FORM 10-Q DATED 6/29/02
Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

     
(XBOX)   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934

For the quarterly period ended                     June 29, 2002

OR

     
(BOX)   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934

For the transition period from ..........to..........

Commission file number: 1-14092

THE BOSTON BEER COMPANY, INC.
(Exact name of registrant as specified in its charter)

     
MASSACHUSETTS   04-3284048
(State or other jurisdiction of incorporation   (I.R.S. Employer
or organization)   Identification No.)

75 Arlington Street, Boston, Massachusetts
(Address of principal executive offices)
02116
(Zip Code)

(617) 368-5000
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

             
Yes   (XBOX)   No   (BOX)

Number of shares outstanding of each of the issuer’s classes of common stock, as of August 7, 2002:

         
Class A Common Stock, $.01 par value
    11,596,928  
Class B Common Stock, $.01 par value
    4,107,355  
(Title of each class)
  (Number of shares)

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TABLE OF CONTENTS

CONSOLIDATED BALANCE SHEETS
CONSOLIDATED STATEMENTS OF OPERATIONS
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
Item 2. CHANGES IN SECURITIES
Item 3. DEFAULTS UPON SENIOR SECURITIES
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Item 5. OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
SIGNATURES
Ex-10.39 Second Amended and Restated Agreement
Ex-10.40 Guaranty Release Agreement
Ex-10.41 Second Amended and Restated Credit Agree.
Ex-99.1 Certification pursuant to 18 U.S.C.
Ex-99.2 Certification pursuant to 18 U.S.C.


Table of Contents

THE BOSTON BEER COMPANY, INC. AND SUBSIDIARIES
FORM 10-Q

QUARTERLY REPORT
JUNE 29, 2002

TABLE OF CONTENTS

                   
              PAGE  
             
 
PART I.  
FINANCIAL INFORMATION
       
       
Item 1. Consolidated Financial Statements
       
         
Consolidated Balance Sheets June 29, 2002 and December 29, 2001
    3  
         
Consolidated Statements of Operations for the Three and Six Months Ended June 29, 2002 and June 30, 2001
    4  
         
Consolidated Statements of Cash Flows for the Six Months Ended June 29, 2002 and June 30, 2001
    5  
         
Notes to Consolidated Financial Statements
    6-8  
       
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
    9-13  
PART II.  
OTHER INFORMATION
       
       
Item 1. Legal Proceedings
    14  
       
Item 2. Changes in Securities
    14  
       
Item 3. Defaults Upon Senior Securities
    14  
       
Item 4. Submission of Matters to a Vote of Security Holders
    14  
       
Item 5. Other Information
    14  
       
Item 6. Exhibits and Reports on Form 8-K
    15-18  
SIGNATURES  
 
    19  

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THE BOSTON BEER COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)
(unaudited)
                     
        June 29,   December 29,
        2002   2001
       
 
Assets
               
 
Current Assets:
               
   
Cash and cash equivalents
  $ 13,923     $ 45,838  
   
Short-term investments
    36,971       2,031  
   
Accounts receivable, net of the allowance for doubtful accounts of $741 and $625 as
of June 29, 2002 and December 29, 2001, respectively
    23,247       19,219  
   
Inventories
    9,842       9,323  
   
Prepaid expenses
    1,170       925  
   
Deferred income taxes
    2,074       2,291  
   
Other current assets
    1,520       844  
   
 
   
     
 
   
Total current assets
    88,747       80,471  
   
Property, plant and equipment, net of accumulated depreciation of $30,085
and $29,816 as of June 29, 2002 and December 29, 2001, respectively
    21,840       23,897  
   
Other assets
    2,142       1,750  
   
Goodwill
    1,377       1,377  
   
 
   
     
 
   
Total assets
    114,106     $ 107,495  
   
 
   
     
 
Liabilities and Stockholders’ Equity
               
 
Current Liabilities:
               
   
Accounts payable
  $ 9,635     $ 11,201  
   
Accrued expenses
    15,817       13,196  
   
 
   
     
 
   
Total current liabilities
    25,452       24,397  
Long-term deferred income taxes
    3,746       3,583  
Other long-term liabilities
    894       1,336  
Commitment and Contingencies
               
 
Stockholders’ Equity:
               
   
Class A Common Stock, $.01 par value; 22,700,000 shares
authorized; 16,591,188 and 16,544,104 issued and outstanding as of
June 29, 2002 and December 29, 2001, respectively
    166       165  
   
Class B Common Stock, $.01 par value; 4,200,000 shares authorized;
4,107,355 issued and outstanding
    41       41  
   
Additional paid-in-capital
    58,018       57,610  
   
Unearned compensation
    (220 )     (212 )
   
Other comprehensive income
    110        
   
Retained earnings
    61,769       55,647  
   
Less: Treasury Stock
               
   
4,377,344 and 4,328,300 shares as of June 29, 2002 and
December 29, 2001, at cost, respectively
    (35,870 )     (35,072 )
   
 
   
     
 
   
Total stockholders’ equity
    84,014       78,179  
   
 
   
     
 
   
Total liabilities and stockholders’ equity
  $ 114,106     $ 107,495  
   
 
   
     
 

The accompanying notes are an integral part of these consolidated financial statements

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THE BOSTON BEER COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)
(unaudited)
                                   
      Three months ended   Six months ended
     
 
      June 29,   June 30,   June 29,   June 30,
      2002   2001   2002   2001
     
 
 
 
Sales
  $ 65,217     $ 53,877     $ 115,696     $ 100,095  
Less excise taxes
    6,345       5,244       11,164       9,786  
 
   
     
     
     
 
 
Net sales
    58,872       48,633       104,532       90,309  
Cost of sales
    23,369       19,429       41,881       36,866  
 
   
     
     
     
 
 
Gross profit
    35,503       29,204       62,651       53,443  
 
   
     
     
     
 
Operating expenses:
                               
Advertising, promotional and selling expenses
    24,592       18,369       46,277       33,576  
General and administrative expenses
    3,824       3,110       7,348       6,837  
 
   
     
     
     
 
 
Total operating expenses
    28,416       21,479       53,625       40,413  
 
   
     
     
     
 
Operating income
    7,087       7,725       9,026       13,030  
 
   
     
     
     
 
Other income:
                               
Interest income, net
    198       353       397       830  
Other income
    928       10       1,026       97  
 
   
     
     
     
 
 
Total other income
    1,126       363       1,423       927  
 
   
     
     
     
 
Income before provision for income taxes
    8,213       8,088       10,449       13,957  
Provision for income taxes
    3,410       3,372       4,327       5,792  
 
   
     
     
     
 
Net income
  $ 4,803     $ 4,716     $ 6,122     $ 8,165  
 
   
     
     
     
 
Earnings per common share – basic
  $ 0.29     $ 0.29     $ 0.37     $ 0.50  
 
   
     
     
     
 
Earnings per common share — diluted
  $ 0.29     $ 0.29     $ 0.37     $ 0.49  
 
   
     
     
     
 
Weighted average number of common shares – basic
    16,354       16,461       16,353       16,458  
 
   
     
     
     
 
Weighted average number of common shares – diluted
    16,682       16,534       16,689       16,563  
 
   
     
     
     
 

The accompanying notes are an integral part of these consolidated financial statements

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THE BOSTON BEER COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)
(unaudited)
                     
        Six months ended
       
        June 29,   June 30,
        2002   2001
       
 
Cash flows from operating activities:
               
Net income
  $ 6,122     $ 8,165  
Adjustments to reconcile net income to net cash provided by operating activities:
               
   
Depreciation and amortization
    2,879       3,270  
   
Loss (gain) on disposal of fixed assets
    206       (46 )
   
Bad debt expense
    116        
   
Stock option compensation expense
    42       44  
 
Changes in assets and liabilities:
               
   
Accounts receivable
    (4,144 )     (4,858 )
   
Inventory
    (519 )     1,600  
   
Prepaid expenses
    (244 )     523  
   
Other current assets
    (598 )     90  
   
Deferred Taxes
    380        
   
Other assets
    (899 )     (37 )
   
Accounts payable
    (1,566 )     2,140  
   
Accrued expenses
    2,620       2,599  
   
Other long-term liabilities
    (206 )     (358 )
 
   
     
 
Net cash provided by operating activities
    4,189       13,132  
 
   
     
 
Cash flows from investing activities:
               
   
Purchases of available-for-sale investments
    (33,832 )     (8,000 )
   
Purchases of held-to-maturity investments
    (9,026 )     (8,132 )
   
Maturities of short-term investments
    8,028       9,540  
   
Purchases of property, plant and equipment
    (947 )     (2,445 )
   
Proceeds on disposal of fixed assets
    202       46  
 
   
     
 
Net cash used in investing activities
    (35,575 )     (8,991 )
 
   
     
 
Cash flows from financing activities:
               
   
Purchase of treasury stock
    (798 )     (2,656 )
   
Proceeds from exercise of stock options
    228        
   
Net proceeds from sale of investment shares
    41       132  
 
   
     
 
Net cash used in financing activities
    (529 )     (2,524 )
 
   
     
 
Net (decrease) increase in cash and cash equivalents
    (31,915 )     1,617  
Cash and cash equivalents at beginning of period
    45,838       25,750  
 
   
     
 
Cash and cash equivalents at end of period
  $ 13,923     $ 27,367  
 
   
     
 
Supplemental disclosure of cash flow information:
               
Interest paid
  $     $ 11  
 
   
     
 
Income taxes paid
  $ 2,041     $ 2,148  
 
   
     
 

The accompanying notes are an integral part of these consolidated financial statements

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THE BOSTON BEER COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A.     BASIS OF PRESENTATION

The Boston Beer Company, Inc. and its subsidiaries (the “Company”) is engaged in the business of brewing and selling malt beverages and cider products throughout the United States and in selected international markets. The accompanying consolidated financial position as of June 29, 2002 and the results of its consolidated operations and consolidated cash flows for the quarters ended June 29, 2002 and June 30, 2001 have been prepared by the Company, without audit, in accordance with accounting principles generally accepted in the United States of America for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required for complete financial statements by generally accepted accounting principles and should be read in conjunction with the audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 29, 2001.

Management’s Opinion

In the opinion of the Company’s management, the Company’s unaudited consolidated financial position as of June 29, 2002 and the results of its consolidated operations and consolidated cash flows for the interim periods ended June 29, 2002 and June 30, 2001, reflect all adjustments (consisting only of normal and recurring adjustments) necessary to present fairly the results of the interim periods presented. The operating results for the interim periods presented are not necessarily indicative of the results expected for the full year.

B.     SHORT-TERM INVESTMENTS

Short-term investments held by the Company as of June 29, 2002 were classified as available-for-sale, held-to-maturity, and trading securities, depending upon the nature of the investment. Available-for-sale investments include mutual funds comprised of United States taxable and tax-advantaged government-related securities. The cost of available-for-sale investments were $32.5 million and $0, as of June 29, 2002 and December 29, 2001, respectively. Available-for-sale securities are recorded at fair market value, with the change in fair market value during the period excluded from earnings and recorded net of tax as a component of other comprehensive income. Held-to-maturity investments consisted of debt securities, which typically mature in one year or less and are valued at amortized cost, which approximates fair value. The Company has the positive intent and ability to hold these securities until maturity. The aggregate fair value at June 29, 2002 and December 29, 2001 was $3.0 million and $2.0 million, respectively, for investments in United States government obligations and corporate debt. The Company received equity securities during the quarter ended June 29, 2002 as a result of the demutualization of a third party insurance company. These securities were classified as trading securities with unrealized income of $1.3 million reflected in the income statement as of June 29, 2002.

The Company recorded unrealized gains of approximately $110,000 and $106,000 on available-for-sale securities as of June 29, 2002 and June 30, 2001. There were no realized gains or losses recorded during the period ended June 29, 2002 and June 30, 2001.

C.     INVENTORIES

Inventories, which consist principally of hops, brewery materials and packaging, are stated at the lower of cost, determined on a first-in, first-out (FIFO) basis, or market.

Inventories consist of the following (in thousands):

                 
    June 29,   December 29,
    2002   2001
   
 
Raw materials, principally hops
  $ 7,901     $ 7,605  
Work in process
    753       773  
Finished goods
    1,188       945  
 
   
     
 
 
  $ 9,842     $ 9,323  
 
   
     
 

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THE BOSTON BEER COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

D.     EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share in accordance with Statement of Financial Accounting Standard No. 128 (in thousands, except per share data):

                                 
    For the three months ended   For the six months ended
   
 
    June 29,   June 30,   June 29,   June 30,
    2002   2001   2002   2001
   
 
 
 
Net income
  $ 4,803     $ 4,716     $ 6,122     $ 8,165  
Shares used in earnings per common share — basic
    16,354       16,461       16,353       16,458  
Dilutive effect of common equivalent shares – stock options
    328       73       336       105  
 
   
     
     
     
 
Shares used in earnings per common share — diluted
    16,682       16,534       16,689       16,563  
 
   
     
     
     
 
Earnings per common share — basic
  $ 0.29     $ 0.29     $ 0.37     $ 0.50  
 
   
     
     
     
 
Earnings per common share — diluted
  $ 0.29     $ 0.29     $ 0.37     $ 0.49  
 
   
     
     
     
 

E.     COMPREHENSIVE INCOME

Comprehensive income calculated in accordance with Statement of Financial Accounting Standard No. 130 is as follows (in thousands):

                                       
          For the three months ended   For the six months ended
         
 
          June 29,   June 30,   June 29,   June 30,
          2002   2001   2002   2001
         
 
 
 
Net income
  $ 4,803     $ 4,716     $ 6,122     $ 8,165  
   
Plus: unrealized gain on available-for-sale Securities
    109       76       110       106  
 
   
     
     
     
 
 
Comprehensive income
  $ 4,912     $ 4,792     $ 6,232     $ 8,271  
 
   
     
     
     
 

Accumulated other comprehensive income calculated in accordance with Statement of Financial Accounting Standard No. 130 is as follows (in thousands):

                                 
    For the three months ended   For the six months ended
   
 
    June 29,   June 30,   June 29,   June 30,
    2002   2001   2002   2001
   
 
 
 
Beginning Balance
  $ 1     $ 30     $     $  
Unrealized gain on available-for-sale securities
    109       76       110       106  
 
   
     
     
     
 
Ending balance
  $ 110     $ 106     $ 110     $ 106  
 
   
     
     
     
 

F.     GOODWILL

Effective January 1, 2002 the Company adopted Financial Accounting Standards Board Statements of Financial Accounting Standards No. 142 (SFAS 142), Goodwill and other Intangible Assets. Under the new rules, goodwill will no longer be amortized but will be subject to annual impairment tests in accordance with the Statements. SFAS No. 142 requires that purchased goodwill and certain indefinite-lived intangibles no longer be amortized, but instead be tested for impairment at least annually.

SFAS No. 142 prescribes a two-phase process for impairment testing of goodwill. The first phase, required to be completed by June 30, 2002, screens for impairment; while the second phase (if necessary), required to be completed by December 31, 2002,

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measures the impairment. The Company completed its first phase impairment analysis during the current quarter and found no instances of impairment of its recorded goodwill; accordingly, the second testing phase, absent future indicators of impairment, is not necessary during 2002.

The Company recorded approximately $24,000 and $48,000 of goodwill amortization during the three and six months ended June 30, 2001, respectively. In accordance with SFAS No. 142, the Company recorded no amortization related to goodwill during 2002. The pro-forma effect of goodwill amortization is not deemed to be material.

G.     RECENT ACCOUNTING PROUNOUNCEMENTS

The Company adopted SFAS No. 141 and SFAS No. 142. SFAS No. 141 requires business combinations initiated after June 30, 2001 to be accounted for using the purchase method of accounting. It also specifies the types of acquired intangible assets that are required to be recognized and reported separate from goodwill. SFAS No. 142 requires that goodwill and certain intangibles no longer be amortized, but instead tested for impairment at least annually. Under SFAS No. 142 goodwill amortization is not recorded. The Company recorded approximately $100,000 of goodwill amortization in 2001. As required under this Statement, the initial testing of goodwill for possible impairment has been completed within the first six months of 2002 and final testing, if possible impairment has been identified, will be completed by the end of the year. After completion of initial testing of goodwill for possible impairment, the Company has determined that goodwill is not impaired.

In August 2001, the FASB issued SFAS No. 143, “Accounting for Asset Retirement Obligations.” This Statement addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. This Statement applies to all entities. It applies to legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and (or) the normal operation of a long-lived asset, except for certain obligations of lessees. SFAS No. 143 is effective for financial statements issued for fiscal years beginning after June 15, 2002. The Company expects that the initial application of SFAS No. 143 will not have a material impact on its financial statements.

On October 3, 2001, the FASB issued SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” SFAS No. 144 supercedes SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of.” SFAS No. 144 applies to all long-lived assets (including discontinued operations) and consequently amends Accounting Principles Board Opinion No. 30. SFAS No. 144 develops one accounting model for long-lived assets that are to be disposed of by sale. SFAS No. 144 requires that long-lived assets that are to be disposed of by sale be measured at the lower of book value or fair value less cost to sell. Additionally, SFAS No. 144 expands the scope of discontinued operations to include all components of an entity with operations that (1) can be distinguished from the rest of the entity and (2) will be eliminated from the ongoing operations of the entity in a disposal transaction. SFAS No. 144 is effective for the Company for all financial statements issued in fiscal 2003. The Company expects that the initial application of SFAS No. 144 will not have a material impact on its financial statements.

In April 2002, the FASB issued SFAS No. 145, “Rescission of FASB Statements 4, 44 and 64, Amendment to FASB Statement 13, and Technical Corrections”. One of the major changes of this statement is to change the accounting for the classification of gains and losses from the extinguishment of debt. Upon adoption, the Company will follow APB 30, Reporting the Results of Operations—Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions in determining whether such extinguishment of debt may be classified as extraordinary. The provisions of this statement related to the rescission of FASB Statement 4 shall be applied in fiscal years beginning after May 15, 2002 with early application encouraged. The Company believes that the adoption of SFAS No. 145 will not have a material impact on its financial statements.

In June 2002, the FASB issued SFAS No. 146, “Accounting for Cost Associated with Exit or Disposal Activities”. SFAS No. 146 addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force (EITF) Issue No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)”. SFAS No. 146 requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred. The provisions of SFAS No. 146 are effective for exit or disposal activities that are initiated after December 31, 2002. The Company believes that the adoption of SFAS No. 146 will not have a material impact on its financial statements.

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Item 2.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following is a discussion of the financial condition and results of operations of the Company for the three and six-month periods ended June 29, 2002 as compared to the three and six-month periods ended June 30, 2001. This discussion should be read in conjunction with the Management’s Discussion and Analysis of Financial Condition and Results of Operations, Consolidated Financial Statements of the Company and Notes thereto included in the Form 10-K for the fiscal year ended December 29, 2001.

RESULTS OF OPERATIONS

For purposes of this discussion, Boston Beer’s “core brands” include all products sold under the Samuel Adams®, Oregon Original™, HardCore® and Twisted Tea® trademarks. “Core brands” do not include the products brewed at the Cincinnati Brewery under contract arrangements for third parties. Volume produced under contract arrangements is referred to below as “non-core products”. Boston Beer’s flagship product is Samuel Adams Boston Lager®.

Three Months Ended June 29, 2002 compared to Three Months Ended June 30, 2001

Net sales. Net sales increased by $10.2 million or 21.1% to $58.9 million for the three months ended June 29, 2002 from $48.6 million for the three months ended June 30, 2001. The increase is primarily due to an increase in volume of Boston Beer’s core brands and an increase in average price.

Volume. Total volume increased by 16.1% to 353,000 barrels in the three months ended June 29, 2002 from 304,000 barrels in the three months ended June 30, 2001. Core brands increased by 21.0% to 351,000 barrels for the quarter ended June 29, 2002 from 290,000 barrels for the quarter ended June 30, 2001. The increase in core brands is primarily due to volume contributed from a new product, Sam Adams Light™, and to an increase in seasonal brand volume. Sam Adams Light™ was initially launched in certain test markets during the second half of 2001. The Company subsequently introduced the new product in New York, Chicago, parts of New Jersey, Arizona, and Hawaii during the second quarter 2002. Results in the Sam Adams Light™ markets have been positive and the Company plans to have completed its national launch by year-end.

Non-core volume decreased by 85.7% to 2,000 barrels for the quarter ended June 29, 2002 from 14,000 barrels for the quarter ended June 30, 2001. The decline in non-core volume is primarily due to the expiration in June 2001 of the production contract with the Company’s largest customer of non-core products. As gross profit is significantly lower on non-core products as compared to core brands, the Company does not believe that this change will have a material impact on its financial position, results of operations or cash flows in the short or long-term.

Selling Price. The selling price per barrel increased approximately 4.4% to $166.78 per barrel for the quarter ended June 29, 2002. This increase is due to a decline in non-core volume, changes in the packaging mix, and normal price increases. As net selling price is significantly lower for non-core products as compared to core brands, the decline in non-core products effectively increased the combined net selling price per equivalent barrel. The ratio of bottles to kegs increased, with bottles representing 72.3% of total shipments in the three months ended June 29, 2002 as compared to 67.8% for the same period last year. The shift in the mix to bottles from kegs effectively increased revenue per barrel, as the selling price per equivalent barrel is higher for bottles than for kegs. This shift is primarily due to the introduction of Sam Adams Light™, as this product is only available in bottles.

Gross Profit. Gross profit was 60.3% as a percentage of net sales or $100.58 per barrel for the quarter ended June 29, 2002, as compared to 60.1% and $95.91 for the quarter ended June 30, 2001. The increase was primarily due to a decline in non-core products, packaging mix changes, offset by an increase in cost of goods sold.

Cost of sales increased by $2.29 per barrel to 39.7% as a percentage of net sales or $66.20 per barrel for the quarter ended June 29, 2002, as compared to 40.0% as a percentage of net sales or $63.81 per barrel for the quarter ended June 30, 2001. This is primarily due to a decline in non-core products and packaging mix changes.

Significant changes in the packaging mix would also have a material effect on gross profit. Assuming the same level of production, a shift in the mix to bottles from kegs would effectively increase gross profit sold per barrel, as the gross profit per equivalent barrel is higher for bottles than for kegs.

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Item 2.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Advertising, Promotional and Selling. As a percentage of net sales, advertising, promotional and selling expenses were 41.8% for the quarter ended June 29, 2002, as compared to 37.8% for the quarter ended June 30, 2001. Advertising, promotional and selling expenses increased by $6.2 million or 33.9% to $24.6 million for the three months ended June 29, 2002, compared to $18.4 million for the three months ended June 30, 2001. This increase is primarily due to the investment in brand support for the launch of Sam Adams Light™ in several markets. The Company plans to launch Sam Adams Light™ in all remaining United States markets with similar high investment levels in brand support.

General and Administrative. General and administrative expenses increased by 23.0% or $714,000 to $3.8 million for the quarter ended June 29, 2002 as compared to the same period last year. The increase was primarily due to wage increases, as well as increases in rent and utilities, consulting, and legal fees.

