CONDUCT" shall mean any act or omission of Redhook or its Affiliates that, in the sole determination of ABI, damages either the reputation or image of ABI or of the brewing industry. ATTACHMENT B attached hereto sets forth examples of the nature and gravity of acts and omissions constituting Incompatible Conduct and not constituting Incompatible Conduct; such examples shall not limit the nature of acts that could be construed as Incompatible Conduct.

"INCREMENTAL MARGIN" shall mean during 2004, * per case-equivalent (of 288 fluid ounces per case) for packaged or draft Product. For 2005 and future years, the applicable amount described above in this definition shall increase or decrease for each calendar year pursuant to the methodology set forth in ATTACHMENT C attached hereto.

"INITIAL TERM" shall have the meaning assigned to it in Section 7.01 hereof.

"INTELLECTUAL PROPERTY" shall have the meaning assigned to it in
Section 6.01.

"INVENTORY MANAGER" shall have the meaning assigned to it in Section 11.10.

"INVENTORY MANAGER FEE" shall mean the Inventory Manager's annual cash compensation.

"INVOICING COSTS" shall mean * per Pallet Lift for Product during 2004. For 2005 and future years, the applicable amount described above in this definition shall increase or decrease for each calendar year pursuant to the methodology set forth in ATTACHMENT C attached hereto.

"MARGIN" shall mean during 2004 * per case-equivalent (of 288 fluid ounces per case) for packaged or draft Product.

For 2005 and future years, the applicable amount described above in this definition shall increase or decrease for each calendar year pursuant to the methodology set forth in ATTACHMENT C attached hereto.

* CONFIDENTIAL TREATMENT REQUESTED

"MASTER DISTRIBUTOR" shall mean ABI in its capacity as a distributor under this Distribution Agreement.

"MODIFIED PRODUCT" shall have the meaning set forth in Section 11.08 of this Agreement.

"NEW PRODUCT" shall mean new malt beverage(s) that Redhook wishes to add, through development or acquisition, to its beverage product line existing as of the Commencement Date.

"NON-ALLIANCE WHOLESALERS" shall mean those beer wholesalers to which Redhook has granted distribution rights for any of the Product in the Territory as of the date of this Agreement and which are listed as "WHOLESALER" on ATTACHMENT D attached hereto, as the same may be modified from time to time pursuant to the terms and conditions of this Agreement, but shall not include Affiliated Wholesalers.

"OFFER EXPIRATION DATE" shall have the meaning assigned to it in
Section 11.04(a).

"OFFER NOTICE" shall have the meaning assigned to it in Section 11.04(a).

"PALLET LIFT" shall mean a pallet of draft or packaged Product or cooperage that, in each case, is prepared in such a manner that ABI may deliver or move such Pallet in accordance with its customary practices in one operation.

"PERSON" shall mean any individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization, association, corporation, institution, public benefit corporation, entity or government (whether federal, state, county, city, municipal or otherwise, including, without limitation, any instrumentality, division, agency, body or department thereof).

"PRODUCTS" shall mean all malt beverage products marketed by Redhook as of the Commencement Date and any malt beverage products for which ABI agrees to act as master distributor pursuant to Section 11.03 hereof but shall not include any malt beverage products the marketing of which Redhook discontinues or the distribution of which is terminated pursuant to this Agreement.

"PURCHASE PRICE" shall have the meaning assigned to it in Section 4.01 hereof.

"RECORDS" shall have the meaning assigned in Article XVII (a).

"SCHEDULED PRICE" shall mean the purchase price for Product.

"STAGING COSTS" shall mean * per Pallet Lift for packaged Product, and
* per Pallet Lift for draught Product, during 2004. ATTACHMENT A describes the methodology used to modify Staging Costs for 2005 and future years and the assumptions and activities involved in Staging Costs.

"TAXES" shall mean all applicable national, federal, state and local excise and other brewing related taxes and any applicable duties and import tariffs and fees (including without limitation liquor and consumption taxes) paid or incurred by ABI in connection with this Agreement.

"TERM" shall have the meaning assigned to it in Section 7.01 hereof.

"TERRITORY" shall mean all states and territories in the United States of America other than Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, New Mexico, Nevada, Oregon and Wyoming, and shall exclude any jurisdiction subsequently excluded from the scope of this Agreement pursuant to
Section 11.11 hereof.

"WHOLESALER SUPPORT CENTER COSTS" or "WSC COSTS" with respect to any Product shipped by Redhook to a WSC shall mean the fee paid by ABI to the operator of the WSC for its services with respect to such Product.

"WIDMER" shall mean Widmer Brothers Brewing Company.

"WSC" shall mean the regional wholesaler support centers or distribution centers established by ABI for the receipt of products designated by ABI and the palletizing and preparation for pick up of such products by the adjoining wholesalers.

ARTICLE II
GRANT OF DISTRIBUTION RIGHTS

Redhook hereby grants to ABI and ABI hereby accepts from Redhook the exclusive right to serve as the master distributor to distribute the Products in the Territory commencing on the Commencement Date, except as otherwise described in

* CONFIDENTIAL TREATMENT REQUESTED

this Section. ABI shall not, without the prior written consent of Redhook, sell any Product acquired hereunder outside the Territory or to any party other than an Alliance Wholesaler. Redhook agrees to not sell any Product to any other Person in the Territory other than ABI, Affiliated Wholesalers and Non-Alliance Wholesalers except at any brew pub situated at a Redhook brewery. At the option of ABI and the respective Affiliated Wholesaler, any Affiliated Wholesaler may become an Alliance Wholesaler, and Redhook shall execute any documents or instruments reasonably requested by ABI to effectuate this.

ARTICLE III
PURCHASE AND SALE OF PRODUCTS

Redhook agrees to sell to ABI, and ABI agrees to purchase from Redhook and re-sell to the Alliance Wholesalers, the quantities of Products ordered by ABI from time to time hereunder. Redhook acknowledges that ABI is not guaranteeing any level of Product sales; and that ABI's obligations under this Agreement are limited to making the Products available to the Alliance Wholesalers, it being understood that Redhook assumes full responsibility for creating demand for the Products. Except for Product shipped directly by Redhook as set forth in Section 11.07, (i) all purchases of Product by ABI from Redhook shall be on an F.O.B. ABI Distribution Facility, freight prepaid basis, and (ii) Redhook shall ship Products to be delivered to an Alliance Wholesaler to the ABI Distribution Facility designated from time to time by ABI for such Alliance Wholesaler.

ARTICLE IV
PRICING OF PRODUCTS

4.01 The price for all Product sold by Redhook to ABI for Products shipped to ABI breweries or distribution centers shall equal: (a) the Scheduled Price minus, as applicable, (b) (i) the Staging Costs, (ii) the Cooperage Handling Charge, and/or (iii) Taxes. The price for all Product sold by Redhook to ABI for Products shipped to a WSC shall equal (a) the Scheduled Price minus, as applicable, (b)(i) the Invoicing Costs, (ii) the Cooperage Handling Charge and/or (iii) Taxes. The price for all Product sold by Redhook to ABI for Product shipped directly by Redhook to Alliance Wholesalers shall equal (a)(i) the Scheduled Price minus, as applicable, (b)(i) the Invoicing Costs, (ii) the Cooperage Handling Charge and/or (iii) Taxes. With respect to any Product, howsoever shipped, the difference between the respective (a) and (b) shall be referred to as the "Purchase Price").

Redhook shall establish the initial Scheduled Price for each Product sold by Redhook to ABI. Redhook shall have the right at any time in its sole discretion to modify such Scheduled Price, such new pricing to become effective for all deliveries to ABI not less than 30 days after date of written notice to ABI of such price modifications.

4.02 Within 30 days after the end of each calendar quarter during the Term, ABI shall pay to Redhook any Additional Price Component which is due Redhook with respect to sales of Product by ABI to Alliance Wholesalers during such calendar quarter.

4.03 Redhook may, from time to time, suggest Product resale prices to ABI, and ABI will consider such suggestions. However, ABI shall have the right to re-sell the Product to Alliance Wholesalers at such prices and on such terms and conditions as ABI may, in its sole discretion, determine from time to time. Any and all price promotions to be offered to Alliance Wholesalers by Redhook shall be implemented in strict accordance with the procedures set forth in ATTACHMENT E attached hereto.

4.04 ABI shall remit payment of the Purchase Price to Redhook for all Product purchased hereunder, contemporaneously with its receipt of funds from the Alliance Wholesalers with respect to such purchases. ABI shall be entitled to set off against such payments any amounts owed to ABI for defective Products (including without limitation, any costs of disposing of such defective Product), or which are due ABI from Redhook pursuant to the terms of this Agreement or otherwise. In the event that any Alliance Wholesaler does not pay to ABI the purchase price with respect to any Products purchased by such Alliance Wholesaler within 60 days after delivery thereof, at the option of Redhook, ABI shall assign all of its rights to Redhook against such Alliance Wholesaler relating to the purchase price for such Products.

4.05 Notwithstanding the foregoing provisions of this Article IV, Redhook and ABI recognize that the laws of certain States and/or U.S. federal laws may preclude the parties from implementing the pricing mechanisms described above. Under such circumstances, it is the intention of the parties to comply with the requirements of such laws, without such compliance being a breach of this Agreement. Under such circumstances, Redhook and ABI shall in good faith negotiate a periodic adjustment to the Purchase Price, other affected provisions hereof and the procedures set forth herein where it is permissible to do so, in an amount necessary to restore the same economic benefits Redhook and ABI would have received had the above pricing mechanisms been in effect. In particular, the parties agree that notwithstanding the other provisions in this Agreement, in the State of Washington, AB shall acquire no title to any Product to be sold and Redhook shall sell Product directly to wholesalers pursuant to agreements between such wholesalers and Redhook at prices and on terms determined by Redhook and such wholesalers.

4.06 (a) Within 45 days after the end of each calendar quarter, Redhook shall deliver a report setting forth the aggregate volume, in case - equivalents, of Product: (i) sold by Redhook in the Territory; and (ii) sold by Redhook in the Territory during the respective calendar quarter in 2003.

(b) Contemporaneously with the delivery of such report, Redhook shall pay to ABI the Margin for all Product sold by Redhook to Non-Alliance Wholesalers or Affiliated Wholesalers during such calendar quarter.

(c) To the extent that during any calendar quarter, the quantity of Products sold in the Territory by Redhook exceeds the quantity of Products (in each case determined on a case equivalent basis) sold by Redhook in the respective calendar quarter in 2003 in the Territory, Redhook shall pay to ABI the Incremental Margin for all Product sold by Redhook during such calendar quarter. Such payment shall be made contemporaneously with the payment set forth in Section 4.06(b).

(d) If during any calendar year, the product of the (i) the Incremental Margin and (ii) the amount, if any, by which the aggregate volume, in case-equivalents, of Product sold by Redhook in the Territory in such calendar year exceeds the

aggregate volume, in case-equivalents of Product sold by Redhook in the Territory during 2003 does not equal the amounts paid by Redhook for such calendar year pursuant to Section 4.06(c), then, within 45 days after the end of such calendar year ABI shall pay to Redhook any amount by which the payments previously made by Redhook pursuant to Section 4.06(c) exceed such product or Redhook shall pay to ABI any amount by which the payments previously made by Redhook are less than such product.

(e) The sales used in computing the Incremental Margin for any calendar quarter shall be the sales derived from the sales areas included in the Territory for the calendar quarter for which the Margin is calculated and those sales derived from those same sales areas for the respective calendar quarter in 2003. For purposes of determining the Margin, the parties agree that Schedule 4.06 sets forth the Product sold by Redhook in the Territory in each calendar quarter of 2003 (excluding the State of Washington). The parties agree that for purposes of determining Incremental Margin to be paid by Redhook in 2004, the calculations set forth in Section 4.06(c) and (d) shall be applied only to that period in 2004 (and the respective period in 2003) occurring after the Commencement Date.

(f) For purposes of Section 4.06, sales by Redhook in the State of Washington shall not affect the computation of Margin or Incremental Margin, and Redhook is not required to deliver any reports reflecting sales in the State of Washington.

4.07 (a) Within 30 days after the end of each calendar month, ABI shall notify Redhook of the WSC Fees payable with respect to the Product delivered by Redhook for such month, and also the product delivered by Redhook to each WSC and the fees incurred with respect to each WSC. Redhook shall pay such WSC Fees within15 days after its receipt of notification.

(b) Within 45 days after the end of each calendar year, ABI shall notify Redhook of the fees charged by each WSC to which Redhook may ship Product during such calendar year.

(c) In the event ABI changes a WSC or renegotiates the fees to be paid to a WSC, in either case to which Redhook may be reasonably expected to ship Product, ABI shall notify Redhook of such change or renegotiated fees.

ARTICLE V
DELIVERY OF PRODUCTS AND RISK OF LOSS

5.01 Except as set forth in Section 11.07, title to the Product and its risk of loss or destruction shall pass from Redhook to ABI upon delivery of the Product to the ABI Distribution Facility designated by ABI to be used for the respective Alliance Wholesaler.

5.02 Redhook shall insure that Product shall be packaged, palletized and prepared for shipment in accordance with ABI's instructions in effect from time to time for ABI's malt beverage products. Redhook shall reimburse ABI for any costs incurred by ABI in handling Products which are not properly palletized and/or prepared for shipment, or which are palletized and/or prepared for shipment in a manner which causes ABI to incur handling expenses not otherwise included in the calculation of Staging Costs as set forth in ATTACHMENT A, and ABI's determination of such costs, absent material error, shall be binding on each of ABI and Redhook, provided, however, that such determination shall be subject to the audit provisions of Article XVII below.

ARTICLE VI
REDHOOK'S TRADEMARKS

6.01 ABI shall not acquire any right in any of the Redhook trademarks, trade dress, copyrights, promotional slogans, trade names, designs, labels, get-ups, color combinations, product shapes, and other distinctive features in the Products, or the promotional goods, advertisements and promotional activities used during the term of this Agreement in conjunction with the advertising, promotion, distribution, and sale of

the Products (collectively, "Intellectual Property'). ABI is hereby granted the right during the Term to use the Intellectual Property in advertising, promotion, distribution, and sale of the Products in the Territory, which right ABI may sub-license to the Alliance Wholesalers; provided, however, that Redhook shall have the right to require ABI and the Alliance Wholesalers to submit representative samples of any use of such Intellectual Property to Redhook for approval, which approval shall be deemed given if Redhook does not provide ABI with written notice of reasonable objection within 10 days of receipt of such samples. Any and all rights that may be acquired in the Intellectual Property by the use of the Intellectual Property by ABI or any Alliance Wholesaler will inure to the sole benefit of the owner of the Intellectual Property, which will be Redhook. The foregoing sentence does not affect ABI's rights in other marks it may use or adopt. At the request of Redhook, ABI will execute an instrument, in a form agreeable to Redhook and ABI, to effect further registration, maintenance, and renewal of the Intellectual Property, and, where applicable, to record Redhook as a registered user of the Intellectual Property. Redhook represents and warrants that it has the right and authority to provide ABI and the Alliance Wholesalers with the rights provided in this Section.

6.02 ABI shall promptly notify Redhook of any and all infringements of the Intellectual Property pertaining to the Products that may come to ABI's attention and shall assist Redhook in taking such action against said infringements as Redhook, in its sole discretion, may decide. All expenses and costs of such legal action, including those of ABI, shall be paid by Redhook.

ARTICLE VII
TERM AND TERMINATION

7.01 The term of this Agreement (the "Term") shall become effective at the Commencement Date and, unless sooner terminated pursuant to the provisions of this Agreement, shall continue in effect until December 31, 2014 (the "Initial Term"). Following the Initial Term, this Agreement shall renew automatically for an additional 10 year period, unless ABI provides written notice to Redhook on or prior to June 30, 2014 that the Agreement shall not be renewed.

7.02 Either party shall have the right at any time to terminate this Agreement immediately, without prejudice to any other legal rights to which such terminating party may be entitled, upon the occurrence and during the continuance of any one or more of the following:

(a) material default by the other party in the performance of any of the provisions of this Agreement or any other agreement between the parties, which default is either:

(i) curable within 30 days, but is not cured within 30 days following written notice of default; or

(ii) not curable within 30 days and either:

(A) the defaulting party fails to take reasonable steps to cure as soon as reasonably possible following written notice of such default; or

(B) such default is not cured within 90 days following written notice of such default;

(b) default by the other party in the performance of any of the provisions of this Agreement or any other agreement between the parties, which default is not described in Section 7.02(a) and which is not cured within 180 days following written notice of such default;

(c) the making by the other party of an assignment for the benefit of creditors; or the commencement by the other party of a voluntary case or proceeding or the other party's consent to or acquiescence in the entry of an order for relief against such other party in an involuntary case or proceeding under any bankruptcy, reorganization, insolvency or similar law;

(d) the appointment of a trustee or receiver or similar officer of any court for the other party or for a substantial part of the property of the other party, whether with or without the consent of the other party, which is not terminated within 60 days from the date of appointment thereof;

(e) the institution of bankruptcy, reorganization, insolvency or liquidation proceedings by or against the other party without such proceedings being dismissed within 90 days from the date of the institution thereof; or

(f) Any representation or warranty made by the other party hereunder or in the course of performance of this Agreement shall be false in material respects.

(g) The Master Distributor Agreement between Craft Brands Alliance LLC and ABI dated the date hereof is terminated or the distribution thereunder of the products of Redhook is terminated pursuant to its terms.

7.03 ABI shall have the right and option to terminate this Agreement at any time upon six months' prior written notice to Redhook, in the event:

(i) Redhook engages in any Incompatible Conduct which is not curable or is not cured to ABI's satisfaction (in ABI's sole opinion) within 30 days following written notice from ABI to Redhook;

(ii) any ABI Competitor or Affiliate thereof acquires 10% or more of the outstanding equity securities in Redhook, and one or more officers, designees or agents of such Person becomes a member of the Board of Directors of Redhook;

(iii) The current chief executive officer of Redhook ceases to function as chief executive officer and within six months of such cessation a successor satisfactory in the sole, good faith discretion of ABI is not appointed; or

(iv) Redhook shall merge or consolidate into or with any other Person or any other Person shall merge or consolidate into or with Redhook; or

(v) ABI or its corporate affiliates incur any liability or expense as a result of any claim asserted against them by or in the name of Redhook or any shareholder of Redhook as a result of the equity ownership of ABI or its affiliates in Redhook or any equity transaction or exchange between ABI or its affiliates and Redhook, and Redhook does not reimburse and indemnify ABI and its corporate affiliates on demand for the entire amount of such liability and expense.

ARTICLE VIII
REMEDIES

If either party commits a breach or a default of this Agreement, no remedy herein conferred upon or reserved to either party is exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement or now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power accruing upon any breach or default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient.

ARTICLE IX
DUTIES OF ABI

9.01 Except as set forth in Section 11.07, ABI shall have responsibility and authority for coordinating delivery of the Product to the Alliance Wholesalers. ABI shall specify the brand, package and quantity of Product ordered and shall designate the ABI Distribution Facility to which the Product shall be shipped (and ABI may change such designation from time to time). The costs charged to Redhook shall vary depending on which ABI Distribution Facility is designated.

9.02 ABI shall store all Product as it stores its own products, and shall handle all Product with the same degree of care as it handles its own products.

9.03 Except for deliveries made by Redhook directly to Alliance Wholesalers as set forth herein, ABI shall promptly and correctly fill each Alliance Wholesaler's order, or shall instruct the WSC to promptly and correctly fill each Alliance Wholesaler's order and to load all Products on the trucks or other means of conveyance to the Alliance Wholesalers.

9.04 ABI may, in its sole discretion, add the Products to Exhibit 1 of the existing Wholesaler Equity Agreement that ABI has with any Alliance Wholesaler. At the option of ABI, in the event ABI acquires the distribution rights to the Products in any sales area, ABI may direct Redhook and an ABI wholesaler servicing such sales area to enter into a transitional distribution agreement in a form satisfactory to ABI in lieu of adding the Products to Exhibit 1 of the Wholesaler Equity Agreement between ABI and such wholesaler.

9.05 ABI shall use its best efforts (to the extent commercially reasonable) to maintain all licenses, permits and other authorizations that are necessary for ABI to distribute the Products in the Territory where there are Alliance Wholesalers.

ARTICLE X
DUTIES OF REDHOOK

10.01 Redhook shall have sole responsibility for developing a market presence, creating demand for the Products in the Territory, generating marketing activity in each sales area of the Territory and developing and distributing promotional programs and promotional literature. As between ABI and Redhook, the parties understand that Redhook has full responsibility and discretion with respect to the marketing, advertising and promotion of the Products. Appropriate procedures with regard to independent pricing of Product are set forth in ATTACHMENT E attached hereto. Promptly upon depletion reports on Redhook inventory at Alliance Wholesalers becoming available to ABI, ABI shall provide such information to Redhook.

10.02 Redhook shall bear risk of loss and transportation costs for the Products until delivery of Products to the ABI Distribution Facility designated by ABI for such Alliance Wholesaler as set forth in Article V hereof.

10.03 Redhook shall, or shall cause its Affiliates to, secure and maintain label registrations in all states in the Territory where Product is sold.

10.04 Redhook shall use commercially reasonable efforts to market and promote Product throughout the Territory in the markets where Products is sold, with a view towards maximizing sales of Products in accordance with its marketing and sales plan. In addition, Redhook shall use commercially reasonable efforts (to the extent permitted by law) to prohibit the Non-Alliance Wholesalers from knowingly selling Products to retailers in the sales areas serviced by the Alliance Wholesalers or the Affiliated Wholesalers.

10.05 As between Redhook and ABI, Redhook shall be responsible for, and shall indemnify ABI on an after-tax basis from, all Taxes levied on, against or in connection with the sale, distribution, possession, marketing or promotion of the Products in the Territory, except for Taxes levied on ABI's net income.

10.06 Redhook shall use commercially reasonable efforts to obtain and maintain all licenses, permits and other authorizations that are necessary for Redhook to sell and distribute the Products in the Territory.

ARTICLE XI
ADDITIONAL AGREEMENTS

11.01 Redhook shall at all times maintain its corporate existence, and will do or cause to be done all things necessary to preserve and keep in full force and effect all rights (charter and statutory), licenses and franchises necessary for it to perform its obligations hereunder.

11.02 During the Term of this Agreement, Redhook shall not, without ABI's prior written consent, sell, license, transfer, convey, encumber, or place any restrictions upon, any of the Intellectual Property, except for licenses of the Intellectual Property to Affiliated Wholesalers or Non-Alliance Wholesalers for use solely in connection with sales of Product by such Affiliated Wholesalers or Non-Alliance Wholesalers.

11.03 Redhook represents, warrants and covenants that it has the exclusive right to market and sell all products of Redhook in the Territory, whether such products are currently existing or are created in the future. Except as set forth to the contrary herein, during the Term of this Agreement, ABI will be the exclusive distributor of Product in the Territory. Subject to the provisions of the following subsections of this Section 11.03, during the Term of this Agreement, Redhook reserves the right to add New Products for distribution in the Territory. In the event Redhook elects to distribute such New Product in the Territory, Redhook shall first offer to ABI in the manner described below, the right to distribute such New Product and to have such New Product be deemed a Product for all purposes of this Agreement.

(a) If Redhook or any of its Affiliates desires to distribute a New Product in the Territory, Redhook shall notify (the "Offer Notice") ABI of such intention and offer ABI the right to distribute such New Product. Within 10 days of ABI's receipt of the Offer Notice, ABI shall advise Redhook of the information required by ABI to make an evaluation of such New Product (which shall include, but may not be limited to, the factors described on ATTACHMENT
F). Within 45 days of ABI's receipt of all such information (the "Offer Expiration Date"), ABI shall advise Redhook of ABI's decision to accept or not accept such New Product as a Product under this Agreement. If ABI declines to accept such New Product or fails to accept such New Product by the Offer Expiration Date, Redhook shall be free to otherwise distribute such New Product as it deems appropriate; provided that Redhook enters into a binding agreement with another Person for the distribution of such New Product within 365 days of the earlier of (Y) ABI's notice not to accept, or (Z) the Offer Expiration Date. If Redhook does not enter into such binding agreement within such time period, or if Redhook then fails to commence distribution under such binding agreement or interrupts such distribution thereafter for 365 consecutive days or more or decides to terminate its binding agreement with such Person, Redhook shall be required to comply with the preceding provisions in this section again before permitting any other Person to distribute the New Product. If ABI exercises its option to distribute the New Product, such New Product shall be distributed by ABI in accordance with the terms and conditions set forth in this Agreement. Notwithstanding the above, Redhook may test market New Products without ABI's prior approval; provided that: (i) the duration all such test marketing on any and all New Products in any single calendar year shall not exceed six months;
(ii) the aggregate volume of all such test marketing on any single New Product in any single calendar year shall not exceed one percent of the sales volume for all Redhook Products for the preceding 12 months; and (iii) all such New Products otherwise comply with the quality standards set forth in this Agreement.

(b) For purposes of this Section 11.03, New Products that are accepted by ABI are deemed Products and if Redhook desires to then modify such Product, such modifications shall be handled as set forth in Section 11.08.

(c) Before making a New Product available to any Non-Alliance Wholesaler, Redhook shall, to the extent allowed by law and permitted by the terms of any contract between Redhook and the Non-Alliance Wholesaler holding the relevant distribution rights, first make such New Product available for distribution by ABI. Within 90 days of ABI's receipt of Redhook's notice that it wishes such New Product distributed in the sales area of such Non-Alliance Wholesaler, ABI shall advise Redhook of ABI's decision to accept distribution rights for such New Product in the sales area, in which event the ABI wholesaler distributing the product in the sales area shall be deemed an Affiliated Wholesaler or an Alliance Wholesaler for such New Product.

11.04 Redhook shall comply with every commercially reasonable request made by ABI to terminate the distribution rights of any Non-Alliance Wholesaler and to cause the Redhook Products to be distributed in the sales area of such Non-Alliance Wholesaler pursuant to this Agreement. This section shall not obligate Redhook to undertake any action inconsistent with applicable law, except that at the written direction of ABI, ABI may obligate Redhook to undertake an action that may give rise solely to civil liabilities to private parties and any such written direction shall obligate ABI to undertake the indemnification obligations with respect to such action as set forth in Section 14.02.

11.05 If Redhook wishes to have Products distributed in a sales area where ABI is unable to provide an Affiliated Wholesaler or an Alliance Wholesaler who will agree to carry or fill orders for Products which have been procured by Redhook or the Affiliated Wholesaler or the Alliance Wholesaler provided by ABI has refused repeatedly to reasonably cooperate with Redhook and has failed to adhere to the provisions of the

Wholesaler Equity Agreement between ABI and such Affiliated or Alliance Wholesaler with regard to the Products, Redhook may, to the extent permitted by applicable law, terminate the distribution rights of the Affiliated Wholesaler or the Alliance Wholesaler, select another Person reasonably acceptable to ABI and upon written terms and conditions consistent with the intent of this Agreement to make ABI the exclusive distributor of Product in the Territory, to distribute the Product in such sales area, and if selected, such Person shall be deemed a Non-Alliance Wholesaler for purposes of this Agreement and shall be added to ATTACHMENT D. In the event ABI is able to identify a wholesaler for such sales area different from the wholesaler previously distributing the Products in such sales area, Redhook's obligations with respect to the Non-Alliance Wholesaler shall be as set forth in Section 11.04.