Interest income, net. Interest income decreased by 44.0% to $198,000 for the quarter ended June 29, 2002 from $353,000 for the quarter ended June 29, 2001. This decrease is primarily due to a significant decline in interest rates during the quarter ended June 29, 2002, as compared to the same period last year.

Other income. Other income increased by $918,000 to $928,000 for the quarter ended June 29, 2002 from $10,000 for the quarter ended June 30, 2001. For the three months ended June 29, 2002, the Company received shares of stock from the demutualization of a third party insurance provider. The Company recorded the value of this stock receipt, or $1.3 million in the quarter ended June 29, 2002. This gain was partially offset by losses relating to the disposal of assets.

Provision for income taxes. The Company anticipates that its effective tax rate will be approximately 41.0% for the year ended December 28, 2002, as contrasted with 40.7% for the year ended December 29, 2001.

Six Months Ended June 29, 2002 compared to Six Months Ended June 30, 2001

Net sales. Net sales increased by $14.2 million or 15.7% to $104.5 million for the six months ended June 29, 2002 from $90.3 million for the six months ended June 30, 2001. The increase is primarily due to an increase in volume of Boston Beer’s core brands coupled with increases in selling prices.

Volume. Total volume increased by 9.4% to 628,000 barrels in the six months ended June 29, 2002 from 574,000 barrels in the six months ended June 30, 2001. Core brands increased by 13.6% to 625,000 barrels for the six months ended June 29, 2002 from 550,000 barrels for the six months ended June 30, 2001. The increase in core brands is primarily due to increases in year round products, specifically Sam Adams Light™. Sam Adams Light™ was initially launched in certain test markets during the second half of 2001. By the end of the first half of 2002, the Company had launched the new product in the following markets: New England, San Diego, Columbus, New York, Chicago, parts of New Jersey, Arizona, and Hawaii. Results in the Sam Adams Light™ markets have been positive and the Company plans to have completed its national launch by year-end.

Non-core volume decreased by 87.5% to 3,000 barrels for the six months ended June 29, 2002 from 24,000 barrels for the six months ended June 30, 2001. The decline in non-core volume is primarily due to the expiration in June 2001 of the production contract with the Company’s largest customer of non-core products. As gross profit is significantly lower on non-core products as compared to core brands, the Company does not believe that this change will have a material impact on its financial position, results of operations or cash flows in the short and long-term.

Selling Price. The selling price per barrel increased approximately 5.8% to $166.45 per barrel for the six months ended June 29, 2002. This increase is due to a decline in non-core volume, changes in the packaging mix, and price increases. As net selling price is significantly lower for non-core products as compared to core brands, the decline in non-core products effectively increased the combined net selling price per equivalent barrel. The ratio of bottles to kegs increased, with bottles representing 71.5% of total shipments in the six months ended June 29, 2002 as compared to 67.9% for the same period last year. The shift in the mix to bottles from kegs effectively increased revenue per barrel, as the selling price per equivalent barrel is higher for bottles than for kegs. This shift is primarily due to the introduction of Sam Adams Light™, as this product is only available in bottles.

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Item 2.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

Gross Profit. Gross profit was 59.9% as a percentage of net sales or $99.76 per barrel for the six months ended June 29, 2002, as compared to 59.2% and $93.03 for the six months ended June 30, 2001. The increase was primarily due to a decline in non-core products, packaging mix changes, price increases, offset by an increase in cost of goods sold.

Cost of sales increased by $2.46 per barrel to 40.1% as a percentage of net sales or $66.69 per barrel for the six months ended June 29, 2002, as compared to 40.8% as a percentage of net sales or $64.17 per barrel for the six months ended June 30, 2001. This is primarily due to a decline in non-core products and packaging mix changes.

Significant changes in the packaging mix would also have a material effect on gross profit. Assuming the same level of production, a shift in the mix to bottles from kegs would effectively increase gross profit sold per barrel, as the gross profit per equivalent barrel is higher for bottles than for kegs.

Advertising, Promotional and Selling. As a percentage of net sales, advertising, promotional and selling expenses were 44.3% for the six months ended June 29, 2002, as compared to 37.2% for the six months ended June 30, 2001. Advertising, promotional and selling expenses increased by $12.7 million or 37.8% to $46.3 million for the six months ended June 29, 2002, compared to $33.6 million for the six months ended June 30, 2001. This increase is primarily due to the investment in brand support for the launch of Sam Adams Light™ in several markets. As of June 29, 2002, the Company has launched Sam Adams Light™ in several domestic markets: New England, San Diego, Columbus, New York, Chicago, parts of New Jersey, Arizona, and Hawaii. The Company plans to launch all remaining United States markets during the third and fourth quarter of 2002, supported by similar high levels of investment in brand support.

General and Administrative. General and administrative expenses increased by 7.5% or $511,000 to $7.3 million for the six months ended June 29, 2002 as compared to the same period last year. The increase was primarily due to wage increases as well as increases in increases in rent and utilities, offset by decreases in recruiting expenses.

Interest income, net. Interest income decreased by 52.2% to $397,000 for the six months ended June 29, 2002 from $830,000 for the six months ended June 29, 2001. This decrease is primarily due to a significant decline in interest rates during the six months ended June 29, 2002, as compared to the same period last year.

Other income. Other income increased by $929,000 to $1.0 million for the six months ended June 29, 2002 from $97,000 for the six months ended June 30, 2001. During the second quarter 2002, the Company received shares of stock from the demutualization of a third party insurance provider. The Company recorded the value of this stock receipt of $1.3 million in the six months ended June 29, 2002. This gain was partially offset by losses relating to the disposal of assets.

Provision for income taxes. The Company anticipates that its effective tax rate will be approximately 41.0% for the year ended December 28, 2002, as contrasted with 40.7% for the year ended December 29, 2001.

LIQUIDITY AND CAPITAL RESOURCES

The company’s financial condition continued to be strong during the first half of 2002. Cash and short-term investments increased to $50.9 million as of June 29, 2002 from $47.9 million as of December 29, 2001. For the six months ended June 29, 2002, cash (excluding short-term investments) provided by operating activities of $4.2 million offset cash used in investing activities of $35.6 million and cash used in financing activities of $529,000. Cash provided by operating activities during the first six months ended 2002 was significantly lower than operating cash flow for the same period in 2001 due to the higher advertising and promotional expenditures incurred to support the launch of Sam Adams Light™.

The Board of Directors has authorized an aggregate expenditure limitation of $45.0 million pursuant to the Company’s share repurchase program. As of June 29, 2002, the Company had repurchased a total of 4.4 million shares under this program at a cost of $35.9 million. The Company repurchased 49,000 shares of its outstanding Class A Common Stock during the second quarter of 2002.

The Company utilized $947,000 for the purchase of capital equipment during the six months ended June 29, 2002 as compared to $2.4 million during the same period last year. Purchases during the first half of 2002 primarily consisted of kegs and computer equipment.

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With working capital of $63.3 million and $45.0 million in unused bank lines of credit as of June 29, 2002, the Company believes that its existing resources should be sufficient to meet the Company’s short-term and long-term operating and capital requirements. The Company’s credit facility as of June 29, 2002 consisted of a $15.0 million revolving line of credit (which would have expired on March 31, 2004) and an additional $30.0 million credit facility, borrowings under which would have converted to a term loan on March 31, 2002, had the facility not been extended through June 30, 2002. Effective July 1, 2002, a new $45.0 million credit facility has subsequently replaced the existing credit facilities that were existing as of June 29, 2002. The new facility expires on March 31, 2007. There were no amounts outstanding under the Company’s credit facilities as of June 29, 2002 or as of the date of this filing.

THE POTENTIAL IMPACT OF KNOWN FACTS, COMMITMENTS, EVENTS AND UNCERTAINTIES

Brewery-Related Transactions
The Company believes that it will have adequate capacity for the production of its products for the foreseeable future, but that the economics of that capacity may change as supply and demand for contract capacity changes (see 10-K for full discussion). In that regard, in April 2002, the Company and High Falls Brewing Company, LLC renegotiated their existing contract brewing agreement, restructuring certain pricing terms, volume requirements, termination provisions and other matters, the result of which extends the Company’s option to produce at High Falls through 2010, at slightly less favorable economics than had existed previously. In connection with this new agreement, the Company released the guaranty of the obligations of High Falls Brewing Company, LLC by the Genesee Brewing Company, Inc.

Hops Purchase Commitments
The Company utilizes several varieties of hops in the production of its products. To ensure adequate supplies of these varieties, the Company enters into advance multi-year purchase commitments based on forecasted future hop requirements among other factors.

During 2001, the Company completed certain hop disposal transactions and cancelled certain hop future contracts. The transactions were deemed necessary in order to bring hop inventory levels and future contracts into balance with the Company’s current brewing volume and hop usage, as the Company did not believe that these hop inventories and future hop contracts would be used by the Company within the foreseeable future. During the six months ending June 29, 2002 and June 30, 2001, the Company did not record significant charges for inventory reserves and cancellation fees associated with excess hops inventories and purchase commitments.

The computation of the excess inventory and purchase commitment reserve requires management to make certain assumptions regarding future sales growth, product mix, cancellation costs and supply, among others. The Company’s accounting policy for hops inventory and purchase commitments is to recognize a loss by establishing a reserve to the extent inventory levels and commitments exceed forecasted needs. The Company continues to manage inventory levels and purchase commitments in an effort to maximize utilization of hops on hand and hops under commitment. The current levels are deemed adequate, based upon foreseeable future brewing requirements. The Company does not anticipate further material losses related to hop inventories or contract commitments within the foreseeable future. However, if actual results differ from management’s assumptions or if management assumptions change regarding future sales growth, product mix, and hop market conditions, future material losses could result.

Recent Accounting Pronouncements
The Company adopted SFAS No. 141 and SFAS No. 142. SFAS No. 141 requires business combinations initiated after June 30, 2001 to be accounted for using the purchase method of accounting. It also specifies the types of acquired intangible assets that are required to be recognized and reported separate from goodwill. SFAS No. 142 requires that goodwill and certain intangibles no longer be amortized, but instead tested for impairment at least annually. Under SFAS No. 142 goodwill amortization is not recorded. The Company recorded approximately $100,000 of goodwill amortization in 2001. As required under this Statement, the initial testing of goodwill for possible impairment has been completed within the first six months of 2002 and final testing, if possible impairment has been identified, will be completed by the end of the year. After completion of initial testing of goodwill for possible impairment, the Company has determined that goodwill is not impaired.

In August 2001, the FASB issued SFAS No. 143, “Accounting for Asset Retirement Obligations.” This Statement addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. This Statement applies to all entities. It applies to legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and (or) the normal operation of a long-lived asset, except for certain obligations of lessees. SFAS No. 143 is effective for financial statements issued for fiscal years beginning after June 15, 2002. The Company expects that the initial application of SFAS No. 143 will not have a material impact on its financial statements.

On October 3, 2001, the FASB issued SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” SFAS No. 144 supercedes SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of.” SFAS No. 144 applies to all long-lived assets (including discontinued operations) and consequently amends Accounting Principles Board Opinion No. 30. SFAS No. 144 develops one accounting model for long-lived assets that are to be disposed of by sale. SFAS No. 144 requires that long-lived assets that are to be disposed of by sale be measured at the lower of book value or fair value less cost to sell. Additionally, SFAS No. 144 expands the scope of discontinued operations to include all components of an entity with operations that (1) can be distinguished from the rest of the entity and (2) will be eliminated from the ongoing operations of the entity in a

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disposal transaction. SFAS No. 144 is effective for the Company for all financial statements issued in fiscal 2003. The Company expects that the initial application of SFAS No. 144 will not have a material impact on its financial statements.

In April 2002, the FASB issued SFAS No. 145, “Rescission of FASB Statements 4, 44 and 64, Amendment to FASB Statement 13, and Technical Corrections”. One of the major changes of this statement is to change the accounting for the classification of gains and losses from the extinguishment of debt. Upon adoption, the Company will follow APB 30, Reporting the Results of Operations—Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions in determining whether such extinguishment of debt may be classified as extraordinary. The provisions of this statement related to the rescission of FASB Statement 4 shall be applied in fiscal years beginning after May 15, 2002 with early application encouraged. The Company believes that the adoption of SFAS No. 145 will not have a material impact on its financial statements.

In June 2002, the FASB issued SFAS No. 146, “Accounting for Cost Associated with Exit or Disposal Activities”. SFAS No. 146 addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force (EITF) Issue No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)”. SFAS No. 146 requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred. The provisions of SFAS No. 146 are effective for exit or disposal activities that are initiated after December 31, 2002. The Company believes that the adoption of SFAS No. 146 will not have a material impact on its financial statements.

Critical Accounting Policies
The Company’s financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles in the United States. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by management’s application of accounting policies. Critical accounting policies for the Company are outlined in the Form 10-K, Footnote B for the fiscal year ended December 29, 2001. Also, refer to Hops Purchase Commitments above.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Since December 29, 2001, there have been no significant changes in the Company’s exposures to interest rate or foreign currency rate fluctuations. The Company currently does not enter into derivatives or other market risk sensitive instruments for the purpose of hedging or for trading purposes.

FORWARD-LOOKING STATEMENTS

In this Form 10-Q and in other documents incorporated herein, as well as in oral statements made by the Company, statements that are prefaced with the words “may,” “will,” “expect,” “anticipate,” “continue,” “estimate,” “project,” “intend,” “designed” and similar expressions, are intended to identify forward-looking statements regarding events, conditions, and financial trends that may affect the Company’s future plans of operations, business strategy, results of operations and financial position. These statements are based on the Company’s current expectations and estimates as to prospective events and circumstances about which the Company can give no firm assurance. Further, any forward-looking statement speaks only as of the date on which such statement is made, and the Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date factor that may emerge, forward-looking statements should not be relied upon as a prediction of actual future financial condition or results. These forward-looking statements, like any forward-looking statements, involve risks and uncertainties that could cause actual results to differ materially from those projected or unanticipated. Such risks and uncertainties include the factors set forth below in addition to the other information set forth in this Form 10-Q.

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PART II. OTHER INFORMATION

  Item 1.   LEGAL PROCEEDINGS
 
      The Company is party to certain claims and litigation in the ordinary course of business. The Company does not believe any of these proceedings will, individually or in the aggregate, have a material adverse effect upon its financial condition or results of operations.

  Item 2.   CHANGES IN SECURITIES
 
      Not Applicable

  Item 3.   DEFAULTS UPON SENIOR SECURITIES
 
      Not Applicable

  Item 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
      The Company held its Annual Meeting of Stockholders on May 21, 2002. The following items were voted upon at that time.
 
      “RESOLVED: That Pearson C. Cummin, III, Robert N. Hiatt and James C. Kautz be, and they hereby are, elected Class A Directors of the Corporation, to serve for a term of one year, ending on the date of the 2003 Annual Meeting of Stockholders in accordance with the By-Laws and until their respective successors are duly chosen and qualified.”
 
      The results of the vote were, as follows:
 
      Election of Class A Directors:
                 
    For   Withheld

Pearson C. Cummin, III
    9,309,997       17,631  
Robert N. Hiatt
    9,307,555       20,073  
James C. Kautz
    9,296,900       30,728  

      Mr. C. James Koch, as the sole holder of the Corporation’s Class B Common Stock, voted on the election of four (4) Class B Directors.
 
      “RESOLVED: That C. James Koch, Charles Joseph Koch, Martin F. Roper and John B. Wing be, and they hereby are, elected Class B Directors of the Corporation to serve for a term of one year ending on the date of the 2003 Annual Meeting of Stockholders in accordance with the By-Laws and until their respective successors are duly chosen and qualified.”
 
      The results of the vote were, as follows:
 
      Election of Class B Directors:
                 
    For   Withheld

C. James Koch
    4,107,355       0  
Charles Joseph Koch
    4,107,355       0  
Martin F. Roper
    4,107,355       0  
John B. Wing
    4,107,355       0  

  Item 5.   OTHER INFORMATION
 
      Not Applicable

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  Item 6.   EXHIBITS AND REPORTS ON FORM 8-K
 
  (a)   Exhibits
             
Exhibit No.   Title        

 
       
3.1   Amended and Restated By-Laws of the Company, dated June 2, 1998 (incorporated by reference to Exhibit 3.5 to the Company’s Form 10-Q filed on August 10, 1998)
     
3.2   Restated Articles of Organization of the Company, dated July 21, 1998 (incorporated by reference to Exhibit 3.6 to the Company’s Form 10-Q filed on August 10, 1998)
     
4.1   Form of Class A Common Stock Certificate (incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement No. 33-96164)
     
10.1   Revolving Credit Agreement between Fleet Bank of Massachusetts, N.A. and Boston Beer Company Limited Partnership (the “Partnership”), dated as of May 2, 1995 (incorporated by reference to Exhibit 10.1 to the Company’s Registration Statement No. 33-96162)
     
10.2   Loan Security and Trust Agreement, dated October 1, 1987, among Massachusetts Industrial Finance Agency, the Partnership and The First National Bank of Boston, as Trustee, as amended (incorporated by reference to Exhibit 10.2 to the Company’s Registration Statement No. 33-96164)
     
10.3   Deferred Compensation Agreement between the Partnership and Alfred W. Rossow, Jr., effective December 1, 1992 (incorporated by reference to Exhibit 10.3 to the Company’s Registration Statement No. 33-96162)
     
10.4   The Boston Beer Company, Inc. Employee Equity Incentive Plan, as adopted effective November 20, 1995 and amended effective February 23, 1996 (incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement No. 333-1798)
     
10.5   Form of Employment Agreement between the Partnership and employees (incorporated by reference to Exhibit 10.5 to the Company’s Registration Statement No. 33-96162)
     
10.6   Services Agreement between The Boston Beer Company, Inc. and Chemical Mellon Shareholder Services, dated as of October 27, 1995 (incorporated by reference to the Company’s Form 10-K, filed on April 1, 1996)
     
10.7   Form of Indemnification Agreement between the Partnership and certain employees and Advisory Committee members (incorporated by reference to Exhibit 10.7 to the Company’s Registration Statement No. 33-96162)
     
10.8   Stockholder Rights Agreement, dated as of December, 1995, among The Boston Beer Company, Inc. and the initial Stockholders (incorporated by reference to the Company’s Form 10-K, filed on April 1, 1996)
     
+10.9   Agreement between Boston Brewing Company, Inc. and The Stroh Brewery Company, dated as of January 31, 1994 (incorporated by reference to Exhibit 10.9 to the Company’s Registration Statement No. 33-96164)
     
+10.10   Agreement between Boston Brewing Company, Inc. and the Genesee Brewing Company, dated as of July 25, 1995 (incorporated by reference to Exhibit 10.10 to the Company’s Registration Statement No. 33-96164)

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Exhibit No.   Title        

 
       
+10.11   Amended and Restated Agreement between Pittsburgh Brewing Company and Boston Brewing Company, Inc. dated as of February 28, 1989 (incorporated by reference to Exhibit 10.11 to the Company’s Registration Statement No. 33-96164)
     
10.12   Amendment to Amended and Restated Agreement between Pittsburgh Brewing Company, Boston Brewing Company, Inc., and G. Heileman Brewing Company, Inc., dated December 13, 1989 (incorporated by reference to Exhibit 10.12 to the Company’s Registration Statement No. 33-96162)
     
+10.13   Second Amendment to Amended and Restated Agreement between Pittsburgh Brewing Company and Boston Brewing Company, Inc. dated as of August 3, 1992 (incorporated by reference to Exhibit 10.13 to the Company’s Registration Statement No. 33-96164)
     
+10.14   Third Amendment to Amended and Restated Agreement between Pittsburgh Brewing Company and Boston Brewing Company, Inc. dated December 1,1994 (incorporated by reference to Exhibit 10.14 to the Company’s Registration Statement No. 33-96164)
     
10.15   Fourth Amendment to Amended and Restated Agreement between Pittsburgh Brewing Company and Boston Brewing Company, Inc. dated as of April 7,1995 (incorporated by reference to Exhibit 10.15 to the Company’s Registration Statement No. 33-96162)
     
+10.16   Letter Agreement between Boston Beer Company Limited Partnership and Joseph E. Seagram & Sons, Inc. (incorporated by reference to Exhibit 10.16 to the Company’s Registration Statement No. 33-96162)
     
10.17   Services Agreement and Fee Schedule of Mellon Bank, N.A. Escrow Agent Services for The Boston Beer Company, Inc. dated as of October 27, 1995 (incorporated by reference to Exhibit 10.17 to the Company’s Registration Statement No. 33-96164)
     
10.18   Amendment to Revolving Credit Agreement between Fleet Bank of Massachusetts, N.A. and the Partnership (incorporated by reference to Exhibit 10.18 to the Company’s Registration Statement No. 33-96164)
     
10.19   1996 Stock Option Plan for Non-Employee Directors (incorporated by reference to the Company’s Form 10-K, filed on March 31, 1997)
     
+10.20   Production Agreement between The Stroh Brewery Company and Boston Beer Company Limited Partnership, dated January 14, 1997 (incorporated by reference to the Company’s Form 10-K, filed on March 31, 1997)
     
+10.21   Letter Agreement between The Stroh Brewery Company and Boston Beer Company Limited Partnership, dated January 14, 1997 (incorporated by reference to the Company’s Form 10-K, filed on March 31, 1997)
     
+10.22   Agreement between Boston Beer Company Limited Partnership and The Schoenling Brewing Company, dated May 22, 1996 (incorporated by reference to the Company’s Form 10-K, filed on March 31, 1997)
     
10.23   Revolving Credit Agreement between Fleet Bank of Massachusetts, N.A. and The Boston Beer Company, Inc., dated as of March 21, 1997 (incorporated by reference to the Company’s Form 10-Q, filed on May 12, 1997)
     
+10.24   Amended and Restated Agreement between Boston Brewing Company, Inc. and the Genesee Brewing Company, Inc. dated April 30, 1997 (incorporated by reference to the Company’s Form 10-Q, filed on August 11, 1997)

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Exhibit No.   Title

 
+10.26   Fifth Amendment, dated December 31, 1997, to Amended and Restated Agreement between Pittsburgh Brewing Company and Boston Brewing Company, Inc. (incorporated by reference to the Company’s Form 10-K, filed on March 26, 1998)
     
10.27   Extension letters, dated August 19, 1997, November 19, 1997, December 19, 1997, January 22, 1998, February 25, 1998 and March 11, 1998 between The Stroh Brewery Company and Boston Brewing Company, Inc. (incorporated by reference to the Company’s Form 10-K, filed on March 26, 1998)
     
+10.28   Employee Equity Incentive Plan, as amended and effective on December 19, 1997 (incorporated by reference to the Company’s Form 10-K, filed on March 26, 1998)
     
+10.29   1996 Stock Option Plan for Non-Employee Directors, as amended and effective on December 19, 1997 (incorporated by reference to the Company’s Form 10-K, filed March 26, 1998)
     
+10.30   Glass Supply Agreement between The Boston Beer Company and Owens’ Brockway Glass Container Inc., dated April 30, 1998 (incorporated by reference to the Company’s Form 10-Q, filed on August 10, 1998)
     
10.31   Extension letters, dated April 13, 1998, April 27, 1998, June 11, 1998, June 25, 1998 and July 20, 1998 between The Stroh Brewery Company and Boston Brewing Company, Inc. (incorporated by reference to the Company’s Form 10-Q, filed on August 10, 1998)
     
+10.33   Amended and Restated Production Agreement between The Stroh Brewery Company and Boston Beer Company Limited Partnership, dated November 1, 1998 (incorporated by reference to the Company’s Form 10-K, filed on March 25, 1999)
     
10.34   Agreement between Boston Beer Company Limited Partnership, Pabst Brewing Company and Miller Brewing Company, dated February 5, 1999 (incorporated by reference to the Company’s Form 10-K, filed on March 25, 1999)
     
10.35   Amendment to Revolving Credit Agreement between Fleet Bank of Massachusetts, N.A. and The Boston Beer Company, Inc., dated March 30, 1999 (incorporated by reference to the Company’s Form 10-Q, filed on May 10, 1999)
     
+10.36   Agreement between Boston Beer Company Limited Partnership and Landstar Logistics and Transportation, dated January 9, 1999 (incorporated by reference to the Company’s Form 10-Q, filed on May 10, 1999)
     
+10.37   Consent to Assignment of the Amended and Restated Agreement between Boston Brewing Company, Inc. and the Genesee Brewing Company, Inc. dated April 30, 1997 to Monroe Brewing Co., LLC (now known as High Falls Brewing Company, LLC) dated December 15, 2000 (incorporated by reference to the Company’s 10-K, filed on March 30, 2001)
     
+10.38   Guaranty of The Genesee Brewing Company, Inc. dated December 15, 2000 in favor of Boston Brewing Company, Inc., for itself and as the sole general partner of Boston Beer Company Limited Partnership in connection with the Consent of Assignment of the Amended and Restated Agreement between Boston Brewing Company, Inc. and the Genesee Brewing Company, Inc. dated April 30, 1997 to Monroe Brewing Co., LLC (now known as High Falls Brewing Company, LLC) dated December 15, 2000 (incorporated by reference to the Company’s 10-K, filed on March 30, 2001)
     
*+10.39   Second Amended and Restated Agreement between Boston Beer Corporation and High Falls Brewing Company, LLC effective as of April 15, 2002.
     
*+10.40   Guaranty Release Agreement by and between GBC Liquidating Corp., formerly known as The Genesee Brewing Company, Inc., and Boston Beer Corporation, d/b/a The Boston Beer Company dated April 22, 2002.
     
*10.41   Second Amended and Restated Credit Agreement between The Boston Beer Company, Inc. and Boston Beer Corporation, as Borrowers, and Fleet National Bank, effective as of July 1, 2002.
     
*11.1   The information required by exhibit 11 has been included in Note D of the notes to the consolidated financial statements.

17


Table of Contents

     
Exhibit No.   Title

 
  21.1   List of subsidiaries of The Boston Beer Company, Inc. (incorporated by reference to the Company’s Form 10-K, filed on March 28, 1997)
     
  21.2   List of subsidiaries of The Boston Beer Company, Inc. effective as of December 30, 2000 (incorporated by reference to the Company’s Form 10-K, filed on March 30, 2001)
     
  21.3   List of subsidiaries of The Boston Beer Company, Inc. effective as of March 30, 2002 (incorporated by reference to the Company’s Form 10-Q, filed on May 14, 2002)
 
*99.1   Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
*99.2   Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


*   Filed with this report.
+   Portions of this Exhibit have been omitted pursuant to an application for an order declaring confidential treatment filed with the Securities and Exchange Commission.

(b)   Reports on Form 8-K.
 
    The Company filed a Form 8-K on May 1, 2002 and an amendment on May 10, 2002 with the Securities and Exchange Commission. The filing was regarding a change in the Company’s independent accountants effective May 1, 2002.
 
    The Company filed a Form 8-K on June 18, 2002 with the Securities and Exchange Commission. The filing was regarding stock sales plans in compliance with Rule 10b5-1 of the Securities and Exchange Commission.

18


Table of Contents

SIGNATURES

  Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Form 10-Q to be signed on its behalf by the undersigned thereunto duly authorized.

THE BOSTON BEER COMPANY, INC.
(Registrant)

     
Date: August 13, 2002   By: /s/ Martin F. Roper

Martin F. Roper
President and Chief Executive Officer
(principal executive officer)
 
     
 
Date: August 13, 2002   By: /s/ Richard P. Lindsay

Richard P. Lindsay
Chief Financial Officer and
Treasurer (principal accounting
and financial officer)

19

<PAGE>

EXHIBIT 10.39
*DENOTES EXPURGATED INFORMATION


                           SECOND AMENDED AND RESTATED
                                AGREEMENT BETWEEN
                             BOSTON BEER CORPORATION
                                       AND
                         HIGH FALLS BREWING COMPANY, LLC



      THIS AGREEMENT ("Agreement"), effective as of the 15th day of April, 2002
(the "Effective Date"), by and between BOSTON BEER CORPORATION, a Massachusetts
corporation with its principal place of business at 75 Arlington Street, Boston,
MA 02116 ("Boston Beer"), and HIGH FALLS BREWING COMPANY, LLC, a New York
limited liability company with its principal place of business at 445 St. Paul
Street, Rochester, NY 14605 ("High Falls"), shall modify, amend and restate the
Amended and Restated Agreement entered into on the 30th day April, 1997, by and
between BOSTON BREWING COMPANY, INC., d/b/a THE BOSTON BEER COMPANY, a
Massachusetts corporation ("Boston Brewing"), for itself and as the sole general
partner of Boston Beer Company Limited Partnership, a Massachusetts limited
partnership ("BBCLP"), and THE GENESEE BREWING COMPANY, INC., a New York
corporation ("Genesee").

      WHEREAS, as of July 25, 1995, Boston Brewing, for itself and as the sole
general partner of BBCLP, and Genesee entered into a production agreement under
which Genesee agreed to brew, package and sell Products for Boston Brewing
 and
BBCLP, which agreement was amended and restated by instrument dated April 30,
1997 (the "Prior Agreement");

      WHEREAS, as of December 15, 2000, Genesee assigned the Prior Agreement to
High Falls;

      WHEREAS, on December 31, 2000, BBCLP transferred all of its assets and
liabilities to Boston Beer and consequently Boston Beer assumed the rights and
obligations of BBCLP and Boston Brewing under the Prior Agreement; and



[*] Indicates that information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment.

<PAGE>

Boston Beer Agreement
Page 2



      WHEREAS, Boston Beer and High Falls (sometimes hereinafter referred to as
the "Parties" or either of them as a "Party") wish to further amend the terms
and conditions of the Prior Agreement as set forth below.

      ACCORDINGLY, for and in consideration of the mutual agreements contained
herein, the Parties, intending to be legally bound, hereby agree as follows:

      1.    SCOPE OF AGREEMENT

            (a) During the term of this Agreement as set forth in Paragraph 4
      hereof and in accordance with the terms set forth herein, High Falls
      agrees to brew, package and sell the Products to Boston Beer and Boston
      Beer agrees to purchase the Products from High Falls. High Falls and
      Boston Beer acknowledge that they both wish to develop a mutually
      beneficial, long-term relationship under this Agreement. The Parties agree
      to act in good faith and to use their best efforts to resolve differences
      arising during the course of their relationship in a mutually agreeable
      manner. The Parties acknowledge that future needs may require one or both
      of the Parties to make capital investments in High Falls' plant and
      equipment and that in the event any such investment is contemplated by
      Boston Beer, the Parties will negotiate in good faith and use their best
      efforts to agree upon any amendments to this Agreement that may be
      required to facilitate the long-term relationship contemplated by the
      Parties.

            (b) CORE PRODUCT. For purposes of this Agreement, "Core Product"
      shall mean: (i) *, in each case packaged in cases of 4/6, 2/12 packs in a
      tray, or 24 loose twelve ounce bottles and 12 twenty-two ounce bottles, in
      half barrel or quarter barrel kegs, and any other package types or
      configurations that the parties mutually agree to use for packaging such
      products, or (ii) any other Boston Beer * product(s) that the parties
      mutually agree in writing shall replace one or more of such products as
      the Core Product.

            (c) OTHER PRODUCTS. High Falls acknowledges that Boston Beer has
      requested that High Falls evaluate the feasibility of producing other
      Boston Beer products, recognizing limitations that may exist due to
      storage of multiple ingredients and yeast varieties, the 



[*] Indicates that information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment.
                                     

<PAGE>

Boston Beer Agreement
Page 3


      availability and capacity of brewing vessels and storage tanks and the
      like. It is the intention of the Parties that High Falls shall brew,
      package and sell to Boston Beer other Boston Beer products upon terms
      mutually agreed to in writing by High Falls and Boston Beer. For purposes
      of this Agreement, "Other Products" shall mean any Boston Beer brand or
      brands other than the Core Product, whether currently offered or developed
      in the future, which the parties mutually agree to add to this Agreement
      during any calendar year in accordance with the following procedure: By
      November 1st in each calendar year, Boston Beer shall provide High Falls
      with an annual forecast for the following calendar year, showing Boston
      Beer's monthly projections by package for the Core Product and any Other
      Products. At least *% of the projected volume in each calendar year shall
      be the Core Product. In the event that the annual forecast includes any
      proposed Other Products, Boston Beer will furnish High Falls with the
      brewing formula and procedures and product specifications for the proposed
      Other Products. High Falls shall: (i) review the specifications and
      brewing formula for any proposed Other Products; (ii) propose a Fixed Cost
      for each of the proposed Other Products; and (iii) propose to Boston Beer
      the minimum order size, tank usage and other production and capacity
      parameters. Boston Beer may accept or reject High Falls' proposal with
      respect to each of the proposed Other Products. If Boston Beer accepts the
      High Falls proposal for a proposed Other Product, such Other Product shall
      be deemed to be added to this Agreement only for the calendar year covered
      by the annual forecast. If in any annual forecast, Boston Beer proposes an
      Other Product that was produced by High Falls in a prior year, and: (x)
      the specifications, brewing formula and procedures, Brewing Ingredients,
      Packaging Materials and the timing and volume of production for such Other
      Product have not changed, and (y) the capacity utilization required for
      High Falls' own products and, from and after * (if applicable), other
      contract products, are substantially the same; then High Falls shall not
      unreasonably refuse to produce such Other Product and the Fixed Charge
      proposed by High Falls for such Other Product shall be the Fixed Charge
      paid by Boston Beer for such Other Product in the most recent prior year,
      increased by the annual adjustment factor for the Core Product set forth
      in Subparagraph 2(b) hereof.

            (d) The Fixed Charge proposed by High Falls for any Other Products,
      and for the Core Product in any package size or type other than those
      identified in Subparagraph 





[*] Indicates that information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment.

<PAGE>

Boston Beer Agreement
Page 4



      1(b) hereof, shall be based on the expected incremental cost differences,
      when compared with Samuel Adams Boston Lager, associated with the brewing
      and/or packaging formulations and processes required in the production of
      such Other Products or package. If High Falls determines during the trial
      brews or initial production of any Other Product that the brewing formula,
      procedures or product specifications furnished by Boston Beer are
      materially inaccurate, then High Falls shall notify Boston Beer in writing
      and High Falls may cease production of such Other Product (after
      completion of any production in progress) until the parties mutually agree
      on adjustment of the brewing formula, procedures or product specifications
      and/or the Fixed Charge for such Other Product.

            (e) PRODUCTS. For purposes of this Agreement, the Core Product and
      all Other Products produced during any calendar year shall be collectively
      referred to as the "Products".

            (f) BARREL. For purposes of this Agreement, the term "barrel" shall
      mean 31 U.S. gallons (3,968 ounces). The following calculation shall be
      used to measure barrels of the Products packaged in containers other than
      Kegs:

CONTAINER VOLUME IN OUNCES X CONTAINERS PER CASE UNIT X NO. OF CASE UNITS

Barrel Volume in Ounces

      2.    PRICE AND MANNER OF PAYMENT

            (a) Except as otherwise provided in the following subparagraphs of
      this Paragraph 2, Boston Beer shall pay High Falls for the Products an
      amount (the "Unit Price") equal to: (i) a "Fixed Charge" as determined in
      accordance with Subparagraphs 1(c) and 1(d) hereof or as set forth in
      Subparagraph 2(b) hereof, plus (ii) except as otherwise provided in
      Subparagraph 3(a)(iv), the net cost to High Falls of all Brewing
      Ingredients [as defined in Paragraph 3(a)] purchased by High Falls and
      used in producing the Products; all federal, state and local excise taxes
      attributable to the Products that are paid by High Falls; and deposit
      charges of $* per Keg, $* per bottle pallet and $* per draft pallet, or
      such other 



[*] Indicates that information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment.

<PAGE>


Boston Beer Agreement
Page 5



      amounts as the parties mutually agree. For this purpose, "net cost to High
      Falls" shall include purchase discounts, but not discounts resulting from
      credit terms.

            (b) The Fixed Charge for Samuel Adams Boston Lager packaged in
      bottles, shall be $* per unit of twenty-four loose 12-ounce bottles, 4/6
      12-ounce bottles, 2/12 12 ounce bottles in a tray or twelve 22-ounce
      bottles (in each instance, a "Case Unit;" it being the intent that the
      Fixed Charge for other 22 ounce package configurations produced by High
      Falls be prorated) plus an amount per Case Unit to be agreed upon from
      time to time which reflects the savings inuring to the benefit of Boston
      Beer (currently $* per case) if High Falls should elect, in its sole
      discretion, to utilize in its production process bulk glass as opposed to
      set-up glass used as of the date hereof by High Falls. The Fixed Charge
      for Samuel Adams Boston Lager packaged in one-half barrel (15.5 U.S.
      gallons) or one-quarter barrel (7.75 U.S. gallons) kegs (individually
      referred to as a "Keg" and collectively referred to as "Kegs") shall be $*
      per Keg. Commencing on January 1, * and on each January 1 thereafter
      during the term of this Agreement through and including January 1, *, the
      Fixed Charge component of the Unit Price for the Products shall be
      increased by *%. If the term of this Agreement has been extended by Boston
      Beer pursuant to Subparagraph 4(b), then, effective January 1, *, the
      Fixed Charge component of the Unit Price for the Products shall be
      increased by an amount equal to * percent (*%) of the increase in the
      Consumer Price Index - All Urban Consumers as published by the United
      States Department of Commerce - Bureau of Labor Statistics (the "CPI
      Increase") for the previous 12-month period. If the term of this Agreement
      has been extended by Boston Beer pursuant to Subparagraph 4(b), on *, the
      Fixed Charge for all Products shall be increased by $* per barrel, or $*
      per Case Unit (the "Fixed Charge Adjustment"). On January 1, *, the Fixed
      Charge component of the Unit Price for the Products shall be increased by
      an amount equal to (i) * percent (*%) of the CPI Increase applied to the
      Fixed Charge in effect on * (the "Fixed Charge Component Increase"), plus
      (ii) the difference between *% of the CPI Increase less *% applied to the
      Fixed Charge Adjustment (i.e., the $* referred to above) (the "Fixed
      Charge Adjustment Increase"), except that if the calculation pursuant to
      this clause (ii) results in a negative number, the Fixed Charge Adjustment
      Increase shall be zero. For example, if the Fixed 


[*] Indicates that information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment.

<PAGE>


Boston Beer Agreement
Page 6


      Charge effective January 1, * were $* per Case Unit and the CPI Increase
      for calendar year * were *%, then the Fixed Charge effective January 1, *
      would be calculated as follows:

         CALCULATION OF FIXED CHARGE COMPONENT INCREASE:


                  Fixed Charge at *                   $*
                  times *% of CPI Increase (*%)                 X  .* 
                                                                ------
                  Fixed Charge Component Increase  =          = $*





[*] Indicates that information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment.

<PAGE>


Boston Beer Agreement
Page 7



         CALCULATION OF FIXED CHARGE ADJUSTMENT INCREASE:
         -----------------------------------------------

                  Fixed Charge Adjustment (per Case Unit)     $*
                  times *% of CPI Increase  (*%)
                           minus *% (*%--*%=*%)               X  .*
                                                              -----
                  Fixed Charge Adjustment Increase          = $*

         CALCULATION OF FIXED CHARGE EFFECTIVE JANUARY 1, *:
         --------------------------------------------------

                  Fixed Charge at *                            $*
                  plus Fixed Charge Component Increase         +*
                  plus Fixed Charge Adjustment                 +*
                  plus Fixed Charge Adjustment Increase        +*
                                                             ----
                  Fixed Charge effective 1/1/*               = $*

Effective January 1 of each calendar year during the remainder of the term of
this Agreement, with the first adjustment to be effective January 1, *, the
Fixed Charge component of the Unit Price for the Products shall be increased by
an amount equal to * percent (*%) of the increase of the CPI for the previous
12-month period. High Falls must notify Boston Beer of any adjustments pursuant
to this Subparagraph 2(b) no later than March 31 of each year (or, if later, the
date that is 30 days after the Department of Commerce publishes the Consumer
Price Index covering the relevant period), with appropriate documentation
supporting any change in such Fixed Charge.

            (c) Until and including *, notwithstanding Paragraph 2(b) above: (i)
      if volume of all bottled Products during any calendar year exceeds in the
      aggregate * barrels, the then current Fixed Charge components of the Unit
      Price on all such excess volume of bottled Products during such calendar
      year shall be reduced by $* per Case Unit; and (ii) if volume of all
      Products packaged in the Sankey Keg during any calendar year exceeds in
      the aggregate * barrels, the then current Fixed Charge components of the
      Unit Price on all Products packaged in the Sankey Keg in excess of *
      barrels during such calendar year shall be reduced by $.* per Keg. The
      foregoing reductions in the Fixed Charge shall apply only if the Core
      Product comprises at least *% of all Products purchased by Boston Beer
      during such calendar year, and are subject to the provisions of
      Subparagraph 4(e) below. If the term of this Agreement is extended by
      Boston Beer pursuant to Subparagraph 4(b), this Subparagraph 2(c) shall no
      longer apply, effective as of *.



[*] Indicates that information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment.

<PAGE>


Boston Beer Agreement
Page 8


            (d) Boston Beer and High Falls (or their predecessors in interest)
      have undertaken improvements and modifications to * and Boston Beer
      contributed an agreed upon amount to the capital cost of such improvements
      and modifications. In consideration thereof, High Falls will pay to Boston
      Beer an annual fee (or ratable portion thereof) for each calendar year or
      portion thereof during the term of this Agreement through and including *,
      based on the volume of Products packaged in bottles during each calendar
      year under this Agreement. The obligation to pay this fee under this
      Agreement shall commence as of * and shall terminate * and is subject to
      the provisions of Subparagraph 4(e) below. The fee shall be paid within
      thirty (30) days after the end of each calendar year and shall be
      calculated as follows:

                           Volume of
                           Products Produced in Bottles
                           During Calendar Year                   Annual Fee
                           --------------------                   ----------

                           Less than * bbls                       $*
                           * up to * bbls                         $*
                           * up to * bbls                         $*
                           More than * bbls                       $*

If the term of this Agreement is extended by Boston Beer pursuant to
Subparagraph 4(b), this Subparagraph 2(d) shall no longer apply, effective as of
*.

            (e) Unit Prices are F.O.B. the carrier's trucks at High Falls' docks
      (i.e., the Unit Price includes the cost and risk of loading trucks at High
      Falls' dock) and include High Falls' labor costs, overhead, profit and
      other costs incurred in the brewing and packaging of the Product.

            (f) On the date the Products are shipped, High Falls will invoice
      Boston Beer for the Fixed Charge, all federal, state and local excise
      taxes attributable to the Products that are paid by High Falls and the Keg
      and pallet deposit charges. High Falls will invoice Boston Beer for all
      Brewing Ingredients purchased by High Falls at High Falls' standard cost
      when the Products are shipped (with monthly reconciliation to reflect High
      Falls' actual 



[*] Indicates that information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment.

<PAGE>

Boston Beer Agreement
Page 9


      cost). High Falls may periodically adjust its standard cost for Brewing
      Ingredients to more accurately reflect its actual costs. High Falls shall
      notify Boston Beer in writing of any adjustment in its standard cost at
      least ten (10) days prior to the date such adjustment will take effect.
      All invoices will be sent to Boston Beer by telecopier and Boston Beer
      will pay each Friday by electronic funds transfer all invoices that relate
      to shipments of the Products made by High Falls during the previous week.
      If High Falls should elect, in its sole discretion, to utilize electronic
      invoicing, Boston Beer will pay on each Wednesday all invoices that relate
      to shipments made during the previous week.

            (g) On the later of the Effective Date or the date upon which both
      Parties have executed this Agreement, Boston Beer will pay to High Falls
      the sum of $*. In addition, Boston Beer will pay to High Falls * percent
      (*%) of the amount that Genesee or its affiliates pays to Boston Beer,
      directly or indirectly, in consideration of its release of the guaranty of
      Genesee of High Falls' obligations to Boston Beer as set forth in the
      Guaranty executed by Genesee on December 15, 2000 (the "Genesee
      Guaranty"). Boston Beer's release of the Genesee Guaranty is contingent on
      its receipt of High Falls' audited financial statements for 2001 and
      current pro-formas that reflect positive cash flow, results of operations
      and debt coverage at levels reasonably acceptable to Boston Beer.

      3.    BREWING INGREDIENTS, PACKAGING MATERIALS AND BREWING SUPPLIES

            (a) For purposes of this Agreement, "Brewing Ingredients" shall be
      defined as all * used to produce the Products. Brewing Ingredients shall
      be purchased and supplied as follows:

            (i) All * used in the brewing of the Products shall be purchased by
Boston Beer or High Falls (at Boston Beer's cost) directly from High Falls'
commercial * suppliers. High Falls and Boston Beer will use their best efforts
to agree upon * specifications for * that will allow High Falls to commingle
storage of * used to produce the Products with * used to produce High Falls' own
products. If High Falls and Boston Beer cannot agree upon 




[*] Indicates that information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment.

<PAGE>

Boston Beer Agreement
Page 10


standard * specifications, the Fixed Charge shall be increased to reflect any
additional cost incurred by High Falls for separate handling and storage of *
used in the Products.

            (ii) All * used in the brewing of the Products shall be purchased by
High Falls from Boston Beer. Delivery of * shall be coordinated between High
Falls and Boston Beer.

            (iii) All * used in the brewing of the Products shall be supplied by
Boston Beer at *. All * supplied by Boston Beer shall remain the property solely
and exclusively of Boston Beer and shall be segregated and identified by High
Falls as such. Delivery of * to High Falls shall be coordinated between High
Falls and Boston Beer.