11.06 At Redhook's request, ABI shall instruct Alliance Wholesalers to return cooperage to the ABI Distribution Facility designated by ABI, and ABI shall make available for pick-up by Redhook all such cooperage. Redhook shall pay ABI the Cooperage Handling Charge for all cooperage received by ABI. ABI shall not be liable for the costs of any cooperage lost or damaged by such Alliance Wholesaler, and ABI assigns to Redhook all of ABI's rights, if any, to seek reimbursement from the Alliance Wholesaler for lost or damaged cooperage. Redhook shall reimburse ABI for any costs incurred by ABI in handling cooperage that is not properly segregated from other cooperage by the Alliance Wholesalers or is returned in any other manner that causes ABI to incur costs not included in the calculation of Cooperage Handling Charges and ABI assigns to Redhook all of ABI's rights, if any, to seek reimbursement from those Alliance Wholesalers that cause Redhook to incur such additional costs. ABI's determination of such costs, absent manifest error, shall be binding, on each of ABI and Redhook; provided, however, that such determination shall be subject to the audit provisions of Section Article XVII. ABI and Redhook shall develop, from time to time, procedures for the collection and redemption of cooperage and cooperage deposit fees satisfactory to each party in its reasonable judgment. Such procedures shall provide for the prompt delivery of cooperage among ABI, Redhook and the Alliance Wholesalers and the payment and return of cooperage deposit fees promptly upon acceptance and return of the respective cooperage.

11.07 With the consent of ABI (which ABI may withdraw or modify at any time at the option of ABI upon 60 days' advance written notice), Redhook shall be permitted to deliver Product directly to Alliance Wholesalers. With respect to any such delivery,

(a) such deliveries shall still be deemed: (i) sales by Redhook to ABI, and (ii) re-sales by ABI to such Alliance Wholesaler for purposes of this Agreement;

(b) title to and risk of loss of such Products shall remain with Redhook until delivery to such Alliance Wholesaler; and

(c) Invoicing Costs shall be substituted for Staging Costs for all purposes under this Agreement.

If ABI does not consent to any request by Redhook to deliver Product directly to an Alliance Wholesaler, at the request of Redhook from time to time (but not more often than annually) ABI shall review the costs and benefits incurred or realized by Redhook and the Alliance Wholesaler that would result from such direct delivery by Redhook and discuss such costs and benefits with Redhook. Within 30 days after completion of the review, ABI shall inform Redhook whether and to what extent ABI shall consent to Redhook's requests to deliver directly to such Alliance Wholesaler.

11.08 In order to modify an existing Product for the purposes of replacing the Product (rather than for the purposes of creating a New Product), Redhook may change, alter, modify or adjust the formula, taste profile, alcohol content, ingredients, brand name or trade dress of any Product (a "Modified Product"), if and only if Redhook has given ABI at least 30 days' notice of such change, alteration, modification or adjustment. ABI shall have the right and option, in its sole discretion, during such 30 day period to terminate distribution of such Modified Product under this Agreement, in which event such Modified Product shall no longer be deemed a Product for purposes of this Agreement. Prior to execution of this Agreement, Redhook has delivered to ABI, in writing, descriptions setting forth for each Product the exact ingredients (by types and origin) and product characteristics for such Product, including applicable tolerances and a description of the primary and secondary packaging for each Product. Other than minor changes in trade dress, any changes or deviations in primary or secondary

packaging, ingredients (additions or deletions), hops or malt type or supplier of other key raw material in any Product from that earlier specified by Redhook, such changes shall cause such Product to be a Modified Product. In addition, if ABI's examination of any Product indicates a deviation greater than the tolerance previously indicated for such Product in three or more tests, such Product shall be deemed to be a Modified Product.

11.09 Redhook shall ship to ABI at 220 Taste Room, One Busch Place, St. Louis, Missouri 63118, Attention: Director - Brewing Education (or to such other address or location as may be specified from time to time in writing by ABI):
(a) one (1) case of each packaged Product during each calendar quarter; and (b) from time to time upon request by ABI, one (1) keg of the draught Product specified by AB.

11.10 ABI shall maintain in its employ a corporate inventory management employee (the "Inventory Manager"), a substantial portion of the responsibilities of whom shall be to coordinate and administer logistics of Product distribution to Alliance Wholesalers. Within fifteen (15) days of the end of each calendar quarter during the Term, beginning with the second calendar quarter of 2004, Redhook shall pay to ABI 8.75% of the annual Inventory Manager Fee. ABI shall pay the Inventory Manager cash compensation not exceeding that generally paid to other ABI employees with similar experience, training, skill level and performance. Annually, ABI and Redhook will review the time spent by the Inventory Manager with respect to the products sold by Redhook as compared to the time spent on other matters for the preceding year, and annually ABI and Redhook shall adjust the percentage specified in this paragraph so that Redhook pays to ABI an amount that reasonably compensates ABI for the time spent by the Inventory Manager in the preceding year on matters relating to products sold by Redhook.

11.11 Upon written agreement by the parties hereto, the Territory may be reduced to exclude states or portions of the United States of America.

11.12 Redhook shall not acquire any alcohol or non-alcohol malt beverage brand or the assets or equity securities of any producer of alcohol malt beverages unless Redhook delivers to ABI a written plan providing for the exclusive distribution of such malt beverages by ABI that is satisfactory to ABI.

ARTICLE XII
REPRESENTATIONS, WARRANTIES AND COVENANTS OF REDHOOK

Redhook represents, warrants and covenants to ABI as follows:

12.01 Redhook is a corporation duly organized, validly existing and in good standing under the laws of the State of Washington, has full corporate or other power and authority to carry on its business as now conducted and as currently proposed to be conducted, and to execute, deliver and carry out the terms of this Agreement, has all permits and authorizations necessary to carry on its business as presently conducted, and is, or shall be if required, duly qualified to do business as a foreign corporation in good standing in each jurisdiction wherein the nature of Redhook's business and operations or the character of the properties owned or held under lease by Redhook makes such qualification necessary and in which the failure to so qualify would have a materially adverse effect on the business, prospects, profits, condition or operations, financial or otherwise, of Redhook.

12.02 This Agreement and all related documents have been duly authorized, executed and delivered by Redhook and constitute legal, valid and binding agreements or obligations of Redhook enforceable against it in accordance with their terms, subject to applicable bankruptcy, insolvency, and similar laws affecting the enforcement of creditors' rights generally. Neither the execution and delivery nor the performance by Redhook of this Agreement will contravene any law or governmental rule or regulation, or any judgment or order, applicable to or binding on Redhook, or Redhook's charter documents, or result in any breach of or constitute any default under, or result in the creation of any lien upon any property of Redhook under, any indenture, mortgage or other agreement or instrument to which Redhook is a party or by which it, or any of its properties may be bound or affected.

12.03 Neither the execution and delivery nor the performance by Redhook of this Agreement requires any consent or approval of, giving notice to, registration with, or taking of any other action in respect of, any federal or state governmental authority or agency which has not been obtained prior to the date hereof.

12.04 ABI's purchase or resale of Products or other goods hereunder in the form furnished to ABI by Redhook and ABI's use of the Intellectual Property in accordance with the terms of authorization by the Redhook of ABI's use pursuant to the this Agreement shall not infringe any valid United States or foreign patent right, right of privacy or publicity, or any rights with respect to trademarks, trade dress, copyrights, promotional slogans, trade names, designs, labels, get-ups, color combinations, product shapes, or other trademarks rights.

12.05 Except as set forth in ATTACHMENT D, Redhook, has no contract, agreement or understanding, whether oral or written, with any Person for the distribution of Product in the Territory.

12.06 As of the date hereof, the list of Non-Alliance Wholesalers set forth in ATTACHMENT D is accurate, full and complete.

12.07    All Products:

         (a) shall be merchantable and fit for their intended purpose;

         (b) shall be produced exclusively in the breweries of Redhook,

Widmer or in other breweries approved by ABI;

(c) shall be free from defects in materials and workmanship and in compliance with applicable federal and state laws and regulations;

(d) shall be delivered free from any lawful security interest, lien or other encumbrance;

(e) shall not be adulterated or misbranded within the meaning of the Federal Food, Drug and Cosmetic Act, as amended, and shall comply with the applicable provisions of the Code of Federal Regulations; and

(f) shall be produced in compliance with the requirements of the Fair Labor Standards Act of 1938, as amended, and Executive Order No. 11246 and of the rules, regulations and relevant orders of the Secretary of Labor, if applicable.

12.08 (a) In order to ensure the freshness quality of Product when consumed by the public, all Products shall be delivered by Redhook to the designated ABI Distribution Facility, or to the Alliance Wholesalers, Affiliated Wholesalers and Non-Alliance Wholesalers: (i) for packaged Product, at least 80 days; and (ii) for draft Product, at least 32 days, prior to the time when such Product would no longer be salable to or consumable by the public, based on criteria developed by Redhook and reasonably acceptable to ABI, by which Redhook judges the freshness of its malt and non-malt beverage products.

(b) If ABI changes from time to time its standards with respect to the remaining shelf life as applied generally to its products sold in the United States, Redhook agrees that within six months of the effective date of such change, Redhook shall conform its shipment practices to the current ABI standard.

(c) To the extent any Product is shipped to a WSC, ABI may change the standards described in Section 12.08(a) to provide assurances, satisfactory in the reasonable judgment of ABI, that the Product will continue to be delivered to retailers with an remaining shelf life consistent with the standards generally used by ABI

12.09 Redhook shall comply in material respects with all applicable governmental laws, regulations and orders covering the production, sale, packaging, marketing and delivering of the Products.

ARTICLE XIII
REPRESENTATIONS, WARRANTIES AND COVENANTS OF ABI

ABI represents, warrants and covenants to Redhook as follows:

13.01 ABI is a corporation duly organized, validly existing and in good standing under the laws of the State of Missouri, has full corporate power and authority to carry on its business as now conducted and as currently proposed to be conducted, and to execute, deliver and carry out the terms of this Agreement and has all permits and authorizations necessary to carry on its business as presently conducted.

13.02 This Agreement and all related documents have been duly authorized, executed and delivered by ABI and constitute legal, valid and binding agreements or

obligations of ABI enforceable against it in accordance with their terms, subject to applicable bankruptcy, insolvency, and similar laws affecting the enforcement of creditors' rights generally. Neither the execution and delivery nor the performance by ABI of this Agreement will contravene any law or governmental rule or regulation, or any judgment or order, applicable to or binding on ABI, or ABI's charter documents, or result in any breach of or constitute any default under, or result in the creation of any lien upon any property of ABI under, any indenture, mortgage or other agreement or instrument to which ABI is a party or by which it, or any of its properties may be bound or affected.

13.03 Neither the execution and delivery nor the performance by ABI of this Agreement requires any consent or approval of, giving notice to, registration with, or taking of any other action in respect of, any federal or state governmental authority or agency, which has not been obtained prior to the date hereof.

13.04 ABI shall comply in material respects with all governmental laws, regulations and orders covering the re-sale and distribution of the Products.

ARTICLE XIV
INDEMNIFICATION

14.01 In addition to any other indemnities set forth in this Agreement, Redhook will indemnify, protect, defend and hold harmless each of ABI, its Affiliates, wholesalers and each of their respective directors, officers, employees and agents, from and against all claims, liabilities, losses, damages, injuries, demands, actions, causes of action, suits, proceedings, judgments and expenses, including, without limitation, reasonable attorneys' fees, court costs and other legal expenses arising from, connected with or attributable to: (a) the Products; (b) the breach by Redhook of any provision hereof; (c) ABI's use of the Intellectual Property in conjunction with the distribution and sale of the Products in accordance with the terms hereof; (d) the inaccuracy of any warranty or representation made by Redhook herein or in connection herewith; or
(e) the termination of the distribution rights of any Affiliated Wholesaler or Alliance Wholesaler pursuant to Section 11.05. None of the above indemnities shall require Redhook to indemnify, protect, defend or hold harmless any indemnitee with respect to any claim to the extent such claim arises from, is connected with or is attributable to the negligence or willful misconduct of such ABI Indemnitee. Expiration or termination of this Agreement shall not affect the continuing obligations of Redhook to indemnify ABI under this Section 14.01.

14.02 In addition to other indemnities set forth in this Agreement, ABI will indemnify, protect, defend and hold harmless each of Redhook, its Affiliates and each of their respective directors, officers, employees and agents, from and against all claims, liabilities, losses, damages, injuries, demands, actions, causes of action, suits, proceedings, judgments and expenses, including, without limitation, reasonable attorneys' fees, court costs and other legal expenses arising from, connected with or attributable to: (a) the breach by ABI of any provision hereof; (b) the inaccuracy of any warranty or representation made by ABI herein or in connection herewith; or (c) any action taken by Redhook at the written direction of ABI pursuant to Section 11.04. Expiration or termination of this Agreement shall not affect the continuing obligations of ABI to indemnify Redhook under this Section 14.02. Nothing herein shall require ABI to indemnify, protect, defend or hold harmless any indemnitee with respect to any claim to the extent such claim arises from, is connected with or is attributable to the negligence or willful misconduct of such indemnitee or the actions of any Non-Alliance Wholesalers.

14.03 If a claim by a third party is made against a party indemnified pursuant to this Article XIV, and if such indemnified party intends to seek indemnity with respect thereto under this Article XIV, the indemnified party shall promptly (and in any case within 30 days of such claim being made) notify the indemnifying party of such claim; provided, however, that any failure of the indemnified party to promptly notify the indemnifying party of such claim shall not relieve the indemnifying party of its obligations pursuant to this Section 14.03 except to the extent that the indemnifying party would be responsible for the payment of any additional amounts or be actually prejudiced in any other way as a result of such failure. The indemnifying party shall have the right (but not the obligation) to undertake, conduct and control, through counsel of its own choosing and at the indemnifying party's expense, the settlement or defense thereof, provided the indemnifying party proceeds in good faith, expeditiously and diligently. If the indemnifying party does not notify the indemnified party in writing that it will defend any matter within 20 business days after receipt of notice from the indemnified party of

the existence of such matter, or if the indemnifying party disputes that it is liable to the indemnified party for any sum pursuant to this Section 14.03, the indemnifying party shall have no right to defend such matter, and the indemnified party shall have full right and power to defend or otherwise deal with and dispose of the matter and shall be indemnified for the fees and expenses of counsel retained for such purpose. The indemnified party shall cooperate with the indemnifying party in connection with any defense by the indemnifying party of a claim, but the indemnifying party shall permit the indemnified party to participate in such settlement or defense through counsel chosen by the indemnified party and the fees and expenses of such counsel shall be borne by the indemnified party. Without the prior written consent of the indemnified party, the indemnifying party will not enter into any settlement of any such claim which would lead to liability or create any financial or other obligation on the part of the indemnified party, and the indemnifying party shall after any such settlement or the resolution of any claim promptly reimburse the indemnified party for the full amount of any loss resulting from such claim not theretofore paid by the indemnifying party. The indemnified party will not enter into any settlement or pay (except pursuant to a judgment) any such claim without the prior written consent of the indemnifying party, which consent shall not unreasonably be withheld or delayed. Notwithstanding the foregoing, the indemnified party shall have the right to pay or settle any such claim, in the event the indemnified party has not assumed or is not pursuing the defense of any claim or is in breach of its indemnification obligations hereunder. The indemnification required by this Section 14.03 shall be made by periodic payments of the amount thereof as losses are incurred and as and when bills are received.

ARTICLE XV
INSURANCE

Redhook shall procure and maintain from qualified and licensed insurers with Best's Ratings of at least A-: (i) a comprehensive or commercial general liability insurance policy with at least $10,000,000 in coverage for each occurrence, including liquor liability; (ii) a worker's compensation policy with at least $2,000,000 in coverage for each occurrence; and (iii) a property insurance policy covering damage to the Product owned by Redhook. Coverage shall be on an occurrence rather than a claims made basis. The policy shall name ABI as an additional insured and shall include coverage for Redhook's indemnification obligations under this Agreement. The policy shall provide that ABI will be notified of the cancellation or any restrictive amendment of the policy at least 15 days prior to the effective date of such cancellation or amendment. Redhook shall not violate, or permit to be violated, any conditions of such insurance policies, and Redhook shall at all times satisfy the requirements of the insurance carrier writing said policy.
From time to time at the request of ABI, Redhook shall provide ABI with a certificate from such insurer certifying that the insurance policy described in this section is in force and the evidence of coverage shall specifically state that coverage as it pertains to ABI shall be primary regardless of any other coverage that may be available to ABI. Failure to procure and maintain the insurance coverage specified herein shall be deemed a material breach of this Agreement

ARTICLE XVI
FORCE MAJEURE

16.01 If by reason of Force Majeure either party is unable in whole or in part to carry out any of its agreements contained herein, such party shall not be deemed in default during the continuance of such inability. The term "Force Majeure" as used herein shall mean, without limitation, the following:
acts of God; strikes, lockouts or other industrial disturbances; acts of public enemies; orders or restraints of any kind from any government of the United States of America or from a state or from any of their departments, agencies or officials (except when such governmental action results from

a party's failure or refusal to comply with any applicable law, rule or regulation), or of any civil or military authority; insurrections; riots; landslides; earthquakes; fires; storms; droughts, floods, explosions; and any other cause or event not reasonably within the control of the respective parties. Each party agrees, however, to remedy with all reasonable dispatch the cause or causes preventing it from carrying out the Agreement, provided that the settlement of strikes, lockouts and other course is in its judgment unfavorable to it.

16.02 The response to an act of Force Majeure resulting from industrial disturbance shall be entirely within the discretion of the affected party, and the affected party shall not be required to make settlement of strikes, lockouts and other industrial disturbances by acceding to the demands of the opposing party or parties.

ARTICLE XVII
AUDIT AND INSPECTION RIGHTS

(a) During the Term and for a period of at least two years following the termination of this Agreement, each party shall maintain such books and records (collectively, "Records") in accordance with generally accepted accounting principles consistently applied as are necessary to substantiate that:
(i) All invoices and other charges submitted to the other for payment hereunder were valid and proper;

(ii) No payments have been made, directly or indirectly, by or on behalf of either party to or for the benefit of any employee or agent of the other party who may reasonably be expected to influence such other party's decision to enter into this Agreement, or the amount to be paid by such other party pursuant hereto (as used herein, "payment" shall include money, property, services, and all other forms of consideration); and

(iii) Such party has conformed to the provisions of this Agreement.

(b) Each party and/or its representative shall have the right at any time during normal business hours, upon five business days' notice, to have PricewaterhouseCoopers LLP, or such other internationally recognized accounting firm as agreed to by the parties audit the Records of the other in a manner which does not create unreasonable disruption to the audited party's normal conduct of business.

ARTICLE XVIII
CONFIDENTIALITY

18.01 (a) During and subsequent to the Term of this Agreement, each party shall treat and shall cause its respective employees, officers, directors, advisors, representatives, subsidiaries, Affiliates, assigns, subcontractors and any and all persons or business entities acting under one or any of them, to treat, as confidential property and not disclose to any other Person or use in any manner, except as is necessary to perform this Agreement, (and then only on a confidential basis satisfactory to both parties), any information regarding the other party's prices, plans, programs, processes, products, costs, equipment, operations or customers (including without limitation information received by ABI with respect to Product formula and ingredient and information by Redhook received regarding the distribution and logistics programs used by ABI) ("Confidential Information") which may come within the knowledge of such party, its officers, employees or advisors in the performance of this Agreement, without in each instance securing the prior written consent of the other party; nor shall ABI use such Confidential Information to produce a beer whose formula duplicates any of the Product formulas.

(b) Nothing above, however, shall prevent either ABI or Redhook from disclosing to any other Person or using in any manner, information that such party can show:

(i) has been published or has become part of the public domain without any breach of this Agreement other than by acts, omissions or fault of such party or its employees or agents;

(ii) has been furnished or has been made known to such party by third parties (other than those acting directly or indirectly for or on behalf of the disclosing party) as a matter of legal right without restrictions on its disclosure;

(iii) was in such party's lawful possession prior to the disclosure thereof by the other party;

(iv) is later independently developed by the receiving party; or

(v) has been required to be disclosed by law, court order, or government order or regulation.

(c) If any party is required by law, court order or government order or regulation to disclose Confidential Information, such party shall provide notice thereof to the other party and undertake reasonable steps to provide the other party with an opportunity to object to such disclosure.

(d) Except as required by law, neither party shall release, or cause or allow the release of, information to the communications media or to any other third party concerning the specific terms of this Agreement or any amendment or modification thereto without the prior written consent of the other party; provided, however, that if in the reasonable opinion of the disclosing party's counsel, the failure to disclose any such information would create a reasonable risk of non-compliance with applicable securities laws, then such disclosing party may so disclose such information provided it gives the other party as much advance notice as is reasonably possible.

18.02 Neither party shall make any Confidential Information available to anyone other than those of its respective employees and advisors who need such Confidential Information to enable them to perform this Agreement.

18.03 These secrecy obligations with respect to the Confidential Information shall survive the termination or expiration of this Agreement.

ARTICLE XIX
ASSIGNMENT

19.01 This Agreement will be binding upon, and will inure to the benefit of, the parties hereto and their respective successors and permitted assigns.

19.02 Redhook may not assign this Agreement to any Person without the prior written consent of ABI.

19.03 Provided that such assignment does not deny Redhook the practical benefits of this Agreement, ABI may assign this Agreement to any entity controlled by Anheuser-Busch Companies, Inc., or to any entity which succeeds through any transaction to the business of ABI substantially as a whole, but no such assignment shall release ABI from its obligations as primary obligor hereunder without Redhook's prior written consent, and ABI shall retain the sole right to provide any consents or waivers under this Agreement.

If to ABI:                 Anheuser-Busch, Incorporated
                           One Busch Place
                           St. Louis, Missouri 63118
                           Attn:    Vice President - Business and
                                    Wholesaler System Development
                           Telephone:  (314) 577-9766
                           Facsimile Number:  (314)765 -9167

If to Redhook:             Redhook Ale Brewery, Incorporated
                           14300 NE  145th Street, Suite 210
                           Woodinville, Washington  98072-9045
                           Attn: Chief Executive Officer
                           Facsimile Number:(425) 485-0761

or to such other address, facsimile number or attention as either party shall provide to the other in accordance herewith. Notices delivered in person, by overnight courier or by facsimile shall be effective when received. Notices given by certified mail shall be effective on the third business day after mailing unless sooner received, in which case they shall be effective upon receipt.

ARTICLE XXI
INDEPENDENT CONTRACTORS

The parties shall be and act as independent contractors and under no circumstances shall this Agreement be construed to create any agency, partnership, joint venture or employment relationship between the parties. Neither party has any authority to bind the other in any way except as may be otherwise expressly stated in this Agreement. The parties recognize that during the period of this Agreement, there will be employees of one party upon the premises of the other. It is understood and agreed that on such occasions the employees of each party shall remain the employees of that party solely, and that each party shall be solely responsible for the wages and benefits for its employees, and that any injury which may be sustained by an employee shall be covered under the worker's compensation insurance of the party by which he is employed.

ARTICLE XXII
MISCELLANEOUS

22.01 In exercising their respective rights (including, without limitation, the making of any determinations under this Agreement, discretionary or otherwise) and performing their respective obligations hereunder, each of the parties shall act in good faith and in a commercially reasonable manner; except that with respect to (a) the determination of Incompatible Conduct or the cure thereof by ABI, (b) ABI's decision to terminate distribution of a Modified Product (as described in Section 11.08 above), (c) ABI's judgment made pursuant to Section 7.03(i) or determination made pursuant to Section 7.03(iii); ABI shall only be required to act in good faith and need not act in a commercially reasonable manner.

22.02 If any provision of this Agreement shall be determined to be illegal and unenforceable by any court of law or any competent governmental or other authority, the remaining provisions shall be severable and enforceable in accordance with their terms so long as this Agreement without such terms or provisions does not fail in its essential commercial purpose or purposes. The parties will negotiate in good faith to replace any such illegal or unenforceable provision or provisions with suitable substitute provisions that will maintain the economic purposes and intentions of this Agreement.

22.03 Failure by either party to insist on strict performance by the other of any term, condition or obligation set forth in this Agreement shall not be deemed a waiver of the same or any similar breach, and no waiver of any provision hereof shall be effective unless in writing, specifying the provision to be waived.

22.04 This Agreement is entered into in the State of Missouri and will be governed by and construed under the laws of Missouri, including the Uniform Commercial Code as in effect in the State. The parties agree that any legal or equitable action or proceeding with respect to this Agreement shall be brought in the United States District Court for the Eastern District of Missouri (or if such court does not have jurisdiction, in any court of general jurisdiction in the County of St. Louis, Missouri) or in the United States District Court for the Western District of Washington (or if such court does not have jurisdiction, in any court of general jurisdiction in Washington).

22.05 This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior or contemporaneous agreements in regard thereto. This Agreement cannot be altered or modified except by an agreement in writing signed by authorized representatives of both parties and specifically referring to this Agreement. The section headings are inserted for convenience only and are in no way intended to define or limit the scope, extent or intent of any provision of this Agreement.

22.06 Nothing in this Agreement, express or implied, is intended or shall be construed to give any Person other than the parties to this Agreement, and the indemnitees specified in Article XIV or their respective successors or assigns any legal or equitable right, remedy or claim under or in respect of any agreement or any provision contained herein.

22.07 This Agreement may be executed in one or more counterparts and shall be the valid and binding agreement of the parties when the counterparts of this Agreement have been duly executed and delivered by each party hereto.

22.08 Redhook acknowledges that ABI is reviewing changes to the procedures by which Affiliated Wholesalers and Alliance Wholesalers generate and transmit orders for Products. ABI may request from Redhook reimbursement of out of pocket costs incurred to analyze or implement such change, and Redhook shall reasonably consider such requests. Redhook and ABI acknowledge that implementing such changes may require an amendment hereto and each party shall reasonably consider such amendment.

(SIGNATURE PAGE FOLLOWS)

IN WITNESS WHEREOF, this Agreement is executed on behalf of the parties by their duly authorized representatives as of the day and year first above written.

ANHEUSER-BUSCH, INCORPORATED                   REDHOOK ALE BREWERY,
                                               INCORPORATED


By:/s/ JAMES F. HOFFMEISTER                    By: /s/ PAUL SHIPMAN
  ------------------------------------------       ----------------------------
       James F. Hoffmeister                            Paul Shipman
       Vice President - Administration                 Chief Executive Officer
                                                       and President

ATTACHMENT A

STAGING COSTS AND COOPERAGE HANDLING COST MODIFICATION

For each calendar year during the Term, the Staging Costs and the Cooperage Handling Costs shall each be recalculated each January to be an amount equal to:

*

where:

* = the Staging Costs or the Cooperage Handling Costs, as applicable, in effect for the prior calendar year

* = the percentage change (in decimal fraction form) in the Average Budgeted Hourly Fully Loaded Labor Rate for beer packaging and shipping laborers, budgeted for the calendar year for which the calculation is made, as compared to the amount which had been budgeted for the prior calendar year.

The Average Budgeted Hourly Fully Loaded Labor Rate for each calendar year shall be determined by taking the arithmetic average of the Budgeted Hourly Fully Loaded Labor Rates for the subject year (as set forth in the annual budget in the CMS/SAP system) in effect on December 31 preceding the subject year for all ABI breweries in the Territory.

2004 Package Staging Cost           *

Budgeted Avg. Fully Loaded Labor
Rate

2004                                *
2005                                *
    % change                        *
2005 Package Staging Cost           *

2004 Cooperage Handling Cost        *

2004                                *
2005                                *
     % change                       *

2005 Cooperage Handling Cost *

*CONFIDENTIAL TREATMENT REQUESTED

ATTACHMENT B

INCOMPATIBLE CONDUCT

A. Examples of activities that constitute Incompatible Conduct:

(1) Advertising by Redhook directed at underage drinkers;

(2) Production by Redhook of a high alcohol beer; provided that high alcohol beer shall not include production of a beer whose alcohol content does not exceed the alcohol content of (a) a similar Product currently distributed hereunder or (b) a product that is made or distributed currently by ABI;

(3) Advertising by Redhook based upon the high alcohol content of its beer;

(4) Statements by Redhook defaming ABI or its products;

(5) Criminal activities by Redhook or its senior executives; and

(6) Quality and wholesomeness of Product is materially affected, taking into account the permitted tolerances and Product specifications.

B. Examples of activities that do not constitute Incompatible Conduct:

(1) Poor operating results by Redhook;

(2) Poor performance of Redhook or unsuccessful product introduction by Redhook;

(3) Introduction by Redhook of products directly competitive with ABI products;

(4) Any activity the sole effect of which on ABI is to decrease the value of ABI's investment in Redhook or the value of ABI's distribution rights of Redhook products; and

(5) Isolated, non-repetitive, inadvertent minor regulatory infractions.

PAGE 1 0F 2
ATTACHMENT C

METHODOLOGY TO ANNUALLY MODIFY THE
INCREMENTAL MARGIN, MARGIN,
AND THE INVOICING COSTS

For each calendar year during the Term, the Incremental Margin, Margin and the Invoicing Costs shall each be recalculated (rounding to the nearest one one-hundredth of a cent) each January to be an amount equal to:

* where:

* = the Incremental Margin, Margin or the Invoicing Costs, as applicable, in effect for the prior calendar year

* = the forecasted annual rate of change (in per cent) in the "GDP Deflator (Implicit)" for the subject calendar year, as published by DRI/McGraw Hill division of Standard & Poor's Corporation in the "Inflation Summary" table in the October issue in the preceding year of REVIEW OF THE U.S. ECONOMY (or such other index or publication as may be reasonably acceptable to Redhook and ABI if such index or publication is no longer published).

The 2005 Base Margin would be calculated by multiplying the 2004 Base Margin

* The 2005 Incremental Margin would be calculated by multiplying the 2004 Incremental Margin

*

* CONFIDENTIAL TREATMENT REQUESTED

The 2005 Invoicing Costs would be calculated by multiplying the 2004 Invoicing Costs (* per Pallet Lift) by *

*

* CONFIDENTIAL TREATMENT REQUESTED

ATTACHMENT D

NON-ALLIANCE WHOLESALERS

Redhook has no Non-Alliance Wholesalers

ATTACHMENT E
PROCEDURES RELATING TO PRICING MATTERS

1. *

2. *

3. *

4. *

5. *.

* CONFIDENTIAL TREATMENT REQUESTED

ATTACHMENT F
FACTORS NEEDED TO EVALUATE NEW PRODUCTS

Redhook must provide at least the following information to ABI in order for ABI to make an evaluation of New Product:

1. Proposed Name of New Product

2. Proposed New Product Packages

3. Proposed New Product Label

4. Proposed Ingredients and Proposed Suppliers

5. Alcohol Content

6. Beginning Gravity

7. IBU

8. Comprehensive Marketing Plan 9. Consumer Research

EXHIBIT 10.3

REGISTRATION RIGHTS AGREEMENT

Registration Rights Agreement, dated as of July 1, 2004, between Redhook Ale Brewery, Incorporated, a Washington corporation ("Redhook"), and Anheuser-Busch, Incorporated, a Missouri corporation ("ABI").

WHEREAS, Redhook and ABI have entered into an Exchange and Recapitalization Agreement dated as of June 30, 2004 (the "Exchange Agreement"), pursuant to which Redhook has agreed to issue and deliver to ABI, and ABI has agreed to accept from Redhook, shares of common stock, par value $0.005 per share ("Common Stock"); and

WHEREAS, ABI may in the future acquire additional securities of Redhook; and

WHEREAS, in order to induce ABI to enter into the Exchange Agreement and to acquire such shares of Common Stock and additional securities, Redhook has agreed to provide registration rights with respect thereto;

NOW, THEREFORE, in consideration of the premises and the covenants hereinafter contained, it is agreed as follows:

1. DEFINITIONS. Unless otherwise defined herein, terms defined in the Exchange Agreement are used herein as therein defined, and the following shall have the following respective meanings (such meanings being equally applicable to both the singular and plural form of the terms defined):

"Agreement" shall mean this Registration Rights Agreement, including any exhibits or schedules thereto, as such agreement may be amended, supplemented or otherwise modified from time to time in accordance with the terms thereof.

"Business Day" shall mean any day that is not a Saturday, a Sunday or a day on which banks are required or permitted to be closed in the State of Missouri, the State of New York or the State of Washington.

"CBA Distribution Agreement" shall mean the Master Distributor Agreement between Craft Brands Alliance LLC and ABI dated July 1, 2004, as such agreement may be amended, supplemented or otherwise modified from time to time in accordance with the terms thereof.

"Commission" shall mean the Securities and Exchange Commission or any other federal agency then administering the Securities Act and other federal securities laws.

"Distribution Agreement" shall mean the Master Distributor Agreement between Redhook and ABI dated the date hereof, as such agreement may be amended, supplemented or otherwise modified from time to time in accordance with the terms thereof.

"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, and all rules and regulations promulgated thereunder.

"Minimum Number of Registrable Securities" shall mean either
(i) if Redhook is not eligible to file a registration statement on Form S-3 (or other comparable short form) under the Securities Act, 250,000 shares of Registrable Securities, (ii) if Redhook is eligible to file a registration statement on Form S-3 (or other comparable short form) under the Securities Act, 150,000 shares of Registrable Securities, or (iii) if fewer than 250,000 shares of Registrable Securities or 150,000 shares of Registrable Securities, as the case may be, are outstanding, all of the remaining outstanding Registrable Securities. Any stock split, stock dividend, recapitalization, reclassification, stock combination or other change in the terms of Stock occurring after the date hereof affecting the number of shares of Stock held by or issuable to ABI shall increase or reduce the Minimum Number of Registrable Securities in the same proportion as the shares of Stock held by or issuable to ABI were increased or decreased by such stock split, stock dividend, recapitalization, reclassification, stock combination or change.

"NASD" shall mean the National Association of Securities Dealers, Inc., or any successor corporation thereto.

"Person" shall mean any individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization, association, corporation, institution, public benefit corporation, entity or government (whether federal, state, county, city, municipal or otherwise, including, without limitation, any instrumentality, division, agency, body or department thereof).

"Registrable Securities" shall mean all shares of Common Stock and other securities issued by Redhook or any Subsidiary of Redhook held by ABI from time to time.

"Securities Act" shall mean the Securities Act of 1933, as amended and all rules and regulations promulgated thereunder.

"Stock" shall mean all shares, options, warrants, rights, general or limited partnership interests, participations or other equivalents (regardless of how designated) of or in a corporation, partnership or equivalent entity whether voting or nonvoting, including, without limitation, common stock, preferred stock, or any other "equity security" (as such term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the Commission under the Exchange Act).

"Termination Date" shall mean any date (i) on which the Distribution Agreement is duly terminated or expires in accordance with its terms, (ii) on which the CBA Distribution Agreement is duly terminated or expires in accordance with its terms or (iii) on which the products of Redhook are excluded from the CBA Distribution Agreement pursuant to its terms.

2. REQUIRED REGISTRATION.

(a) At any time, after receipt of a written request from ABI requesting that Redhook effect the registration under the Securities Act of at least the Minimum Number of Registrable Securities and specifying the intended method or methods of disposition thereof, thereupon Redhook shall, as expeditiously as is possible, but not later than 90 days after receipt of the request, file a registration statement under the Securities Act with respect to, and use its best efforts to effect the registration under the Securities Act of, all shares of Registrable Securities which Redhook has been so requested to register, all to the extent required to permit the disposition (in accordance with the intended method or methods thereof, as aforesaid) of the Registrable Securities so registered; PROVIDED, HOWEVER, that, except as otherwise described in this section, Redhook shall not be required to effect more than three registrations of any Registrable Securities pursuant to this Section 2 in any five calendar year period.

(b) Notwithstanding the other provisions of this
Section 2, after a Termination Date, ABI shall be entitled to cause Redhook to effect two additional registrations of Registrable Securities pursuant to
Section 2(a), notwithstanding any limitations in Section 2 or additional registrations that might otherwise be available pursuant to Section 2.

3. INCIDENTAL REGISTRATION. If Redhook at any time proposes to file on its behalf and/or on behalf of any of its security holders (the "demanding security holders") a Registration Statement under the Securities Act on any form (other than a Registration Statement on Form S-4 or S-8 or any successor form for securities to be offered in a transaction of the type referred to in Rule 145 under the Securities Act or to employees of Redhook pursuant to any employee benefit plan, respectively) for the general registration of securities, it will give written notice to ABI at least 60 days before the initial filing with the Commission of such Registration Statement, which notice shall set forth the intended method of disposition of the securities proposed to be registered by Redhook. The notice shall offer to include in such filing the aggregate number of shares of Registrable Securities as ABI may request.

If ABI desires to have Registrable Securities registered under this Section 3, it shall advise Redhook in writing within 20 Business Days after the date of receipt of such offer from Redhook, setting forth the amount and type of such Registrable Securities for which registration is requested. Redhook shall thereupon include in such filing the number and type of shares of Registrable Securities for which registration is so requested, subject to the remaining provisions of this paragraph, and shall use its best efforts to effect registration under the Securities Act of such shares. If the lead managing underwriter of a proposed public offering shall advise Redhook that, in its opinion, the distribution of the Registrable Securities requested to be included in the registration concurrently with the securities being registered by Redhook or any demanding security holder would materially and adversely affect the distribution of such securities by such demanding security holder or Redhook or the proceeds to be received by such demanding security holder or Redhook as a result of the distribution of such securities, then the securities to be sold by any demanding security holder not contractually entitled to include

securities in the offering shall be eliminated from the offering to the extent necessary to avoid such effect. If such reduction does not eliminate the effect, then ABI, Redhook and each demanding security holder contractually entitled to include securities in the offering shall each reduce the amount of securities intended to be distributed through such offering by such parties on a pro rata basis to the extent necessary to avoid such effect.

4. REGISTRATION PROCEDURES. If Redhook is required by the provisions of Section 2 or 3 to use its best efforts to effect the registration of any of its securities under the Securities Act, Redhook will, as expeditiously as possible:

(a) prepare and file with the Commission a Registration Statement with respect to such securities which shall be available for the sale of the Registrable Securities in accordance with the intended method of distribution thereof, cause the Registration Statement not to misstate any material fact and not to omit to state any material fact required to be included therein or necessary to make the statements therein not misleading in the light of the circumstances when made and to comply in all material respects with the requirements of the Securities Act, and use its best efforts to cause such Registration Statement to become and remain effective for a period of time required for the disposition of such securities by ABI;

(b) use best efforts to prepare and file with the Commission such amendments and supplements to such Registration Statement and the prospectus used in connection therewith as may be necessary to keep such Registration Statement effective and to comply with the provisions of the Securities Act with respect to the sale or other disposition of all securities covered by such Registration Statement until such time as all of such securities have been disposed of in a public offering (the expenses of such amendments and supplements being paid as described in Section 5(a) hereof);

(c) furnish to ABI such number of copies of a summary prospectus or other prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents, as ABI may reasonably request;

(d) use its best efforts to register or qualify the securities covered by such Registration Statement under such other securities or blue sky laws of such jurisdictions within the United States and Puerto Rico as ABI shall request (PROVIDED, HOWEVER, that Redhook shall not be obligated to qualify as a foreign corporation to do business under the laws of any jurisdiction in which it is not then qualified or to file any general consent to service of process), and do such other reasonable acts and things as may be required of it to enable ABI to consummate the disposition in such jurisdiction of the securities covered by such Registration Statement;

(e) at the request of ABI, cause all Registrable Securities to be listed on any securities exchange or any automated quotation system on which Stock of the same class is then listed or quoted or, if the Registrable Securities are Common Stock and the Common Stock is not so listed or quoted and Redhook meets the requirements therefor, on the NASDAQ Stock Market;

(f) make available for inspection by ABI, any underwriter participating in the distribution of the Registrable Securities, any representative of any such underwriter and any attorney or accountant designated by ABI, at reasonable times and in a reasonable manner and subject to reasonable limitations designed to protect the confidentiality of proprietary information not required to be disclosed in the Registration Statement, all financial and other records, pertinent documents and properties of Redhook, and cause the respective officers, directors and employees of Redhook to supply all information reasonably requested by ABI and any such underwriter, representative, attorney or accountant;

(g) a reasonable time prior to the filing thereof, deliver to ABI the Registration Statement, the prospectus, any amendment to the Registration Statement or supplement to any prospectus or any document that is to be incorporated by reference into the Registration Statement or prospectus, and make such representatives of Redhook as shall be reasonably requested by ABI available for discussion of any such document, but subject to reasonable limitations designated to protect the confidentiality of proprietary information not required to be disclosed in the Registration Statement;

(h) furnish, at the request of ABI, on the date that such shares of Registrable Securities are delivered to the underwriters for sale pursuant to the offering or, if such Registrable Securities are not being sold through underwriters, on the date that the Registration Statement with respect to such shares of Registrable Securities becomes effective, (1) an opinion letter, dated such date, of the independent counsel representing Redhook for the purposes of such registration, addressed to the underwriters, if any, and if such Registrable Securities are not being sold through underwriters, then to ABI, in customary form and covering matters of the type customarily covered in such legal opinions; and (2) a comfort letter dated such date, from the independent certified public accountants of Redhook, addressed to the underwriters, if any, and if such Registrable Securities are not being sold through underwriters, then to ABI and, if such accountants refuse to deliver such letter to ABI, then to Redhook, in a customary form and covering matters of the type customarily covered by such comfort letters and as the underwriters or ABI shall reasonably request. Such letter from the independent certified public accountants shall additionally cover such other financial matters (including information as to the period ending not more than five Business Days prior to the date of such letter) with respect to the offering in respect of which such letter is being given as ABI may reasonably request;

(i) enter into customary agreements (including an underwriting agreement in customary form) and take such other actions as are reasonably required in order to expedite or facilitate the disposition of such Registrable Securities and cause the officers and employees of Redhook to participate in road shows or other marketing efforts customarily undertaken by registrants in public offerings as may be reasonably requested by ABI or the underwriters of its Registrable Securities;

(j) promptly notify ABI and, if requested by ABI, confirm such advice in writing (1) when the Registration Statement has become effective and when any post-effective amendments thereto become effective, (2) of any request by the Commission or any state securities authority for amendments and supplements to the Registration Statement and

prospectus or for additional information, (3) of the issuance by the Commission or any state securities authority of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose; and (4) at any time when a prospectus relating to such Registrable Securities is required to be delivered under the Securities Act, of the happening of any event as a result of which the prospectus includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances when made or, if for any other reason it shall be necessary during such period to amend or supplement the Registration Statement or the prospectus or to file under the Exchange Act any document incorporated by reference into the Registration Statement; and under those circumstances, at the request of ABI, Redhook shall prepare and file such document and furnish to ABI as many copies as ABI may from time to time reasonably request, including but not limited to copies of a supplemented prospectus or a supplement to such prospectus as may be necessary to correct such statement or omission or effect such compliance;

(k) use its best efforts to obtain the withdrawal of any order suspending the effectiveness of the Registration Statement as promptly as possible and provide prompt notice to ABI of the withdrawal of any such order;

(l) use its best efforts to comply with all applicable rules and regulations of the Commission, use best efforts to take all other steps necessary to effect the registration of the Registrable Securities and make available to its security holders, as soon as reasonably practicable, but not later than 18 months after the effective date of the Registration Statement, an earnings statement covering the period of at least 12 months beginning with the first full month after the effective date of such Registration Statement, which earnings statements shall satisfy the provisions of Section 11(a) of the Securities Act; and

(m) It shall be a condition precedent to the obligation of Redhook to take any action pursuant to this Agreement in respect of the securities which are to be registered at the request of ABI that ABI shall furnish to Redhook such information regarding the securities held by ABI and the intended method of disposition thereof as Redhook shall reasonably request and as shall be required in connection with the action taken by ABI.

5. EXPENSES. All expenses incurred in complying with this Agreement, including, without limitation, all registration and filing fees (including all expenses incident to filing with the NASD), printing expenses, fees and disbursements of counsel for Redhook, the reasonable fees and expenses of a single counsel for the holders of the securities to be sold in the offering (selected by those holding a majority of the securities being registered in the event of a registration pursuant to Section 3 and selected by ABI in the event of a registration pursuant to Section 2), expenses of any special audits incident to or required by any such offering, rating agency fees and expenses of complying with the securities or blue sky laws of any jurisdiction pursuant to
Section 4 (d), shall be paid by Redhook, except that

(a) all such out-of-pocket expenses in connection with any amendment or supplement to the Registration Statement or prospectus filed more than 270 days after the effective date of such Registration Statement because ABI has not effected the disposition of the

securities requested to be registered shall be paid by ABI (provided that in the event that the Registration Statement was subject to any order suspending the effectiveness of the Registration Statement for any period, for purposes of this
Section 5(a) such period shall be excluded for purposes of determining the period for which the Registration Statement has been effective);

(b) Redhook shall not be liable for any fees, discounts or commissions to any underwriter or any fees or disbursements of counsel for any underwriter in respect of the securities sold by ABI.

6. INDEMNIFICATION AND CONTRIBUTION.

(a) In the event of any registration of any Registrable Securities under the Securities Act pursuant to this Agreement, Redhook shall indemnify and hold harmless ABI, ABI's directors and officers, each other person (including each underwriter) who participated in the offering of such Registrable Securities and each other person, if any, who controls ABI or such participating person within the meaning of the Securities Act, against any losses, claims, damages or liabilities, joint or several, to which ABI or any such director or officer or participating person or controlling person may become subject under the Securities Act or any other statute or at common law, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon (i) any actual or alleged untrue statement of any material fact contained in any Registration Statement under which such securities were registered under the Securities Act, any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereto, or (ii) any actual or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and shall reimburse ABI or such director, officer or participating person or controlling person for any legal or any other expenses reasonably incurred by ABI or such director, officer or participating person or controlling person in connection with investigating or defending any such loss, claim, damage, liability or action; PROVIDED, HOWEVER, that Redhook shall not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon any actual or alleged untrue statement or actual or alleged omission made in such Registration Statement, preliminary prospectus, prospectus or amendment or supplement in reliance upon and in conformity with written information furnished to Redhook by ABI specifically for use therein or (in the case of any registration pursuant to Section 2) so furnished for such purposes by any underwriter. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of ABI or such director, officer or participating person or controlling person, and shall survive the transfer of such securities by such holder.

(b) ABI agrees to indemnify and hold harmless Redhook, its directors and officers and each other person, if any, who controls Redhook within the meaning of the Securities Act against any losses, claims, damages or liabilities, joint or several, to which Redhook or any such director or officer or any such person may become subject under the Securities Act or any other statute or at common law, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon information in writing provided to Redhook by ABI specifically for use and contained, on the effective date thereof, in any Registration Statement under which securities were registered under the Securities Act at the

request of ABI, any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereto. Notwithstanding the foregoing, ABI shall not be required to provide indemnification pursuant to this Section 6(b) in excess of the amount by which the net proceeds realized by ABI from the sale of the Registrable Securities in the offering exceeds the amount of any damages that ABI has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission.

(c) In case any proceeding (including any governmental investigation) shall be instituted involving any person in respect of which indemnity may be sought pursuant to
Section 6(a) or Section 6(b), the indemnified party shall promptly notify the indemnifying party in writing and the indemnifying party, upon request of the indemnified party, shall retain counsel satisfactory in the reasonable judgment of the indemnified party to represent the indemnified party and any others the indemnifying party may designate in such proceeding and shall pay the fees and disbursements of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood that the indemnifying party shall not, in respect of the legal expenses of any indemnified party in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition to any local counsel for all such indemnified parties) and that all such fees and expenses shall be reimbursed as they are incurred. Such firm shall be designated in writing by ABI, in the case of parties indemnified pursuant to
Section 6(a), and by Redhook, in the case of parties indemnified pursuant to
Section 6(b). The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel as contemplated by the second and third sentences of this Section 6(c), the indemnifying party agrees that it shall be liable for any settlement of any proceeding even if effected without its written consent if (i) such settlement is entered into more than 30 days after receipt by such indemnifying party of the aforesaid request and of written notice of the terms of such settlement and
(ii) such indemnifying party shall not have reimbursed the indemnified party in accordance with such request prior to the date of such settlement. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened proceeding in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such proceeding.

(d) If the indemnification provided for in this
Section 6 from the indemnifying party is unavailable to an indemnified party hereunder in respect of any losses, claims, damages, liabilities or expenses referred to therein, then the indemnifying party, in lieu of

indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities or expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party and indemnified parties in connection with the actions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative fault of such indemnifying party and indemnified parties shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been made by, or relates to, information supplied by, such indemnifying party or indemnified parties, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such action. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include any legal or other fees or expenses reasonably incurred by such party in connection with any investigation or proceeding.

(e) The parties hereto agree that it would not be just and equitable if contribution pursuant to Section 6(d) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.

7. POSTPONEMENT OF REGISTRATION OBLIGATIONS.

(a) Notwithstanding the other provisions of this Agreement, Redhook shall be entitled to postpone for a reasonable period of time (but not exceeding three months) the filing of any registration statement otherwise required to be prepared and filed by it pursuant to Section 2, if Redhook determines, in its reasonable judgment, that such registration and offering would interfere with any financing, acquisition, corporate reorganization or other material transaction involving Redhook or would require premature disclosures thereof. Redhook shall promptly give ABI written notice of such determination, containing a general statement of the reasons for such postponement and a specification of the anticipated delay. Redhook shall not be entitled to exercise its rights under this Section 7(a) during any period in which it is undertaking a registration for any other holder of securities or for itself.

(b) If Redhook shall so postpone the filing of a registration statement under this Section, ABI shall have the right to withdraw the request for registration by giving written notice to Redhook within 20 days after receipt of the notice of postponement, and, in the event of such withdrawal, such request shall not be counted for purposes of the requests for registration to which ABI is entitled pursuant to Section 2 hereof.

8. SELECTION OF MANAGING UNDERWRITERS. The lead managing underwriter for any offering of Registrable Securities to be conducted pursuant to Section 2 shall be selected by ABI but shall either be a nationally recognized underwriter of securities or such other underwriter as shall be acceptable in the reasonable judgment of Redhook.

9. MISCELLANEOUS.

(a) NO INCONSISTENT AGREEMENTS. Redhook will not hereafter enter into any agreement with respect to its securities which is inconsistent with the rights granted to ABI in this Agreement. Redhook does not have in effect any agreement with respect to any of its securities granting any registration rights to any person. Any right granted by Redhook to any other Person to include securities held by that Person in a registration effected pursuant to Section 2 or the inclusion of securities to be issued or sold by Redhook in a registration effected pursuant to Section 2 shall apply or be permitted only to the extent that the lead managing underwriter of the offering advises ABI that, in its opinion, the distribution of the securities requested to be included in the registration concurrently with the Registrable Securities would not materially and adversely affect the distribution of such securities by ABI or the proceeds to be received by ABI as a result of the distribution of the Registrable Securities.

(b) REMEDIES. ABI, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Agreement. Redhook agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Agreement and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate. In any action or proceeding brought to enforce any provision of this Agreement or where any provision hereof is validly asserted as a defense, the successful party shall be entitled to recover reasonable attorneys' fees in addition to any other available remedy.

(c) AMENDMENTS AND WAIVERS. Except as otherwise provided herein, the provisions of this Agreement may not be amended, modified, supplemented or waived unless the same shall be in writing and signed by Redhook and ABI and shall specifically refer to this Agreement. The waiver by any party hereto of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any preceding or succeeding breach, and no failure by either party to exercise any right or privilege hereunder shall be deemed a waiver of such party's rights or privileges hereunder or shall be deemed a waiver of such party's rights to exercise the same at any subsequent time or times hereunder.

(d) NOTICE GENERALLY. Any notice, demand, request, consent, approval, declaration, delivery or other communication hereunder to be made pursuant to the provisions of this Agreement shall be sufficiently given or made if in writing and either delivered in person with receipt acknowledged or sent by registered or certified mail, return receipt requested, postage prepaid, or by telecopy and confirmed by telecopy answerback, addressed as follows:

(i) if to ABI, at

Anheuser-Busch, Incorporated One Busch Place St. Louis, Missouri 63118 Attention: Vice President-Business and Wholesaler System Development Telecopy Number: (314) 765-9167

with a copy to:

Anheuser-Busch Companies, Inc. One Busch Place St. Louis, Missouri 63118 Attention: Vice President and General Counsel Telecopy Number: (314) 577-0776

(ii) if to Redhook, at

Redhook Ale Brewery, Incorporated 14300 NE 145th Street Woodinville, Washington 98072 Attention: President Telecopy Number: (425) 485-0761

with a copy to:

Riddell Williams P.S.

1001 Fourth Avenue Plaza, Suite 4500
Seattle, WA 98154
Attention: Douglass A. Raff
Telecopy Number: (206) 389-1708

or at such other address as may be substituted by notice given as herein provided. The giving of any notice required hereunder may be waived in writing by the party entitled to receive such notice. Every notice, demand, request, consent, approval, declaration, delivery or other communication hereunder shall be deemed to have been duly given or served on the date on which personally delivered, with receipt acknowledged, telecopied and confirmed by telecopy answerback or three Business Days after the same shall have been deposited in the United States mail.

(e) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties hereto including any affiliate of ABI that ABI designates to hold or receive the Registrable Securities and any person to whom Registrable Securities are transferred by ABI, other than any Person that is not an Affiliate of ABI acquiring such Registrable Securities (i) in an offering registered under the Securities Act or (ii) pursuant to Section 4(1) of the Securities Act or Rule 144 or Rule 144A (or any similar provision then in force) promulgated under the Securities Act of 1933 if such Person is permitted to publicly resell publicly the Registrable Securities held by such Person so long as it is not an affiliate of Redhook without subsequent registration under the Securities Act or compliance with the requirements of Rule 144 thereunder. Any right or remedy, arising hereunder or by reason hereof, shall be assignable by ABI to any Affiliate without the prior written consent of Redhook, so long as ABI shall remain liable for ABI's obligations hereunder.

(f) HEADINGS. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

(g) GOVERNING LAW. This Agreement shall be governed by the laws of the State of Washington, without regard to the provisions thereof relating to conflict of laws.

(h) SEVERABILITY. Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.

(i) ENTIRE AGREEMENT. This Agreement, together with the Exchange Agreement, represents the complete agreement and understanding of the parties hereto in respect of the subject matter contained herein and therein. This Agreement supersedes all prior agreements and understandings between the parties with respect to the subject matter hereof.

(j) COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to be one and the same instrument.

(SIGNATURE PAGE FOLLOWS)

IN WITNESS WHEREOF, Redhook and ABI have executed this Agreement as of the date first above written.

REDHOOK ALE BREWERY, INCORPORATED

By:/s/ PAUL SHIPMAN
   -----------------------------------------
   Title: President and Chief Executive Officer

ANHEUSER-BUSCH, INCORPORATED

By: /s/ JAMES F. HOFFMEISTER
   --------------------------------------------
    Title:  Vice President - Administration

EXHIBIT 10.4

SUPPLY, DISTRIBUTION, AND LICENSING AGREEMENT

BY AND BETWEEN

CRAFT BRANDS ALLIANCE LLC

AND

REDHOOK ALE BREWERY, INCORPORATED

JULY 1, 2004

By:               CRAFT BRANDS ALLIANCE LLC, an Oregon limited liability company
                  ("Company")
                  929 N. Russell
                  Portland, Oregon  97227

and:              REDHOOK ALE BREWERY, INCORPORATED, a Washington
                  corporation ("Redhook")
                  14300 NE 145th
                  Woodinville, Washington 98072

Date:             July 1, 2004

This Supply, Distribution, and Licensing Agreement ("Agreement") is entered into by and between Redhook and Company effective as of the date first set forth above.

BACKGROUND

A. Widmer Brothers Brewing Company, an Oregon corporation ("Widmer") and Redhook are both manufacturers of craft malt beverages. Widmer and Redhook previously each had a distribution agreement with Anheuser-Busch Inc. ("ABI") pursuant to which ABI distributed the malt beverage products of Widmer (collectively, "Widmer Products") and of Redhook (collectively "Redhook Products").