            (iv) All * used in the brewing and packaging of the Products shall
be purchased by High Falls directly from High Falls' commercial * suppliers.
Commencing on the Effective Date, Boston Beer shall pay * percent (*%) of the
cost of all * used in the brewing and packaging of the Products, and High Falls
shall pay the other * percent (*%).

            (b) For purposes of this Agreement, "Packaging Materials" shall be
      defined as all bottles, crowns, labels, cases, cartons, Kegs, tap covers,
      pallets and dust covers and the like used in the packaging and shipment of
      the Products. Packaging Materials shall be purchased and supplied as
      follows:

            (i) Bottles, crowns, labels, cases, cartons, tap covers and the like
shall be purchased by Boston Beer and supplied to High Falls as needed to meet
the Packaging Schedule for the Products.

            (ii) Unless otherwise mutually agreed, Kegs and pallets in
quantities adequate for the volume of the Products to be packaged under this
Agreement shall be purchased by Boston Beer and supplied to High Falls from time
to time. All such Kegs and pallets shall be returned and reused in accordance
with High Falls' standard policies for Keg and pallet return and reuse. From
time to time during the term of this Agreement, Boston Beer shall purchase and
supply to High Falls additional Kegs and pallets in numbers adequate to replace
Kegs and pallets lost or otherwise rendered unusable. All Kegs and pallets shall
conform to the specifications of 




[*] Indicates that information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment.

<PAGE>

Boston Beer Agreement
Page 11


Kegs and pallets used by High Falls in packaging and shipping its own products.
High Falls may reject any Kegs or pallets that are damaged, are unacceptably
dirty or do not otherwise conform to High Falls' specifications. All rejected
Kegs shall be held by High Falls for periodic removal by Boston Beer. All
rejected pallets shall be disposed of by High Falls at no charge to Boston Beer.
Upon each delivery to High Falls of Kegs and pallets purchased by Boston Beer,
High Falls shall issue to Boston Beer a credit of $* per Keg, $* per bottle
pallet and $* per draft pallet. High Falls shall maintain records of all Kegs
and pallets received from Boston Beer and provide a monthly reconciliation
showing Kegs and pallets received, Kegs rejected and returned to Boston Beer,
pallets disposed of by High Falls, Kegs and pallets on hand at High Falls and
Kegs and pallets in the float.

      (iii) * shall purchase and supply at its own cost Lock n' Pop, shrink
wrap, label adhesive, hot melt glue and bungs used in packaging and shipping of
the Products.

            (c) Boston Beer has the right, subject to the approval of High
      Falls, which approval will not be unreasonably withheld, to make changes
      in the Packaging Materials. If the proposed new Packaging Materials can be
      produced without modification or addition to High Falls' existing
      equipment, High Falls shall produce the Products using the new Packaging
      Materials upon mutual agreement by High Falls and Boston Beer to any
      adjustment to the Fixed Charge required to compensate High Falls for any
      difference in production cost compared to the cost to produce the Core
      Product in the comparable bottle package. If the proposed new Packaging
      Material requires any modifications or additions to High Falls' existing
      equipment, then the obligations of the parties with respect to such
      modifications or additions shall be governed by Paragraph 9 of this
      Agreement.

            (d) For purpose of this Agreement, "Brewing Supplies" shall be
      defined as zinc sulfate, gypsum, Diatomaceous Earth, and Chill-Garde. *
      shall purchase and supply at its own cost all Brewing Supplies used in the
      brewing of the Product.

            (e) Boston Beer shall have sole responsibility for the selection and
      approval of all Brewing Ingredients, Packaging Materials and Brewing
      Supplies used to produce the 




[*] Indicates that information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment.

<PAGE>

Boston Beer Agreement
Page 12



      Products. Boston Beer shall have sole responsibility for the content and
      design of all labels, tap covers, crowns, cartons, cases and other
      Packaging Materials.

            (f) Upon the termination of this Agreement for any reason: (i)
      Boston Beer will purchase from High Falls (w) all Kegs and pallets
      furnished by Boston Beer that are on hand at High Falls at their
      respective credit amounts set forth in Subparagraph 3(b)(ii) above, (x)
      all finished Products at the Fixed Charge, (y) all inventory of work in
      process of the Products at High Falls' cost, and (z) all inventory of
      Brewing Ingredients, Packaging Materials and Brewing Supplies purchased by
      High Falls that are not reasonably useable by High Falls in its own
      products at High Falls' cost; and (ii) High Falls will make available for
      pick up by Boston Beer at High Falls' dock all finished Products, all
      Brewing Ingredients, Packaging Materials and Brewing Supplies referred to
      in Subparagraph 3(e) hereof, and all Kegs, pallets and dust covers on hand
      at High Falls that were furnished by Boston Beer. In the event sales of
      the Products are substantially less than forecasted by Boston Beer
      resulting in abnormally excess inventories of Brewing Ingredients,
      Packaging Materials and Brewing Supplies purchased by High Falls, Boston
      Beer will purchase such excess from High Falls at High Falls' cost.

      4.    TERM

            (a) The term of this Agreement shall commence on the Effective Date
      and, unless sooner extended by the following provisions of this Paragraph
      4 or terminated pursuant to Paragraph 10 hereof, this Agreement shall
      expire on *.

            (b) Provided that Boston Beer is not then in default under this
      Agreement, Boston Beer may, in its

            (c) sole discretion, extend the term of this Agreement for a period
      of * (*) months (i.e., until *), provided that it gives High Falls written
      notice thereof on or before *.

            (d) If Boston Beer has extended the term of this Agreement pursuant
      to Subparagraph 4(b), then, provided (i) that Boston Beer is not then in
      default under this Agreement, and (ii) the aggregate volume of Products
      produced by High Falls for Boston 




[*] Indicates that information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment.

<PAGE>

Boston Beer Agreement
Page 13


      Beer during calendar year * is equal to or greater than * barrels, Boston
      Beer may, in its sole discretion, extend the term of this Agreement for an
      additional * years (i.e., until *), provided that it gives High Falls
      written notice thereof on or before *.

            (e) The Parties acknowledge that Boston Beer' s obligations pursuant
      to this Agreement to make payments to High Falls and the Parties'
      respective rights and obligations under Paragraphs 3(e), 9, 10, 11, 12,
      14, 16, 17 and 26 shall survive the expiration or termination of this
      Agreement.

            (f) If Boston Beer does not elect to extend the term of this
      Agreement pursuant to Subparagraph 4(b), any adjustments based on volume
      for * shall use * of the volume (forecasted or actual, as the case may be)
      in lieu of twelve-month volume.

      5.    MINIMUM ORDERS

            (a)   (i)   Effective *, the Core Product shall comprise at least *%
                        of all the Products produced, and the maximum quantity
                        of the Products that High Falls shall be required to
                        produce under this Agreement in any calendar year shall
                        be * barrels. No * shall be required for * of the
                        Products.

                  (ii)  On or before November 1 of each year, Boston Beer shall
                        provide High Falls with a forecast for its aggregate
                        volume requirements for the following calendar year (the
                        "Annual Forecast"). The Annual Forecast for calendar
                        year * is attached as Schedule 1 hereto. The Annual
                        Forecast shall be no more than * percent (*%) greater
                        nor more than * percent (*%) less than the actual
                        purchases made by Boston Beer in the 12-full-month
                        period immediately preceding such Annual Forecast. For
                        example, if the actual purchases for the 12-month period
                        from November * to October * were * barrels, Boston
                        Beer's Annual Forecast for the calendar year * shall be
                        no greater than * barrels and no less than * barrels.



[*] Indicates that information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment.

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                        The Annual Forecast shall contain monthly projections by
                        package for each Core Product and any Other Products,
                        with the understanding that Boston Beer may, at any
                        time, through the Production Plan process described in
                        Subparagraph 5(b), substitute one or more of the Core
                        Products for any other Core Product or permitted Other
                        Product for the forecasted Products.

                  (iii) Effective *, if Boston Beer's actual purchases during a
                        calendar year are less than * percent (*%) of the total
                        volume set forth in the Annual Forecast ("Annual Minimum
                        Volume"), Boston Beer shall pay to High Falls a fee of
                        $* per barrel for each barrel below the Annual Minimum
                        Volume (the "Volume Short-Fall Fee"), except that the
                        Volume Short-Fall Fee shall not exceed $* in calendar
                        year *, nor, if the term of this Agreement is not
                        extended by Boston Beer pursuant to Subparagraph 4(b),
                        $* for the first eight months of calendar year *. The
                        Volume Short-Fall Fee, if any, shall be paid on or
                        before January 31 of the following year (or on or before
                        * for the first * months of * if the term of this
                        Agreement is not extended by Boston Beer pursuant to
                        Subparagraph 4(b)).

                  (iv)  Boston Beer may elect to pay High Falls a fee which,
                        when added to its actual Product purchases for the
                        applicable calendar year, will be treated as actual
                        purchases made for the purposes of forecasting and
                        determination of volume obligations, as follows: (a) $*
                        per barrel for the first * barrels, (b) $* per barrel
                        for the next * barrels, and (c) $* per barrel for each
                        barrel thereafter, offset by the Volume Short-Fall Fee,
                        if any, paid by Boston Beer for the same calendar year.
                        Such payment, if elected, shall be made by Boston Beer
                        to High Falls on or before January 31 of the following
                        year.




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treatment.

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                        For example, if Boston Beer's Annual Forecast for *
                        barrels were * barrels, but it only purchased * barrels,
                        Boston Beer could (after paying the Volume Short-Fall
                        Fee required by Subparagraph 5(a)(iii)) pay a fee,
                        calculated as set forth below, for up to * barrels (*%
                        increase over * forecasted barrels, or * barrels, less
                        actual purchases of *):

                                 $*/bbl for first * bbls  = $   *
                         +       $*/bbl for next * bbls   = $   *
                         +       $*/bbl for next * bbls   = $   *
                                                            -----
                                                          =   $*

                         less $*/bbl Volume Short-Fall Fee of
                         * barrels (amount below *% of
                         * forecasted barrels)            = $  (*)
                                                          ------

                         TOTAL FEE paid by Boston Beer to
                         obtain maximum barrelage for *
                         of *                             =    $  *

            (b) On a weekly basis, Boston Beer shall provide High Falls with a
      twelve (12) week Production Plan for the Products (the "Production Plan").
      The Production Plan shall be a rolling twelve-week schedule setting forth
      brewing and packaging requirements for the Products for each week during
      the twelve weeks covered by the Production Plan. All brewing requirements
      for the Products during the first six weeks of the Production Plan shall
      constitute firm orders by Boston Beer. All brewing requirements for the
      Products during the second six weeks of the Production Plan and all
      packaging requirements set forth in the Production Plan shall be a
      forecast of Boston Beer's best estimate of brewing and packaging
      requirements for the Products and shall be used by High Falls for capacity
      planning purposes. Boston Beer shall update the Production Plan each week
      by providing its best estimate of brewing and packaging requirements for
      the twelfth week and by revising the schedule for brewing and packaging
      requirements in the sixth through eleventh weeks of the Production Plan.
      The brew size that Boston Beer shall utilize in the Production Plan shall
      be High Falls' maximum brew based on High Falls' current brewing vessels,
      currently estimated to yield approximately * * (*) barrels of the Core
      Product (a "Brew"). The minimum brewing requirement that Boston Beer may
      specify 



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during any week shall be * (*) Brews. The maximum brewing requirement that
Boston Beer may specify shall not exceed * barrels in any consecutive * (*) week
period. High Falls shall have the right, in its sole discretion, to set the
actual time and date on which each Brew shall be brewed, provided that High
Falls shall use its best efforts to (i) minimize the length of time that the
Products remain in storage prior to packaging, and (ii) meet the shipment dates
specified on the Packaging Schedule.

            (c) Boston Beer shall place all orders for packaging and shipment of

the Product by the eighth business day of each month (the "Packaging Schedule").
The Packaging Schedule shall set forth the quantity of the Products by package
type and the week in which each order shall be shipped in the following month.
Packaging shall be scheduled in increments of * cases for 22 oz. bottles; *
cases for 12 oz. bottles in new glass; and * cases for 12 oz. bottles in
refillable glass. The minimum order for packaging the Products, in Kegs shall be
* (*) Kegs.

      6.    RISK OF LOSS

            Boston Beer shall have sole responsibility for selecting carriers
and making all arrangements for shipment of the Products to its customers.
Boston Beer shall pay for all costs associated with shipment of the Products
from High Falls's facility. High Falls and Boston Beer acknowledge and agree
that, consistent with the F.O.B. pricing terms, the risk of loss in loading the
carrier's trucks shall be borne by High Falls. However, the carrier's driver
shall have the right to inspect each shipment for damage prior to leaving the
loading dock and, accordingly, Boston Beer shall bear the risk of loss on any
shipment of Products, once the carrier's truck leaves the loading dock.

      7.    BREWERY OF RECORD

            (a) High Falls shall provide all Products brewed hereunder under the
name of "The Boston Beer Company," as the Brewery of Record. High Falls shall
secure and maintain any permits, licenses, approvals and the like required by
any federal, state or local governmental agency on behalf of Boston Beer. *
out-of-pocket costs, including, without limitation, legal expenses, incurred in
connection therewith.




[*] Indicates that information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment.

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      (b)   High Falls and Boston Beer shall maintain an alternating
proprietorship whereby the Products are produced at High Falls's facility under
a Brewer's Notice for such premises issued to Boston Beer. High Falls shall
maintain separate records for the Products produced under the Boston Beer
alternating proprietorship and shall file monthly reports and federal excise tax
returns in a timely manner on behalf of the Boston Beer alternating
proprietorship. High Falls shall, to the extent reasonably possible, but subject
to and in compliance with all applicable federal, state or local laws, rules and
regulations, identify Boston, Massachusetts, as the sole label source for the
Product. * out-of-pocket costs, including, without limitation legal expenses,
incurred in connection with maintaining the Boston Beer alternating
proprietorship.

      8.    FORCE MAJEURE

            (a) High Falls shall not be liable to Boston Beer in the event that
High Falls shall delay in or fail to deliver Products to Boston Beer hereunder
for any reason or cause beyond its control, including but not limited to a
slowdown, stoppage or reduction of High Falls's production or delivery due to
strikes, fire, flood, labor stoppage or slowdown, inability to obtain materials
or packages, shortage of energy, acts of God, a limitation or restriction of its
production by action of any military or governmental authority, or any other
such causes.

            (b) In the event of any such slowdown, stoppage or reduction of High
Falls's production or deliveries, High Falls will allocate its remaining
capacity pro rata between High Falls's own products, the Products, and, from and
after *, the other contract products produced by High Falls, provided that
Boston Beer shall use reasonable efforts to move production of the Products to
its other suppliers for the duration of any such slowdown, stoppage or reduction
so as to minimize the amount of the Products that High Falls is required to
produce for Boston Beer during such slowdown, stoppage or reduction. Such pro
rata allocation of High Falls's remaining production capacity shall be based on
the proportionate volume of High Falls's own products, the Products, and other
contract products produced by High Falls during the * (*) month period
immediately preceding the 




[*] Indicates that information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment.

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      month in which occurred the event which gave rise to the slowdown,
      stoppage or reduction of High Falls's production or delivery. In
      allocating the proportionate share of its remaining capacity to be devoted
      to the Products, High Falls shall use its best efforts to accommodate the
      mix of Core Products and Other Products specified by Boston Beer.

      9.    CHANGE PARTS AND BREWERY MODIFICATIONS

            The Parties anticipate that production of Other Products or the use
of new Packaging Materials may require changes or modifications to High Falls's
brewing equipment and facilities, or the installation of new equipment by High
Falls to accommodate Other Products or new Packaging Materials. Subject to the
obligations of Boston Beer and High Falls under Subparagraph 1(a) of this
Agreement, High Falls shall have no obligation to make any modifications to its
equipment or facilities to accommodate the production of the Products unless
agreed to by High Falls in writing. If the change parts, modifications or new
equipment required to produce any Other Products or use any new Packaging
Materials would, in High Falls's reasonable judgment, have a material adverse
impact on High Falls's operations, including without limitation, space
availability, plant capacity, or cost of production, then High Falls shall not
be required to produce any such Other Products or use any such new Packaging
Materials. If High Falls determines that the required changes, modifications or
new equipment would not have a material adverse impact, then the allocation of
cost, ownership and the other terms and conditions relating to such change
parts, modifications or new equipment shall be determined as provided herein:

            (a) Boston Beer will pay for all change parts, brewery,
      modifications or new equipment that are unique to producing the Products
      at High Falls's facility, provided that High Falls notifies Boston Beer in
      advance of making any such expenditures. Boston Beer shall own all change
      parts and brewery modifications paid for by Boston Beer and High Falls
      shall allow Boston Beer to remove all such change parts and brewery
      modifications at the termination or expiration of this Agreement, provided
      that Boston Beer shall restore, or reimburse High Falls for its cost to
      restore, High Falls's equipment or facilities to their 



[*] Indicates that information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
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Page 19


      condition prior to the installation of such change parts or modifications,
      ordinary wear and tear excluded.

            (b) The cost and ownership of any change parts, brewery
      modifications or new equipment that can also be used by High Falls to
      produce its own products shall be allocated between High Falls and Boston
      Beer by prior written agreement based on the following: (i) if High Falls
      determines that the change parts, modifications or new equipment would
      have been purchased by High Falls even without the need to accommodate the
      Products or new Packaging Materials, then High Falls shall pay the entire
      cost of such change parts, modifications or new equipment and High Falls
      shall have exclusive ownership thereof; (ii) if High Falls determines that
      it would benefit from the change parts, modifications or new equipment but
      High Falls would not have purchased them if not for the need to
      accommodate the Products or new Packaging Materials, then the cost and
      ownership of such change parts, modifications or new equipment shall be
      allocated between the Parties as the Parties mutually agree based on the
      relative benefit that each party will derive from such change parts,
      modifications or new equipment.

            (c) With respect to any change parts, modifications or new equipment
      paid for in part by Boston Beer under Subparagraph 9(b)(ii) hereof,
      including the improvements and modifications to * referred to in
      Subparagraph 2(d) hereof, the amount paid by Boston Beer shall be
      amortized based on a mutually agreeable amortization schedule. The
      amortization schedule for the improvements and modifications to * is
      attached as Schedule 2 hereto.

            (i) If Boston Beer elects to extend the term of this Agreement
pursuant to Subparagraph 4(b) hereof, then, if High Falls is not in default
under this Agreement on *, any change parts, modifications or new equipment paid
for in part by Boston Beer under Subparagraph 9(b)(ii) hereof prior to * will no
longer be subject to repayment by High Falls under any circumstances, all right,
title and ownership thereof will automatically transfer to High Falls as of *,
and Boston Beer will have no further interest therein.




[*] Indicates that information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
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            (ii) Subject to Subparagraph 9(c)(i) hereof, upon expiration of the
amortization schedule with respect to each change part, modification or new
piece of equipment paid for in part by Boston Beer, all right, title and
ownership thereof shall automatically transfer to High Falls and Boston Beer
shall have no further interest therein.

            (iii) Upon: (A) the expiration of this Agreement; or (B) the
termination of this Agreement by Boston Beer under Subparagraphs 10(c) or 10(d)
hereof, High Falls shall reimburse Boston Beer for the unamortized balance of
the cost of any change parts, modifications or new equipment paid for in part by
Boston Beer under Subparagraph 9(b)(ii), provided that the amortization shall
continue during any applicable Notice Period and the unamortized balance shall
be calculated as of and paid on the effective date of any such termination. If
Boston Beer does not extend the term of this Agreement, High Falls'
reimbursement obligations shall include any equipment for which High Falls had a
reimbursement obligations pursuant to Subparagraph 9(b)(ii) (including the *)
under the Prior Agreement. If Boston Beer extends the term of this Agreement,
then, effective *, High Falls' reimbursement obligations shall specifically
exclude any change parts, modifications or new equipment paid for in whole or in
part by Boston Beer prior to * (including the *). Upon payment by High Falls of
the unamortized balance, all right, title and ownership of such change parts,
modifications or new equipment shall automatically transfer to High Falls and
Boston Beer shall have no further interest therein. Notwithstanding the
foregoing, High Falls shall have no obligation to reimburse Boston Beer for the
unamortized balance of the cost of change parts, modifications or new equipment
if, during the twelve (12) calendar months immediately preceding the effective
date of termination: (X) Boston Beer purchased less than * barrels of the
Products; or (Y) Boston Beer failed to purchase at least * percent (*%) of the
volume of the Products that was purchased by Boston Beer during the twelve (12)
calendar months immediately preceding said twelve (12) calendar month period;
and in either such event, all right, title and ownership of such change parts,
modifications or new equipment shall automatically transfer to High Falls on the
effective date of such termination and Boston Beer shall have no further
interest therein.



[*] Indicates that information has been omitted and filed separately with the
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treatment.

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            (iv) If this Agreement is terminated for any other reason, then High
Falls shall have no obligation to reimburse Boston Beer for the unamortized
balance of the cost of any change parts, modifications or new equipment paid for
in part by Boston Beer under Subparagraph 9(b)(ii) hereof, and all right, title
and ownership of such chance parts, modifications or new equipment shall
automatically transfer to High Falls on the effective date of such termination
and Boston Beer shall have no further interest therein.

            (d) The parties agree to execute appropriate UCC financing
      statements to reflect their respective interests in any change parts,
      brewery modifications or new equipment paid for, in whole or in part, by
      Boston Beer. Boston Beer shall execute and deliver to High Falls UCC
      termination statements, bills of sale and any other documentation
      reasonably requested by High Falls upon the transfer of ownership to High
      Falls of any change parts, modification, or new equipment pursuant to
      Subparagraph 9(c) hereof.

      10.   TERMINATION

            (a) If Boston Beer has extended the term of this Agreement pursuant
      to Subparagraph 4(b) or 4(c) hereof, then Boston Beer may terminate this
      Agreement effective no less than * (*) months after written notice to High
      Falls.

            (b) If Boston Beer has extended the term of this Agreement pursuant
      to Subparagraph 4(b) or 4(c) hereof, High Falls may terminate this
      Agreement, effective no less than * (*) months after written notice to
      Boston Beer, if Boston Beer has failed to purchase or to have been deemed
      to have purchased pursuant to Subparagraph 5(a)(iv) hereof at least *
      barrels of Product in any period of twelve consecutive months.

            (c) In addition to exercising its rights under Paragraph 21 hereof,
      either Party may also terminate this Agreement effective immediately upon
      written notice to the other Party in the event that the other Party is in
      default of any of its obligations under this Agreement, which default
      continues for a period of * (*) calendar days following receipt of written
      notice of such default.




[*] Indicates that information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
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            (d) Either Party may terminate this Agreement effective immediately
      upon written notice to the other Party in the event that: (i) the other
      Party makes an assignment for the benefit of creditors or files a
      voluntary bankruptcy, insolvency, reorganization or similar petition
      seeking protection from creditors; (ii) the other Party fails to vacate
      any involuntary bankruptcy, insolvency or reorganization petition filed
      against such Party within sixty (60) days after the filing of such
      petition; or (iii) the other Party liquidates, dissolves or ceases to do
      business as a going concern.