B. Widmer Products and Redhook Products (collectively, "Products") have been distributed in the following common states pursuant to distribution agreements between ABI and each of Widmer and Redhook:
Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, New Mexico, Nevada, Oregon, Washington, and Wyoming. ABI, Widmer, and Redhook have determined that it would create certain efficiencies and synergies for Widmer and Redhook to consolidate certain marketing, advertising, sales, distribution, and related operations and to jointly distribute their respective products in the "Territory" (as defined in Section 2 below).

C. Widmer, Redhook, and Company have executed and delivered or are negotiating the following documents: a Restated Operating Agreement (the "Operating Agreement") of Company, and other documents described in the Operating Agreement (collectively, the "Related Agreements"). Pursuant to the Operating Agreement and certain of the Related Agreements, Widmer and Redhook will consolidate their advertising, marketing, sales, and distribution operations for the purpose of allowing Company to advertise, market, sell, and distribute Products in the Territory. One of the Related Agreements is a Supply, Distribution, and Licensing Agreement between Company and Widmer pursuant to which Company advertises, markets, sells, and distributes Widmer Products in the Territory (the "Widmer Distribution Agreement").

REDHOOK SUPPLY, DISTRIBUTION, AND
LICENSING AGREEMENT

D. Redhook and Company desire for Redhook to manufacture and sell Redhook Products to Company and for Company to market, advertise, sell, and distribute the Redhook Products in the Territory under the terms of the Distribution Agreement between ABI and Company (the "ABI Distribution Agreement").

E. Pursuant to a Licensing Agreement between Redhook and Widmer dated February 1, 2003 (the "Eastern Distribution Agreement"), Widmer licensed Redhook the right to manufacture, advertise, market, sell, and distribute Redhook Products and Widmer Products in the states of Maine, Vermont, New Hampshire, Massachusetts, Rhode Island, Connecticut, New York, Pennsylvania, Ohio, Maryland, New Jersey, Delaware, West Virginia, Virginia, North Carolina, South Carolina, Kentucky, Tennessee, Georgia, Alabama, Mississippi, Florida, Wisconsin, Michigan, Indiana, Illinois, and Washington D.C. The parties do not intend for the parties rights and obligations under the Eastern Distribution Agreement to be modified by the terms of this Agreement.

AGREEMENT

Based on the mutual promises set forth below and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Redhook and Company hereby agree as follows:

1. GRANT OF LICENSE.

1.1 GRANT.

1.1.1 Upon the terms and conditions hereinafter set forth, Redhook hereby grants to Company, and Company hereby accepts (a) a license to use the trademarks, logos, trade dress, copyrights, promotional slogans, color combinations, product shapes, and distinctive features in the Redhook Products, or other intellectual property related to the Redhook Products, including (without limitation) the intellectual property described on EXHIBIT A, attached hereto (collectively, the "Intellectual Property"), (b) a non-exclusive license to use the Intellectual Property in connection with the manufacturing, packaging, promotion, sale, and distribution of "Merchandise" in the Territory, and (c) the right to sublicense the Intellectual Property to others as necessary or convenient to permit Company to perform its obligations under this Agreement. The Intellectual Property shall include any derivative works related to any existing Intellectual Property and any Intellectual Property related to any new Redhook Products, including those Redhook Products added pursuant to Section 3 below.

1.1.2 Company shall not acquire any other right in any of the Intellectual Property other than as set forth in Section 1.1.1 above. Redhook shall have the right to require Company and any sublicensee of Company to submit representative samples of any use of such Intellectual Property to Redhook for approval, which approval shall be deemed given if Redhook does not provide Company with written notice of reasonable objection within 10 days of receipt of such samples. Any and all rights that may be acquired in the Intellectual Property by the use of the Intellectual Property by Company or any sublicensee of Company will inure to the sole benefit of Redhook. At the request of Redhook, Company will execute an instrument, in a form agreeable to Redhook, to effect further registration, maintenance, and renewal of the Intellectual Property, and, where applicable, to record Redhook as a registered user of the Intellectual Property. Company shall promptly notify Redhook of any and all infringements of the Intellectual Property pertaining to the Products that may come to Company's attention and shall assist Redhook in taking such action against said infringements as Redhook, in its sole discretion, may decide.

REDHOOK SUPPLY, DISTRIBUTION, AND
LICENSING AGREEMENT

1.1.3 "Merchandise" means all non-beverage products that (a) are currently manufactured or sold by Redhook, (b) are manufactured or sold by Redhook in connection with its beverage business in the future, and (c)are proposed by Company and not rejected by Redhook within 30 days following Company's submission to Redhook; provided that Redhook may reject such proposed Merchandise only if Redhook would be permitted to reject such usage pursuant to
Section 1.3 below.

1.2 EXCLUSIVITY.

1.2.1 Except as specifically set forth below, during the term of this Agreement, Redhook shall not directly or indirectly in the Territory (as expanded as provided herein) manufacture, advertise, market, sell, or distribute, whether for itself or for others, any Redhook Product or any other malt beverage or alcoholic beverage product, whether now existing or later developed (each, a "Restricted Product"). In the event of a default under this Section, Company shall be entitled (without limiting any of its other rights and remedies) to a temporary restraining order, preliminary injunction, and other injunctive relief, in addition to other available remedies, including damages.

1.2.2 If the Restricted Products are distributed by Company under this Agreement, the following shall apply:

(a) The restrictions set forth in Section 1.2.1 shall not apply to Restricted Products to the extent that (i) the Restricted Products are sold directly to consumers, including (without limitation) Restricted Products sold on or from the premises of a Redhook brew-pub restaurant (each, a "Redhook Brew-Pub") or (ii) on or from the premises of a Redhook facility at which Products are manufactured (each, a "Redhook Plant").

1.2.3 If the Restricted Products are not distributed by Company under this Agreement (each, a "Non-Distributed Product"), the restrictions set forth in Section 1.2.1 shall not apply to the extent that:

(a) (i) The Non-Distributed Products are (A) sold only for consumption in or from the premises of a Redhook Brew-Pub or a Redhook Plant or (B) sold or distributed in beer competitions, beer festivals, and similar types of temporary sales events and (ii) The quantity of such Non-Distributed Products does not exceed 70,000 Product Case Equivalents per calendar year in each of Redhook's Brew-Pubs and Redhook Plants;

(b) As used in this Agreement, the terms "Product Case Equivalents" or "PCEs" mean (i) the number of full cases of Products sold in bottles plus (ii) the number of barrels of Products purchased by Company, divided by 13.78.

1.2.4 The parties acknowledge that in the state of Washington, (a) Company will receive orders for Redhook Products from ABI Wholesalers, (b) Company will assign the orders to Redhook, and (c) the Redhook Products will be sold and distributed directly by Redhook to ABI Wholesalers located in Washington. The restrictions set forth in Section 1.2.1 do not apply to Redhook Products sold to distributors authorized to sell Redhook Products only in the state of Washington (each, a "Washington Distributor"). Redhook will deliver to Company each week (on the business day of the week requested by Company) a written report of each the types and quantities of Redhook Products sold to and ordered by the Washington Distributors as of the date of such report. As compensation for the marketing, advertising, and related services provided by Company with respect to sales made in Washington, Redhook shall pay within 10 days following the end of each calendar month a marketing fee calculated using the formula set forth on Schedule 1.2.4, attached hereto. At Company's election, Company may off-set such amount from any amount due Redhook under this Agreement.

REDHOOK SUPPLY, DISTRIBUTION, AND
LICENSING AGREEMENT

1.2.5 Redhook and Company acknowledge that Redhook will continue to operate its business outside the Territory and such operations may result in Redhook Products being incidentally advertised in the Territory. The parties agree that such operations do not violate Redhook's exclusivity obligations under this Agreement. Such permitted activities include maintaining a website advertising Redhook's Products (fulfilling its obligations under the Eastern Distribution Agreement) and buying radio and print advertisements that are not targeted in the Territory, but may be seen or heard in the Territory.

1.3 QUALITY CONTROL. The nature and quality of all of Company's uses of the Intellectual Property shall conform to reasonable standards set out by Redhook from time to time. Such standards shall be consistent with the nature and quality of the current Redhook Products. Without limiting the foregoing, Redhook may reject any new Intellectual Property proposed by Company only if such proposal would have a materially detrimental effect on the value of the marks or be wholly inconsistent with the current nature and quality of the existing Intellectual Property.

1.4 RIGHT TO PURCHASE MERCHANDISE. Redhook has an option to purchase any quantity of Merchandise (utilizing Redhook's Intellectual Property) manufactured by or for Company at a price equal to Company's direct out-of-pocket cost to manufacture the Merchandise, plus shipping costs.

2. TERRITORY.

2.1 INITIAL TERRITORY. The "Territory" means the geographic areas in which Company is authorized to take the actions set forth in Section 1.2 above. The initial Territory shall be the states of Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, New Mexico, Nevada, Oregon, Washington, and Wyoming.

2.2 EXPANSION OF TERRITORY. Upon notice to Redhook, Company may, from time to time at its election and without paying any amount to Redhook or Widmer, expand the Territory to include one or more of the following states: Arkansas, Iowa, Kansas, Louisiana, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma, South Dakota, and Texas. If Company elects to expand the Territory, Redhook and Company will promptly take all actions necessary to complete such inclusion.

REDHOOK SUPPLY, DISTRIBUTION, AND
LICENSING AGREEMENT

3. REDHOOK PRODUCTS.

3.1 INITIAL REDHOOK PRODUCTS. The initial Redhook Products that will be distributed by Company under this Agreement are set forth on SCHEDULE 3.1 attached hereto.

3.2 ADDITIONAL REDHOOK PRODUCTS.

3.2.1 Company may add additional Redhook Products if it determines that it is in the best interests of Company to add a new Redhook Product that is developed by Company or Redhook.

3.2.2 If Company elects to add a new Redhook Product, Company shall at its expense develop all Intellectual Property related to such Redhook Product. All such Intellectual Property shall be the property of Redhook pursuant to Section 7.2 of this Agreement and licensed to Company under the terms of this Agreement.

3.3 REMOVAL OF REDHOOK PRODUCTS. Company may, in accordance with a then current Budget and Business Plan (as defined under the Operating Agreement), elect to discontinue distributing one or more of the Redhook Products (each, a "Discontinued Redhook Product") upon notice to Redhook if (a) the total volume of the Discontinued Redhook Product in the immediately preceding calendar year is less than twenty percent (20%) of the total volume of all Redhook Products sold in the same calendar year, (b) the volume of Redhook Product sold in the immediately preceding calendar year is at least ten percent (10%) less than the sales for the calendar year two years preceding such calendar year; and (c) Company determines in good faith that it is in the best long-term interests of Company for a Discontinued Redhook Product to be discontinued. If the volume of any Discontinued Redhook Product sold in the immediately preceding calendar year is less than twenty percent (20%), but more than five percent (5%), of the total volume of all Redhook Products sold in the same calendar year (the "Discontinued Redhook Product Percentage"), then Redhook may submit the matter to arbitration as set forth below:

3.3.1 If Redhook disagrees with any decision by Company to discontinue a Redhook Product with a Discontinued Product Percentage of at least five percent (5%), Redhook shall notify Company within thirty (30) days of the date Company notifies Redhook of its decision to discontinue such Discontinued Redhook Product. If Redhook and Company do not resolve the matter within twenty
(20) days following the written notice by a party to the other party referencing this Section 3.3, the parties will submit the Dispute to binding arbitration pursuant to arbitration as provided below:

3.3.2 The arbitration shall be conducted before a single arbitrator located in Portland, Oregon using a "baseball arbitration" format in accordance with the rules of the Arbitration Service of Portland, Inc. and judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. The arbitrator shall be acceptable to both parties. If the parties do not agree within 20 days on an arbitrator, the arbitrator shall be selected by the Presiding Judge of the Circuit Court of Multnomah County, Oregon. The arbitrator must determine whether or not the Company is required to continue to advertise, market, sell, and distribute the subject Discontinued Redhook Product within 15 days following the date the arbitrator is selected. In making his or her determination, the arbitrator must select the choice which the arbitrator determines to be in the best long-term interests of Company. The arbitrator may not formulate his or her resolution for the Dispute.

REDHOOK SUPPLY, DISTRIBUTION, AND
LICENSING AGREEMENT

3.3.3 The party whose proposed resolution of the Dispute is not selected by the arbitrator shall be responsible for the payment of costs, fees, and expenses incurred in connection with such arbitration, including reasonable attorneys' fees and experts' fees of both of the parties in accordance with
Section 16.11 below.

3.4 NON-DISTRIBUTED REDHOOK PRODUCTS. If any Redhook Products are discontinued pursuant to Section 3.3 above, or are proposed to Company by Redhook and not accepted, pursuant to Section 3.2 above, for distribution by Company (collectively, the "Non-Distributed Redhook Products") Redhook may manufacture the Non-Distributed Redhook Products and may sell Non-Distributed Redhook Products in the Territory subject to the restrictions set forth in Sections 1.2 and 1.3 above. From time to time, Company may test any Non-Distributed Product to determine if it is equal to or greater in quality than the Redhook Products Company then distributes. If Company determines that a Non-Distributed Product is not of such quality, Redhook shall cease manufacturing and selling such Non-Distributed Product until Company reasonably determines that such quality standards have been met. Company has determined that the Redhook Products identified on SCHEDULE 3.4, attached hereto, currently meet such quality standards.

4. MANUFACTURING RIGHTS OF REDHOOK PRODUCTS AND WIDMER PRODUCTS.

4.1 EXISTING REDHOOK PRODUCTS.

4.1.1 Except as set forth herein, Redhook has the right to manufacture all existing Redhook Products.

4.1.2 At least thirty (30) days prior to the beginning of each calendar quarter, Company will provide Redhook with a three-month rolling forecast (each, a "Three-Month Forecast") of the quantity of each Redhook Product Company expects to purchase during such three-month period (each a "3-Month Forecasted Quantity"). Within ten (10) days following Redhook's receipt of each Three-Month Forecast, Redhook will notify Company (i) if it is unwilling or unable to manufacture at least 110% of the 3-Month Forecasted Quantity (the "Required Redhook Quantity") and (ii) the quantity of Redhook Products it is willing and able to manufacture (the "Promised Redhook Quantity") if such quantity is less than the Required Redhook Quantity. If Redhook does not so notify Company, it will be presumed that Redhook is willing and able to manufacture at least the Required Redhook Quantity. If Redhook notifies Company that it is unwilling or unable to manufacture the Required Redhook Quantity, Company may engage Widmer (pursuant to the Widmer Distribution Agreement) or if Widmer is unable or unwilling to manufacture the difference, may engage another contract brewer to manufacture the difference between the Required Redhook Quantity and the Promised Redhook Quantity.

4.2 EXISTING WIDMER PRODUCTS.

4.2.1 If, pursuant to the Widmer Distribution Agreement, Widmer notifies Company that it is unwilling or unable to manufacture all of the Required Widmer Quantity (as defined in the Widmer Distribution Agreement), Company shall notify Redhook of Company's desire to purchase the difference (the "Widmer Quantity Difference") between the Required Widmer Quantity and the Promised Redhook Quantity (as defined in the Widmer Distribution Agreement). For a period of five business days following the date Redhook receives such notice, Redhook shall have the option to accept the obligation to manufacture the Widmer Quantity Difference by notifying Company within such five business day period. If Redhook fails to exercise such option, Company may have any other contract brewer manufacture the Widmer Quantity Difference.

REDHOOK SUPPLY, DISTRIBUTION, AND
LICENSING AGREEMENT

4.2.2 Under the terms and conditions set forth in SCHEDULE 4.2.2, attached hereto, Redhook will have an option to manufacture Widmer Products, or Widmer will have an option to manufacture Redhook Products.

4.3 NEW REDHOOK PRODUCTS AND NEW WIDMER PRODUCTS. Redhook and Company acknowledge that (a) under the Widmer Distribution Agreement, new Widmer Brands may be added upon terms similar to those in Section 3.2 above, (b) the volume of Redhook Products and Widmer Products derived from such new brands (each, a "New Brand") that will be distributed and sold by Company is speculative, and (c) the parties under this Agreement and the Widmer Distribution Agreement intend for the number of New Brands to be apportioned equitably between Redhook and Widmer. Redhook and Company agree that with respect to the New Brands to which Section 4.4 does not apply, (x) the first New Brand will be offered to the brewer (Redhook or Widmer) that sold the lower quantity of Products in the immediately preceding calendar year, and (y) each additional New Brand will thereafter be apportioned alternatively to each brewer. If a New Brand is apportioned to Redhook, (i) Redhook shall have the obligation to manufacture all Products ordered by Company as provided under this Agreement, (ii) Redhook shall have the right during this Agreement to manufacture the Products even though the New Brand may be a Widmer brand, and (iii) all Products using such New Brand will be subject to the terms under this Agreement as if it were an original Brand. Within ten (10) days following written notice to Redhook of the assignment of a New Brand, Redhook may elect not to accept such New Brand by notifying Company within such ten (10) day period. If Redhook elects not to accept such New Brand, Company may assign the New Brand to Widmer.

4.4 REINTRODUCED DISCONTINUED PRODUCTS. Redhook will have the first opportunity to manufacture a New Brand that Company elects to introduce if (a) such New Brand is in the same "Beer Style" as a Discontinued Redhook Brand that Company discontinued, pursuant to Section 3.3 of this Agreement, in the immediately preceding 12-month period and (b) such New Brand is not in the same Beer Style as a Discontinued Widmer Brand (as defined in the Widmer Distribution Agreement) that Company discontinued, pursuant to Section 3.3 of the Widmer Distribution Agreement, in the immediately preceding 12-month period. As used in this Section, a "Beer Style" is one of the following: porter, amber, pale ale, blonde, fruit beer, hefeweizen, lager, and stout, as those terms are commonly used in the beer industry. In order to exercise its option, Redhook must notify Company within ten (10) days following written notice from Company of its intent to have such New Brand manufactured.

4.5 AGREEMENT WITH THIRD PARTY CONTRACT BREWERS. If pursuant to Section 4.1.2 or Section 4.2.1 above (or pursuant to the parallel provisions in the Widmer Distribution Agreement) Company engages a third party contract brewer (each a "Contract Brewer") to manufacture any Product, Company may enter into a contract brewing agreement (each, a "Brewing Contract") with a Contract Brewer on terms and conditions Company deems reasonable, which may include (without limitation) the following: (a) the term during which Company will be obligated to purchase Products from the Contract Brewer and (b) the minimum quantity of Products that Company will be obligated to purchase from the Contract Brewer. Redhook agrees that Company shall have no liability to Redhook for failure to purchase any Products from Redhook in order to comply with its obligations under the Brewing Contract.

REDHOOK SUPPLY, DISTRIBUTION, AND
LICENSING AGREEMENT

4.6 PACKAGING CHANGES. Company may, from time to time and in accordance with the restrictions set forth in Section 1.3 above, require changes to the Intellectual Property or packaging for existing Redhook Products and require new Intellectual Property or packaging for new Redhook Products upon 180 days' prior written notice to Redhook. The direct out-of-pocket costs for all such changes or new Intellectual Property will be paid by Company. If Company requires any changes to the Intellectual Property or packaging that requires capital expenditures by Redhook, Company shall reimburse Redhook for such expenditures; provided that Company may not require any changes to the packaging or the Intellectual Property that requires capital improvements exceeding $100,000.00. If Company requires any changes to the packaging or the Intellectual Property that increases Redhook's variable cost to manufacture and package the Products, the price for such Products shall be increased by such estimated additional incremental cost if (a) within thirty (30) days following the date Company requests such change Redhook notifies Company of the increased incremental cost, providing reasonable supporting documentation, and (b) Company thereafter elects for Redhook to manufacture such Products. Company may, upon notice to Redhook, audit Redhook's books and records to the extent necessary to confirm such increased variable costs.

5. ABI DISTRIBUTION AGREEMENT.

5.1 The parties acknowledge that Company is distributing the Products through ABI pursuant to the ABI Distribution Agreement, subject to the restrictions, limitations, and conditions set forth therein.

5.2 Company shall notify Redhook of any notice of default Company receives from ABI with respect to the ABI Distribution Agreement and shall comply with the terms and condition of the ABI Distribution Agreement.

5.3 Redhook has reviewed the ABI Distribution Agreement and, to the extent relating to Redhook and its Products, (a) confirms each representation and warranty that Company has made under the ABI Distribution Agreement and (b) covenants to perform or cooperate with Company in performing all of Company's obligations under the ABI Distribution Agreement.

5.4 Neither party shall take any action under this Agreement that would be a violation or cause Company to be in violation of the ABI Distributor Agreement.

6. ORDERS; PURCHASE PRICE; PAYMENT.

6.1 OBLIGATION TO MANUFACTURE. Subject to Section 4.1.2 above, Redhook shall manufacture the Redhook Products in the packages ordered by Company and shall cause the Redhook Products to be bottled, labeled, packaged, and delivered by the delivery dates set forth in the order. Company may not require delivery less than thirty (30) days following the date of the Order.

REDHOOK SUPPLY, DISTRIBUTION, AND
LICENSING AGREEMENT

6.2 REDHOOK PRODUCT SPECIFICATIONS.

(a) Each of the Redhook Products manufactured by Redhook will conform to the specifications, recipes, and quality control requirements attached as SCHEDULE 6.2.

(b) For each new Redhook Product, the Redhook Products delivered will conform to the specifications, recipe, and quality control requirements as reasonably determined by the Company.

(c) Product specifications of Redhook Products may be changed only upon mutual agreement of Redhook and Company.

(d) In addition to the foregoing, the Redhook Products shall comply with the Product requirements as set forth in the ABI Distribution Agreement, as modified from time to time, and shall not (in Company's reasonable determination) be adulterated, contaminated, or otherwise of a quality that is below the average quality previously supplied by Widmer, which may include, without limitation, (i) apparent defects in taste or appearance in excess of typical age-related changes; (ii) microbiological contamination or other contamination such as carryover of cleaning chemicals or foreign object inclusions; and (iii) defective primary or secondary packaging.

6.3 PRICES. The initial purchase prices for the Redhook Products are set forth on SCHEDULE 6.3, attached hereto. Thereafter, the purchase prices for Redhook Products shall be adjusted effective each January 1, to be an amount equal to:

(a) For draught Redhook Products, the purchase price per barrel will be equal to (i) the Average Draught Net Sales Price multiplied times *, plus
(ii) any applicable Excise Taxes. "Average Draught Net Sales Price" means the product of (x) the gross amount received by Company during the immediately preceding fiscal year of October 1 through September 30 (the "Fiscal Year") for sales of all draught Redhook Products and draught Widmer Products, less any discounting, depletion allowance, promotion, or post-off pricing, divided by (y) the total number of barrels of draught Redhook Products and draught Widmer Products sold by Company during such Fiscal Year. "Excise Taxes" means all federal, state, and local excise taxes.

(b) For bottled Redhook Products, the purchase price per PCE will be equal to (i) the Average Bottle Net Sales Price multiplied times *, plus (ii) any applicable Excise Taxes. "Average Bottle Net Sales Price" means the product of (x) the gross amount received by Company during the immediately preceding Fiscal Year for sales of all bottled Redhook Products and bottled Widmer Products, less any discounting, depletion allowance, promotion, or post-off pricing, divided by (y) the total number of PCEs of bottled Redhook Products and bottled Widmer Products sold by Company during such Fiscal Year.

* CONFIDENTIAL TREATMENT REQUESTED

REDHOOK SUPPLY, DISTRIBUTION, AND
LICENSING AGREEMENT

6.4 PACIFIC RIDGE. Notwithstanding the provisions in Section 6.3 above, the purchase price for the Pacific Ridge brand Redhook Products shall be equal to the following: (a) the gross amount received (including any freight costs incurred by Company) by Company for sales of all Pacific Ridge brand Redhook Product, minus (b) any discounting, depletion allowance, promotion, or post-off pricing.

7. RIGHTS IN INTELLECTUAL PROPERTY.

7.1 INTELLECTUAL PROPERTY. Company acknowledges that its use of the Intellectual Property shall not create any right, title, or interest in or to the Intellectual Property in Company. Company may, however, sublicense others the right to use the Intellectual Property for the purpose of fulfilling Company's obligations under this Agreement. Company shall not apply at any time anywhere in the world for any trademark or other intellectual property protection in its name for any of the Intellectual Property.

7.2 IMPROVEMENTS; OWNERSHIP. Improvements and modifications to the Intellectual Property created by either party during the term of this Agreement shall, from the time of conception or development, be the property of Redhook. Company hereby assigns, and agrees to take all actions necessary as reasonably requested by Redhook to assign all such improvements and modifications.

7.3 REPRESENTATIONS AND WARRANTIES. Redhook represents and warrants that
(a) it has the right to license the Intellectual Property to Company as provided under this Agreement; (b) the license of the Intellectual Property and distribution rights under this Agreement do not conflict with any agreement, judgment, or other obligation of Redhook; and (c) Company's use of the Intellectual Property hereunder will not violate the rights of any third person.

8. INFRINGEMENT.

8.1 CLAIMS AGAINST THIRD PARTIES. Company shall notify Redhook promptly in writing of any infringement or unauthorized use of the Intellectual Property by third parties that may come to its attention in writing. Redhook shall promptly and diligently act, or cooperate with Company who may act, to enjoin and prevent in the Territory infringement or threatened infringement by others of the Intellectual Property, and shall take, or cooperate with Company who may take, such legal action as may be required to protect such rights. Costs, expenses and recoveries of prosecuting infringement actions shall be handled as follows:

8.1.1 If Redhook at its own expense files and is successful in infringement litigation or settlement, then Redhook shall be entitled exclusively to any amounts recovered.

8.1.2 If Company at its own expense files and is successful in infringement litigation or settlement, then Company shall be entitled exclusively to any amounts recovered, and shall be entitled to a credit against any amounts owing Redhook under this Agreement for all costs and expenses of litigation in excess of the award for or other recovery of such costs and expenses.

8.1.3 If Company and Redhook jointly pursue and are successful in infringement litigation or settlement, amounts recovered shall be first applied to Company's costs and expenses, then to Redhook's costs and expenses, and then shared in direct proportion to the financial investment (costs and expenses) made in such litigation or settlement.

REDHOOK SUPPLY, DISTRIBUTION, AND
LICENSING AGREEMENT

8.2 CLAIMS AGAINST REDHOOK. Company shall notify Redhook promptly in writing of any and all allegations or claims by others which may come to its attention in writing that the use of the Intellectual Property infringes or violates a trademark of any third party. In such event, Redhook shall procure for Company the right to continue to use the matter which is the subject of the claim, or to modify the same so that it becomes non-infringing. Redhook shall undertake and conduct the defense of any suit, action, or proceeding arising out of the use by Company of the Intellectual Property hereunder. Company shall cooperate in such defense provided Redhook shall pay any out-of-pocket expenses incurred by Company in connection therewith. No settlement of any such claim or suit shall be made without the prior written consent of Redhook.

9. COMPLIANCE WITH LAW. Both Redhook and Company shall comply with all applicable rules and regulations of the TTB (Alcohol and Tobacco Tax and Trade Bureau of the Department of the Treasury), and any other regulatory agency that has jurisdiction over the Redhook Products. The parties shall cooperate with each other to provide and retain any regulatory, taxation, or other reports or information required by TTB, or any other regulatory agency.

10. CONFIDENTIALITY.

10.1 ACCESS TO INFORMATION. Each party ("Recipient") acknowledges that during the term of this Agreement it may have access to nonpublic information about the existing or proposed business or products ("Confidential Information") of the other party (the "Disclosing Party") . Confidential Information includes, without limitation, (i) information marked or otherwise designated by the Disclosing Party as confidential or proprietary, (ii) information that by the nature of the circumstances surrounding the disclosure would reasonably be treated as confidential information by a prudent brewer, and (iii) information provided to the Disclosing Party by third parties that it is obligated to keep confidential. Confidential Information may be written, oral, embodied in products (including the Redhook Product), or in other forms. Confidential Information does not include information that is or becomes publicly known, other than as a result of Recipient's actions or failure to prevent disclosure. The fact that portions of Confidential Information may be publicly available shall not affect Recipient's obligations with respect to the remaining portion or with respect to the particular formulation or compilation disclosed by the Disclosing Party.

10.2 NON-DISCLOSURE AND NON-USE. Recipient shall not disclose to others or use any Confidential Information of the Disclosing Party, except as required to perform its obligations under this Agreement. Recipient may, however, disclose Confidential Information to its employees and agents who need to know the information in connection with this Agreement, who are made aware of its confidential nature, and who are obligated to comply with the restrictions imposed by this Section 10. A default by a Recipient's employee or independent contractor of the provisions set forth under this Agreement shall be a default of the Recipient.

REDHOOK SUPPLY, DISTRIBUTION, AND
LICENSING AGREEMENT

10.3 RETURN. Except as set forth below, upon the expiration or termination of this Agreement, Recipient shall promptly destroy or return to the Disclosing Party, as the Disclosing Party may direct, all tangible materials provided to it by the Disclosing Party that embody Confidential Information (other than Redhook Products) and shall erase or delete all such Confidential Information embodied in any magnetic, optical, or similar medium or stored or maintained on any information storage and/or retrieval device. Recipient may retain one copy of Confidential Information for archival and regulatory purposes.

10.4 REMEDIES. In the event of a default under this Section, the Disclosing Party shall be entitled to a temporary restraining order, preliminary injunction, and other injunctive relief, in addition to other available remedies, including damages.

10.5 DURATION. The obligations set forth in this Section shall continue in effect beyond the term of this Agreement and for so long as Recipient possesses Confidential Information.

11. INDEMNIFICATION.

11.1 OBLIGATION. Each party (the "Indemnitor") shall indemnify and hold harmless the other party, its affiliates, its successors, and assigns, and each of their respective directors, officers, employees, and agents, from and against all claims, liabilities, losses, damages, injuries, demands, actions, causes of action, suits, proceedings, judgments, and expenses, including, without limitation, reasonable attorneys' fees, court costs, and other legal expenses (collectively, "Costs") to the extent arising from, connected with or attributable to any claim arising out of the negligence, willful misconduct, or breach of this Agreement by the Indemnitor. Without limiting the foregoing, Redhook shall indemnify, defend, and hold harmless Company and ABI and each of their respective affiliates, successors, and assigns, and each of their respective directors, officers, employees, and agents from and against all Costs arising out of or related to any product liability claims except to the extent such Costs resulted from any negligence or willful misconduct of Company.

11.2 INDEMNIFICATION PROCEDURE. With respect to claims made by third parties, if any party that is entitled to indemnification hereunder (each, an "Indemnitee") is threatened with any claim, or any claim is presented to or any action or proceeding commenced against the Indemnitee, which may give rise to the right of indemnification hereunder, the Indemnitee will give prompt written notice thereof to the Indemnitor. The Indemnitor, by delivery of written notice to the Indemnitee within twenty (20) days of receipt of notice of a claim for indemnification from the Indemnitee, may elect to assume the defense of any such third party claim at the Indemnitor's expense. If the Indemnitor assumes the defense, it shall have the right to settle an indemnifiable matter without the consent of the Indemnitee unless the settlement would have a material adverse effect on the Indemnitee. If the Indemnitor does not timely elect to defend an indemnifiable matter, the Indemnitee shall have the exclusive right to prosecute, defend, compromise, settle, or pay any claim, without prejudice to the right of the Indemnitee to recover any and all losses and reasonable expenses (including attorneys fees and costs) incurred from the Indemnitor. The Indemnitee shall permit the Indemnitor reasonable access to the books and records of the Indemnitee and shall otherwise cooperate with the Indemnitor in connection with any matter or claim of indemnification.

REDHOOK SUPPLY, DISTRIBUTION, AND
LICENSING AGREEMENT

11.3 INTENDED THIRD PARTY BENEFICIARY. ABI is an intended third party beneficiary under this Section 11.

12. INSURANCE. Each party shall keep in force at all times while any Redhook Product is being offered for sale, general liability insurance with both "products" and "contractual" coverage for aggregated claim in the minimum amount of $3,000,000, and to furnish the other a certificate from a financially responsible insurance company evidencing that such insurance is in force, naming the other party as an additional insured, and providing that such coverage may not be cancelled or materially changed without thirty (30) days prior written notice to the other party. Any such policy of insurance shall contain a waiver of subrogation.

13. WARRANTIES.

13.1 WARRANTY OF AUTHORITY. Each of the parties hereto warrants and represents to the other party that (a) it has the full right, power and authority to enter into this Agreement and to carry out its obligations hereunder and (b) that it has no obligations to any other party that are inconsistent with its obligations under this Agreement.

13.2 LIMITATION OF LIABILITY. EXCEPT FOR CONSEQUENTIAL DAMAGES CAUSED BY A BREACH OF THE CONFIDENTIALITY AGREEMENTS IN SECTION 10 ABOVE, IN NO EVENT SHALL ANY PARTY BE LIABLE FOR SPECIAL, INCIDENTAL, OR CONSEQUENTIAL DAMAGES OR LOST REVENUES OR PROFITS.

14. TERMINATION.

14.1 TERM. The term of this Agreement shall commence on the date first set forth above and continue until terminated as set forth herein.

14.2 TERMINATION BY EITHER PARTY. Either party may terminate this Agreement upon written notice given to the other party following the occurrence of any of the following events:

14.2.1 The other party fails to timely make any payment required under this Agreement for a period of 60 days following written notice thereof by the nonbreaching party.

14.2.2 The other party fails to perform any other material obligation under this Agreement and such failure remains uncured for a period of 60 days following written notice thereof by the nonbreaching party.

14.2.3 The other party becomes the subject of insolvency or bankruptcy proceedings, ceases doing business, makes an assignment of assets for the benefit of creditors, dissolves, or has a trustee appointed for all or a substantial portion of such party's assets.

14.2.4 Any government authority makes a final decision invalidating a substantial portion of this Agreement.

14.2.5 Either party finds that complying with any law or regulation relating to fulfilling its obligations under this Agreement would be commercially unreasonable and failure to comply with the law or regulation would subject such party or any of its personnel to a monetary or criminal penalty.

REDHOOK SUPPLY, DISTRIBUTION, AND
LICENSING AGREEMENT

14.2.6 The ABI Distribution Agreement terminates for any reason.

14.2.7 The Operating Agreement terminates for any reason.

14.3 TERMINATION BY COMPANY.

14.3.1 Company may upon notice to Redhook terminate this Agreement if Redhook causes Company to be in default in its obligations under the ABI Distribution Agreement and Redhook either (a) fails to take all actions necessary to cause Company to cure such default in accordance with the ABI Distribution Agreement or (b) fails to pay on demand all direct or indirect Costs (as defined in Section 11.1) arising out of or related to such default.

14.3.2 Company may upon notice to Redhook (a) terminate this Agreement if (i) an event of default occurs under Section 7 of the Agreement giving ABI the right to terminate the ABI Distribution Agreement (each, a "Default Event"), (ii) Redhook caused such Default Event, and (iii) Company elects to cure such Default Event or attempt to rectify the damage to the reputation or image of ABI or the brewing industry caused by such Default Event by terminating this Agreement and (b) cease advertising, marketing, or distributing one or more Redhook Product brands (including Pacific Ridge brands) if ABI notifies Company that it will no longer distribute such Redhook Product brand or brands under the ABI Distribution Agreement.

14.4 SURVIVAL OF RIGHTS AND OBLIGATIONS. Termination of this Agreement shall not prejudice any rights of either party hereto against the other which may have accrued up to the date of termination. In addition, all covenants respecting indemnification, governing law, attorneys fees, arbitration, confidentiality, warranties, termination, and continuing liability for amounts payable hereunder shall survive the termination of this Agreement as expressly set forth elsewhere herein.

14.5 TERMINATION OF OTHER AGREEMENTS. Upon expiration or any termination, (a) all rights granted to Company with respect to the Intellectual Property, as appropriate, shall revert to Redhook; thereafter, (b) Company shall
(i) refrain from all further use of the Intellectual Property, and (ii) Company shall (at Redhook's direction) either destroy or return to Redhook all copies of labels, packaging, or other materials on which a Trademark may be affixed, except for Redhook Products which may be disposed of in any commercially reasonable manner and (c) unless it would violate the terms of the ABI Distribution Agreement, Redhook may purchase the remaining inventory of Redhook Products at a price agreed upon by the parties; provided however that if Redhook and Company do not agree on a price within ten (10) days following such expiration or termination, Company may sell the Redhook Products to any third-party at a net price that is equal to or greater than the price last offered by Redhook.

15. NOTICES. Any notice, request or demand to be given or made under this Agreement shall be in writing and shall be deemed to have been duly given or made (i) upon delivery, if delivered by hand and addressed to the party for whom intended at the address listed below, (ii) ten (10) days after deposit in the mails, if sent certified or registered air mail (if available) with return receipt requested, or five (5) days after deposit if deposited for delivery with a reputable courier service, and in each case addressed to the party for whom intended at the address listed below or (iii) upon completion of transmission, if sent by facsimile transmission to the party for whom intended at the fax number listed below, provided that a copy of the facsimile transmission is promptly deposited for delivery by one of the methods listed in (i) or (ii) above:

If to Redhook, to:                 Redhook Ale Brewery, Incorporated
                                   14300 NE 145th Street, Suite 210
                                   Woodinville, Washington 98072
                                   Attn:  President
                                   Fax:  (425) 485-0761

If to Company, to:                 Craft Brands Alliance LLC
                                   929 N. Russell
                                   Portland, Oregon  97227
                                   Attn:  President
                                   Fax:  (503) 281-1496

Any party may change its address and/or fax number for the purposes of this
Section 15 by written notice hereunder given to the other parties at least ten
(10) days prior to the effective date of such change. Copies of all notices of default or any notice under Section 14 under this Agreement shall be sent to:

Widmer Brothers Brewing Company
929 N. Russell
Portland, Oregon 97229
Attn: President
Fax: (503) 281-1496

16. MISCELLANEOUS.

16.1 RELATIONSHIP. This Agreement does not make either party the employee, agent, or legal representative of the other party for any purpose whatsoever. Neither party is granted any right or authority to assume or to create any obligation or responsibility, express or implied, on behalf of or in the name of the other party. In fulfilling its obligations pursuant to this Agreement each party shall be acting as an independent contractor.

16.2 ASSIGNMENT. Except as set forth herein, neither party shall have the right to assign, sublicense, subcontract, or otherwise transfer its rights and obligations under this Agreement except with the prior written consent of the other party. Redhook does consent to Company's distributing the Redhook Product through ABI distributors within the Territory. The parties acknowledge that the Redhook Product shall be distributed pursuant to the Master Distribution Agreement between Company and ABI. Each of Company and Redhook agree that the terms and conditions of the ABI Distribution Agreement (as amended, replaced, or modified from time to time), including the rights and obligations of ABI, shall apply to the Redhook Products as if they were products of Company. Any prohibited assignment shall be null and void. The parties acknowledge and agree that Redhook may elect to assign all of its assets related to the Redhook Brew-Pubs to an Affiliate. In this event, the provisions relating to the Redhook Brew-Pub will apply with respect the Affiliate's restaurants. For the purposes of this section, an "Affiliate" is a company controlled by, in common control of, or under common ownership with Redhook. Upon an assignment to an Affiliate, a copy of the assignment agreement will be delivered to Company.

REDHOOK SUPPLY, DISTRIBUTION, AND
LICENSING AGREEMENT

16.3 ENTIRE AGREEMENT. THIS AGREEMENT, INCLUDING ALL ATTACHMENTS HERETO,

CONSTITUTES THE ENTIRE AGREEMENT OF THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF, AND SUPERSEDES ALL PREVIOUS AGREEMENTS BY AND BETWEEN THE PARTIES AS WELL AS ALL PROPOSALS, ORAL OR WRITTEN, AND ALL NEGOTIATIONS, CONVERSATIONS, OR DISCUSSIONS HERETOFORE HAD BETWEEN THE PARTIES RELATED TO THIS AGREEMENT.

16.4 AMENDMENT. This Agreement shall not be deemed or construed to be modified, amended, rescinded, canceled, or waived, in whole or in part, except by written amendment signed by the parties hereto.

16.5 SEVERABILITY. In the event that any of the terms of this Agreement are in conflict with any rule of law or statutory provision or are otherwise unenforceable under the laws or regulations of any government or subdivision thereof, such terms shall be deemed stricken from this Agreement, but such invalidity or unenforceability shall not invalidate any of the other terms of this Agreement and this Agreement shall continue in force, unless the invalidity or unenforceability of any such provisions hereof does substantial harm to, or where the invalid or unenforceable provisions comprise an integral part of, or are otherwise inseparable from, the remainder of this Agreement.

16.6 CONSENT. Unless otherwise expressly stated in this Agreement, if any action is conditioned upon the consent of either party (a) such consent may not be unreasonably withheld, delayed, or conditioned and (b) consent shall be deemed granted unless the consenting party notifies the other party in writing of the reasons why such consent is not granted within 15 days following receipt of the written request for consent.

16.7 COUNTERPARTS. This Agreement may be executed in two or more counterparts, and each such counterpart shall be deemed an original hereof.

16.8 HEADINGS. Headings and subheadings in this Agreement are not intended to and do not have any substantive content whatsoever.

16.9 MUTUAL NEGOTIATION IN DRAFTING. The parties acknowledge each party and its counsel have materially participated in the drafting of this Agreement. Consequently, the rule of contract interpretation, that ambiguities, if any, in a writing be construed against the drafter, shall not apply.

16.10 WAIVER. No failure by either party to take any action or assert any right hereunder shall be deemed to be a waiver of such right in the event of the continuation or repetition of the circumstances giving rise to such right.

16.11 ATTORNEY FEES. In the event of a default under this Agreement, the defaulting party shall reimburse the non-defaulting party for all costs and expenses reasonably incurred by the non-defaulting party in connection with the default, including, without limitation, attorney fees and costs (however incurred, including at trial, on appeal, and on any petition for review). An event of "default" is a breach by either party of this Agreement that is not cured within an applicable cure period. Additionally, in the event any suit, action, or arbitration is brought to enforce or interpret any of the terms of this Agreement, the prevailing party shall be entitled to recover from the other party all reasonable attorney fees and costs (however incurred, including at trial, on appeal, and on any petition for review), together with such other expenses, costs, and disbursements as may be allowed by law.

REDHOOK SUPPLY, DISTRIBUTION, AND
LICENSING AGREEMENT

16.12 FORCE MAJEURE. Neither party shall be liable for any delay or default in performing its obligations if such default or delay is caused by any event beyond the reasonable control of such party, including, but not limited to, acts of nature, terrorism, war, or insurrection, civil commotion, destruction of production facilities or materials by earthquake, fire, storm, or flood, labor disturbances or strikes, epidemic, materials shortages, equipment malfunction, failure of ABI distributors, or other similar event. The party suffering such cause shall immediately notify the other party of the cause and the expected duration of such cause. If either party's performance is delayed by more than 90 days pursuant to this Section, the other party may immediately terminate this Agreement by written notice given before the affected party resumes performance.

16.13 GOVERNING LAW; ARBITRATION. This Agreement shall be governed by the laws of the State of Oregon, without regards to the principles of conflicts of laws thereof. Any controversy or claim arising out of or relating to this Agreement, or the breach thereof, shall be settled by arbitration in Portland, Oregon in accordance with the rules of the Arbitration Service of Portland, Inc. and judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof.

16.14 COMMENCEMENT OF AGREEMENT. Neither party shall have any rights or obligations under this Agreement and none of its provisions shall be operative unless and until all of the following have occurred:

16.14.1 The Operating Agreement, this Agreement, the other Related Agreements, and the transactions described therein have been approved by the respective boards of directors of Redhook and Widmer;

16.14.2 The Operating Agreement and each of the other Related Agreements are finalized, executed, and delivered by each party thereto; and

16.14.3 Company obtains all of the regulatory licenses and approvals necessary to sell Products in the Initial Territory.

REDHOOK SUPPLY, DISTRIBUTION, AND
LICENSING AGREEMENT

The parties have executed this Agreement as of the date first set forth above.

CRAFT BRANDS ALLIANCE LLC                     REDHOOK ALE BREWERY, INCORPORATED



By:/s/ TERRY MICHAELSON                       By: /s/ DAVID MICKELSON
------------------------------                ---------------------------------
Name:  TERRY MICHAELSON                       Name:   DAVID MICKELSON
------------------------------                ---------------------------------
Title:    PRESIDENT                           Title: EXECUTIVE VICE PRESIDENT,
                                                     CHIEF FINANCIAL OFFICER,
                                                     CHIEF OPERATING OFFICER

                                                                                           CHRISTENSEN O'CONNOR JOHNSON KINDNESSPLLC
                                                                                                       1420 Fifth Avenue, Suite 2800
                                                                                                      Seattle, Washington 98101-2347
                                                                                                           Telephone: (206) 682-8100
                                                                                                                 Fax: (206) 224-0779

REDHOOK ALE BREWERY, INCORPORATED                                                                                  ACTIVE TRADEMARKS
JUNE 9, 2004                                                                                                         REGISTERED ONLY

Client Ref./                             Country/
COJK Ref./              Mark/             Int'l     Appl. No./    Reg. No./
Status            Atty  Owner             Class     Date Filed    Reg. Date     Goods and Services   Action               Date
------------------------------------------------------------------------------------------------------------------------------------
IABR-2-0008119    JRU   BALLARD BITTER    Canada      687,267       426,849     Ale and beer.        Renewal Begin        11/06/2008
Registered        JRU                                08/08/91      05/06/94                          Renewal End          05/06/2009
------------------------------------------------------------------------------------------------------------------------------------
IABR-2-0012695    JRU   BALLARD BITTER    Mexico       218818        484957     Ale and beer.        Renewal End          11/30/2004
Registered        JRU                      IC32      11/30/94      03/13/95                          Renewal Begin        05/30/2014
------------------------------------------------------------------------------------------------------------------------------------
IABR-2-0013093    JRU   BALLARD BITTER    USA NH       H TM     VOL. 90, PG     Ale.                 Renewal Begin        08/15/2004
Registered        JRU                      IC48                      26                              Renewal End          02/15/2005
                                                                   02/15/95
------------------------------------------------------------------------------------------------------------------------------------
IABR-2-0001668    JRU   BLACK HOOK         USA        443,637     1,299,809     Ale - namely,        Renewal End          10/09/2004
Registered        JRU                      IC32      09/14/83      10/09/84     porter.              Renewal Begin        10/09/2013
------------------------------------------------------------------------------------------------------------------------------------
IABR-2-0012697    JRU   BLACK HOOK        Mexico       218820        484959     Ale and beer.        Renewal End          11/30/2004
Registered        JRU                      IC32      11/30/94      03/13/95                          Renewal Begin        05/30/2014
------------------------------------------------------------------------------------------------------------------------------------
IABR-2-0013095    JRU   BLACK HOOK        USA NH       H TM      VOL. 90 PG.    Ale.                 Renewal Begin        08/15/2004
Registered        JRU                      IC48                      24                              Renewal End          02/15/2005
                                                                   02/15/95
------------------------------------------------------------------------------------------------------------------------------------
IABR-2-0001667    JRU   BLACK HOOK         USA        443,629     1,296,703     Ale, namely,         Renewal End          09/18/2004
Registered        JRU   PORTER & Design    IC32      09/14/83      09/18/84     porter.              Renewal Begin        09/18/2013
------------------------------------------------------------------------------------------------------------------------------------
IABR-2-0003118    JRU   Design (Ballard    USA        575,704     1,409,762     Ale.                 Renewal Begin        09/16/2005
Registered        JRU    Bitter)           IC32      12/30/85      09/16/86                          Renewal End          09/16/2006
------------------------------------------------------------------------------------------------------------------------------------
IABR-2-0004446    JRU   Design             USA        685,638     1,493,423     Ale.                 Renewal Begin        06/21/2007
Registered        JRU    (Winterhook)      IC32      09/18/87      06/21/88                          Renewal End          06/21/2008
------------------------------------------------------------------------------------------------------------------------------------
IABR-2-0016525    JRU   ESB               Japan   1997-103375       4370896     Ale; other beer.     Renewal Begin        09/30/2009
Registered        JRU                      IC32      04/03/97      03/31/00                          Renewal End          03/31/2010
------------------------------------------------------------------------------------------------------------------------------------
IABR-2-0012699    JRU   FORECASTERS        USA     74/590,218     1,929,789     Restaurant and bar   Renewal Begin        10/24/2004
Registered        JRU                      IC42      10/24/94      10/24/95     services.            Renewal End          10/24/2005
------------------------------------------------------------------------------------------------------------------------------------
IABR-2-0018651    JRU   INDIA PALE ALE     USA     75/479,479     2,262,841     Ale.                 Section 8, 15        07/20/2004
Registered        JRU   RED HOOK "YA       IC32      05/05/98      07/20/99                          Declaration Begin
                        SURE YA BETCHA"
                        ETC. and Design                                                              6 Month Section 8,   01/20/2005
                                                                                                     15 Declaration

                                                                                                     Section 8, 15        07/20/2005
                                                                                                     Declaration End

                                                                                                     Renewal Begin        07/20/2008

                                                                                                     Renewal End          07/20/2009
------------------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------------------
IABR-2-0025094    JRU   RED HOOK        Australia      852882        852882     Beer and ale.        Renewal Begin        04/09/2010
Registered        JRU                      IC32      10/09/00      08/03/01                          Renewal End          10/09/2010
------------------------------------------------------------------------------------------------------------------------------------
IABR-2-0008113    JRU   RED HOOK          Canada      687,394       418,500     Ale and beer.        Renewal Begin        04/22/2008
Registered        JRU                                08/08/91      10/22/93                          Renewal End          10/22/2008
------------------------------------------------------------------------------------------------------------------------------------
IABR-2-0008114    JRU   RED HOOK        Hong Kong     6207/91       2375/93     Ale and beer.        Renewal Begin        02/28/2012
Registered        JRU                      IC32      08/28/91      06/18/93                          Renewal End          08/28/2012
------------------------------------------------------------------------------------------------------------------------------------
IABR-2-0016529    JRU   RED HOOK          Japan   1997-103376       4265307     Restaurant services, Renewal Begin        10/23/2008
Registered        JRU                      IC42      04/03/97      04/23/99     bar services, and    Renewal End          04/23/2009
                                                                                all other services
                                                                                belonging in this
                                                                                class.
------------------------------------------------------------------------------------------------------------------------------------
IABR-2-0008115    JRU   RED HOOK          Japan    1991-85923       2601613     Ale and beer.        Renewal/             04/30/2004
Registered        JRU                      IC32      08/15/91      11/30/93                          Reclassification
                                                                                                     Accepted?
                                                                                                     Renewal Begin        05/30/2013
                                                                                                     Renewal End          11/30/2013
------------------------------------------------------------------------------------------------------------------------------------
IABR-2-0012694    JRU   RED HOOK          Mexico       218821        484960     Ale and beer.        Renewal End          11/30/2004
Registered        JRU                      IC32      11/30/94      03/13/95                          Renewal Begin        05/30/2014
------------------------------------------------------------------------------------------------------------------------------------
IABR-2-0008117    JRU   RED HOOK        Singapore     7563/91       7563/91     Ale and beer.        Renewal Begin        02/13/2011
Registered        JRU                      IC32      08/13/91      08/13/91                          Renewal End          08/13/2011
------------------------------------------------------------------------------------------------------------------------------------
IABR-2-0008116    JRU   RED HOOK          South      91-23412       247,104     (IC36): Ale and      Renewal Begin        02/17/2012
Registered        JRU                      Korea     08/13/91      08/17/92     beer.                Renewal End          08/17/2012
                                           IC32
------------------------------------------------------------------------------------------------------------------------------------
IABR-2-0008118    JRU   RED HOOK          Taiwan    (80)36883       556 831     Wine, ale and        Renewal Begin        10/15/2001
Registered        JRU                      IC17      08/14/91      04/16/92     beer.                Renewal End          04/15/2012
------------------------------------------------------------------------------------------------------------------------------------
IABR-2-0001242    JRU   RED HOOK           USA     73/380,687     1,253,138     Ale.                 Renewal Begin        10/04/2012
Registered        JRU                      IC32      08/19/82      10/04/83                          Renewal End          10/04/2013
------------------------------------------------------------------------------------------------------------------------------------
IABR-2-0001198    JRU   RED HOOK ALE &     USA        382,104     1,332,480     Ale.                 Renewal End          04/23/2005
Registered        JRU   Design             IC32      08/26/82      04/23/85                          Renewal Begin        04/23/2014
------------------------------------------------------------------------------------------------------------------------------------
IABR-2-0015487    JRU   RED HOOK DOUBLE   Japan    1996-76304       4143687     Ale and beer.        Renewal Begin        11/08/2007
Registered        JRU   BLACK              IC32      07/11/96      05/08/98                          Renewal End          05/08/2008
------------------------------------------------------------------------------------------------------------------------------------
IABR-2-0013092    JRU   RED HOOK ESB      USA NH       H TM     VOL. 90, PG     Ale.                 Renewal Begin        08/15/2004
Registered        JRU                      IC48                      25                              Renewal End          02/15/2005
                                                                   02/15/95
------------------------------------------------------------------------------------------------------------------------------------
IABR-2-0012592    JRU   RED HOOK ESB and   USA     74/597,335     1,940,873     (IC25) Men's,        Renewal Begin        12/12/2004
Registered        JRU   Design             IC25      11/10/94      12/12/95     women's and          Renewal End          12/12/2005
                                           IC30                                 children's
                                           IC32                                 clothing, namely,
                                                                                shirts, Tshirts,
                                                                                sweatshirts, polo
                                                                                shirts, and hats;
                                                                                (IC30) bread;
                                                                                (IC32) ale.
------------------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------------------
IABR-2-0016079    JRU   Red Hook Logo   Community      440996        440966     Ale and beer.        Renewal Begin        06/11/2006
Registered        JRU                      IC32      12/11/96      10/23/98                          Renewal End          12/11/2006
------------------------------------------------------------------------------------------------------------------------------------
IABR-2-0029334    JRU   SUNRYE             USA     78/232,950     2,819,966     Ale.                 Section 8, 15        03/02/2009
Registered        JRU                      IC32      04/02/03      03/02/04                          Declaration
                        Redhook Ale                                                                  Begin
                        Brewery,
                        Incorporated                                                                 6 Month Section 8,   09/02/2009
                                                                                                     15 Declaration

                                                                                                     Section 8, 15        03/02/2010
                                                                                                     Declaration End

                                                                                                     Renewal Begin        03/02/2013

                                                                                                     Renewal End          03/02/2014
------------------------------------------------------------------------------------------------------------------------------------
IABR-2-0012698    JRU   TROLLEYMAN         USA     74/590,217     1,929,788     Restaurant and bar   Renewal Begin        10/24/2004
Registered        JRU                      IC42      10/24/94      10/24/95     services.            Renewal End          10/24/2005
------------------------------------------------------------------------------------------------------------------------------------
IABR-2-0008121    JRU   WHEAT HOOK        Canada      687,268       413,666     Wheat brewed ale.    Renewal Begin        12/18/2007
Registered        JRU                                08/08/91      06/18/93                          Renewal End          06/18/2008
------------------------------------------------------------------------------------------------------------------------------------
IABR-2-0012696    JRU   WHEAT HOOK        Mexico       218819        484958     Ale and beer.        Renewal End          11/30/2004
Registered        JRU                      IC32      11/30/94      03/13/95                          Renewal Begin        05/30/2004
------------------------------------------------------------------------------------------------------------------------------------
IABR-2-0013094    JRU   WHEAT HOOK        USA NH       H TM     VOL. 90, PG     Wheat brewed ale.    Renewal Begin        08/15/2004
Registered        JRU                      IC48                      27                              Renewal End          02/15/2005
                                                                    2/15/95
------------------------------------------------------------------------------------------------------------------------------------
IABR-2-0004444    JRU   WINTERHOOK         USA        684,962     1,490,430     Ale.                 Renewal Begin        05/31/2007
Registered        JRU                      IC32      09/18/87      05/31/88                          Renewal End          05/31/2008
------------------------------------------------------------------------------------------------------------------------------------
IABR-2-0013096    JRU   WINTERHOOK        USA NH       H TM                     Beer and ale.        Renewal Begin        09/20/2005
                  JRU                      IC48                    03/20/96                          Renewal End          03/20/2006
------------------------------------------------------------------------------------------------------------------------------------

The information contained in this status report is privileged and confidential information intended only for the use of Redhook Ale Brewery, Incorporated. This information is continually updated in the records at Christensen O'Connor Johnson Kindness and may be subject to change at any time. Comments, questions or changes should be directed to Christensen O'Connor Johnson Kindness.