            (e) Between the date of receipt of a notice of termination pursuant
      to this Paragraph 10 and the effective date of such termination (such
      period, the "Notice Period"), the volume of Products purchased by Boston
      Beer for the * month period following notice of termination or any
      successive * month period (or such lesser period as may be remaining)
      prior to the effective date of termination shall be not less than *% of
      the volume purchased in the immediately preceding * month period. If
      Boston Beer fails or is unable or unwilling, for any reason, to purchase
      the required volume of the Products during the Notice Period, then Boston
      Beer shall pay a termination fee of $* per barrel for each barrel under
      the amount required to be purchased during the Notice Period. The
      termination fee, if any, shall be paid each January 1, April 1, July 1 and
      October 1 during the Notice Period. The quarterly payment shall be
      calculated by multiplying the $* per barrel termination fee by the
      difference between (x) the number of barrels of the Products that Boston
      Beer would have to purchase during the three calendar months preceding
      each payment date if the volume of the Products that Boston Beer must
      purchase during the entire Notice Period was spread evenly over the entire
      Notice Period (the "Quarterly Volume"), and (y) the actual number of
      barrels of the Products purchased by Boston Beer during the three calendar
      months preceding each payment date, provided that if the amount of the
      Products purchased by Boston Beer in any calendar quarter exceeds the
      Quarterly Volume, then such excess shall be carried forward and applied to
      reduce any termination fee that would otherwise be payable in any
      subsequent calendar quarter.

            (f) Upon termination pursuant to this Paragraph 10, Boston Beer
      shall promptly pay to High Falls all unpaid invoices in full and all
      unpaid costs incurred by High 



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Securities and Exchange Commission pursuant to a request for confidential
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      Falls pursuant to this Agreement in the brewing, packaging, shipping and
      storage for the Product. High Falls will use all reasonable efforts to
      minimize such costs upon termination and Boston Beer will have the right
      to review documentation evidencing such costs.

      11.   AGENCY AND INDEMNIFICATION

            High Falls and Boston Beer understand and agree that neither Party
is, by virtue of this Agreement or anything contained herein, including High
Falls affixing to any Product and/or registering the name of "The Boston Beer
Company" or "Boston Beer Company," constituted or appointed the agent of the
other Party for any purpose whatsoever, nor shall anything herein contained be
deemed or construed as granting Boston Beer or High Falls any right or authority
to assume or to create any obligation or responsibility, express or implied, for
or on behalf of or in the name of the other, or to bind the other in any manner
or way whatsoever. Boston Beer shall indemnify and hold harmless High Falls from
and against any and all claims, expenses, causes of action or liabilities of any
nature whatsoever (collectively, "Damages"), to the extent that Damages arise
solely from the independent conduct of Boston Beer; provided that Damages shall
not include any loss, liability, cost or expense incurred by High Falls as a
consequence of the exercise by Boston Beer of any of its rights under this
Agreement.

      12.   PRODUCT LIABILITY

            (a) High Falls and Boston Beer shall each maintain product liability
      insurance coverage in the respective amount of not less than $* per
      occurrence and $* combined single limit, and in the amount of not less
      than $* combined single limit in the aggregate relating to the Products
      produced by High Falls for Boston Beer hereunder.

            (b) High Falls shall indemnify and hold harmless Boston Beer and all
      of its affiliates from and against any and all loss, liability, cost or
      expense of any nature whatsoever, including reasonable attorney's fees
      (collectively, "Product Liability Damages"), arising out of or associated
      with the manufacture and/or packaging of the Products by High Falls,
      regardless of when manufactured or packaged, and whether under this
      Agreement or otherwise, except to the extent that (i) Product Liability
      Damages were 



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      caused solely by improper storage, handling or alteration of the Products
      after delivery to Boston Beer, (ii) Product Liability Damages are based on
      or result from a claim that the Products are inherently defective, or
      (iii) Product Liability Damages were caused by Brewing Ingredients,
      Packaging Materials (other than bottles) or Brewing Supplies specified or
      otherwise approved by Boston Beer.

            (c) Boston Beer shall indemnify and hold harmless High Falls and all
      of its affiliates from and against any and all Product Liability Damages
      to the extent arising out of the causes excepted from High Falls's duty to
      indemnify Boston Beer under clauses (i), (ii) and (iii) of subparagraph
      (b) of this Paragraph 12.

            (d) Notwithstanding the provisions of subparagraphs (b) and (c) of
      Paragraph 12, in no event shall either Party be liable to indemnify the
      other Party for consequential damages suffered by the other Party in an
      amount greater than the lesser of (i) $* or (ii) $* plus * (*) times the
      aggregate Fixed Charge paid by Boston Beer for all Products during the *
      (*) months preceding the month in which occurred the event giving rise to
      the claim for indemnification.

      13.   RECIPE AND QUALITY

            (a) High Falls shall produce the Products using the ingredients and
      brewing formula and procedures specified in the Brewing Package provided
      by Boston Beer Company to High Falls on June 8, 1995, as updated from time
      to time. High Falls shall produce any new Core Product or any Other
      Products using the brewing formula and procedures specified in the Brewing
      Package provided by Boston Beer to High Falls for such Core Product or
      Other Products. Boston Beer shall have the right to change ingredients
      and/or brewing formula and procedures upon reasonable prior written
      notice, provided that the cost of any such change shall be borne by Boston
      Beer and, provided further, that the specified ingredients are readily
      available in the necessary timeframe.

            (b) High Falls shall use its best efforts to meet the specifications
      for the Core Product attached hereto as Exhibit A, as amended from time to
      time. High Falls shall use its 


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Securities and Exchange Commission pursuant to a request for confidential
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      best efforts to meet the specifications for any new Core Product or any
      Other Products which are furnished in writing by Boston Beer at the time
      the parties agree to add a new Core Product or Other Products to this
      Agreement. Boston Beer has the right to reject batches of the Products
      which it determines to taste materially different from representative
      sample of the Products, such rejection not to be arbitrary or
      unreasonable. Any rejected batches *.

            (c) The Products shall be brewed and packaged according to Boston
      Beer's specifications, including the maintenance of standards and quality
      control programs furnished to High Falls in writing by Boston Beer. Boston
      Beer shall have ultimate responsibility and authority over every detail of
      the production process for the Products, with such responsibility and
      authority as to those parameters affecting beer taste and quality to be
      the same as if Boston Beer were the owner of High Falls's brewing
      facility. Boston Beer shall have the right, at any time, to monitor and
      review the practices and procedures of High Falls in the production and
      packaging of the Products and inspect High Falls's brewing facility. If a
      decision made by Boston Beer in the exercise of its authority under this
      Subparagraph 13(c) results in *, High Falls shall be entitled to *. In
      addition, in the exercise of its authority under this Subparagraph 13(c),
      Boston Beer shall not interfere with High Falls's production process for
      its own proprietary brands or other contract products.

            (d) Consistent with the provisions of Subparagraph 13(c), High Falls
      and Boston Beer will, in any and all public statements or comments,
      recognize that Boston Beer controls the ingredients, recipe, brewing
      processes and procedures and quality parameters for all Products produced
      for Boston Beer by High Falls, and that Boston Beer is the brewer of all
      such Products. Neither Party will make any public statements inconsistent
      with the foregoing.

      14.   TRADEMARKS

            (a) High Falls acknowledges that no trademark or trade name rights
      in SAMUEL ADAMS, SAM ADAMS, "The Boston Beer Company" and any other




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      trademarks, trade names, domain names, service marks, logos or other
      intellectual property of Boston Beer (collectively, the "Trademarks") are
      granted by this Agreement.

            (b) Boston Beer hereby represents, warrants and covenants to High
      Falls that it has and will maintain its right to use the Trademarks and
      will indemnify and hold harmless High Falls from any alleged infringement
      by any Party against High Falls including, but not limited to, High
      Falls's reasonable costs of legal expenses.

      15.   TEST BREWING

            Notwithstanding anything to the contrary in this Agreement, Boston
Beer may, at any time after notice to High Falls engage any other brewer for the
purpose of conducting test production and distribution of the Products in order
to ensure the delivery of the Product following termination of this Agreement.

      16.   COMPETING PRODUCTS

            (a) High Falls will not at anytime use the brewing formula for the
      Products which Boston Beer has supplied to High Falls or any yeast
      supplied to High Falls by Boston Beer to produce a malt beverage product
      for itself (or any of its affiliates) or on behalf of any unaffiliated
      person.

            (b) Boston Beer acknowledges that High Falls is currently in the
      business of brewing craft and specialty malt beverage products, both for
      itself and on behalf of other unaffiliated persons, that are similar to
      and compete with the Products, and Boston Beer agrees that nothing in this
      Agreement shall prevent High Falls from continuing or expanding its craft
      and specialty business or its contract brewing business, provided that
      High Falls shall not intentionally copy the brewing formula for the
      Products or use any yeast supplied to High Falls by Boston Beer to produce
      craft and specialty products for itself, any of its affiliates, or for any
      third parties. Further, High Falls shall use its best efforts to ensure
      that any production, whether for itself, its affiliates, or other
      unaffiliated persons, shall not diminish in any material respect the
      quality or frequency of the brewing, packaging, 




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Securities and Exchange Commission pursuant to a request for confidential
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      shipping or other levels of service provided by High Falls to Boston Beer
      prior to the Effective Date.

      17.   RIGHTS OF OFFSET

            The parties acknowledge and agree that, to the extent a Party is at
any time owed money by the other Party, such Party may set off such amount
against any monies owed by such Party from time to time to such other Party,
said set-off to be accomplished by written notice to such other Party effective
upon being sent.

      18.   NOTICES

            All notices required herein shall be given by registered airmail,
return receipt requested, or by overnight courier service, in both cases with a
copy also sent by telecopier, to the following addresses (unless change thereof
has previously been given to the Party giving the notice) and shall be deemed
effective when received:

            If to Boston Beer:      Jeffrey D. White, COO, and
                                    Martin F. Roper, President and CEO
                                    Boston Beer Corporation
                                    75 Arlington Street
                                    Boston, MA 02116
                                    Telecopier: (617) 368-5553

            with a copy to:         Frederick H. Grein, Jr., Esq.
                                    Hutchins, Wheeler & Dittmar
                                    101 Federal Street
                                    Boston, Massachusetts 02110
                                    Telecopier: (617) 951-1295

            If to High Falls:       Samuel T. Hubbard, Jr., President and CEO
                                    High Falls Brewing Company, LLC
                                    445 St. Paul Street
                                    Rochester, NY 14605
                                    Telecopier: (585) 235-1964

            with a copy to:         Paul J. Yesawich, III, Esq.
                                    Harris Beach LLP
                                    99 Garnsey Road



[*] Indicates that information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment.

<PAGE>

Boston Beer Agreement
Page 28


                                    Pittsford, New York  14534
                                    Telecopier: (585) 419-8801

      19.   SUCCESSORS AND ASSIGNS

            This Agreement shall be binding upon and inure to the benefit of the
successors and assigns of the Parties, but shall not be assigned by any Party,
whether by merger, consolidation, reorganization, operation of law or otherwise,
without the prior written consent of the other Party, which consent will not be
unreasonably withheld. Notwithstanding the foregoing, Boston Beer may assign
this Agreement without the consent of High Falls to its successor corporation or
other successor entity in the event of any reorganization, public offering or
change in the form of entity of Boston Beer, provided that *. No failure of a
Party to consent to a proposed assignment of this Agreement by the other Party
shall be deemed unreasonable if such Party believes in good faith that the
proposed assignee is not capable of performing the financial or production
obligations of the Party proposing to assign this Agreement. Permitted
assignment of this Agreement shall relieve the assigning Party of its financial
obligations hereunder, including its indemnification obligations hereunder.

      20.   GOVERNING LAW

            This Agreement shall be interpreted and construed in accordance with
the laws of the State of New York.

      21.   DISPUTE RESOLUTION

            Any disputes arising out of, or relating to the terms of, this
Agreement shall be resolved by arbitration pursuant to the Commercial
Arbitration Rules of the American Arbitration Association. Any arbitration shall
take place in New York City, New York and shall be the Parties' sole and
exclusive remedy and forum for the resolution of any such disputes.

      22.   EXECUTION IN COUNTERPARTS



[*] Indicates that information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment.


<PAGE>

Boston Beer Agreement
Page 29



            This Agreement may be executed in one or more counterparts each of
which shall be deemed to be an original but all of which together shall
constitute one and the same document.

      23.   AMENDMENTS

            No amendment, change or modification of any of the terms, provisions
or conditions of this Agreement shall be effective unless made in writing and
signed or initialed on behalf of the Parties hereto by their duly authorized
representatives.

      24.   NO THIRD PARTY BENEFICIARIES

            High Falls and Boston Beer agree that this Agreement is solely for
their benefit and it does not nor is it intended to create any rights in favor
of, or obligations owing to, any person not a Party to this Agreement.

      25.   MERGER; SEPARABILITY

            This Agreement terminates and supersedes all prior formal or
informal understandings between the Parties with respect to the subject matter
contained herein. Should any provision or provisions of this Agreement be deemed
ineffective or void for any reason whatsoever, such provision or provisions
shall be deemed separable and shall not effect the validity of any other
provision.

      26.   LIMITATION PERIOD ON CLAIMS

      All claims hereunder must be brought no later than * after such claims
arose or the Party having such claim shall be deemed to have waived and forever
released it; provided that for this purpose, a claim will be deemed to have
arisen at the time the Party asserting the claim first became aware of it.

      IN WITNESS WHEREOF, the parties hereto enter into this Second Amended and
Restated Agreement this ___ day of April, 2002.



[*] Indicates that information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment.

<PAGE>

Boston Beer Agreement
Page 30



Witness:                      BOSTON BEER CORPORATION



                              By:                                               
--------------------------        -----------------------------------------
                                  Martin F. Roper, President and
                                  Chief Executive Officer



Witness:                      HIGH FALLS BREWING COMPANY, LLC.



                              By:                                               
--------------------------        -----------------------------------------
                                  Samuel T. Hubbard, Jr., Chairman and
                                  Chief Executive Officer




[*] Indicates that information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment.


<PAGE>

EXHIBIT 10.40
*DENOTES EXPURGATED INFORMATION


                           GUARANTY RELEASE AGREEMENT


      THIS AGREEMENT (this "Agreement") is made this 22nd day of April, 2002 by
and between GBC Liquidating Corp., formerly known as The Genesee Brewing
Company, Inc., a New York corporation ("Genesee"), and Boston Beer Corporation,
d/b/a/ The Boston Beer Company, a Massachusetts corporation, ("Boston Beer").

                                    RECITALS:

      WHEREAS, Genesee and Boston Brewing Company, Inc., a Massachusetts
corporation, for itself and as the sole general partner of Boston Beer Company
Limited Partnership, a Massachusetts limited partnership (collectively,
"BBCLP"), were parties to an Amended and Restated Agreement dated as of April
30, 1997 (the "Production Agreement"), under which Genesee agreed to supply
BBCLP, and BBCLP agreed to purchase from Genesee, certain malt beverage
products;

      WHEREAS, Genesee assigned the Production Agreement to High Falls Brewing
Company, LLC, formerly known as Monroe Brewing Co., LLC ("High Falls") pursuant
to an Assignment and Assumption Agreement by and between Genesee and High Falls
dated December 15, 2000 (the "Assignment Agreement"); and

      WHEREAS, as a condition of its consent to assignment of the Production
Agreement to High Falls pursuant to the
 Assignment Agreement, BBCLP required
Genesee to guarantee High Falls' performance of the Production Agreement
pursuant to the terms of a Guaranty by Genesee in favor of BBCLP dated December
15, 2000, a copy of which is attached hereto as Exhibit A (the "Guaranty"); and

      WHEREAS, on December 31, 2000, BBCLP transferred all of its assets and
liabilities to Boston Beer and consequently Boston Beer assumed the rights and
obligations of BBCLP under the Production Agreement; and

      WHEREAS, Boston Beer is willing to release and discharge Genesee from its
obligations under the Guaranty in consideration of a lump sum payment by Genesee
to Boston Brewing.

                                   PROVISIONS:

      NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, Genesee and Boston Beer hereby agree as follows:

      1.    CONSIDERATION FOR RELEASE. In consideration for the release from the
            Guaranty more fully described in Section 2 of this Agreement,
            Genesee agrees to pay to Boston Beer * Dollars ($*) by wire transfer
            of immediately available funds to an account identified in writing
            by Boston 



[*] Indicates that information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment.

<PAGE>



            Beer, which payment shall be made within two (2) business days after
            execution of this Agreement by both parties hereto.

      2.    RELEASE FROM GUARANTY. Upon receipt by Boston Beer of the payment
            described in Section 1 of this Agreement, Boston Beer does hereby
            irrevocably release and discharge Genesee, Genesee Corporation,
            their respective officers, directors and employees, and their
            respective successors and assigns, (collectively, "Releasees") from
            any and all: (a) obligations, duties, covenants and responsibilities
            under the Guaranty or the Production Agreement; and (b) claims,
            demands, actions, causes of action, debts, costs and liabilities
            whatsoever whether in law or equity, which Boston Beer ever had, now
            has or hereafter can, shall or may have against Releasees arising
            from or related to the Guaranty or the Production Agreement.

      3.    ENTIRE AGREEMENT; AMENDMENTS OR MODIFICATION. This Agreement
            constitutes the entire agreement between the parties regarding the
            subject matter hereof. This Agreement may not be amended or modified
            except in writing executed by both parties.

      4.    COUNTERPARTS. This Agreement may be executed in multiple
            counterparts, each of which shall be deemed an original, but all of
            which together shall constitute one and the same instrument.

      5.    GOVERNING LAW. This Agreement, as well as all rights and obligations
            of the parties hereto, shall be governed, construed and interpreted
            according to the internal laws of the State of New York.

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

                                  GBC LIQUIDATING CORP.

                                  By:      ________________________________

                                  Name:    ________________________________

                                  Title:   ________________________________


                                  BOSTON BEER CORPORATION

                                  By:      ________________________________

                                  Name:    ________________________________

                                  Title:   ________________________________






<PAGE>
                                                                  EXECUTION COPY





                  SECOND AMENDED AND RESTATED CREDIT AGREEMENT

                                     BETWEEN

                          THE BOSTON BEER COMPANY, INC.

                                       AND

                             BOSTON BEER CORPORATION

                                  AS BORROWERS

                                       AND

                               FLEET NATIONAL BANK






                          EFFECTIVE AS OF JULY 1, 2002

<PAGE>
                                TABLE OF CONTENTS


<TABLE>
<CAPTION>
SECTION                                                                      PAGE
-------                                                                      ----
<S>                                                                          <C>
1.  DESCRIPTION OF CREDIT FACILITY..........................................   2

    1.1  THE LOANS..........................................................   2

    1.2  THE NOTES..........................................................   2

    1.3  INTEREST; DEFAULT RATE.............................................   2

    1.4  NOTICE AND MANNER OF BORROWING OR CONVERSION OF LOANS..............   2

    1.5  PREPAYMENTS........................................................   3

    1.6  FEES...............................................................   3

    1.7  CAPITAL ADEQUACY...................................................   3

    1.8  TAXES..............................................................   4

    1.9  METHOD AND APPLICATION OF  PAYMENTS................................   4

    1.10  COMPUTATION OF INTEREST AND FEES..................................   5

    1.11  USE OF PROCEEDS...................................................   5

    1.12  SUBSIDIARY GUARANTIES.............................................   5


2.  CONDITIONS OF LOANS.....................................................   5

    2.1  CONDITIONS PRECEDENT TO INITIAL LOAN...............................   5

    2.2  CONDITIONS PRECEDENT TO ALL LOANS..................................   5


3.  REPRESENTATIONS AND WARRANTIES..........................................   6

    3.1  ORGANIZATION AND QUALIFICATION.....................................   6

    3.2  AUTHORITY..........................................................   7

    3.3  CONSENTS; VALIDITY.................................................   7

    3.4  TITLE TO PROPERTIES; ABSENCE OF ENCUMBRANCES.......................   7

    3.5  FINANCIAL STATEMENTS...............................................   7

    3.6  TAXES..............................................................   8

    3.7  LITIGATION.........................................................   8

    3.8  COMPLIANCE WITH LAWS AND AGREEMENTS................................   8

    3.9  NO INSOLVENCY......................................................   8

    3.10  FULL DISCLOSURE...................................................   8

    3.11  MARGIN STOCK......................................................   9

    3.12  PATENTS, TRADEMARKS, ETC..........................................   9

    3.13  ERISA.............................................................   9

    3.14  ENVIRONMENTAL LAWS................................................  10
</TABLE>


<PAGE>

<TABLE>
<CAPTION>
SECTION                                                                      PAGE
-------                                                                      ----
<S>                                                                          <C>
    3.15  OWNERSHIP.........................................................  11


4.  AFFIRMATIVE COVENANTS...................................................  11

    4.1  FINANCIAL REPORTING................................................  11

    4.2  CONDUCT OF BUSINESS................................................  12

    4.3  MAINTENANCE
 AND INSURANCE..........................................  13

    4.4  TAXES AND ACCOUNTS PAYABLE.........................................  13

    4.5  MAINTENANCE OF BOOKS AND RECORDS...................................  13

    4.6  ENVIRONMENTAL LAWS.................................................  13

    4.7  FURTHER ASSURANCES.................................................  13

    4.8  PRINCIPAL DEPOSITORY...............................................  13


5.  FINANCIAL COVENANTS.....................................................  14

    5.1  COVENANTS..........................................................  14

    5.2  DEFINITIONS........................................................  14


6.  NEGATIVE COVENANTS......................................................  16

    6.1  INDEBTEDNESS, GUARANTEES...........................................  16

    6.2  ENCUMBRANCES.......................................................  16

    6.3  SALE AND LEASEBACK.................................................  17

    6.4  MERGER; CONSOLIDATION; DISPOSITION OF ASSETS; ETC. ................  17

    6.5  INVESTMENTS........................................................  17

    6.6  TRANSACTIONS WITH AFFILIATES.......................................  17

    6.7  DISTRIBUTIONS......................................................  17


7.  DEFAULTS................................................................  18

    7.1  EVENTS OF DEFAULT..................................................  18

    7.2  REMEDIES...........................................................  20


8.  GENERAL PROVISIONS......................................................  20

    8.1  NOTICES............................................................  20

    8.2  EXPENSES...........................................................  21

    8.3  SET-OFF............................................................  21

    8.4  NO WAIVERS; TERM...................................................  22

    8.5  REPLACEMENT OF NOTES...............................................  22

    8.6  USURY..............................................................  22

    8.7  GOVERNING LAW......................................................  23
</TABLE>



                                     - ii -

<PAGE>

<TABLE>
<CAPTION>
SECTION                                                                      PAGE
-------                                                                      ----
<S>                                                                          <C>
    8.8  ENTIRE AGREEMENTS; AMENDMENTS......................................  23

    8.9  BINDING EFFECT OF AGREEMENT; ASSIGNMENTS...........................  23

    8.10  COUNTERPARTS, ETC.................................................  24

    8.11  WAIVER OF JURY TRIAL..............................................  24

    8.12  CONSENT TO JURISDICTION...........................................  24

    8.13  INDEMNIFICATION; JOINT AND SEVERAL LIABILITY......................  24
</TABLE>



                                    - iii -

<PAGE>
SCHEDULES

Schedule A  General Defined Terms
Schedule B  LIBOR Terms

EXHIBITS

Exhibit 1.2    Form of Revolving Credit Note
Exhibit 1.4    Notice of Borrowing or Conversion
Exhibit 2.1    Agenda of Closing
Exhibit 3.7    Litigation
Exhibit 3.14   Environmental Matters
Exhibit 3.15   Ownership
Exhibit 4.1    Form of Officer's Compliance Certificate
Exhibit 6.4    Form of Notice of New Subsidiary

<PAGE>
                  SECOND AMENDED AND RESTATED CREDIT AGREEMENT

      THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this "Agreement") is
effective as of July 1, 2002 by and among THE BOSTON BEER COMPANY, INC. (the
"Holding Company") and BOSTON BEER CORPORATION, the successor in interest to
Boston Beer Company Limited Partnership (the "Principal Operating Company"),
each a Massachusetts corporation (together, the "Borrowers" and each
individually, a "Borrower"); and FLEET NATIONAL BANK, a national banking
association (the "Bank"). Capitalized terms used herein are defined in Section 5
and SCHEDULES A and B hereto.

      A. Boston Beer Company Limited Partnership, the predecessor in interest of
the Principal Operating Company (the "Partnership") and the Holding Company, as
borrowers, previously entered into a Credit Agreement dated as of March 21,
1997, as amended (the "Original Agreement"), pursuant to which the Partnership
and the Holding Company issued their joint and several Revolving Credit Note and
Revolving Credit and Term Note (together, the "Original Notes") to evidence
revolving lines of credit in the respective principal amounts of $15,000,000 and
$30,000,000 (together, the "Original Facilities"). $-0- is outstanding under the
Original Facilities.

      B. Effective as of December 31, 2000, the Partnership transferred all of
its assets and properties (including its rights under the Original Agreement) to
the Principal Operating Company, which assumed all of the Partnership's
outstanding liabilities (including its obligations under the Original
Agreement). The Partnership was cancelled on November 19, 2001. (The foregoing
transactions are referred to collectively herein as the "Partnership Transfer".)

      C. In connection with and subsequent to the Partnership Transfer, the
Holding Company also caused the transfer of the assets of certain other
Subsidiaries, the dissolution thereof and the formation of several new
Subsidiaries (collectively with the Partnership Transfer, the "Restructuring").

      D. The Borrowers desire to (1) replace the Original Facilities with a new
revolving line of credit in the principal amount of $45,000,000, expiring March
31, 2007, (2) amend the Original Agreement to reflect the Restructuring and (3)
effect certain other amendments to the Original Agreement.

      E. The Bank is willing to establish such replacement line of credit
facility and make such amendments, subject to the terms and conditions set forth
herein. This Agreement amends and restates the Original Agreement (which amended
and restated the Credit Agreement dated as of May 2, 1995 between the
Partnership and the Bank).

      NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the parties hereto hereby agree as follows:

<PAGE>
1.    DESCRIPTION OF CREDIT FACILITY.

      1.1 THE LOANS. Subject to the terms and conditions of this Agreement, the
Bank agrees to make revolving credit loans (the "Loans") jointly to the
Borrowers from time to time until the close of business on March 31, 2007 (the
"Expiration Date"), in such sums as the Borrowers may request; provided,
however, that the aggregate principal amount of the Loans at any time
outstanding hereunder shall not exceed $45,000,000 (the "Commitment"). Within
the limits of the Commitment, the Borrowers may borrow, prepay and reborrow
hereunder from the date hereof to the Expiration Date; provided that each Loan
shall be in the amount of $100,000 or an integral multiple thereof. All of the
outstanding principal on the Loans, together with all accrued interest thereon
and all fees, expenses and other charges under the Loan Documents, shall be due
and payable in full on the Expiration Date.

      1.2 THE NOTES. The Loans shall be evidenced by the joint and several
Revolving Credit Note of the Borrowers in the form of EXHIBIT 1.2 hereto payable
to the order of the Bank (together with any additional Revolving Credit Notes
issued to any assignee(s) of the Bank or otherwise issued in substitution
therefor or replacement thereof, the "Notes"). Said Revolving Credit Note amends
and restates the Original Revolving Note. The Notes are incorporated herein by
reference and made a part hereof.

      1.3  INTEREST; DEFAULT RATE.

      (a) Subject to this Agreement, the Borrowers may elect an interest rate
for each Loan based on either (i) the Alternative Prime Rate or (ii) the
applicable LIBOR Rate (as defined on SCHEDULE B hereto) plus .45%. Each Prime
Rate Loan shall bear interest on the outstanding principal amount thereof at a
rate per annum equal to the Alternative Prime Rate, payable on the last day of
each month, commencing on April 30, 2002, and when such Prime Rate Loan is due
(whether at maturity, by reason of acceleration or otherwise). LIBOR Loans shall
bear interest, and otherwise be governed, in accordance with SCHEDULE B (the
"LIBOR Terms").

      (b) Overdue principal (whether at maturity, by reason of acceleration or
otherwise) and, to the extent permitted by applicable law, overdue interest and
fees or any other amounts payable hereunder or under the Notes, shall bear
interest (whether or not the Bank has accelerated payment of the Notes) from and
including the due date until paid, payable on demand, at a rate per annum equal
to 4% above the rate then applicable to Prime Rate Loans. In addition, if the
entire amount of any required principal and/or interest is not paid in full
within ten days after the same is due, the Borrowers shall pay to the Bank a
late fee equal to 5% of the required payment.

      1.4  NOTICE AND MANNER OF BORROWING OR CONVERSION OF LOANS.

      (a) Whenever the Borrowers desire to obtain or continue a Loan hereunder
or convert an outstanding Loan to a Loan of a different type, they shall notify
the Bank (which notice shall be irrevocable) by telecopy or telephone received
no later than 10:30 a.m. Boston time (i) on the date of the requested action,
with respect to a Loan to be made, continued or converted to a


                                     - 2 -

<PAGE>
Prime Rate Loan, and (ii) not less than two, nor more than five, Business Days
before the requested action, with respect to a Loan to be made, continued as or
converted to a LIBOR Loan. Such notice shall specify (A) the effective date and
amount of each Loan or portion thereof to be made, continued or converted, (B)
the interest rate option to be applicable thereto, and (C) the duration of the
LIBOR Period, if applicable. Each such notification (a "Notice of Borrowing or
Conversion") shall be immediately followed by a written confirmation in the form
attached hereto as EXHIBIT 1.4.

      (b) Subject to the LIBOR Terms, the Borrowers may convert all or any part
(in integral multiples of $100,000) of any outstanding Loan into a LIBOR Loan or
a Prime Rate Loan, as the case may be, in the same aggregate principal amount,
on any Business Day (which, in the case of a conversion of an existing LIBOR
Loan, must be on the last day of the LIBOR Period applicable to such existing
LIBOR Loan).

      (c) Notwithstanding the foregoing, no LIBOR Loan may be continued as such
nor may any Prime Rate Loan be converted to a LIBOR Loan during the existence of
a Default if the Bank has determined, in its sole discretion, not to permit such
continuations and conversions.

      1.5 PREPAYMENTS. LIBOR Loans may be prepaid, without premium or penalty
(but subject to the LIBOR Terms), on the last day of the applicable LIBOR
Period, upon at least three Business Days' prior written notice provided by the
Borrowers to the Bank. Prime Rate Loans may be prepaid at any time, without
premium or penalty, on same day notice if such notice is received prior to 10:30
a.m. on the date of such prepayment. Any interest accrued on the amounts so
prepaid to the date of such payment must be paid at the time of any such
payment.

      1.6 FEES. The Borrowers shall pay to the Bank during the Revolving Credit
Period a non-refundable commitment fee computed at the rate of .15% per annum on
the average daily unused portion of the Commitment, payable quarterly in
arrears, on the last day of March, June, September and December of each year and
on the last day of the Revolving Credit Period.

      1.7 CAPITAL ADEQUACY. The Bank shall notify the Borrowers if after the
date hereof the Bank determines that (a) the adoption after the date hereof of
or change after the date hereof in any law, rule, regulation or guideline
regarding capital adequacy for banks or bank holding companies, or any change
after the date hereof in the interpretation or application thereof by any
governmental authority charged with the administration thereof (to the extent
such adoption or change occurs after the date hereof), or (b) compliance by the
Bank or its parent bank holding company with any guideline, request or directive
taking effect after the date hereof of any such entity regarding capital
adequacy (whether or not having the force of law), has the effect of reducing
the return on the Bank's or such holding company's capital as a consequence of
the Bank's commitment to make Loans hereunder to a level below that which the
Bank or such holding company could have achieved but for such adoption, change
or compliance (taking into consideration the Bank's or such holding company's
then existing policies with respect to capital adequacy and assuming the full
utilization of such entity's capital) by any amount the Bank considers to be
material. The Borrowers agree to pay to the Bank the actual amount of such
reduction of return as and when such reduction is determined, when the Bank
presents a


                                     - 3 -

<PAGE>
statement of the amount and setting forth the Bank's calculation thereof. Such
statement shall be deemed true and correct, absent manifest error.

      1.8  TAXES.

      (a) All payments made by the Borrowers under this Agreement shall be made
free and clear of, and without deduction or withholding for or on account of,
any present or future income, stamp, franchise, excise or other taxes, levies,
imposts, duties, charges, fees, deductions or withholdings, now or hereafter
imposed, levied, collected, withheld or assessed by any Governmental Authority,
excluding net income taxes and franchise taxes (imposed in lieu of net income
taxes) imposed on the Bank as a result of a present or former connection between
the Bank and the jurisdiction of the Governmental Authority imposing such tax or
any political subdivision or taxing authority thereof or therein (other than any
such connection arising solely from the Bank having executed, delivered or
performed its obligations or received a payment under, or enforced, this
Agreement or any other Loan Document). If any such non-excluded taxes, levies,
imposts, duties, charges, fees, deductions or withholdings ("Non-Excluded
Taxes") or other stamp or documentary taxes or excise or property taxes, charges
or similar levies arising from any payment made hereunder or from the execution,
delivery or enforcement of, or otherwise with respect to, this Agreement or any
other Loan Document ("Other Amounts") are required to be withheld from any
amounts payable to the Bank hereunder, the amounts so payable to the Bank
(including any penalties, interest or expenses) shall be increased to the extent
necessary to yield to the Bank (after payment of all Non-Excluded Taxes and
Other Amounts) interest or any such other amounts payable hereunder at the rates
or in the amounts specified in this Agreement.

      (b) In addition, the Borrowers shall pay any Other Amounts to the relevant
Governmental Authority in accordance with applicable law.

      (c) Whenever any Non-Excluded Taxes or Other Amounts are payable by the
Borrowers, as promptly as possible thereafter the Borrowers shall send to the
Bank a certified copy of an original official receipt received by the Borrowers
showing payment thereof. If the Borrowers fail to pay any Non-Excluded Taxes or
Other Amounts when due pursuant to this Agreement to the appropriate taxing
authority or fails to remit to the Bank the required receipts or other required
documentary evidence, the Borrowers shall indemnify the Bank for any incremental
taxes, interest or penalties that may become payable by the Bank as a result of
any such failure.

      1.9 METHOD AND APPLICATION OF PAYMENTS. All payments and prepayments of
principal and all payments of interest and fees shall be made by the Borrowers
to the Bank at its head office in immediately available funds, on or before
11:00 a.m. (Boston time) on the due date thereof, free and clear of, and without
set-off, deduction, withholding or counterclaim for, any taxes or other
payments. All payments shall be applied first to the payment of all fees,
expenses and other amounts due to the Bank (excluding principal and interest),
then to accrued interest, and the balance on account of outstanding principal;
provided, however, that after the occurrence


                                     - 4 -

<PAGE>
of a Default payments will be applied to the Obligations as the Bank determines,
in its sole discretion..

      1.10 COMPUTATION OF INTEREST AND FEES. All interest and fees payable
hereunder shall be computed daily on the basis of a 360-day year, counting the
actual number of days elapsed. If the due date for any payment of principal is
extended by operation of law, interest shall be payable for such extended time.
If any payment required by this Agreement becomes due on a day that is not a
Business Day, such payment may be made on the next succeeding Business Day
(subject to the definition of LIBOR Period set forth in the LIBOR Terms), and
such extension shall be included in computing interest in connection with such
payment.

      1.11 USE OF PROCEEDS. The proceeds of the Loans shall be used for the
working capital requirements of the Borrowers and their respective Subsidiaries
(collectively, the "Companies") and for fixed asset purchases by the Companies
made in the ordinary course of business and not pursuant to any business
acquisition. In addition, up to $20,000,000 in the aggregate may be used for
Permitted Acquisitions consummated by the Companies after the date hereof
("Acquisition Loans").

      1.12 SUBSIDIARY GUARANTIES. The Obligations shall be unconditionally
guaranteed at all times by each Borrower's Material Subsidiaries pursuant to an
unconditional guaranty satisfactory to the Bank (each, a "Subsidiary Guaranty").

2.    CONDITIONS OF LOANS.

      2.1 CONDITIONS PRECEDENT TO INITIAL LOAN. The obligation of the Bank to
make its initial Loan under this Agreement is subject to the conditions
precedent that the Bank shall have received, in form and substance reasonably
satisfactory to the Bank and its counsel, (a) all of the agreements, instruments
and certificates described on the Closing Agenda attached as EXHIBIT 2.1, duly
executed and delivered, together with all other documents and materials referred
to in such Closing Agenda, and (b) satisfactory evidence of the completion of
all actions referred to in such Closing Agenda.

      2.2 CONDITIONS PRECEDENT TO ALL LOANS. The obligation of the Bank to make
each Loan, including the initial Loan under this Agreement, or to continue or
convert any Loan to a LIBOR Loan, is further subject to the following
conditions:

      (a) the Bank shall have received a properly completed Notice of Borrowing
or Conversion;

      (b) the representations and warranties contained in Section 3 shall be
true and accurate in all material respects on and as of the date of such Notice
of Borrowing or Conversion and on the effective date of the making, continuation
or conversion of each Loan as though made at and as of each such date (except to
the extent that such representations and warranties expressly relate to an
earlier date);


                                     - 5 -

<PAGE>
      (c) no Default shall have occurred and be continuing, or would exist after
giving effect to such Loan (on the proposed borrowing date thereof and, on a pro
forma basis, on the last day of the most recent fiscal quarter for which
financial statements and a Compliance Report have been delivered to the Bank
under Section 4.1, as applicable); and

      (d) no change shall have occurred in any law or regulation or
interpretation thereof making it illegal or against the policy of any
governmental authority for the Bank to make Loans hereunder.

      Each request for the making, continuation or conversion of a Loan shall be
deemed a representation and warranty to such effect by the Borrowers as of the
date of the making, continuation or conversion of such Loan.

3.    REPRESENTATIONS AND WARRANTIES.

      To induce the Bank to enter into this Agreement and to make Loans under
the Commitment, each of the Borrowers makes the representations and warranties
set forth below, each of which representations and warranties reflect the
execution hereof and the initial Loan hereunder, and shall survive the delivery
of the Notes and the making of all Loans:

      3.1  ORGANIZATION AND QUALIFICATION.


      (a) The Principal Operating Company (i) is a corporation duly organized,
validly existing and in good standing under the laws of the Commonwealth of
Massachusetts, (ii) has all requisite corporate power to own its property and
conduct its business as now conducted and as presently contemplated, (iii) is
duly qualified and in good standing as a foreign corporation and is duly
authorized to do business in each jurisdiction where the nature of its
properties or business requires such qualification, and (iv) has no
Subsidiaries, except Hops Financial Holdings Business Trust, a Massachusetts
business trust ("Hops Financial"). Hops Financial was organized on March 4, 2002
and is a Material Subsidiary.

      (b) The Holding Company (i) is a Massachusetts corporation duly organized,
validly existing and in good standing under the laws of the Commonwealth of
Massachusetts, (ii) has all requisite corporate power to own its property and
conduct its business as now conducted and as presently contemplated, (iii) is
duly qualified and in good standing as a foreign corporation and is duly
authorized to do business in each jurisdiction where the nature of its property
or business requires such qualification, and (iv) has no Subsidiaries other than
as specified on EXHIBIT 3.15.

      (c) Each of the Subsidiaries of the Borrowers (i) is a corporation,
limited liability company or business trust duly organized or formed, validly
existing and in good standing under its laws of its state of incorporation or
formation, as applicable, (ii) has all requisite power to own its own property
and conduct its business as now conducted and a presently contemplated, (iii) is
duly qualified and in good standing as a foreign business entity and is duly
authorized to


                                      - 6 -

<PAGE>
do business in each jurisdiction where the nature of its property or business
requires such qualification, and (iv) has no Subsidiaries other than as
specified on EXHIBIT 3.15.

      (d) This representation shall be updated from time to time by the
Borrowers when any new Subsidiary is formed, by delivery of a properly completed
Notice of New Subsidiary, as required under Section 6.4.

      3.2 AUTHORITY. The execution, delivery and performance of this Agreement,
the Notes, the Subsidiary Guaranties and all related agreements, instruments and
certificates (all of the foregoing collectively referred to as the "Loan
Documents") and the transactions contemplated hereby are within the power and
authority of the Companies who are named as parties thereto, and have been
authorized by the governing bodies (and, if required, equityholders) of the
respective Companies, as applicable, and by all other necessary proceedings, and
do not and will not (a) violate the Organizational Documents of any Company or
any law, rule, order or regulation applicable to any of them, (b) contravene any
provision of, or constitute (with due notice or lapse of time or both), a
default under, any other agreement, instrument, order or undertaking binding on
any Company, or (c) result in the creation or imposition of any Encumbrance on
any of the properties, assets or rights of any Company.

      3.3 CONSENTS; VALIDITY. The execution, delivery and performance by each
Company of the Loan Documents and the transactions contemplated therein do not
require any approval or consent of, or filing or registration with, any
Governmental Authority or any other party. The Loan Documents are the legal,
valid and binding obligations of each Company named as a party thereto,
enforceable in accordance with their respective terms, except as limited by
bankruptcy, insolvency, reorganization, moratorium or other laws affecting the
enforcement of creditors' rights generally.

      3.4 TITLE TO PROPERTIES; ABSENCE OF ENCUMBRANCES. Each Company has good
title to all of the properties, assets and rights purported to be owned by it,
including without limitation, those reflected in the financial statements
referred to in Section 3.5 (except inventory and equipment disposed of in the
ordinary course of business since the date thereof), free from all Encumbrances,
except Permitted Encumbrances.

      3.5 FINANCIAL STATEMENTS. The Holding Company has provided to the Bank its
consolidated balance sheet as of December 29, 2001 and the consolidated
statements of operations and cash flows for the fiscal year then ended, and
related footnotes, audited and certified by Arthur Andersen, LLC, together with
the related consolidating statements as of and for the fiscal year ending on
such date. Such financial statements were prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods specified and present fairly the financial position of the Holding
Company and its Subsidiaries as of such dates and the results of the operations
of the Holding Company and its Subsidiaries for such periods. There are no
liabilities or commitments, contingent or otherwise, not disclosed in such
financial statements that involve a material amount. Since the date of the most
recent audited financial statements delivered to the Bank, except as otherwise
disclosed in writing prior to the date hereof to the Bank with respect to
certain unrealized loss in investment


                                     - 7 -

<PAGE>
securities, there have been no changes in the assets, liabilities, financial
condition or business of any Company, other than changes in the ordinary course
of business, the effect of which has not, in the aggregate, been materially
adverse to any Company or its assets and properties.

      3.6 TAXES. Each Company has filed all federal, state and other material
tax returns required to be filed by it, if any, and has paid or made adequate
provision for the payment of all federal, state and other taxes, charges and
assessments, if any.

      3.7 LITIGATION. Except as disclosed on EXHIBIT 3.7, there is no
litigation, arbitration, proceeding or investigation pending, or, to the
knowledge of any of the Borrowers' officers, threatened, against or affecting
any Company that, if adversely determined, would reasonably be likely (a) to
result in a material judgment not fully covered by insurance or a forfeiture of
all or any material part of the property of any Company, or (b) otherwise to
have a material adverse effect on the assets, business, prospects or condition,
financial or otherwise, of any Company.

      3.8 COMPLIANCE WITH LAWS AND AGREEMENTS. None of the Companies is a party
to any agreement or instrument or subject to any corporate or partnership
restriction materially adversely affecting its assets, business, prospects or
condition, financial or otherwise. None of the Companies is in (a) violation or
alleged violation of any provision of law or regulation, including without
limitation any ERISA provision, any SEC law, rule or regulation or any
Environmental Law, the violation of which would reasonably be likely to have a
material adverse effect upon any Company, or any order, judgment or decree of
any court or other agency of government or (b) default in the performance,
observance or fulfillment of any of the obligations, covenants or conditions
contained in any material agreement or instrument to which it is a party. None
of the Companies is subject to regulation under the Investment Company Act of
1940, as amended.

      3.9 NO INSOLVENCY. None of the Companies is insolvent or unable to pay its
debts as they become due; the Loans made or to be made to the Borrowers do not
and will not render any Company insolvent or unable to pay its debts as they
become due; the capital of each Company is not unreasonably small, compared with
the capital of companies of similar size and engaged in similar activities, in
light of the needs and anticipated needs for capital of the businesses conducted
or anticipated to be conducted by it; none of the Companies is contemplating
either the filing of a petition by it under any state or federal bankruptcy or
insolvency laws or the liquidating of all or a major portion of its property,
and none of the Borrowers' officers has knowledge of any person contemplating
the filing of any such petition against any Company or any of its properties and
assets.

      3.10 FULL DISCLOSURE. No statement of fact made by or on behalf of any
Company in any Loan Document or other document provided to Bank contains any
untrue statement of a material fact or omits to state any material fact
necessary to make statements contained therein or herein not misleading. There
is no fact presently known to any of the Borrowers' officers which has not been
disclosed to the Bank which materially affects adversely or, as far as such
officer or partner can foresee, will materially affect adversely the assets,
business or condition (financial or otherwise) of any Company. As of the date of
this Agreement, no Default exists.


                                     - 8 -

<PAGE>
      3.11 MARGIN STOCK. Neither Borrower owns or has any present intention of
acquiring, and no portion of any Loan is to be used for the "purpose of
purchasing or carrying", any "margin stock" as such terms are used in
Regulations U and X of the Board of Governors of the Federal Reserve System, 12
C.F.R. 221 and 224, as amended.