SCHEDULE 1.2.4

WASHINGTON MARKETING FEE FORMULA

1. FORMULA: The Washington Marketing Fee shall be equal to (a) the price paid to CBA for the Products, minus (b) the price paid to Redhook by CBA for the Redhook Products. The Washington Marketing Fee shall be calculated separately for each package type.

2. EXAMPLE.

*

* CONFIDENTIAL TREATMENT REQUESTED

REDHOOK SUPPLY, DISTRIBUTION, AND
LICENSING AGREEMENT

REDHOOK SUPPLY, DISTRIBUTION, AND
LICENSING AGREEMENT

SCHEDULE 3.1

INITIAL REDHOOK PRODUCTS

ESB
IPA
Sunrye
Nut Brown Ale
Chinook Copper
Pacific Ridge
Blackhook Porter
Winterhook
Hoptoberfest
Blonde

REDHOOK SUPPLY, DISTRIBUTION, AND
LICENSING AGREEMENT

SCHEDULE 3.4

NON-DISTRIBUTED REDHOOK PRODUCTS

None.

REDHOOK SUPPLY, DISTRIBUTION, AND
LICENSING AGREEMENT

REDHOOK SUPPLY, DISTRIBUTION, AND
LICENSING AGREEMENT

SCHEDULE 4.2.2

OPTION TO MANUFACTURE

1. If, over any calendar year (the "Base Year") both (a) and (b) are true:

(a) The total quantity (in PCEs) of the Products of a brewer (the "Increasing Brewer") sold in the Territory is greater than the total quantity (in PCEs) of Products of the Increasing Brewer sold in the Territory in the immediately preceding calendar year (the difference is referred to as the "Product Volume Increase"), and

(b) The total quantity (in PCEs) of the Products of the other brewer (the "Decreasing Brewer") sold in the Territory is less than the total quantity (in PCEs) of Products of the Decreasing Brewer sold in the Territory in the immediately preceding calendar year (the difference is referred to as the "Product Volume Decrease");

then

(x) In the immediately following calendar year (the "Option Year"), the Decreasing Brewer shall have the option (the "Decreasing Brewer Option") to manufacture a quantity of Products equal to the lower of the following (the "Option Quantity"):

(i) the Product Volume Increase, and

(ii) the Product Volume Decrease.

2. Notwithstanding the foregoing, if the Decreasing Brewer is not able to manufacture the Products in each type of packaging that was manufactured by the Increasing Brewer in the Base Year, (a) the Decreasing Brewer Option shall include only those Products the packaging of which the Decreasing Brewer is able to manufacture and (b) the Decreasing Brewer Option shall include only the percentage of the Option Quantity equal to the percentage manufactured by the Increasing Brewer using such packaging in the Base Year. For example, if the Option Quantity for all types of packaging is 1,000 PCEs and the Increasing Brewer manufactured 40 percent long-neck bottle Products and 60 percent draft Products, and the Decreasing Brewer is not able to manufacture long-neck bottles, then the Option Quantity shall be reduced to 600 PCEs of draft Products. The Decreasing Brewer may not substitute 400 PCEs of draft Products for the 400 PCEs of long-neck bottled Product.

3. The Decreasing Brewer must exercise the Decreasing Brewer Option, if at all, within ten (10) days following written notice from Company of such right. The Decreasing Brewer may exercise the Decreasing Brewer Option with respect to all or any portion of the Option Quantity. The brands of Product (which may be either Redhook Products or Widmer Products) that make up the Option Quantity shall be those brands selected by Company; provided, however, that (i) the Company shall endeavor to select no more than two brands of the Increasing Brewer and only those brands that had the highest sales volume in the Base Year and (ii) if the Decreasing Brewer will (under provisions of its distribution agreement with Company) be manufacturing Products of the Increasing Brewer in the Option Year, the Company shall endeavor to reassign brands, in equal volumes and package types, to the Increasing Brewer and the Decreasing Brewer so as to permit each Brewer to manufacture its own Product.

REDHOOK SUPPLY, DISTRIBUTION, AND
LICENSING AGREEMENT

----------- ---------- -------- ---------- ---------- ------------ ----------- ------------
                         WID %                WID %
                          OF      WIDMER      TOTAL      REDHOOK     RH % OF
  BASE       WIDMER     TOTAL     BBLS        BBLS       BARRELS      TOTAL      REDHOOK
   YEAR     BBLS SOLD    BUS      MANUF       MANUF       SOLD         BUS      BBLS MANUF
----------- ---------- -------- ---------- ---------- ------------ ----------- ------------
   2005       170,000      52%    170,000        52%      160,000         48%      160,000
----------- ---------- -------- ---------- ---------- ------------ ----------- ------------
   2006       150,000      45%    150,000        45%      185,000         55%      185,000
----------- ---------- -------- ---------- ---------- ------------ ----------- ------------
   2007       160,000      47%    180,000        53%      180,000         53%      160,000
----------- ---------- -------- ---------- ---------- ------------ ----------- ------------
   2008       170,000      49%    165,000        48%      175,000         51%      180,000
----------- ---------- -------- ---------- ---------- ------------ ----------- ------------
   2009       140,000      44%    135,000        42%      180,000         56%      185,000
----------- ---------- -------- ---------- ---------- ------------ ----------- ------------
   2010       130,000      41%    135,000        43%      185,000         59%      180,000
----------- ---------- -------- ---------- ---------- ------------ ----------- ------------
   2011       100,000      33%    105,000        35%      200,000         67%      195,000
----------- ---------- -------- ---------- ---------- ------------ ----------- ------------
   2012       120,000      39%    135,000        44%      190,000         61%      175,000
----------- ---------- -------- ---------- ---------- ------------ ----------- ------------
   2013       150,000      45%    140,000        42%      185,000         55%      195,000
----------- ---------- -------- ---------- ---------- ------------ ----------- ------------
   2014       170,000      50%    165,000        49%      170,000         50%      175,000
----------- ---------- -------- ---------- ---------- ------------ ----------- ------------

----------- ---------- -------- ---------- ---------- ------------ ----------- ------------
10 yr Avg     146,000      45%    148,000        45%      181,000         55%      179,000
----------- ---------- -------- ---------- ---------- ------------ ----------- ------------

-----------  --------- ----------------------- ----------------------- -------------------------
                RH %                                                    DECLINING BREWER OPTION
               TOTAL            WIDMER                 REDHOOK           (DURING OPTION YEAR)
  BASE         BBLS    ----------------------  ----------------------  -------------------------
   YEAR        MANUF      +/(-)        BASE       +/(-)       BASE       WIDMER*      REDHOOK*
-----------  --------- ----------- ----------- ---------- ------------ ----------- -------------
  2005            48%
-----------  --------- ----------- ----------- ---------- ------------ ----------- -------------
   2006           55%    (20,000)     170,000     25,000      160,000      20,000
-----------  --------- ----------- ----------- ---------- ------------ ----------- -------------
   2007           47%      10,000     150,000    (5,000)      185,000                     5,000
-----------  --------- ----------- ----------- ---------- ------------ ----------- -------------
   2008           52%      10,000     160,000    (5,000)      180,000                     5,000
-----------  --------- ----------- ----------- ---------- ------------ ----------- -------------
   2009           58%    (30,000)     170,000      5,000      175,000       5,000
-----------  --------- ----------- ----------- ---------- ------------ ----------- -------------
   2010           57%    (10,000)     140,000      5,000      180,000       5,000
-----------  --------- ----------- ----------- ---------- ------------ ----------- -------------
   2011           65%    (30,000)     130,000     15,000      185,000      15,000
-----------  --------- ----------- ----------- ---------- ------------ ----------- -------------
   2012           56%      20,000     100,000   (10,000)      200,000                    10,000
-----------  --------- ----------- ----------- ---------- ------------ ----------- -------------
   2013           58%      30,000     120,000    (5,000)      190,000                     5,000
-----------  --------- ----------- ----------- ---------- ------------ ----------- -------------
   2014           51%      20,000     150,000   (15,000)      185,000                    15,000
-----------  --------- ----------- ----------- ---------- ------------ ----------- -------------

-----------  --------- ----------- ----------- ---------- ------------ ----------- -------------
10 yr Avg         55%                                                      45,000        40,000
-----------  --------- ----------- ----------- ---------- ------------ ----------- -------------

ASSUMPTIONS:

1. The Declining Brewer is able to manufacture all types of packaging of the Increasing Brewer.

2. The Declining Brewer exercises the Declining Brewer Option each time it is available.

3. Company always assigns the Option Quantity Products of the Increasing Brewer to the Declining Brewer.

REDHOOK SUPPLY, DISTRIBUTION, AND
LICENSING AGREEMENT

SCHEDULE 6.2

REDHOOK PRODUCT SPECIFICATIONS

SEE ATTACHED.

REDHOOK SUPPLY, DISTRIBUTION, AND
LICENSING AGREEMENT

-------------------------- ------------ ------------- ---------------------- ------------- -------------
          BRAND              ALCOHOL      ALCOHOL           ORIGINAL             RDF          IBU'S
                              (wt%)        (vol%)            GRAVITY
-------------------------- ------------ ------------- ---------------------- ------------- -------------
         BLONDE               4.24          5.41         12.57 (1.05077)         66.6          18.3
                           (4.20-4.29)  (5.35-5.48)       (12.41-12.79)      (66.1-67.4)   (16.7-19.6)
           BHP                4.10          5.23         12.34 (1.04980)         65.7          32.6
                           (4.03-4.23)  (5.15-5.39)       (12.09-12.63)      (63.6-67.3)   (28.4-36.6)
           ESB                4.52          5.77         13.46 (1.05454)         66.2          24.3
                           (4.41-4.64)  (5.64-5.92)       (13.26-13.57)      (64.6-68.0)   (19.4-27.3)
           IPA                5.11          6.51         14.21 (1.05773)         70.5          38.5
                           (4.97-5.33)  (6.34-6.79)       (13.85-14.40)      (68.1-73.0)   (34.0-41.0)
         CHINOOK              4.46          5.70         13.52 (1.05479)         65.1          28.1
       COPPER ALE          (4.41-4.50)  (5.64-5.75)       (13.30-13.72)      (64.6-65.4)   (23.2-32.2)
         SUNRYE               3.66          4.65          9.76 (1.03905)         74.7          20.0

        NUT BROWN             4.36          5.57         13.54 (1.05487)         63.5          21.2
                           (4.18-4.53)  (5.35-5.79)       (13.32-13.76)      (62.1-64.9)   (18.8-23.6)
         WH '03               4.67          5.98         14.19 (1.05765)         64.8          45.4

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



-------------------------- ------------ -------------- ----------------------- --------------
          BRAND               COLOR       CALORIES         CARBOHYDRATES          PROTEIN
                              (SRM)       / 12 oz.            (g/12oz)           (g/12oz)
-------------------------- ------------ -------------- ----------------------- --------------
         BLONDE                7.0          166.4              13.13               2.19
                            (6.7-7.3)     (164-169)        (12.59-13.58)        (2.02-2.44)
           BHP                47.0          163.2              12.92               2.53
                           (41.5-52.4)    (159-168)        (12.12-14.34)        (2.22-2.89)
           ESB                13.2          179.0              14.15               2.58
                           (11.9-13.9)    (176-181)        (13.45-14.62)        (2.35-2.94)
           IPA                 8.4          188.1              12.66               2.78
                            (7.7-9.6)     (182-191)        (10.68-13.80)        (2.39-3.09)
         CHINOOK              12.0           180               14.63               2.46
       COPPER ALE          (10.7-13.3)    (177-183)        (14.36-14.90)        (2.40-2.51)
         SUNRYE                4.6           125                7.12               1.65

        NUT BROWN             31.9          181.0              16.02               2.54
                           (30.2-33.5)    (178-184)
         WH '03               34.1           190               15.54               2.90

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

IBU's (International Bitterness Units)
RDF (Real Degree of Fermentation)
SRM (Standard Reference Method)

These numbers are provided by Redhook Quality Control, Woodinville Brewery. They are presented as average (minimum - maximum) based on the results of WDV beer analyzed by A-B Brewing Technical Services during year 2000 to 2003. This info. may be used by the Redhook Sales Force and their distributors.

                                  SCHEDULE 6.3

                         INITIAL REDHOOK PRODUCT PRICES

---------------------------------------- ------------------------------------------- ---------------------------------
            2004 Net Sales                                Draught                       Bottle Per Case Equivalent
---------------------------------------- ------------------------------------------- ---------------------------------
Widmer                                                       *                                      *
---------------------------------------- ------------------------------------------- ---------------------------------
Redhook                                                      *                                      *
---------------------------------------- ------------------------------------------- ---------------------------------
Total                                                        *                                      *
                                                             =                                      =
---------------------------------------- ------------------------------------------- ---------------------------------
Average/2                                                    *                                      *
---------------------------------------- ------------------------------------------- ---------------------------------
Average Price @ 59%                                          *                                      *
---------------------------------------- ------------------------------------------- ---------------------------------
Plus Base Excise Tax                                         *                                      *
---------------------------------------- ------------------------------------------- ---------------------------------
2005 Transfer Price                                          *                                      *
---------------------------------------- ------------------------------------------- ---------------------------------

* CONFIDENTIAL TREATMENT REQUESTED

REDHOOK SUPPLY, DISTRIBUTION, AND
LICENSING AGREEMENT

EXHIBIT 10.5

MASTER DISTRIBUTOR AGREEMENT

BETWEEN

CRAFT BRANDS ALLIANCE LLC

AND

ANHEUSER-BUSCH, INCORPORATED

MASTER DISTRIBUTOR AGREEMENT

THIS MASTER DISTRIBUTOR AGREEMENT (the "Agreement") is made as of July 1, 2004 by and between CRAFT BRANDS ALLIANCE LLC having its principal place of business at 929 North Russell, Portland, Oregon 97227 ("CBA") and ANHEUSER-BUSCH, INCORPORATED having its principal place of business at One Busch Place, St. Louis, MO 63118 (referred to herein interchangeably as "Master Distributor" or "ABI").

WHEREAS, CBA acquires products from Redhook Ale Brewery, Incorporated and Widmer Brothers Brewing Company and markets the Products in certain states west of the Mississippi River.

WHEREAS, ABI and CBA desire to have ABI serve as Master Distributor of the Products and to coordinate the delivery of the Products to designated wholesalers in the ABI wholesaler network; and

WHEREAS, ABI and CBA desire CBA to have responsibility for developing and implementing programs that create demand for, market, promote and advertise the Products in the Territory (as defined herein);

NOW THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth, CBA and ABI agree as follows:

ARTICLE I

DEFINITIONS

For purposes of this Agreement, capitalized terms not otherwise defined herein shall have the following meanings ascribed thereto:

"ABI COMPETITOR" shall mean any Person that, together with the Affiliates of such Person, has annual alcohol beverage sales of $100,000,000 or more in North America (such number to be adjusted annually in proportion to changes in the Consumer Price Index from the date hereof).

"ABI DISTRIBUTION FACILITY" shall mean the ABI source brewery, warehouse, WSC, third-party warehouse or other suitable location reasonably designated by ABI from which ABI will ship Product to Alliance Wholesalers.

"ADDITIONAL PRICE COMPONENT" shall mean 90% of the difference between the price actually charged to an Alliance Wholesaler by ABI for a Product, and the Fully Loaded Cost for such Product.

"AFFILIATE" shall mean, with respect to any Person, (i) each Person that, directly or indirectly, owns or controls, whether beneficially, or as a trustee, guardian or other fiduciary, 50% or more of the equity securities having ordinary voting power in the election of directors of such Person, or
(ii) each Person that controls, is controlled by or is under common control with such Person or any Affiliate of such Person. For the purpose of this definition, "control" of a Person shall mean the possession, directly or indirectly, of the power to direct or cause the direction of its management or policies, whether through the ownership of voting securities, by contract or otherwise. Kona, Redhook, Widmer shall be considered to be Affiliates of CBA.

"AFFILIATED WHOLESALER" shall mean any wholesaler of the alcohol beverage products of ABI that distributes the Products in any portion of the Territory pursuant to a distribution agreement between CBA, Redhook or Widmer and such wholesaler.

"ALLIANCE WHOLESALERS" shall mean those malt beverage wholesalers of ABI, including without limitation, ABI branches, which have agreed to purchase the Products from ABI and to distribute the Products in the Territory.

"BARREL" shall be equal to 31 United States gallons.

"COMMENCEMENT DATE" shall mean July 1, 2004.

"CONFIDENTIAL INFORMATION" shall have the meaning assigned to it in
Section 18.01(a).

"COOPERAGE HANDLING CHARGE" shall mean * per Pallet Lift for draft Product during 2004; ATTACHMENT A attached hereto describes the methodology used to modify Cooperage Handling Charge for 2005 and future years.

"FORCE MAJEURE" shall have the meaning assigned to it in Section 16.01.

"FULLY LOADED COST" shall mean for a Product, the sum of:

(a) the Scheduled Price for such Product; plus (b) the Margin.

"INCOMPATIBLE CONDUCT" shall mean any act or omission of CBA or its Affiliates that, in the sole determination of ABI, damages either the reputation or image of ABI or of the brewing industry. ATTACHMENT B attached hereto sets forth examples of the nature and gravity of acts and omissions constituting Incompatible Conduct and not constituting Incompatible Conduct; such examples shall not limit the nature of acts that could be construed as Incompatible Conduct.

"INCREMENTAL MARGIN" shall mean during 2004, * per case-equivalent (of 288 fluid ounces per case) for packaged or draft Product. For 2005 and future years, the applicable amount described above in this definition shall increase or decrease for each calendar year pursuant to the methodology set forth in ATTACHMENT C attached hereto.

"INITIAL TERM" shall have the meaning assigned to it in Section 7.01 hereof.

"INTELLECTUAL PROPERTY" shall have the meaning assigned to it in
Section 6.01.

"INVENTORY MANAGER" shall have the meaning assigned to it in Section 11.10.

"INVENTORY MANAGER FEE" shall mean the Inventory Manager's annual cash compensation.

"INVOICING COSTS" shall mean * per Pallet Lift for Product during 2004. For 2005 and future years, the applicable amount described above in this definition shall increase or decrease for each calendar year pursuant to the methodology set forth in ATTACHMENT C attached hereto.

* CONFIDENTIAL TREATMENT REQUESTED

"KONA" shall mean Kona Brewery LLC.

"MARGIN" shall mean during 2004 * per case-equivalent (of 288 fluid ounces per case) for packaged or draft Product.

For 2005 and future years, the applicable amount described above in this definition shall increase or decrease for each calendar year pursuant to the methodology set forth in ATTACHMENT C attached hereto.

"MASTER DISTRIBUTOR" shall mean ABI in its capacity as a distributor under this Distribution Agreement.

"MODIFIED PRODUCT" shall have the meaning set forth in Section 11.08 of this Agreement.

"NEW PRODUCT" shall mean new malt beverage(s) that CBA wishes to add, through development or acquisition, to its beverage product line existing as of the Commencement Date.

"NON-ALLIANCE WHOLESALERS" shall mean those beer wholesalers to which CBA, Redhook or Widmer has granted distribution rights for any of the Product in the Territory as of the date of this Agreement and which are listed as "WHOLESALER" on ATTACHMENT D attached hereto, as the same may be modified from time to time pursuant to the terms and conditions of this Agreement, but shall not include Affiliated Wholesalers.

"OFFER EXPIRATION DATE" shall have the meaning assigned to it in
Section 11.04(a).

"OFFER NOTICE" shall have the meaning assigned to it in Section 11.04(a).

"PALLET LIFT" shall mean a pallet of draft or packaged Product or cooperage that, in each case, is prepared in such a manner that ABI may deliver or move such Pallet in accordance with its customary practices in one operation.

"PERSON" shall mean any individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization, association, corporation, institution, public

* CONFIDENTIAL TREATMENT REQUESTED

benefit corporation, entity or government (whether federal, state, county, city, municipal or otherwise, including, without limitation, any instrumentality, division, agency, body or department thereof).

"PRODUCTS" shall mean all malt beverage products marketed by CBA as of the Commencement Date and any malt beverage products for which ABI agrees to act as master distributor pursuant to Section 11.03 hereof but shall not include any malt beverage products the marketing of which CBA discontinues or the distribution of which is terminated pursuant to this Agreement.

"PURCHASE PRICE" shall have the meaning assigned to it in Section 4.01 hereof.

"RECORDS" shall have the meaning assigned in Article XVII (a).

"REDHOOK" shall mean Redhook Ale Brewery, Incorporated.

"SCHEDULED PRICE" shall mean the purchase price for Product.

"STAGING COSTS" shall mean * per Pallet Lift for packaged Product, and
* per Pallet Lift for draught Product, during 2004. ATTACHMENT A describes the methodology used to modify Staging Costs for 2005 and future years and the assumptions and activities involved in Staging Costs.

"STOCKHOLDERS AGREEMENT" shall mean the letter agreement dated July 1, 2004 between Kurt and Robert Widmer, Widmer and ABI.

"TAXES" shall mean all applicable national, federal, state and local excise and other brewing related taxes and any applicable duties and import tariffs and fees (including without limitation liquor and consumption taxes) paid or incurred by ABI in connection with this Agreement.

"TERM" shall have the meaning assigned to it in Section 7.01 hereof.

"TERRITORY" shall mean Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, New Mexico, Nevada, Oregon and Wyoming, and shall also include any other jurisdiction included within the scope of this Agreement pursuant to
Section 11.11 hereof.

* CONFIDENTIAL TREATMENT REQUESTED

"WHOLESALER SUPPORT CENTER COSTS" or "WSC COSTS" with respect to any Product shipped by CBA to a WSC shall mean the fee paid by ABI to the operator of the WSC for its services with respect to such Product.

"WIDMER" shall mean Widmer Brothers Brewing Company.

"WSC" shall mean the regional wholesaler support centers or distribution centers established by ABI for the receipt of products designated by ABI and the palletizing and preparation for pick up of such products by the adjoining wholesalers.

ARTICLE II
GRANT OF DISTRIBUTION RIGHTS

CBA hereby grants to ABI and ABI hereby accepts from CBA the exclusive right to serve as the master distributor to distribute the Products in the Territory commencing on the Commencement Date, except as otherwise described in this Section. ABI shall not, without the prior written consent of CBA, sell the Product outside the Territory or to any party other than an Alliance Wholesaler. CBA agrees to not sell any Product to any other Person in the Territory other than ABI, Affiliated Wholesalers and Non-Alliance Wholesalers. At the option of ABI and the respective Affiliated Wholesaler, any Affiliated Wholesaler may become an Alliance Wholesaler, and CBA shall, and shall cause Redhook and Widmer to, execute any documents or instruments reasonably requested by ABI to effectuate this.

ARTICLE III
PURCHASE AND SALE OF PRODUCTS

CBA agrees to sell to ABI, and ABI agrees to purchase from CBA and re-sell to the Alliance Wholesalers, the quantities of Products ordered by ABI from time to time hereunder. CBA acknowledges that ABI is not guaranteeing any level of Product sales; and that ABI's obligations under this Agreement are limited to making the Products available to the Alliance Wholesalers, it being understood that CBA assumes full responsibility for creating demand for the Products. Except for Product shipped directly by CBA as set forth in Section 11.07, (i) all purchases of Product by ABI from CBA shall be on an F.O.B. ABI Distribution Facility, freight prepaid basis, and (ii) CBA shall ship Products to be delivered to an Alliance Wholesaler to the ABI Distribution Facility designated from time to time by ABI for such Alliance Wholesaler.

ARTICLE IV
PRICING OF PRODUCTS

4.01 The price for all Product sold by CBA to ABI for Products shipped to ABI breweries or distribution centers shall equal: (a) the Scheduled Price minus as applicable, (b) (i) the Staging Costs, (ii) the Cooperage Handling Charge, and/or (iii) Taxes. The price for all Product sold by CBA to ABI for Products shipped to a WSC shall equal (a)(i) the Scheduled Price minus as applicable, (b)(i) the Invoicing Costs, (ii) the Cooperage Handling Charge and/or (iii) Taxes. The price for all Product sold by CBA to ABI for Product shipped directly by CBA to Alliance Wholesalers shall equal (a) the Scheduled Price minus as applicable, (b)(i) the Invoicing Costs, (ii) the Cooperage Handling Charge and/or (iii) Taxes. With respect to any Product, howsoever shipped, the difference between the respective (a) and (b) shall be referred to as the "Purchase Price").

CBA shall establish the initial Scheduled Price for each Product sold by CBA to ABI. CBA shall have the right at any time in its sole discretion to modify such Scheduled Price, such new pricing to become effective for all deliveries to ABI not less than 30 days after date of written notice to ABI of such price modifications.

4.02 Within 30 days after the end of each calendar quarter during the Term, ABI shall pay to CBA any Additional Price Component which is due CBA with respect to sales of Product by ABI to Alliance Wholesalers during such calendar quarter.

4.03 CBA may, from time to time, suggest Product resale prices to ABI, and ABI will consider such suggestions. However, ABI shall have the right to re-sell the Product to Alliance Wholesalers at such prices and on such terms and conditions as ABI may, in its sole discretion, determine from time to time. Any and all price promotions to be offered to Alliance Wholesalers by CBA shall be implemented in strict accordance with the procedures set forth in ATTACHMENT E attached hereto.

4.04 ABI shall remit payment of the Purchase Price to CBA for all Product purchased hereunder, contemporaneously with its receipt of funds from the Alliance Wholesalers with respect to such purchases. ABI shall be entitled to set off against such payments any amounts owed to ABI for defective Products (including without limitation, any costs of disposing of such defective Product), or which are due ABI pursuant to the terms of this Agreement or otherwise or which are due ABI from Redhook or Widmer and which amounts arose out of the brewing or sale of Products in the Territory. In the event that any Alliance Wholesaler does not pay to ABI the purchase price with respect to any Products purchased by such Alliance Wholesaler within 60 days after delivery thereof, at the option of CBA, ABI shall assign all of its rights to CBA against such Alliance Wholesaler relating to the purchase price for such Products.

4.05 Notwithstanding the foregoing provisions of this Article IV, CBA and ABI recognize that the laws of certain States and/or U.S. federal laws may preclude the parties from implementing the pricing mechanisms described above. Under such circumstances, it is the intention of the parties to comply with the requirements of such laws, without such compliance being a breach of this Agreement. Under such circumstances, CBA and ABI shall in good faith negotiate a periodic adjustment to the Purchase Price, other affected provisions hereof and the procedures set forth herein where it is permissible to do so, in an amount necessary to restore the same economic benefits CBA and ABI would have received had the above pricing mechanisms been in effect.