      3.12 PATENTS, TRADEMARKS, ETC. Each Company owns or possesses all the
patents, trademarks, service marks, trade names, copyrights, consents and
licenses, and all rights with respect to the foregoing, necessary for the
current and currently planned future conduct of its business, without any known
conflict with the rights of others.

      3.13 ERISA. All contributions and other payments required to be made by
either Borrower or any entity with which either Borrower would be aggregated (a
"Commonly Controlled Entity") under Section 414(b), (c), (m), or (o) of the Code
to all employee benefit plans, as defined in Section 3(3) of ERISA which either
Borrower or any Commonly Controlled Entity maintains or maintained or to which
any of them contributes or has contributed (the "Employee Benefit Plans") have
been made or reserves adequate for such purposes have been set aside and
reflected on the Borrowers' financial statements. No Employee Benefit Plan which
is subject to Section 412 of the Code or Section 302 of ERISA has an accumulated
or waived funding deficiency, has permitted decreases in its funding standard
account, or has applied for a waiver of the minimum funding standard or an
extension of any amortization period. No proceedings have been instituted to
terminate, or to appoint a trustee to administer, any Employee Benefit Plan
subject to Section 412 of the Code of Section 302 of ERISA. No lien imposed
under the Code or ERISA on the assets of the Borrowers or any Commonly
Controlled Entity exists, or is likely to arise, on account of any Employee
Benefit Plan subject to Section 412 of the Code of Section 302 of ERISA. Neither
of the Borrowers and no Commonly Controlled Entity has incurred, or is likely to
incur, any material withdrawal liability with respect to any multiemployer plan
as defined in Section 4001(a)(3) of ERISA ("Multiemployer Plan"). No
Multiemployer Plan is insolvent, unable to pay its debts as they become due, or
in reorganization. Each Employee Benefit Plan which is an employee pension
benefit plan, as defined in Section 3(2) of ERISA, has been determined to be
qualified under Section 401(a) or Section 403(a) of the Code and nothing has
occurred which would cause the loss of such qualification or the imposition of
any tax liability or penalty under the Code or ERISA on either Borrower. Each
Employee Benefit Plan has been and is administered in accordance with its terms
and in material compliance with applicable law. To the best of their knowledge,
neither of the Borrowers and no Commonly Controlled Entity has breached any
fiduciary duty imposed on it under ERISA with respect to any Employee Benefit
Plan or has engaged in any prohibited transaction, as defined in Title I of
ERISA or Section 4975 of the Code, involving any Employee Benefit Plan for which
no exemption is available. No Employee Benefit Plan which is an employee welfare
benefit plan, as defined in Section 3(1) of ERISA, provides for continuing
benefits or coverage for any participant (or beneficiary) after the termination
of the participant's employment except as may be required under Section 4980B of
the Code or applicable state statutory law.


                                     - 9 -

<PAGE>
      3.14  ENVIRONMENTAL LAWS.

      (a) Each Company has obtained all permits, licenses and other
authorizations which are required under all Environmental Laws, except to the
extent failure to have any such permit, license or authorization would not have
a material adverse effect on any Company's business, financial condition or
operations. Each Company is in compliance with the terms and conditions of all
such permits, licenses and authorizations, and is also in compliance with all
other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in any applicable
Environmental Law or in any regulation, code, plan, order, decree, judgment,
injunction, notice or demand letter issued, entered, promulgated or approved
thereunder, except to the extent failure to comply would not have a material
adverse effect on any Company's business, financial condition, prospects or
operations.

      (b) No notice, notification, demand, request for information, citation,
summons or order has been issued, no complaint has been filed, no penalty has
been assessed and no investigation or review is pending or threatened by any
governmental or other entity with respect to any alleged failure by any Company
to have any permit, license or authorization required in connection with the
conduct of its business or with respect to any Environmental Laws, including,
without limitation, Environmental Laws relating to the generation, treatment,
storage, recycling, transportation, disposal or release of any Hazardous
Materials, except to the extent that such notice, complaint, penalty or
investigation did not or could not result in the remediation of any property
owned or used by any Company costing in excess of $10,000 in the aggregate.

      (c) To the best of each Borrower's knowledge, no material oral or written
notification of a release of a Hazardous Material has been filed by or on behalf
of any Company and no property now or previously owned, leased or used by any
Company is listed or proposed for listing on the National Priorities List under
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, or on any similar state list of sites requiring investigation
or clean-up.

      (d) There are no Encumbrances arising under or pursuant to any
Environmental Laws or any of the real property or properties owned, leased or
used by any Company and no governmental actions have been taken or are in
process which could subject any of such properties to such liens or encumbrances
or, as a result of which any Company would be required to place any notice or
restriction relating to the presence of Hazardous Materials at any property
owned by it in any deed to such property.

      (e) Except as disclosed on EXHIBIT 3.14, none of the Companies and, to the
best knowledge of either Borrower, no previous owner, tenant, occupant or user
of any property owned, leased or used by any Company has (i) engaged in or
permitted any operations or activities upon or any use or occupancy of such
property, or any portion thereof, for the purpose of or in any way involving the
handling, manufacture, treatment, storage, use, generation, release, discharge,
refining, dumping or disposal (whether legal or illegal, accidental or
intentional) of any Hazardous Materials on, under, in or about such property,
except to the extent commonly used in day-to-day operations of such property and
in such case only in compliance with all


                                     - 10 -

<PAGE>
Environmental Laws, or (ii) transported any Hazardous Materials to, from or
across such property except to the extent commonly used in day-to-day operations
of such property and, in such case, in compliance with, all Environmental Laws;
nor, to the best knowledge of either Borrower, have any Hazardous Materials
migrated from other properties upon, about or beneath such property, nor, to the
best knowledge of either Borrower, are any Hazardous Materials presently
constructed, deposited, stored or otherwise located on, under, in or about such
property except to the extent commonly used in day-to-day operations of such
property and, in such case, in compliance with, all Environmental Laws.

      3.15 OWNERSHIP. The Holding Company is the owner, directly or thorough
wholly-owned Subsidiaries, beneficially and legally, of all of the outstanding
equity interests in the Principal Operating Company. EXHIBIT 3.15 sets forth in
detail such direct and indirect ownership. No person or entity not identified on
EXHIBIT 3.15 has an equity interest in the Principal Operating Company or any
right to acquire such an interest. The Holding Company's authorized capital
stock consists of two classes, a limited voting rights Class A Common Stock and
a full voting rights Class B Common Stock. Among its voting rights, the holders
of the Class A Common Stock have the right to elect not fewer than two nor more
than four of the Holding Company's Directors, and the holders of the Class B
Common Stock have the right to elect no fewer than five nor more than seven of
the Holding Company's Directors. C. James Koch is currently the sole holder,
beneficially and legally, of all of the issued and outstanding shares of the
Class B Common Stock. The Class A Common Stock is publicly traded and is listed
on the New York Stock Exchange.

4.    AFFIRMATIVE COVENANTS.

      Each of the Borrowers covenants and agrees that, so long as the Bank has
any commitment to lend hereunder or in connection with any other Obligation, or
any Loan or other Obligation remains outstanding, each of the Borrowers will,
and (as applicable) will cause each Subsidiary to:

      4.1  FINANCIAL REPORTING.  Furnish to the Bank:

      (a) Within 120 days after the end of each fiscal year, its consolidated
balance sheet as of the end of, and the related statements of operations and
cash flow for, such year, and comparisons to prior years, audited and certified
by Deloitte & Touche (or other independent certified public accountants
acceptable to the Bank), together with the related consolidating statements, and
promptly (and in any event within five days) after the same is available, a copy
of the management letter prepared by such accountants with respect thereto;

      (b) Within 55 days after the end of each fiscal quarter, its consolidated
balance sheet as of the end of, and the related statements of operations and
cash flow for, the period then ended and year-to-date, and comparisons to prior
periods and years, certified by the Borrowers' chief financial officer (subject
to normal, recurring year-end adjustments that shall not in the aggregate be
material in amount);


                                     - 11 -

<PAGE>
      (c) On the date hereof and concurrently with the delivery of the annual
and quarterly financial statements required by Sections 4.1(a) and (b), a report
substantially in the form of EXHIBIT 4.1 hereto signed on behalf of each
Borrower by its chief financial officer;

      (d) No later than 60 days after the beginning of each fiscal year,
financial projections of the Borrowers for such fiscal year;

      (e) Immediately upon becoming aware of the existence of any condition or
event that constitutes a Default, written notice thereof specifying the nature
and duration thereof and the action being or proposed to be taken with respect
thereto;

      (f) Promptly (and in any event within five days) after becoming aware of
any litigation or of any investigative proceedings by a governmental agency or
authority commenced or threatened against any Company, the outcome of which
would have a reasonable likelihood of resulting in a materially adverse effect
on any of its material assets or its business or financial condition, written
notice thereof and of the action being or proposed to be taken with respect
thereto;

      (g) Promptly after the same are available, copies of all financial
statements, proxy statements and regular and periodic reports that the Holding
Company may send to its stockholders or file with the SEC or any other
governmental authority at any time having jurisdiction over any Company;

      (h) If and when either Borrower gives or is required to give notice to the
PBGC of any "Reportable Event" (as defined in Section 4043 of ERISA) with
respect to any Employee Benefit Plan that might constitute grounds for a
termination of such Employee Benefit Plan under Title IV of ERISA, or knows that
any member of the Commonly Controlled Entity or the Employee Benefit Plan
Administrator of any Employee Benefit Plan has given or is required to give
notice of any such Reportable Event, a copy of the notice of such Reportable
Event given or required to be given to the PBGC;

      (i) Promptly upon becoming aware of any investigative proceedings by a
governmental agency or authority commenced or threatened against any Company
regarding any potential violation of Environmental Laws or any spill, release,
discharge or disposal of any Hazardous Material, written notice thereof and the
action being or proposed to be taken with respect thereto; and

      (j) From time to time, such other data and information (financial and
otherwise) about any Company or its respective assets and properties as the Bank
may reasonably request.

      4.2 CONDUCT OF BUSINESS. (a) Maintain in good standing its existence as a
corporation, limited liability company or business trust, as applicable, and its
foreign qualifications as required by applicable law where the failure to do so
qualify could have a material adverse effect on it (b) duly observe and comply
in all material respects with all applicable laws and all applicable
requirements of any Governmental Authorities whether now in effect or hereafter


                                     - 12 -

<PAGE>
enacted or promulgated, including without limitation Environmental Laws, SEC
laws, rules and regulations and ERISA, (c) comply in all material respects with
all material agreements to which it is or becomes a party, (d) maintain and keep
in full force and effect all rights, privileges, patents, trademarks, licenses,
permits and other intangibles necessary in any material respect to the proper
conduct of its business, and (e) remain and engage in substantially the same
business as that in which each is now engaged.

      4.3 MAINTENANCE AND INSURANCE. Maintain its properties in good repair,
working order and condition as required for the normal conduct of its business;
and at all times maintain liability, product liability, builder's risk, workers'
compensation, casualty and other insurance insuring such Company and its
properties with financially sound and reputable insurers in such amounts as the
officers or partners of such Company in the exercise of their reasonable
judgment deem to be adequate and, in any event, in customary amounts with
respect to like properties or risks of companies conducting similar businesses;
at the Bank's request from time to time, deliver certificates of insurance
evidencing such coverage.

      4.4 TAXES AND ACCOUNTS PAYABLE. Pay or cause to be paid all taxes,
assessments or governmental charges on it or its respective properties, as well
as all lawful claims for labor, materials and supplies or otherwise, which, if
unpaid, could become a lien or charge upon such properties or any part thereof
when or before they become due; provided that this covenant shall not apply to
any tax, assessment or charge that is being contested in good faith by
appropriate proceedings and with respect to which adequate reserves have been
established and are being maintained in accordance with generally accepted
accounting principles.

      4.5 MAINTENANCE OF BOOKS AND RECORDS. Keep adequate books and records of
account, in which true and complete entries will be made reflecting all of its
business and financial transactions and prepare financial statements hereunder
in accordance with U.S. generally accepted accounting principles consistently
applied and applicable law. Permit agents or representatives of the Bank, at any
reasonable time, and upon reasonable notice (or if a Default shall have occurred
and is continuing, at any time without prior notice), to (a) examine, make
copies of and take abstracts from the financial and accounting books and records
of the Companies, and (b) discuss the affairs, finances and accounts of the
Companies with their officers, partners, employees and accountants.

      4.6 ENVIRONMENTAL LAWS. Comply in all material respects with, and perform
all Clean-up Work necessary under, all Environmental Laws applicable (now or in
the future) to any Company or its business.

      4.7 FURTHER ASSURANCES. At any time and from time to time, (a) cause any
Subsidiary prior to or upon becoming a Material Subsidiary to execute and
deliver to Bank an unlimited guaranty in favor of Bank, guaranteeing all
existing and future obligations of Borrowers to Bank; and (b) execute and
deliver such further instruments and take such further action as may reasonably
be requested by the Bank to effect the purposes of the Loan Documents.

      4.8 PRINCIPAL DEPOSITORY. Use the Bank as its principal depository.


                                     - 13 -

<PAGE>
5.    FINANCIAL COVENANTS.

      5.1 COVENANTS. Each of the Borrowers covenants and agrees that, so long as
the Bank has any commitment to lend hereunder or any Loan or other Obligation to
the Bank remains outstanding, each of the Borrowers will:

      (a) Maintain at all times during the period from the date hereof through
June 30, 2002, Tangible Net Worth of not less than (i) $68,000,000, plus (ii)
50% of positive Net Income (with no reduction for losses) for the fiscal
quarters ended March 31 and June 30, 2002 plus (iii) 100% of Net Equity Proceeds
received during such two fiscal quarters; and, thereafter, maintain Tangible Net
Worth at all times during each fiscal quarter (each, a "Test Quarter") of at
least (A) the minimum amount of Tangible Net Worth required hereunder as of the
last day of the immediately preceding fiscal quarter, plus (B) 50% of positive
Net Income (with no reduction for losses) for the Test Quarter, plus (C) 100% of
Net Equity Proceeds received during the Test Quarter; and

      (b) Not permit at any time the ratio of Total Liabilities to Tangible Net
Worth to be greater than 1.00:1.00;

      (c) Not permit the ratio of Total Funded Debt at any time to EBITDA for
the most recently ended period of four consecutive fiscal quarters to be greater
than 2.50:1.00; and

      (d) As to the Holding Company, earn Net Income of at least $1.00 for each
trailing four consecutive fiscal quarter-period.

      5.2 DEFINITIONS. For purposes of this Section, the following terms shall
have the following meanings and any undefined terms shall be defined in
accordance with generally accepted accounting principles on a basis consistent
with (a) that used in prior periods and (b) that in preparing the audited
financial statements referred to in Sections 3.5 and 4.1(a):

      (a) As used herein, "EBITDA" shall mean, for any period, an amount equal
to Net Income for such period plus, to the extent deducted in the calculation of
Net Income for such period, (i) taxes in respect of income and profits paid or
accrued during such period (ii) Interest Expense for such period and (iii)
depreciation, amortization and other non-cash charges taken in accordance with
generally accepted accounting principles for such period.

      (b) As used herein, "Indebtedness for Borrowed Money" shall mean, without
duplication, all indebtedness of the Companies with respect to any of the
following: (i) money borrowed (whether recourse or nonrecourse), including
principal, interest and premiums, (ii) obligations evidenced by a bond,
debenture, note or other similar written obligation to pay money, (iii)
capitalized lease obligations, (iv) obligations under conditional sales or other
title retention agreements or secured by any Encumbrance, (v) any letters of
credit or similar instruments (including reimbursement obligations with respect
thereto), (vi) the deferred purchase price of property or services, except trade
payables and accrued expenses as incurred in


                                     - 14 -

<PAGE>
the ordinary course of business, or (vii) any guaranty of any or all of the
foregoing, in case each determined on a consolidated basis in accordance with
generally accepted accounting principles.

      (c) As used herein, "Interest Expense" shall mean, for any period,
interest expense (including imputed interest on capital lease obligations) of
the Companies for such period, determining on a consolidated basis in accordance
with generally accepted accounting principles.

      (d) As used herein, "Net Equity Proceeds" shall mean, for any period, the
aggregate cash proceeds (net of reasonable out-of-pocket fees and expenses)
received by the Holding Company during such period in connection with any
issuance by the Holding Company of any shares of its capital stock, other equity
interests or options, warrants or other purchase rights to acquire such capital
stock or other equity interests to, or receipt of a capital contribution from,
any Person (other than (i) an officer, employee or director of any Company or
(ii) either Borrower, with respect to capital contributions to their respective
Subsidiaries), minus cash payments made to effect (i) any Phase 1 Stock
Repurchases during such period and (ii) solely to the extent such deduction is
permitted by the Bank, in its sole discretion, any Phase 2 Stock Repurchases
during such period.

      (e) As used herein, "Net Income" shall mean the net income (or loss) of
the Companies, after deducting all operating expenses, provisions for all taxes
and reserves (including reserves for deferred income taxes) and all other proper
deductions, all determined on a consolidated in accordance with generally
accepted accounting principles.

      (f) As used herein, "Tangible Net Worth" shall mean as of any date as of
which the amount thereof shall be determined, the total consolidated assets of
the Companies minus (a) the sum of any amounts attributable to (i) goodwill,
(ii) intangible items such as unamortized debt discount and expense, patents,
trade and service marks and names, copyrights and research and development
expenses except prepaid expenses, (iii) all reserves not already deducted from
assets, (iv) any write-up in the book value of assets resulting from any
revaluation thereof subsequent to the date of the Holding Company's audited
financial statements referred to in Section 3.5, and (v) the value of any
minority interest in any Subsidiaries (other than Permitted Acquisitions), and
(b) Total Liabilities.

      (g) As used herein, "Total Funded Debt" shall mean, at any time, all
Indebtedness for Borrowed Money at such time, determined in accordance with
generally accepted accounting principles. The aggregate amount of Total Funded
Debt at any time shall include all accrued interest which has become due and
payable but has not been paid (whether or not capitalized).

      (h) As used herein, "Total Liabilities" shall mean at any date as of which
the amount thereof shall be determined, all obligations which should, in
accordance with generally accepted accounting principles, be classified as
liabilities on the consolidated balance sheet of the Holding Company, including
in any event all Indebtedness.


                                     - 15 -

<PAGE>
6.    NEGATIVE COVENANTS.

      Each of the Borrowers covenants and agrees that, so long as the Bank has
any commitment to lend hereunder or any Loan or other Obligation to the Bank
remains outstanding, each of the Borrowers will not, and will cause each of the
Subsidiaries to not:

      6.1 INDEBTEDNESS, GUARANTEES. Create, incur, assume or be or remain liable
with respect to any Indebtedness or Guarantees, other than the following:

      (a) Indebtedness of the Borrowers to the Bank or any of its affiliates;

      (b) Indebtedness represented by amortization of the signing payment
received by the Holding Company under its 1998 glass bottle contract;

      (c) Purchase money Indebtedness permitted under Section 6.2(c);

      (d) Guarantees made by the Borrowers' Subsidiaries in favor of the Bank or
any of its affiliates; and

      (e) Guarantees resulting from the endorsement of negotiable instruments
for collection in the ordinary course of business.

      6.2 ENCUMBRANCES. Create, incur, assume or suffer to exist any mortgage,
pledge, security interest, lien or other charge or encumbrance, including the
lien or retained security title of a conditional vendor upon or with respect to
any of its property or assets ("Encumbrances"), or assign or otherwise convey
any right to receive income, except the following ("Permitted Encumbrances"):

      (a) landlords' and lessors' liens in respect of rent not in default or
liens in respect of pledges or deposits under workers' compensation,
unemployment insurance, social security laws, or similar legislation (other than
ERISA) or in connection with appeal and similar bonds incidental to litigation;
mechanics' and similar liens, if the obligations secured by such liens are not
then delinquent; liens securing the performance of bids, tenders, contracts
(other than for the payment of money); and statutory obligations incidental to
the conduct of its business that do not in the aggregate materially detract from
the value of the property of the Borrowers, or materially impair the use thereof
in the operation of the businesses of the Borrowers;

      (b) judgment liens that shall not have been in existence for a period
longer than 30 days after the creation thereof or, if a stay of execution shall
have been obtained, for a period longer than 30 days after the expiration of
such stay;

      (c) Encumbrances against any Company securing purchase money Indebtedness
for tangible personal property (other than inventory) in the ordinary course of
business in an aggregate amount (for the Companies as a group) of no more than
$5,000,000, provided that (i) the obligations secured by any such Encumbrance
shall not exceed 100% of the lesser of cost or


                                     - 16 -



<PAGE>

fair market value as of the time of the acquisition of such property covered
thereby, and (ii) each such Encumbrance shall at all times be limited solely to
the item or items of property so acquired;

         (d) Encumbrances on certain assets of the Borrowers (other than
accounts and inventory and proceeds thereof) securing only the Indebtedness
permitted under Section 6.1(b); and

         (e) Easements, rights of way, restrictions and other similar charges or
Encumbrances relating to real property and not interfering in a material way
with the ordinary conduct of the business of the Borrowers and the Subsidiaries.

         6.3 SALE AND LEASEBACK. Enter into any arrangement, directly or
indirectly, whereby it shall sell or transfer any property owned by it, in order
to lease such property or lease other property that any Company intends to use
for substantially the same purpose as the property being sold or transferred.

         6.4 MERGER; CONSOLIDATION; DISPOSITION OF ASSETS; ETC. Without the
Bank's prior written consent: (a) sell, lease or otherwise dispose of any of its
assets or properties except inventory and/or equipment in the ordinary course of
business; (b) amend or permit the amendment of its Organizational Documents in
any way that could have a material adverse effect upon its business or the
Bank's rights under any Obligation or alter the relative voting rights of the
Class A and Class B Common Stock of the Holding Company (whether for the Board
of Directors or otherwise); (c) dissolve, liquidate, merge or consolidate into
or with any other person or entity; (d) form (by spin-off or otherwise) any
Subsidiary unless (i) no Default then exists or would result therefrom, (ii) at
least ten days prior notice thereof shall have been provided to the Bank by
delivery of a properly completed Notice of New Subsidiary in the form of EXHIBIT
6.4 and (iii) such Subsidiary, if a Material Subsidiary, shall have executed and
delivered in favor of the Bank an unlimited guaranty, in form satisfactory to
the Bank, guaranteeing all existing and future obligations of the Borrowers to
the Bank; or (e) change its fiscal year.

         6.5 INVESTMENTS. Make or maintain any Investments other than Permitted
Investments.

         6.6 TRANSACTIONS WITH AFFILIATES. Enter into any transaction,
including, without limitation, the purchase, sale or exchange of property or
assets or the rendering or accepting of any service with or to any Affiliate of
any Company except in the ordinary course of business and pursuant to the
reasonable requirements of such Borrower's business or Subsidiary's and upon
terms not less favorable to the Borrowers and the Material Subsidiaries than
they could obtain in a comparable arm's-length transaction with a third party
other than such Affiliate.