4.06 (a) Within 45 days after the end of each calendar quarter, CBA shall deliver a report setting forth the aggregate volume, in case - equivalents, of Product: (i) sold by CBA in the Territory and by Redhook and Widmer in the State of Washington in such calendar quarter and (ii) sold by Kona, Redhook and Widmer in the Territory and in the State of Washington during the respective calendar quarter in 2003.

(b) Contemporaneously with the delivery of such report, CBA shall pay to ABI the Margin for all Product sold by CBA to Non-Alliance Wholesalers or Affiliated Wholesalers and the Margin for all Product sold by Redhook or Widmer in the State of Washington during such calendar quarter.

(c) To the extent that during any calendar quarter, the quantity of Products sold in the Territory by CBA and by Redhook and Widmer in the State of Washington exceeds the quantity of Products (in each case determined on a case equivalent basis) sold by Kona, Redhook or Widmer in the respective calendar quarter in 2003 in the Territory and the State of Washington, CBA shall pay to ABI the Incremental Margin for all such Product sold during such calendar quarter. Such payment shall be made contemporaneously with the payment set forth in Section 4.06(b).

(d) If during any calendar year, the product of the (i) the Incremental Margin and (ii) the amount, if any, by which the aggregate volume, in case-equivalents, of Product sold by CBA in the Territory and Redhook and Widmer in the State of Washington in such calendar year exceeds the aggregate volume, in case-equivalents of Product sold by Kona, Redhook and Widmer during 2003 in the Territory and in the State of Washington does not equal the amounts paid by CBA for such calendar year pursuant to Section 4.06(c), then, within 45 days after the end of such calendar year ABI shall pay to CBA any amount by which the payments previously made by CBA pursuant to Section 4.06(c) exceed such product or CBA shall pay to ABI any amount by which the payments previously made by CBA are less than such product.

(e) The sales used in computing the Incremental Margin for any calendar quarter shall be the sales derived from the sales areas included in the Territory and in the State of Washington for the calendar quarter for which the Margin is calculated and those sales derived from those same sales areas and the State of Washington for the respective calendar quarter in 2003. For purposes of determining the Margin, the parties agree that Schedule 4.06 sets forth the Product sold by Kona, Redhook and Widmer in the Territory and the State of Washington in each calendar quarter of 2003. The parties agree that for purposes of determining Incremental Margin to be paid by CBA in 2004, the calculations set forth in Section 4.06(c) and (d) shall be applied only to that period in 2004 (and the respective period in 2003) occurring after the Commencement Date.

4.07 (a) Within 30 days after the end of each calendar month, ABI shall notify CBA of the WSC Fees payable with respect to the Product delivered by CBA for such month, together with the product delivered by CBA to each WSC and the fees incurred with respect to each WSC. CBA shall pay such WSC Fees within 15 days after its receipt of notification.

(b) Within 30 days after the end of each calendar year, ABI shall notify CBA of the fees charged by each WSC to which CBA may ship Product during such calendar year.

(c) In the event ABI changes a WSC or renegotiates the fees to be paid to a WSC, in either case to which CBA may be reasonably expected to ship Product, ABI shall notify CBA of such change or renegotiated fees.

ARTICLE V
DELIVERY OF PRODUCTS AND RISK OF LOSS

5.01 Except as set forth in Section 11.07, title to the Product and its risk of loss or destruction shall pass from CBA to ABI upon delivery of the Product to the ABI Distribution Facility designated by ABI to be used for the respective Alliance Wholesaler.

5.02 CBA shall insure that Product shall be packaged, palletized and prepared for shipment in accordance with ABI's instructions in effect from time to time for ABI's malt beverage products. CBA shall reimburse ABI for any costs incurred by ABI in handling Products which are not properly palletized and/or prepared for shipment, or which are palletized and/or prepared for shipment in a manner which causes ABI to incur handling expenses not otherwise included in the calculation of Staging Costs as set forth in ATTACHMENT A, and ABI's determination of such costs, absent material error, shall be binding on each of ABI and CBA, provided, however, that such determination shall be subject to the audit provisions of Article XVII below.

ARTICLE VI
CBA'S TRADEMARKS

6.01 ABI shall not acquire any right in any of the CBA, Kona, Redhook, or Widmer trademarks, trade dress, copyrights, promotional slogans, trade names, designs, labels, get-ups, color combinations, product shapes, and other distinctive features in the Products, or the promotional goods, advertisements and promotional activities used during the term of this Agreement in conjunction with the advertising, promotion, distribution, and sale of the Products (collectively, "Intellectual Property'). ABI is hereby granted the right during the Term to use the Intellectual Property in advertising, promotion, distribution, and sale of the Products in the Territory, which right ABI may sub-license to the Alliance Wholesalers; provided, however, that CBA shall have the right to require ABI and the Alliance Wholesalers to submit representative samples of any use of such Intellectual Property to CBA for approval, which approval shall be deemed given if CBA does not provide ABI with written notice of reasonable objection within 10 days of receipt of such samples. Any and all rights that may be acquired in the Intellectual Property by the use of the Intellectual Property by ABI or any Alliance Wholesaler will inure to the sole benefit of the owner of the Intellectual Property, which will be either CBA, Kona, Redhook, or Widmer. The foregoing sentence does not affect ABI's rights in other marks it may use or adopt. At the request of CBA, ABI will execute an instrument, in a form agreeable to CBA and ABI, to effect further registration, maintenance, and renewal of the Intellectual Property, and, where applicable, to record CBA, Kona, Redhook, or Widmer (as the case may be) as a registered user of the Intellectual Property. CBA represents and warrants that it has the right and authority to provide ABI and the Alliance Wholesalers with the rights provided in this Section.

6.02 ABI shall promptly notify CBA of any and all infringements of the Intellectual Property pertaining to the Products that may come to ABI's attention and shall assist CBA in taking such action against said infringements as CBA, in its sole discretion, may decide. All expenses and costs of such legal action, including those of ABI, shall be paid by CBA.

ARTICLE VII
TERM AND TERMINATION

7.01 The term of this Agreement (the "Term") shall become effective at the Commencement Date and, unless sooner terminated pursuant to the provisions of this Agreement, shall continue in effect until December 31, 2014 (the "Initial Term"). Following the Initial Term, this Agreement shall renew automatically for an additional 10 year period, unless ABI provides written notice to CBA on or prior to June 30, 2014 that the Agreement shall not be renewed.

7.02 Either party shall have the right at any time to terminate this Agreement immediately, without prejudice to any other legal rights to which such terminating party may be entitled, upon the occurrence and during the continuance of any one or more of the following:

(a) material default by the other party in the performance of any of the provisions of this Agreement or any other agreement between the parties, which default is either:

(i) curable within 30 days, but is not cured within 30 days following written notice of default; or

(ii) not curable within 30 days and either:

(A) the defaulting party fails to take reasonable steps to cure as soon as reasonably possible following written notice of such default; or

(B) such default is not cured within 90 days following written notice of such default;

(b) default by the other party in the performance of any of the provisions of this Agreement or any other agreement between the parties, which default is not described in Section 7.02(a) and which is not cured within 180 days following written notice of such default;

(c) the making by the other party of an assignment for the benefit of creditors; or the commencement by the other party of a voluntary case or proceeding or the other party's consent to or acquiescence in the entry of an order for relief against such other party in an involuntary case or proceeding under any bankruptcy, reorganization, insolvency or similar law;

(d) the appointment of a trustee or receiver or similar officer of any court for the other party or for a substantial part of the property of the other party, whether with or without the consent of the other party, which is not terminated within 60 days from the date of appointment thereof;

(e) the institution of bankruptcy, reorganization, insolvency or liquidation proceedings by or against the other party without such proceedings being dismissed within 90 days from the date of the institution thereof; or

(f) Any representation or warranty made by the other party hereunder or in the course of performance of this Agreement shall be false in material respects.

7.03 (a) ABI shall have the right and option to terminate this Agreement at any time upon six months' prior written notice to CBA, in the event:

(i) CBA, Kona, Redhook or Widmer engage in any Incompatible Conduct which is not curable or is not cured to ABI's satisfaction (in ABI's sole opinion) within 30 days following written notice from ABI to CBA;

(ii) (x) any Person (including any "group" as defined by Section 13(d)(3) of the Securities and Exchange Act of 1934), other than Redhook or Widmer, acquires or enters into an agreement to acquire any equity securities issued by CBA or CBA provides such Person the ability to acquire any equity securities issued by CBA.

(y) any ABI Competitor or Affiliate thereof acquires 10% or more of the outstanding equity securities in Kona, Redhook or Widmer, and one or more officers, designees or agents of such Person becomes a member of the Board of Directors of Kona, Redhook or Widmer, respectively;

(iii) Material default by Redhook or Widmer in the performance of any of the provisions of any agreement between such parties and ABI or any material default by CBA, Redhook or Widmer in any agreement between or among such parties related to the establishment or operation of CBA, in either case, which default is either:

(x) curable within 30 days, but is not cured within 30 days following written notice of default; or

(y) not curable within 30 days and either:

(A) the defaulting party fails to take reasonable steps to cure as soon as reasonably possible following written notice of such default; or

(B) such default is not cured within 90 days following written notice of such default.

(iv) Default by Redhook or Widmer in the performance of any of the provisions of any agreement between such parties and ABI or any default by CBA, Redhook or Widmer in any agreement between or among such parties related to the establishment or operation of CBA, in either case, which default is not described in Section 7.03(a)(iii) and is not cured within 180 days following written notice of such default;

(v) The current chief executive officer of any of CBA, Redhook or Widmer ceases to function as chief executive officer and within six months of such cessation a successor satisfactory in the sole, good faith discretion of ABI is not appointed; or

(vi) Redhook, Widmer or CBA shall merge or consolidate into or with any other Person or any other Person shall merge or consolidate into or with Redhook, Widmer or CBA;

(vii) ABI or its corporate affiliates incur any liability or expense as a result of any claim asserted against them by or in the name of Redhook or Widmer or any shareholder of Redhook or Widmer as a result of the equity ownership of ABI or its affiliates in Redhook or Widmer or any equity transaction or exchange between ABI or its affiliates and Redhook and Widmer, and Redhook or Widmer, respectively, do not reimburse and indemnify ABI and its corporate affiliates on demand for the entire amount of such liability and expense; or

(viii) Kurt or Robert Widmer are in default or breach of their obligations under the Stockholders Agreement which default or breach is not cured within 30 days after written notice thereof by ABI.

(b) Notwithstanding the foregoing, this Agreement shall not be subject to termination as a consequence of Incompatible Conduct if: (i) the act of Incompatible Conduct does not arise out of or relate to the operations or condition of CBA; (ii) within 90 days after notice of termination by ABI, CBA has terminated its sale and marketing of the products of each brewer out of whose operations or condition the act of Incompatible Conduct arose or to which operations or condition the act of Incompatible Conduct related and such products are no longer subject to distribution pursuant to the terms hereof; and
(iii) such termination has, in the good faith judgment of ABI, rectified the damage to the reputation or image of ABI or the brewing industry caused by such act.

(c) Notwithstanding the provisions set forth in Section 7.03(a)(ii)-(viii), this Agreement shall not be subject to termination as a consequence of the circumstances described in such provisions if: (i) the circumstances do not arise out of the operations, acts, omissions or condition of CBA; and (ii) within 90 days after notice of termination by ABI, CBA has terminated its sale and marketing of the products of each brewer out of whose operations, acts, omissions, condition or stockholders the circumstances arose and such products are no longer subject to distribution pursuant to the terms hereof. Notwithstanding the provisions set forth in Section 7.03(a)(viii), this Agreement shall not be subject to termination as a consequence of the circumstances described in such provisions if within 90 days after notice of termination by ABI, CBA has terminated its sale and marketing of the Widmer products.

7.04 ABI shall have the right and option to terminate this Agreement at any time upon written notice to CBA in the event:

(i) Either Redhook or Widmer makes an assignment for the benefit of creditors; or commences a voluntary case or proceeding or consents to or acquiesces in the entry of an order for relief against it in an involuntary case or proceeding under any bankruptcy, reorganization, insolvency or similar law;

(ii) A trustee or receiver or similar officer of any court is appointed for Redhook or Widmer or for a substantial part of the property of Redhook or Widmer, whether with or without the consent of Redhook or Widmer, which is not terminated within 60 days from the date of appointment thereof;

(iii) The institution of bankruptcy, reorganization, insolvency or liquidation proceedings by or against Redhook or Widmer without such proceedings being dismissed within 90 days from the date of the institution thereof;

(iv) Any of Kona, Redhook or Widmer terminate or purport to terminate the right of CBA to market and sell the Products as contemplated hereby or either of Redhook or Widmer terminate or disavow, or purport to terminate or disavow, the guaranty of the obligations of CBA hereunder; or

(v) CBA dissolves or undertakes proceedings to dissolve; or

(vi) the master distributor agreement between ABI and Redhook or the master distributor agreement between ABI and Widmer is terminated.

(vii) Notwithstanding the provisions set forth in
Section 7.04(i)-(vi), this Agreement shall not be subject to termination as a consequence of the circumstances described in such provisions (or, if the Agreement has been terminated as a result of such provisions, shall be subject to automatic reinstatement) if: (i) the circumstances do not arise out of or relate to the operations, acts, omissions or condition of CBA; and (ii) within 90 days after notice of termination by ABI, CBA has terminated its sale and marketing of the products of each brewer out of whose operations, acts, omissions or status the circumstances arose or to which operations, acts, omissions, condition or stockholders the circumstances related and such products are no longer subject to distribution pursuant to the terms hereof.

ARTICLE VIII
REMEDIES

If either party commits a breach or a default of this Agreement, no remedy herein conferred upon or reserved to either party is exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement or now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power accruing upon any breach or default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient.

ARTICLE IX
DUTIES OF ABI

9.01 Except as set forth in Section 11.07, ABI shall have responsibility and authority for coordinating delivery of the Product to the Alliance Wholesalers. ABI shall specify the brand, package and quantity of Product ordered and shall designate the ABI Distribution Facility to which the Product shall be shipped (and ABI may change such designation from time to time). The costs charged to CBA shall vary depending on which ABI Distribution Facility is designated.

9.02 ABI shall store all Product as it stores its own products, and shall handle all Product with the same degree of care as it handles its own products.

9.03 Except for deliveries made by CBA directly to Alliance Wholesalers as set forth herein, ABI shall promptly and correctly fill each Alliance Wholesaler's order, or shall instruct the WSC to promptly and correctly fill each Alliance Wholesaler's order and to load all Products on the trucks or other means of conveyance to the Alliance Wholesalers.

9.04 ABI may, in its sole discretion, add the Products to Exhibit 1 of the existing Wholesaler Equity Agreement that ABI has with any Alliance Wholesaler. At the option of ABI, in the event ABI acquires the distribution rights to the Products in any sales area, ABI may direct CBA and an ABI wholesaler servicing such sales area to enter into a transitional distribution agreement in a form satisfactory to ABI in lieu of adding the Products to Exhibit 1 of the Wholesaler Equity Agreement between ABI and such wholesaler.

9.05 ABI shall use its best efforts (to the extent commercially reasonable) to maintain all licenses, permits and other authorizations that are necessary for ABI to distribute the Products in the Territory where there are Alliance Wholesalers.

ARTICLE X
DUTIES OF CBA

10.01 CBA shall have sole responsibility for developing a market presence, creating demand for the Products in the Territory, generating marketing activity in each sales area of the Territory and developing and distributing promotional programs and promotional literature. As between ABI and CBA, the parties understand that CBA has full responsibility and discretion with respect to the marketing, advertising and promotion of the Products. Appropriate procedures with regard to independent pricing of Product are set forth in ATTACHMENT E attached hereto. Promptly upon depletion reports on CBA inventory at Alliance Wholesalers becoming available to ABI, ABI shall provide such information to CBA.

10.02 CBA shall bear risk of loss and transportation costs for the Products until delivery of Products to the ABI Distribution Facility designated by ABI for such Alliance Wholesaler as set forth in Article V hereof.

10.03 CBA shall, or shall cause its Affiliates to, secure and maintain label registrations in all states in the Territory where Product is sold.

10.04 CBA shall use commercially reasonable efforts to market and promote Product throughout the Territory in the markets where Products is sold, with a view towards maximizing sales of Products in accordance with its marketing and sales plan. In addition, CBA shall use commercially reasonable efforts (to the extent permitted by law) to prohibit the Non-Alliance Wholesalers from knowingly selling Products to retailers in the sales areas serviced by the Alliance Wholesalers or the Affiliated Wholesalers.

10.05 As between CBA and ABI, CBA shall be responsible for, and shall indemnify ABI on an after-tax basis from, all Taxes levied on, against or in connection with the sale, distribution, possession, marketing or promotion of the Products in the Territory, except for Taxes levied on ABI's net income.

10.06 CBA shall use commercially reasonable efforts to obtain and maintain all licenses, permits and other authorizations that are necessary for CBA to sell and distribute the Products in the Territory.

ARTICLE XI
ADDITIONAL AGREEMENTS

11.01 CBA shall at all times maintain its corporate existence, and will do or cause to be done all things necessary to preserve and keep in full force and effect all rights (charter and statutory), licenses and franchises necessary for it to perform its obligations hereunder.

11.02 During the Term of this Agreement, CBA shall not, without ABI's prior written consent, sell, license, transfer, convey, encumber, or place any restrictions upon, any of the Intellectual Property, except for licenses of the Intellectual Property to Affiliated Wholesalers or Non-Alliance Wholesalers for use solely in connection with sales of Product by such Affiliated Wholesalers or Non-Alliance Wholesalers.

11.03 CBA represents, warrants and covenants that it has the exclusive right to market and sell all products of Kona, Redhook and Widmer in the Territory, whether such products are currently existing or are created in the future, other than sales by Kona, Redhook or Widmer occurring at their breweries to retail consumers, sales from the premises of brew-pub restaurants operated by Kona, Redhook or Widmer or Redhook or sales made by Kona, Redhook or Widmer at beer competitions, beer festivals and similar types of temporary sales events. CBA covenants that it shall not amend, modify, terminate, waive or fail to enforce any provision of any agreement or instrument between it, Kona, Redhook and Widmer without the prior written consent of AB. Except as set forth to the contrary herein, during the Term of this Agreement, ABI will be the exclusive distributor of Product in the Territory. Subject to the provisions of the following subsections of this Section 11.03, during the Term of this Agreement, CBA reserves the right to add New Products for distribution in the Territory. In the event CBA elects to distribute such New Product in the Territory, CBA shall first offer to ABI in the manner described below, the right to distribute such New Product and to have such New Product be deemed a Product for all purposes of this Agreement.

(a) If CBA or any of its Affiliates desires to distribute a New Product in the Territory, CBA shall notify (the "Offer Notice") ABI of such intention and offer ABI the right to distribute such New Product. Within 10 days of ABI's receipt of the Offer Notice, ABI shall advise CBA of the information required by ABI to make an evaluation of such New Product (which shall include, but may not be limited to, the factors described on ATTACHMENT F). Within 45 days of ABI's receipt of all such information (the "Offer Expiration Date"), ABI shall advise CBA of ABI's decision to accept or not accept such New Product as a Product under this Agreement. If ABI declines to accept such New Product or fails to accept such New Product by the Offer Expiration Date, CBA shall be free to otherwise distribute such New Product as it deems appropriate; provided that CBA enters into a binding agreement with another Person for the distribution of such New Product within 365 days of the earlier of (Y) ABI's notice not to accept, or (Z) the Offer Expiration Date. If CBA does not enter into such binding agreement within such time period, or if CBA then fails to commence distribution under such binding agreement or interrupts such distribution thereafter for 365 consecutive days or more or decides to terminate its binding agreement with such Person, CBA shall be required to comply with the preceding provisions in this section again before permitting any other Person to distribute the New Product. If ABI exercises its option to distribute the New Product, such New Product shall be distributed by ABI in accordance with the terms and conditions set forth in this Agreement. Notwithstanding the above, CBA may test market New Products without ABI's prior approval; provided that: (i) the duration all such test marketing on any and all New Products in any single calendar year shall not exceed six months; (ii) the aggregate volume of all such test marketing on any single New Product in any single calendar year shall not exceed one percent of the sales volume for all CBA Products for the preceding 12 months; and (iii) all such New Products otherwise comply with the quality standards set forth in this Agreement.

(b) For purposes of this Section 11.03, New Products that are accepted by ABI are deemed Products and if CBA desires to then modify such Product, such modifications shall be handled as set forth in Section 11.08.

(c) Before making a New Product available to any Non-Alliance Wholesaler, CBA shall, to the extent allowed by law and permitted by the terms of any contract between CBA and the Non-Alliance Wholesaler holding the relevant distribution rights, first make such New Product available for distribution by ABI. Within 90 days of ABI's receipt of CBA's notice that it wishes such New Product distributed in the sales area of such Non-Alliance Wholesaler, ABI shall advise CBA of ABI's decision to accept distribution rights for such New Product in the sales area, in which event the ABI wholesaler distributing the product in the sales area shall be deemed an Affiliated Wholesaler or an Alliance Wholesaler for such New Product.

11.04 CBA shall comply with every commercially reasonable request made by ABI to terminate the distribution rights of any Non-Alliance Wholesaler and to cause the CBA Products to be distributed in the sales area of such Non-Alliance Wholesaler pursuant to this Agreement. This section shall not obligate CBA to undertake any action inconsistent with applicable law, except that at the written direction of ABI, ABI may obligate CBA to undertake an action that may give rise solely to civil liabilities to private parties and any such written direction shall obligate ABI to undertake the indemnification obligations with respect to such action as set forth in Section 14.02.

11.05 If CBA wishes to have Products distributed in a sales area where ABI is unable to provide an Affiliated Wholesaler or an Alliance Wholesaler who will agree to carry or fill orders for Products which have been procured by CBA or the Affiliated Wholesaler or the Alliance Wholesaler provided by ABI has refused repeatedly to reasonably cooperate with CBA and has failed to adhere to the provisions of the Wholesaler Equity Agreement between ABI and such Affiliated or Alliance Wholesaler with regard to the Products, CBA may, to the extent permitted by applicable law, terminate the distribution rights of the Affiliated Wholesaler or the Alliance Wholesaler, select another Person reasonably acceptable to ABI and upon written terms and conditions consistent with the intent of this Agreement to make ABI the exclusive distributor of Product in the Territory, to distribute the Product in such sales area, and if selected, such Person shall be deemed a Non-Alliance Wholesaler for purposes of this Agreement and shall be added to ATTACHMENT D. In the event ABI is able to identify a wholesaler for such sales area different from the wholesaler previously distributing the Products in such sales area, CBA's obligations with respect to the Non-Alliance Wholesaler shall be as set forth in Section 11.04.

11.06 At CBA's request, ABI shall instruct Alliance Wholesalers to return cooperage to the ABI Distribution Facility designated by ABI or, at the option of CBA, any cooperage used by a designated brewer, and ABI shall make available for pick-up by CBA all such cooperage. CBA shall pay ABI the Cooperage Handling Charge for all cooperage received by ABI. ABI shall not be liable for the costs of any cooperage lost or damaged by such Alliance Wholesaler, and ABI assigns to CBA all of ABI's rights, if any, to seek reimbursement from the Alliance Wholesaler for lost or damaged cooperage. CBA shall reimburse ABI for any costs incurred by ABI in handling cooperage that is not properly segregated from other cooperage by the Alliance Wholesalers or is returned in any other manner that causes ABI to incur costs not included in the calculation of Cooperage Handling Charges and ABI assigns to CBA all of ABI's rights, if any, to seek reimbursement from those Alliance Wholesalers that cause CBA to incur such additional costs. ABI's determination of such costs, absent manifest error, shall be binding, on each of ABI and CBA; provided, however, that such determination shall be subject to the audit provisions of Section Article XVII. ABI and CBA shall develop, from time to time, procedures for the collection and redemption of cooperage and cooperage deposit fees satisfactory to each party in its reasonable judgment. Such procedures shall provide for the prompt delivery of cooperage among ABI, CBA and the Alliance Wholesalers and the payment and return of cooperage deposit fees promptly upon acceptance and return of the respective cooperage.

11.07 With the consent of ABI (which ABI may withdraw or modify at any time upon 60 days' advance notice to CBA), CBA shall be permitted to deliver Product directly to Alliance Wholesalers. With respect to any such delivery,

(a) such deliveries shall still be deemed: (i) sales by CBA to ABI, and (ii) re-sales by ABI to such Alliance Wholesaler for purposes of this Agreement;

(b) title to and risk of loss of such Products shall remain with CBA until delivery to such Alliance Wholesaler; and

(c) Invoicing Costs shall be substituted for Staging Costs for all purposes under this Agreement.

If ABI does not consent to any request by CBA to deliver Product directly to an Alliance Wholesaler, at the request of CBA from time to time (but not more often than annually) ABI shall review the costs and benefits incurred or realized by CBA and the Alliance Wholesaler that would result from such direct delivery by CBA and discuss such costs and benefits with CBA. Within 30 days after completion of the review, ABI shall inform CBA whether and to what extent ABI shall consent to CBA's requests to deliver directly to such Allliance Wholesaler.

11.08 In order to modify an existing Product for the purposes of replacing the Product (rather than for the purposes of creating a New Product), CBA may change, alter, modify or adjust the formula, taste profile, alcohol content, ingredients, brand name or trade dress of any Product (a "Modified Product"), if and only if CBA has given ABI at least 30 days notice of such change, alteration, modification or adjustment. ABI shall have the right and option, in its sole discretion, during such 30 day period to terminate distribution of such Modified Product under this Agreement, in which event such Modified Product shall no longer be deemed a Product for purposes of this Agreement. Prior to execution of this Agreement, CBA, Redhook or Widmer have delivered to ABI, in writing, descriptions setting forth for each Product the exact ingredients (by types and origin) and product characteristics for such Product, including applicable tolerances and a description of the primary and secondary packaging for each Product. Other than minor changes in trade dress, any changes or deviations in primary or secondary packaging, ingredients (additions or deletions), hops or malt type or supplier of other key raw material in any Product from that earlier specified by CBA, Redhook or Widmer, such changes shall cause such Product to be a Modified Product. In addition, if ABI's examination of any Product indicates a deviation greater than the tolerance previously indicated for such Product in three or more tests, such Product shall be deemed to be a Modified Product.

11.09 CBA shall ship to ABI at 220 Taste Room, One Busch Place, St. Louis, Missouri 63118, Attention: Director - Brewing Education (or to such other address or location as may be specified from time to time in writing by ABI):
(a) one (1) case of each packaged Product during each calendar quarter; and (b) from time to time upon request by ABI, one (1) keg of the draught Product specified by AB.

11.10 ABI shall maintain in its employ a corporate inventory management employee (the "Inventory Manager"), a substantial portion of the responsibilities of whom shall be to coordinate and administer logistics of Product distribution to Alliance Wholesalers. Within fifteen (15) days of the end of each calendar quarter during the Term, beginning with the second calendar quarter of 2004, CBA shall pay to ABI 16.25% of the annual Inventory Manager Fee. ABI shall pay the Inventory Manager cash compensation not exceeding that generally paid to other ABI employees with similar experience, training, skill level and performance. Annually, ABI and CBA will review the time spent by the Inventory Manager with respect to the products sold by CBA as compared to the time spent on other matters for the preceding year, and annually ABI and CBA shall adjust the percentage specified in this paragraph so that CBA pays to ABI an amount that reasonably compensates ABI for the time spent by the Inventory Manager in the preceding year on matters relating to products sold by CBA..

11.11 Upon written agreement by the parties hereto, the Territory may be expanded to include states or portions of the United States of America (or other countries in the world) not included in the Territory as of the Commencement Date.

11.12 CBA shall not acquire any alcohol or non-alcohol malt beverage brand or the assets or equity securities of any producer of alcohol malt beverages unless CBA delivers to ABI a written plan providing for the exclusive distribution of such malt beverages by ABI that is satisfactory to ABI.

11.13 If Kona exercises any right available to it to have any Person other than Widmer, ABI or CBA to distribute its products in any portion of the United States, CBA shall, upon learning thereof, promptly notify ABI. At the option of ABI, upon 90 days notice to CBA, ABI may notify CBA that products brewed by Kona or bearing Kona trade names or trademarks shall no longer be distributed pursuant to this Agreement, such termination to occur without liability by either party hereto.

ARTICLE XII
REPRESENTATIONS, WARRANTIES AND COVENANTS OF CBA

CBA represents, warrants and covenants to ABI as follows:

12.01 CBA is a limited liability corporation duly organized, validly existing and in good standing under the laws of the State of Oregon, has full corporate or other power and authority to carry on its business as now conducted and as currently proposed to be conducted, and to execute, deliver and carry out the terms of this Agreement, has all permits and authorizations necessary to carry on its business as presently conducted, and is, or shall be if required, duly qualified to do business as a foreign corporation in good standing in each jurisdiction wherein the nature of CBA's business and operations or the character of the properties owned or held under lease by CBA makes such qualification necessary and in which the failure to so qualify would have a materially adverse effect on the business, prospects, profits, condition or operations, financial or otherwise, of CBA.

12.02 This Agreement and all related documents have been duly authorized, executed and delivered by CBA and constitute legal, valid and binding agreements or obligations of CBA enforceable against it in accordance with their terms, subject to applicable bankruptcy, insolvency, and similar laws affecting the enforcement of creditors' rights generally. Neither the execution and delivery nor the performance by CBA of this Agreement will contravene any law or governmental rule or regulation, or any judgment or order, applicable to or binding on CBA, or CBA's charter documents, or result in any breach of or constitute any default under, or result in the creation of any lien upon any property of CBA under, any indenture, mortgage or other agreement or instrument to which CBA is a party or by which it, or any of its properties may be bound or affected.

12.03 Neither the execution and delivery nor the performance by CBA of this Agreement requires any consent or approval of, giving notice to, registration with, or taking of any other action in respect of, any federal or state governmental authority or agency which has not been obtained prior to the date hereof.

12.04 ABI's purchase or resale of Products or other goods hereunder in the form furnished to ABI by CBA and ABI's use of the Intellectual Property in accordance with the terms of authorization by the CBA of ABI's use pursuant to the this Agreement shall not infringe any valid United States or foreign patent right, right of privacy or publicity, or any rights with respect to trademarks, trade dress, copyrights, promotional slogans, trade names, designs, labels, get-ups, color combinations, product shapes, or other trademarks rights.

12.05 Except as set forth in ATTACHMENT D, CBA, Kona, Redhook and Widmer have no contract, agreement or understanding, whether oral or written, with any Person for the distribution of Product in the Territory.

12.06 As of the date hereof, the list of Non-Alliance Wholesalers set forth in ATTACHMENT D is accurate, full and complete.

12.07    All Products:

         (a) shall be merchantable and fit for their intended purpose;

         (b) shall be produced  exclusively  in the  breweries of Kona,

Redhook, Widmer or in other breweries approved by ABI;

(c) shall be free from defects in materials and workmanship and in compliance with applicable federal and state laws and regulations;

(d) shall be delivered free from any lawful security interest, lien or other encumbrance;

(e) shall not be adulterated or misbranded within the meaning of the Federal Food, Drug and Cosmetic Act, as amended, and shall comply with the applicable provisions of the Code of Federal Regulations; and

(f) shall be produced in compliance with the requirements of the Fair Labor Standards Act of 1938, as amended, and Executive Order No. 11246 and of the rules, regulations and relevant orders of the Secretary of Labor, if applicable.

12.08 (a) In order to ensure the freshness quality of Product when consumed by the public, all Products shall be delivered by CBA to the designated ABI Distribution Facility, or to the Alliance Wholesalers, Affiliated Wholesalers and Non-Alliance Wholesalers: (i) for packaged Product, at least 80 days; and (ii) for draft Product, at least 32 days, prior to the time when such Product would no longer be salable to or consumable by the public, based on criteria developed by CBA and reasonably acceptable to ABI, by which CBA judges the freshness of its malt and non-malt beverage products.

(b) If ABI changes from time to time its standards with respect to the remaining shelf life as applied generally to its products sold in the United States, CBA agrees that within six months of the effective date of such change, CBA shall conform its shipment practices to the current ABI standard.

(c) To the extent any Product is shipped to a WSC, ABI may change the standards described in Section 12.08(a) to provide assurances, satisfactory in the reasonable judgment of ABI, that the Product will continue to be delivered to retailers with an remaining shelf life consistent with the standards generally used by ABI.

12.09 CBA shall comply in material respects with all applicable governmental laws, regulations and orders covering the production, sale, packaging, marketing and delivering of the Products.

ARTICLE XIII
REPRESENTATIONS, WARRANTIES AND COVENANTS OF ABI

ABI represents, warrants and covenants to CBA as follows:

13.01 ABI is a corporation duly organized, validly existing and in good standing under the laws of the State of Missouri, has full corporate power and authority to carry on its business as now conducted and as currently proposed to be conducted, and to execute, deliver and carry out the terms of this Agreement and has all permits and authorizations necessary to carry on its business as presently conducted.

13.02 This Agreement and all related documents have been duly authorized, executed and delivered by ABI and constitute legal, valid and binding agreements or obligations of ABI enforceable against it in accordance with their terms, subject to applicable bankruptcy, insolvency, and similar laws affecting the enforcement of creditors' rights generally. Neither the execution and delivery nor the performance by ABI of this Agreement will contravene any law or governmental rule or regulation, or any judgment or order, applicable to or binding on ABI, or ABI's charter documents, or result in any breach of or constitute any default under, or result in the creation of any lien upon any property of ABI under, any indenture, mortgage or other agreement or instrument to which ABI is a party or by which it, or any of its properties may be bound or affected.

13.03 Neither the execution and delivery nor the performance by ABI of this Agreement requires any consent or approval of, giving notice to, registration with, or taking of any other action in respect of, any federal or state governmental authority or agency, which has not been obtained prior to the date hereof.

13.04 ABI shall comply in material respects with all governmental laws, regulations and orders covering the re-sale and distribution of the Products.

ARTICLE XIV
INDEMNIFICATION

14.01 In addition to any other indemnities set forth in this Agreement, CBA will indemnify, protect, defend and hold harmless each of ABI, its Affiliates, wholesalers and each of their respective directors, officers, employees and agents, from and against all claims, liabilities, losses, damages, injuries, demands, actions, causes of action, suits, proceedings, judgments and expenses, including, without limitation, reasonable attorneys' fees, court costs and other legal expenses arising from, connected with or attributable to: (a) the Products; (b) the breach by CBA of any provision hereof; (c) ABI's use of the Intellectual Property in conjunction with the distribution and sale of the Products in accordance with the terms hereof; (d) the inaccuracy of any warranty or

representation made by CBA herein or in connection herewith; or (e) the termination of the distribution rights of any Affiliated Wholesaler or Alliance Wholesaler pursuant to Section 11.05. None of the above indemnities shall require CBA to indemnify, protect, defend or hold harmless any indemnitee with respect to any claim to the extent such claim arises from, is connected with or is attributable to the negligence or willful misconduct of such ABI Indemnitee. Additionally, to the extent permitted by law, CBA shall indemnify, protect, defend and hold harmless ABI and any employee or designee of ABI on the board of directors of CBA from all claims, liabilities, losses, damages, injuries, demands, actions, causes of action, suits, proceedings, judgments and expenses, including without limitation, reasonable attorneys' fees, courts costs and other legal expenses arising from, connected with or attributable to the status of any employee or designee of ABI as a director of CBA. Expiration or termination of this Agreement shall not affect the continuing obligations of CBA to indemnify ABI under this Section 14.01.

14.02 In addition to other indemnities set forth in this Agreement, ABI will indemnify, protect, defend and hold harmless each of CBA, its Affiliates and each of their respective directors, officers, employees and agents, from and against all claims, liabilities, losses, damages, injuries, demands, actions, causes of action, suits, proceedings, judgments and expenses, including, without limitation, reasonable attorneys' fees, court costs and other legal expenses arising from, connected with or attributable to: (a) the breach by ABI of any provision hereof; (b) the inaccuracy of any warranty or representation made by ABI herein or in connection herewith; or (c) any action taken by CBA at the written direction of ABI pursuant to Section 11.04. Expiration or termination of this Agreement shall not affect the continuing obligations of ABI to indemnify CBA under this Section 14.02. Nothing herein shall require ABI to indemnify, protect, defend or hold harmless any indemnitee with respect to any claim to the extent such claim arises from, is connected with or is attributable to the negligence or willful misconduct of such indemnitee or the actions of any Non-Alliance Wholesalers.

14.03 If a claim by a third party is made against a party indemnified pursuant to this Article XIV, and if such indemnified party intends to seek indemnity with respect thereto under this Article XIV, the indemnified party shall promptly (and in any case

within 30 days of such claim being made) notify the indemnifying party of such claim; provided, however, that any failure of the indemnified party to promptly notify the indemnifying party of such claim shall not relieve the indemnifying party of its obligations pursuant to this Section 14.03 except to the extent that the indemnifying party would be responsible for the payment of any additional amounts or be actually prejudiced in any other way as a result of such failure. The indemnifying party shall have the right (but not the obligation) to undertake, conduct and control, through counsel of its own choosing and at the indemnifying party's expense, the settlement or defense thereof, provided the indemnifying party proceeds in good faith, expeditiously and diligently. If the indemnifying party does not notify the indemnified party in writing that it will defend any matter within 20 business days after receipt of notice from the indemnified party of the existence of such matter, or if the indemnifying party disputes that it is liable to the indemnified party for any sum pursuant to this Section 14.03, the indemnifying party shall have no right to defend such matter, and the indemnified party shall have full right and power to defend or otherwise deal with and dispose of the matter and shall be indemnified for the fees and expenses of counsel retained for such purpose. The indemnified party shall cooperate with the indemnifying party in connection with any defense by the indemnifying party of a claim, but the indemnifying party shall permit the indemnified party to participate in such settlement or defense through counsel chosen by the indemnified party and the fees and expenses of such counsel shall be borne by the indemnified party. Without the prior written consent of the indemnified party, the indemnifying party will not enter into any settlement of any such claim which would lead to liability or create any financial or other obligation on the part of the indemnified party, and the indemnifying party shall after such settlement or resolution of any claim promptly reimburse the indemnified party for the full amount of any loss resulting from such claim not theretofore paid by the indemnifying party. The indemnified party will not enter into any settlement or pay (except pursuant to a judgment) any such claim without the prior written consent of the indemnifying party, which consent shall not unreasonably be withheld or delayed. Notwithstanding the foregoing, the indemnified party shall have the right to pay or settle any such claim, in the event the indemnified party has not assumed or is not pursuing the defense of any claim or is in breach of its indemnification obligations hereunder. The indemnification required by this Section 14.03 shall be made by periodic payments of the amount thereof as losses are incurred and as and when bills are received.

ARTICLE XV
INSURANCE

CBA shall procure and maintain from qualified and licensed insurers with Best's Ratings of at least A-: (i) a comprehensive or commercial general liability insurance policy with at least $10,000,000 in coverage for each occurrence, including liquor liability; (ii) a worker's compensation policy with at least $2,000,000 in coverage for each occurrence; and (iii) a property insurance policy covering damage to the Product owned by CBA. Coverage shall be on an occurrence rather than a claims made basis. The policy shall name ABI as an additional insured and shall include coverage for CBA's indemnification obligations under this Agreement. The policy shall provide that ABI will be notified of the cancellation or any restrictive amendment of the policy at least 15 days prior to the effective date of such cancellation or amendment. CBA shall not violate, or permit to be violated, any conditions of such insurance policies, and CBA shall at all times satisfy the requirements of the insurance carrier writing said policy.
From time to time at the request of ABI, CBA shall provide ABI with a certificate from such insurer certifying that the insurance policy described in this section is in force and the evidence of coverage shall specifically state that coverage as it pertains to ABI shall be primary regardless of any other coverage that may be available to ABI. Failure to procure and maintain the insurance coverage specified herein shall be deemed a material breach of this Agreement

ARTICLE XVI
FORCE MAJEURE

16.01 If by reason of Force Majeure either party is unable in whole or in part to carry out any of its agreements contained herein, such party shall not be deemed in default during the continuance of such inability. The term "Force Majeure" as used herein shall mean, without limitation, the following:
acts of God; strikes, lockouts or other industrial disturbances; acts of public enemies; orders or restraints of any kind

from any government of the United States of America or from a state or from any of their departments, agencies or officials (except when such governmental action results from a party's failure or refusal to comply with any applicable law, rule or regulation), or of any civil or military authority; insurrections; riots; landslides; earthquakes; fires; storms; droughts, floods, explosions; and any other cause or event not reasonably within the control of the respective parties. Each party agrees, however, to remedy with all reasonable dispatch the cause or causes preventing it from carrying out the Agreement, provided that the settlement of strikes, lockouts and other course is in its judgment unfavorable to it.

16.02 The response to an act of Force Majeure resulting from an industrial disturbance shall be entirely within the discretion of the affected party, and the affected party shall not be required to make settlement of strikes, lockouts and other industrial disturbances by acceding to the demands of the opposing party or parties.

ARTICLE XVII
AUDIT AND INSPECTION RIGHTS

(a) During the Term and for a period of at least two years following the termination of this Agreement, each party shall maintain such books and records (collectively, "Records") in accordance with generally accepted accounting principles consistently applied as are necessary to substantiate that:
(i) All invoices and other charges submitted to the other for payment hereunder were valid and proper;

(ii) No payments have been made, directly or indirectly, by or on behalf of either party to or for the benefit of any employee or agent of the other party who may reasonably be expected to influence such other party's decision to enter into this Agreement, or the amount to be paid by such other party pursuant hereto (as used herein, "payment" shall include money, property, services, and all other forms of consideration); and

(iii) Such party has conformed to the provisions of this Agreement.

(b) Each party and/or its representative shall have the right at any time during normal business hours, upon five business days' notice, to have PricewaterhouseCoopers LLP, or such other internationally recognized accounting firm as agreed to by the parties audit the Records of the other in a manner which does not create unreasonable disruption to the audited party's normal conduct of business.

ARTICLE XVIII
CONFIDENTIALITY

18.01 (a) During and subsequent to the Term of this Agreement, each party shall treat and shall cause its respective employees, officers, directors, advisors, representatives, subsidiaries, Affiliates, assigns, subcontractors and any and all persons or business entities acting under one or any of them, to treat, as confidential property and not disclose to any other Person or use in any manner, except as is necessary to perform this Agreement (and then only on a confidential basis satisfactory to both parties), any information regarding the other party's prices, plans, programs, processes, products, costs, equipment, operations or customers (including without limitation information received by ABI with respect to Product formula and ingredient and information by CBA received regarding the distribution and logistics programs used by ABI) ("Confidential Information") which may come within the knowledge of such party, its officers, employees or advisors in the performance of this Agreement, without in each instance securing the prior written consent of the other party; nor shall ABI use such Confidential Information to produce a beer whose formula duplicates any of the Product formulas.

(b) Nothing above, however, shall prevent either ABI or CBA from disclosing to any other Person or using in any manner, information that such party can show:

(i) has been published or has become part of the public domain without any breach of this Agreement other than by acts, omissions or fault of such party or its employees or agents;

(ii) has been furnished or has been made known to such party by third parties (other than those acting directly or indirectly for or on behalf of the disclosing party) as a matter of legal right without restrictions on its disclosure;

(iii) was in such party's lawful possession prior to the disclosure thereof by the other party;

(iv) is later independently developed by the receiving party; or

(v) has been required to be disclosed by law, court order, or government order or regulation.

(c) If any party is required by law, court order or government order or regulation to disclose Confidential Information, such party shall provide notice thereof to the other party and undertake reasonable steps to provide the other party with an opportunity to object to such disclosure.

(d) Except as required by law, neither party shall release, or cause or allow the release of, information to the communications media or to any other third party concerning the specific terms of this Agreement or any amendment or modification thereto without the prior written consent of the other party; provided, however, that if in the reasonable opinion of the disclosing party's counsel, the failure to disclose any such information would create a reasonable risk of non-compliance with applicable securities laws, then such disclosing party may so disclose such information provided it gives the other party as much advance notice as is reasonably possible.

18.02 Neither party shall make any Confidential Information available to anyone other than those of its respective employees and advisors who need such Confidential Information to enable them to perform this Agreement.

18.03 These secrecy obligations with respect to the Confidential Information shall survive the termination or expiration of this Agreement.

ARTICLE XIX
ASSIGNMENT

19.01 This Agreement will be binding upon, and will inure to the benefit of, the parties hereto and their respective successors and permitted assigns.

19.02 CBA may not assign this Agreement to any Person without the prior written consent of ABI.

19.03 Provided that such assignment does not deny CBA the practical benefits of this Agreement, ABI may assign this Agreement to any entity controlled by Anheuser-Busch Companies, Inc., or to any entity which succeeds through any transaction to the business of ABI substantially as a whole, but no such assignment shall release ABI from its obligations as primary obligor hereunder without CBA's prior written consent, and ABI shall retain the sole right to provide any consents or waivers under this Agreement.

If to ABI:                 Anheuser-Busch, Incorporated
                           One Busch Place
                           St. Louis, Missouri 63118
                           Attn:    Vice President - Business and
                                    Wholesaler System Development
                           Facsimile Number:  (314)765 -9167

If to CBA:                 Craft Brands Alliance LLC
                           929 North Russell
                           Portland, Oregon 97227
                           Attn: Chief Executive Officer
                           Facsimile Number:  (503) 281-1496

with copies to:

Redhook Ale Brewery, Incorporated 14300 NE 145th Street Woodinville, Washington 98072 Attention: President Telecopy Number: (425) 492-6976

Widmer Brothers Brewing Company 929 North Russell Portland, Oregon 97227 Attention: President Telecopy Number: (503) 281-1496

or to such other address, facsimile number or attention as either party shall provide to the other in accordance herewith. Notices delivered in person, by overnight courier or by facsimile shall be effective when received. Notices given by certified mail shall be effective on the third business day after mailing unless sooner received, in which case they shall be effective upon receipt.

ARTICLE XXI
INDEPENDENT CONTRACTORS

The parties shall be and act as independent contractors and under no circumstances shall this Agreement be construed to create any agency, partnership, joint venture or employment relationship between the parties. Neither party has any authority to bind the other in any way except as may be otherwise expressly stated in this Agreement. The parties recognize that during the period of this Agreement, there will be employees of one party upon the premises of the other. It is understood and agreed that on such occasions the employees of each party shall remain the employees of that party solely, and that each party shall be solely responsible for the wages and benefits for its employees, and that any injury which may be sustained by an employee shall be covered under the worker's compensation insurance of the party by which he is employed.

ARTICLE XXII
MISCELLANEOUS

22.01 In exercising their respective rights (including, without limitation, the making of any determinations under this Agreement, discretionary or otherwise) and performing their respective obligations hereunder, each of the parties shall act in good faith and in a commercially reasonable manner; except that with respect to (a) the determination of Incompatible Conduct or the cure thereof by ABI, (b) ABI's decision to terminate distribution of a Modified Product (as described in Section 11.08 above); (c) ABI's judgment made pursuant to Section 7.03(a)(i) or (b); and (d) ABI's decision whether to provide approval as contemplated pursuant to Section 7.03(a)(v) above; ABI shall only be required to act in good faith and need not act in a commercially reasonable manner.

22.02 If any provision of this Agreement shall be determined to be illegal and unenforceable by any court of law or any competent governmental or other authority, the remaining provisions shall be severable and enforceable in accordance with their terms so long as this Agreement without such terms or provisions does not fail in its essential commercial purpose or purposes. The parties will negotiate in good faith to replace any such illegal or unenforceable provision or provisions with suitable substitute provisions that will maintain the economic purposes and intentions of this Agreement.

22.03 Failure by either party to insist on strict performance by the other of any term, condition or obligation set forth in this Agreement shall not be deemed a waiver of the same or any similar breach, and no waiver of any provision hereof shall be effective unless in writing, specifying the provision to be waived.

22.04 This Agreement is entered into in the State of Missouri and will be governed by and construed under the laws of Missouri, including the Uniform Commercial Code as in effect in the State. The parties agree that any legal or equitable action or proceeding with respect to this Agreement shall be brought in the United States District Court for the Eastern District of Missouri (or if such court does not have jurisdiction, in any court of general jurisdiction in the County of St. Louis, Missouri) or in

the United States District Court in Multonomah County, Oregon (or if such court does not have jurisdiction, in any court of general jurisdiction in Oregon).

22.05 This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior or contemporaneous agreements in regard thereto. This Agreement cannot be altered or modified except by an agreement in writing signed by authorized representatives of both parties and specifically referring to this Agreement. The section headings are inserted for convenience only and are in no way intended to define or limit the scope, extent or intent of any provision of this Agreement.

22.06 Nothing in this Agreement, express or implied, is intended or shall be construed to give any Person other than the parties to this Agreement, and the indemnitees specified in Article XIV or their respective successors or assigns any legal or equitable right, remedy or claim under or in respect of any agreement or any provision contained herein.

22.07 This Agreement may be executed in one or more counterparts and shall be the valid and binding agreement of the parties when the counterparts of this Agreement have been duly executed and delivered by each party hereto.

22.08 CBA acknowledges that ABI is reviewing changes to the procedures by which Affiliated Wholesalers and Alliance Wholesalers generate and transmit orders for Products. ABI may request from CBA reimbursement of out of pocket costs incurred to analyze or implement such change, and CBA shall reasonably consider such requests. CBA and ABI acknowledge that implementing such changes may require an amendment hereto and each party shall reasonably consider such amendment.

IN WITNESS WHEREOF, this Agreement is executed on behalf of the parties by their duly authorized representatives as of the day and year first above written.

ANHEUSER-BUSCH, INCORPORATED                  CRAFT BRANDS ALLIANCE LLC


By:/s/ JAMES F. HOFFMEISTER                   By: /s/ TERRY MICHAELSON
   ------------------------                   ----------------------------
       James F. Hoffmeister                           Terry Michaelson
       Vice President - Administration                Chief Executive
                                                      Officer and President

Redhook and Widmer hereby jointly and severally irrevocably guarantee the performance by CBA of its obligations hereunder. Each of Redhook and Widmer agree that this is a guaranty of performance and not of payment and waive any defense that may be available to it with respect to this guaranty other than performance. In the event ABI is required to return any payment made to it by CBA, this guaranty shall be reinstated with respect to such payment.

REDHOOK ALE BREWERY, INCORPORATED

By:/s/ PAUL SHIPMAN
--------------------------------------------------
Title: PRESIDENT AND CHIEF EXECUTIVE OFFICER

WIDMER BROTHERS BREWING COMPANY

By: /s/ KURT WIDMER
--------------------------------------------------
Title: PRESIDENT AND CHIEF EXECUTIVE OFFICER

2
211010.6/TDL
211010.6/TDL
ATTACHMENT A

STAGING COSTS AND COOPERAGE HANDLING COST MODIFICATION

For each calendar year during the Term, the Staging Costs and the Cooperage Handling Costs shall each be recalculated each January to be an amount equal to:

* where:

* = the Staging Costs or the Cooperage Handling Costs, as applicable, in effect for the prior calendar year

* = the percentage change (in decimal fraction form) in the Average Budgeted Hourly Fully Loaded Labor Rate for beer packaging and shipping laborers, budgeted for the calendar year for which the calculation is made, as compared to the amount which had been budgeted for the prior calendar year.

The Average Budgeted Hourly Fully Loaded Labor Rate for each calendar year shall be determined by taking the arithmetic average of the Budgeted Hourly Fully Loaded Labor Rates for the subject year (as set forth in the annual budget in the CMS/SAP system) in effect on December 31 preceding the subject year for all ABI breweries in the Territory.

2004                           *
2005                           *
     % change                  *

2005 Package Staging Cost      *                                  *

2004 Cooperage Handling Cost                                      *

2004                           *
2005                           *
     % change                  *

2005 Cooperage Handling Cost * *

* CONFIDENTIAL TREATMENT REQUESTED

ATTACHMENT B

INCOMPATIBLE CONDUCT

A. Examples of activities that constitute Incompatible Conduct:

(1) Advertising by CBA, Kona, Redhook or Widmer directed at underage drinkers;

(2) Production by Kona, Redhook or Widmer of a high alcohol beer; provided that high alcohol beer shall not include production of a beer whose alcohol content does not exceed the alcohol content of (a) a similar Product currently distributed hereunder or (b) a product that is made or distributed currently by ABI;

(3) Advertising by CBA, Kona, Redhook or Widmer based upon the high alcohol content of its beer;

(4) Statements by CBA, Kona, Redhook or Widmer defaming ABI or its products;

(5) Criminal activities by Kona, Redhook or Widmer or their senior executives; and

(6) Quality and wholesomeness of Product is materially affected, taking into account the permitted tolerances and Product specifications.

B. Examples of activities that do not constitute Incompatible Conduct:

(1) Poor operating results by CBA, Kona, Redhook or Widmer;

(2) Poor performance of CBA, Kona, Redhook or Widmer products or unsuccessful product introduction by CBA, Kona, Redhook or Widmer;

(3) Introduction by CBA, Kona, Redhook or Widmer of products directly competitive with ABI products;

(4) Any activity the sole effect of which on ABI is to decrease the value of ABI's investment in Redhook or Widmer or the value of ABI's distribution rights of CBA products; and

(5) Isolated, non-repetitive, inadvertent minor regulatory infractions.

PAGE 1 0F 2
ATTACHMENT C

METHODOLOGY TO ANNUALLY MODIFY THE
INCREMENTAL MARGIN, MARGIN,
AND THE INVOICING COSTS

For each calendar year during the Term, the Incremental Margin, Margin and the Invoicing Costs shall each be recalculated (rounding to the nearest one one-hundredth of a cent) each January to be an amount equal to:

* where:

* = the Incremental Margin, Margin or the Invoicing Costs, as applicable, in effect for the prior calendar year

* = the forecasted annual rate of change (in per cent) in the "GDP Deflator (Implicit)" for the subject calendar year, as published by DRI/McGraw Hill division of Standard & Poor's Corporation in the "Inflation Summary" table in the October issue in the preceding year of REVIEW OF THE U.S. ECONOMY (or such other index or publication as may be reasonably acceptable to CBA and ABI if such index or publication is no longer published).

The 2005 Base Margin would be calculated by multiplying the 2004 Base Margin

*
*
* The 2005 Incremental Margin would be calculated by multiplying the 2004 Incremental Margin

*
*
* * CONFIDENTIAL TREATMENT REQUESTED

The 2005 Invoicing Costs would be calculated by multiplying the 2004 Invoicing Costs (* per Pallet Lift) by 1.020

*

* CONFIDENTIAL TREATMENT REQUESTED

ATTACHMENT D

NON-ALLIANCE WHOLESALERS

Kelson Distributing
214 W. Morton
Moscow, Idaho 83843
(Redhook products only)

ATTACHMENT E
PROCEDURES RELATING TO PRICING MATTERS

1. *

2. *

3. *

4. *

5. *

* CONFIDENTIAL TREATMENT REQUESTED

ATTACHMENT F
FACTORS NEEDED TO EVALUATE NEW PRODUCTS

CBA must provide at least the following information to ABI in order for ABI to make an evaluation of New Product:

1. Proposed Name of New Product

2. Proposed New Product Packages

3. Proposed New Product Label

4. Proposed Ingredients and Proposed Suppliers

5. Alcohol Content

6. Beginning Gravity

7. IBU

8. Comprehensive Marketing Plan

9. Consumer Research