         6.7 DISTRIBUTIONS. Without the Bank's prior written consent, no
Borrower shall make any distributions on account of or in redemption, retirement
or purchase its capital stock, partnership or other equity interests; except
that (a) the Borrowers' respective Subsidiaries may make distributions on
account of their capital stock to the Borrowers, (b) the Holding Company


                                     - 17 -

<PAGE>
may redeem from former employees non-vested shares in the Holding Company's
Class A Common Stock issued under the Holding Company's Employee Equity
Incentive Plan, to the extent that the Holding Company has the right to redeem
such shares under said Plan, and (c) the Holding Company may redeem additional
shares of its Class A Common Stock, (i) as approved by its Board of Directors
between January 4, 2000 and February 20, 2002 (collectively, the "Phase 1 Stock
Repurchases") or (ii) as approved by its Board of Directors at any time after
the date hereof (collectively, the "Phase 2 Stock Repurchases").

7. DEFAULTS.

         7.1 EVENTS OF DEFAULT. There shall be an Event of Default hereunder if
any of the following events occurs:

         (a) default in the payment or mandatory prepayment of any amount of
principal, interest, fees or expenses of any Loan or any other Obligation when
due; or

         (b) failure to perform any term, covenant or agreement contained in
Section 4, Section 5, Section 6 or Section 8.2; or

         (c) failure by any Company, as applicable, to perform any other term,
covenant or agreement contained in any Loan Document if such default shall
continue for 30 days after the earlier of (i) actual knowledge thereof on the
part of either Borrower or (ii) notice thereof is sent to the Borrowers by the
Bank; or

         (d) any representation or warranty made in this Agreement or any
certificate or other document furnished by or on behalf of any Company,
including without limitation, in any Subsidiary Guaranty, at the closing
hereunder or otherwise shall prove to have been false in any material respect
upon the date when made or deemed to have been made; or

         (e) default or breach (after the applicable grace period, if any) under
the Indebtedness described in Section 6.1(b) or under any instrument or
agreement of any Company with respect to other Indebtedness of any Company
(other than to the Bank) for borrowed money or with respect to financing
available to any Company (other than from the Bank), if the effect of such
default or breach is to permit the holder of such Indebtedness to accelerate the
maturity thereof; or

         (f) any Company shall (i) apply for or consent to the appointment of,
or the taking of possession by, a receiver, custodian, trustee, liquidator or
similar official of itself or of all or a substantial part of its property, (ii)
be generally not paying its debts as such debts become due, (iii) make a general
assignment for the benefit of its creditors, (iv) commence a voluntary case
under the Federal Bankruptcy Code (as now or hereafter in effect), (v) take any
action or commence any case or proceeding under any law relating to bankruptcy,
insolvency, reorganization, winding-up or composition or adjustment of debts, or
any other law providing for the relief of debtors, (vi) fail to contest in a
timely or appropriate manner, or acquiesce in writing to, any petition filed
against it in an involuntary case under the Federal Bankruptcy Code or other
law, (vii) take any action under the laws of its jurisdiction of incorporation
or organization


                                     - 18 -

<PAGE>
similar to any of the foregoing, or (viii) take any corporate action for the
purpose of effecting any of the foregoing; or

         (g) a proceeding or case shall be commenced, without the application or
consent of any Company in any court of competent jurisdiction, seeking (i) the
liquidation, reorganization, dissolution, winding up, or composition or
readjustment of such Borrower's or such Subsidiary's debts, (ii) the appointment
of a trustee, receiver, custodian, liquidator or the like of all or any
substantial part of any Company's assets, or (iii) similar relief in respect of
any Company, under any law relating to bankruptcy, insolvency, reorganization,
winding-up or composition or adjustment of debts or any other law providing for
the relief of debtors, and such proceeding or case shall continue undismissed,
or unstayed and in effect, for a period of 60 days; or an order for relief shall
be entered in an involuntary case under the Federal Bankruptcy Code, against any
Company; or action under the laws of the jurisdiction of incorporation or
organization similar to any of the foregoing shall be taken with respect to any
Company and shall continue unstayed and in effect for any period of 60 days; or

         (h) a judgment or order for the payment of money shall be entered
against any Company by any court, or a warrant of attachment or execution or
similar process shall be issued or levied against property of any Company, that
in the aggregate exceeds $500,000 in value and such judgment, order, warrant or
process shall continue undischarged or unstayed for 60 days or execution shall
have issued in respect thereto; or

         (i) there shall occur any material adverse change in the assets,
liabilities, financial condition, business or prospects of any Company, as
reasonably determined by the Bank acting in good faith; or

         (j) for any reason, any Loan Document (including any Subsidiary
Guaranty) at any time shall not be in full force and effect in all material
respects or shall not be enforceable in all material respects in accordance with
its terms, or any Encumbrance granted pursuant thereto shall fail to be
perfected, or any person or entity (other than the Bank) shall contest the
validity, enforceability or perfection of any Encumbrance granted pursuant
thereto, or any party thereto (other than the Bank) shall seek to disaffirm,
terminate, limit or reduce its obligations under any of the Loan Documents; or

         (k) for any reason, (i) C. James Koch and (ii) either Martin Roper or
Richard Lindsay (or their successors, approved as provided below) shall cease to
be actively engaged in the management of the Borrowers, unless a manager or
management team with qualifications, experience and reputation within the
consumer beverage business reasonably acceptable to the Bank commences
management of the Borrowers within 180 days after such cessations; or

         (l) for any reason, the Principal Operating Company shall cease to be
wholly owned, directly or indirectly through one or more wholly owned
Subsidiaries, by the Holding Company; or


                                     - 19 -

<PAGE>
         (m) for any reason, (i) C. James Koch (or, in the event of his death or
disability, his heirs, legatees or legal representatives) shall cease to be the
beneficial and legal owner of at least 51% of all issued and outstanding Class B
Common Stock of the Holding Company on a fully diluted basis or (ii) no Class B
Common Stock of the Holding Company shall be issued and outstanding.

         7.2 REMEDIES. Upon the occurrence of an Event of Default described in
Section 7.1(f) or and (g), immediately and automatically, and upon the
occurrence of any other Event of Default, at any time thereafter while such
Event of Default is continuing, at the Bank's option and upon the Bank's
declaration, (a) the Commitment and all other commitments of the Bank to lend to
the Borrowers shall terminate; (b) the unpaid principal amount of the Loans,
together with accrued interest and all other Obligations, shall become
immediately due and payable without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived; and (c) the Bank
may exercise any and all rights it has under the Loan Documents or at law or in
equity and proceed to protect and enforce the Bank's rights by any action at
law, in equity or other appropriate proceeding.

8. GENERAL PROVISIONS.

         8.1 NOTICES. Unless otherwise specified herein, all notices hereunder
to any party hereto shall be in writing, shall be addressed to such party at its
address indicated below, and shall be deemed to have been given when delivered
by hand, two days after being properly deposited in the mails postage prepaid,
when sent by electronic telecopy transmission, or one day after delivery to an
overnight courier:

         If to the Borrowers:

                  The Boston Beer Company, Inc.
                  Boston Beer Corporation
                  75 Arlington Street
                  Boston, Massachusetts  02116
                  Attention:  Mr. Richard P. Lindsay, Chief Financial Officer
                  Telecopy No.:  (617) 368-5530
                  email:  richard.lindsay@bostonbeer.com

                with copies to:

                  Ms. Kathleen H. Wade
                  Boston Beer Corporation
                  75 Arlington Street
                  Boston, Massachusetts  02116
                  Telecopy No.:  (617) 368-5553
                  email:  kathy.wade@bostonbeer.com

                  and


                                     - 20 -

<PAGE>
                  Frederick H. Grein, Jr., Esq.
                  Hutchins, Wheeler & Dittmar
                  101 Federal Street
                  Boston, Massachusetts  02110
                  Telecopy No.:  (617) 951-1295
                  email:  fhg@hutch.com

         If to the Bank:

                  Fleet National Bank
                  100 Federal Street
                  Boston, Massachusetts  02110
                  Attention:  Thomas F. Brennan, Senior Vice President
                  Telecopy No.:  (617) 434-8102
                  email:  thomas_f_brennan@Fleet.com

                with a copy to:

                  Susan E. Siebert, Esq.
                  Edwards & Angell, LLP
                  101 Federal Street
                  Boston, Massachusetts  02110
                  Telecopy No.:  (617) 439-4170
                  email:  ssiebert@ealaw.com

or at any other address specified by such party in writing.

         8.2 EXPENSES. The Borrowers shall pay to the Bank on demand all
Expenses incurred by the Bank and the amount of all such Expenses remaining
unpaid thirty (30) days after receipt by the Borrowers of an invoice therefor
shall, until paid, bear interest at the rate applicable to principal hereunder
(including any default rate) and be an Obligation guaranteed under the
Subsidiary Guaranties.

         8.3 SET-OFF. The Borrowers hereby grant to the Bank, a continuing lien,
security interest and right of setoff as security for all liabilities and
obligations to the Bank, whether now existing or hereafter arising, upon and
against all deposits, credits, collateral and property, now or hereafter in the
possession, custody, safekeeping or control of the Bank or any entity under the
control of FleetBoston Financial Corporation and its successors and assigns or
in transit to any of them. At any time after the occurrence and during the
continuance of an Event of Default, without demand or notice (any such notice
being expressly waived by the Borrowers), the Bank may set off the same or any
part thereof and apply the same to any and all Obligations of the Borrowers even
though unmatured and regardless of the adequacy of any other collateral securing
the Obligations. ANY AND ALL RIGHTS TO REQUIRE THE BANK TO EXERCISE ITS RIGHTS
OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH


                                     - 21 -

<PAGE>
SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO
SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF THE BORROWERS OR ANY GUARANTOR, ARE
HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.

         8.4 NO WAIVERS; TERM. No failure or delay by the Bank in exercising any
right, power or privilege hereunder or under any other Loan Document shall
operate as a waiver thereof; nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies herein and in the other Loan
Documents are cumulative and not exclusive of any rights or remedies otherwise
provided by agreement or law. This Agreement shall continue in force and effect
so long as the Bank has any commitment to make Loans hereunder or any Loan or
any other Obligation shall be outstanding, provided that the Borrowers
agreements under Sections 1.7, 1.8, 8.2, 8.13 and Part B, Sections 2, 3 and 4 of
SCHEDULE B shall survive the payment of the obligations and the expiration of
the Commitment.

         8.5 REPLACEMENT OF NOTES. Upon receipt of an appropriate and reasonably
acceptable affidavit of an officer of the Bank as to the loss, theft,
destruction or mutilation of any Note or of any other Loan Document which is not
of public record and, in the case of any such mutilation, upon surrender and
cancellation of such Note or other Loan Document, the Borrowers will issue, in
lieu thereof, a replacement Note or other Loan Document in the same principal
amount and in any event of like tenor.

         8.6 USURY. All agreements between one or both of the Borrowers (on the
one hand) and the Bank (on the other hand) are hereby expressly limited so that
in no contingency or event whatsoever, whether by reason of acceleration of
maturity of the Notes or otherwise, shall the amount paid or agreed to be paid
to the Bank for the use or the forbearance of the Obligations represented by the
Notes exceed the maximum permissible under applicable law. As used herein, the
term "applicable law" shall mean the law in effect as of the date hereof;
provided, however, that in the event there is a change in the law which results
in a higher permissible rate of interest, then this Agreement and the Notes
shall be governed by such new law as of its effective date. In this regard, it
is expressly agreed that it is the intent of the Borrowers and the Bank in the
execution, delivery and acceptance of this Agreement and the Notes to contract
in strict compliance with the laws of the Commonwealth of Massachusetts from
time to time in effect. If, under any circumstances whatsoever, performance or
fulfillment of any provision of the Notes or any of the other Loan Documents at
the time such provision is to be performed or fulfilled shall involve exceeding
the limit of validity prescribed by applicable law, then the obligation so to be
performed or fulfilled shall be reduced automatically to the limits of such
validity, and if under any circumstances whatsoever the Bank should ever receive
as interest an amount which would exceed the highest lawful rate, such amount
which would be excessive interest shall be applied to the reduction of the
principal balance evidenced by the Notes and not to the payment of interest. The
provisions of this Section 8.6 shall control every other provision of this
Agreement and of the Notes.


                                     - 22 -

<PAGE>
         8.7 GOVERNING LAW. This Agreement, the Notes and the other Loan
Documents shall be deemed to be contracts made under seal and shall be construed
in accordance with and governed by the laws of the Commonwealth of Massachusetts
(without giving effect to any conflicts of laws provisions contained therein).

         8.8 ENTIRE AGREEMENTS; AMENDMENTS. This Agreement is intended by the
parties as the final, complete and exclusive statement of the transactions
evidenced by this Agreement. All prior or contemporaneous promises, agreements
and understandings, whether oral or written, are deemed to be superceded by this
Agreement and no party is relying on any promise, agreement or understanding not
set forth in this Agreement. Neither this Agreement nor the Notes nor any other
Loan Document nor any provision hereof or thereof may be amended or waived
except by a written instrument signed by the Bank and, in the case of
amendments, by the Bank and the other parties named thereto.

         8.9  BINDING EFFECT OF AGREEMENT; ASSIGNMENTS.

         (a) This Agreement shall be binding upon and inure to the benefit of
the Borrowers and the Bank and their respective successors and assigns; provided
that neither Borrower may assign or transfer its rights or obligations
hereunder.

         (b) The Bank may assign its rights and interests under this Agreement,
the Notes and the other Loan Documents and delegate its obligations hereunder
and thereunder, in whole or in part; provided that in connection with any such
assignment, the assignee shall assume such rights, interests and obligations in
writing.

         (c) The Bank may at any time pledge all or any portion of its rights
under any Loan Document (including any portion of the Notes) to any of the 12
Federal Reserve Banks organized under Section 4 of the Federal Reserve Act, 12
U.S.C. Section 341. No such pledge or the enforcement thereof shall release the
Bank from its obligations under any of the Loan Documents.

         (d) The Bank shall have the unrestricted right at any time and from
time to time, and without the consent of or notice to the Borrowers to grant to
one or more banks or other financial institutions (each, a "Participant")
participating interests in the Bank's obligation to lend hereunder and/or any or
all of the Obligations. In the event of any such grant by the Bank of a
participating interest to a Participant, whether or not upon notice to the
Borrowers, the Bank shall remain responsible for the performance of its
obligations hereunder and the Borrowers shall continue to deal solely and
directly with the Bank in connection with its rights and obligations hereunder.
Each of the Borrowers authorizes the Bank to disclose to any participant or
assignee any prospective participant or assignee any and all information in the
Bank's possession concerning the Borrowers which has been delivered to the Bank
by or on behalf of the Borrowers pursuant to this Agreement or which has been
delivered to the Bank by or on behalf of the Borrowers in connection with the
Bank's credit evaluation prior to becoming a party to this Agreement.


                                     - 23 -

<PAGE>
         8.10 COUNTERPARTS, ETC. This Agreement may be signed in any number of
counterparts with the same effect as if the signatures hereto and thereto were
upon the same instrument. The invalidity or unenforceability of any one or more
phrases, clauses or sections of this Agreement shall not affect the validity or
enforceability of the remaining portions hereof. The captions and headings of
the various sections and subsections of this Agreement are provided for
convenience only and shall not be construed to modify the meaning of such
sections or subsections.

         8.11 WAIVER OF JURY TRIAL. THE BORROWERS AND THE BANK MUTUALLY HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN
RESPECT OF ANY CLAIM BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT, THE NOTES OR ANY OTHER LOAN DOCUMENTS CONTEMPLATED TO BE
EXECUTED IN CONNECTION HEREWITH OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS,
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY, INCLUDING,
WITHOUT LIMITATION, ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS OR
ACTIONS OF THE BANK RELATING TO THE ADMINISTRATION OF THE LOANS OR ENFORCEMENT
OF THE LOAN DOCUMENTS, AND AGREE THAT NO PARTY WILL SEEK TO CONSOLIDATE ANY SUCH
ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN
WAIVED. EXCEPT AS PROHIBITED BY LAW, EACH BORROWER HEREBY WAIVES ANY RIGHT IT
MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE
OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES. EACH BORROWER CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF
THE BANK HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE BANK WOULD NOT, IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER. THIS WAIVER
CONSTITUTES A MATERIAL INDUCEMENT FOR THE BANK TO ENTER INTO THIS AGREEMENT,
ACCEPT THE NOTES AND MAKE THE LOANS.

         8.12 CONSENT TO JURISDICTION. EACH OF THE BORROWERS HEREBY SUBMITS TO
THE JURISDICTION OF THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS AND THE
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS, AS WELL AS TO
THE JURISDICTION OF ALL COURTS FROM WHICH AN APPEAL MAY BE TAKEN OR OTHER REVIEW
SOUGHT FROM THE AFORESAID COURTS, FOR THE PURPOSE OF ANY SUIT, ACTION OR OTHER
PROCEEDING ARISING OUT OF EITHER BORROWER'S OBLIGATIONS UNDER OR WITH RESPECT TO
ANY LOAN DOCUMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR ANY OTHER
OBLIGATION TO BANK, AND EXPRESSLY WAIVES ANY AND ALL OBJECTIONS IT MAY HAVE AS
TO VENUE IN ANY OF SUCH COURTS.

         8.13 INDEMNIFICATION; JOINT AND SEVERAL LIABILITY. Each of the
Borrowers will indemnify and hold the Bank harmless against any and all claims,
demands, suits, actions, causes of action, damages, losses, settlement payments,
obligations, costs, expenses and all other liabilities whatsoever which shall at
any time or times be incurred or sustained by the Bank or by


                                     - 24 -

<PAGE>
any of its shareholders, directors, officers, employees, subsidiaries,
affiliates or agents (except any of the foregoing incurred or sustained as a
result of the gross negligence or willful misconduct of the Bank) on account of,
or in relation to, or in any way in connection with, any of the arrangements or
transactions contemplated by, associated with or ancillary to any of the
Obligations. All of the obligations of the Borrowers under any and all of the
Loan Documents are and shall be joint and several.

                     * THE NEXT PAGE IS THE SIGNATURE PAGE *


                                     - 25 -

<PAGE>
         IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed under seal by their duly authorized officers as of the day and year
first above written.


                                   THE BOSTON BEER COMPANY, INC.


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


                                   BOSTON BEER CORPORATION


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


                                   FLEET NATIONAL BANK


                                   By:
                                      -----------------------------------------
                                      Thomas F. Brennan, Senior Vice President



[SIGNATURE PAGE TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT]

<PAGE>
                                   SCHEDULE A



                              GENERAL DEFINED TERMS

         As used herein, the following terms shall have the following meanings
and any undefined accounting terms shall be defined in accordance with generally
accepted accounting principles on a basis consistent with (a) that used in prior
periods and (b) that used in preparing the audited financial statements referred
to in Sections 3.5 and 4.1(a):

         ACQUISITION LOANS: See Section 1.11.

         AFFILIATE: As applied to any Company, any member, trustee, director,
officer, manager or employee, any corporation, association, partnership, firm or
other entity in which such Company is a partner, shareholder (except any holder
of not more than 5% of the outstanding stock of any company listed on a national
securities exchange or actively traded on the over-the-counter securities
market), warrant holder, option holder, member, director or officer, and any
other person or entity directly or indirectly controlling, controlled by, or
under common control with, such Company.

         ALTERNATIVE PRIME RATE: The higher of (i) the Prime Rate and (ii) the
Federal Funds Rate plus 1/2 of 1% per annum (rounded upwards, if necessary, to
the next 1/8 of 1%). The Alternative Prime Rate is not necessarily intended to
be the lowest rate of interest determined by the Bank in connection with
extensions of credit. Changes in the rate of interest resulting from changes in
the Alternative Prime Rate shall take place immediately without notice or demand
of any kind.

         BANK: See Preamble.

         BORROWER AND BORROWERS: See Preamble.

         BUSINESS DAY: (i) For all purposes other than as covered by clause (ii)
below, any day other than a Saturday, Sunday or a day which shall be, in the
Commonwealth of Massachusetts, a legal holiday or day on which banking
institutions are required or authorized to close business; and (ii) if the
applicable day relates to a LIBOR Loan or an interest period for a LIBOR Loan,
the day on which dealings in Dollar deposits are also carried on in the London
interbank market and banks are open for business in London.

         CLEAN-UP WORK: All activities, including, without limitation, cleanup
design and implementation, removal activities, investigation, field and
laboratory testing and analysis, monitoring and other remedial and response
actions, taken or to be taken, arising out of or in connection with Hazardous
Materials, including without limitation (a) all activities included within the
meaning of the terms "removal," "remedial action" or "response", as defined in
42 U.S.C. Section 9601(23), (24) and (25), and (b) all activities included
within the meaning of

<PAGE>
the terms "remedial response actions" and "Remedial Response Implementation Plan
(RRIP)," as defined in 310 CMR 40.

         CODE: The Internal Revenue Code of 1986 and the rules and regulations
thereunder, as may be supplemented or amended from time to time.

         COMMITMENT:  See Section 1.1.

         COMMONLY CONTROLLED ENTITY:  See Section 3.13.

         COMPANIES.  See Section 1.11.

         DEFAULT: An Event of Default or event or condition that, but for the
requirement that time elapse or notice be given, or both, would constitute an
Event of Default.

         EBITDA:  See Section 5.2(a).

         EMPLOYEE BENEFIT PLAN:  See Section 3.13.

         ENCUMBRANCE:  See Section 6.2.

         ERISA: The Employee Retirement Income Security Act of 1974 and the
rules and regulations thereunder, as supplemented or amended from time to time.

         ENVIRONMENTAL LAWS: The Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, the Emergency Planning and
Community Right-to-Know Act of 1986, as amended, the Resources Conservation and
Recovery Act of 1976, as amended, and any applicable statutes, regulations,
rules, ordinances, codes, licenses, permits, orders, approvals, plans,
authorizations, concessions, and similar items of all governmental authorities
and all applicable judicial, administrative and regulatory decrees, judgments
and orders, any of which relate to the protection of human health or the
environment from the effects of Hazardous Substances, including, but not limited
to, those pertaining to reporting, licensing, permitting, investigating and
remediating emissions, discharges, releases or threatened releases of Hazardous
Substances into the air, surface water, groundwater or land, or relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Substances.

         EVENT OF DEFAULT:  Any event described in Section 7.1.

         EXPENSES: Any and all present and future expenses incurred by or on
behalf of the Bank in connection with this Agreement or any of the other Loan
Documents or in connection with the Bank's exercise, preservation or enforcement
of any of its rights, remedies or options hereunder or thereunder, whether
incurred heretofore or hereafter, which expenses shall include, without being
limited to, (a) the cost of record searches, fees of outside legal counsel or
the allocated costs of in-house legal counsel (for regulation, preparation,
execution and delivery of the Loan


                                     - 2 -

<PAGE>
Documents and amendments and waivers thereto and enforcement and collection and
bankruptcy services with respect thereto), disbursements and expenses, all costs
and expenses incurred by the Bank in connection with the administration of the
Loans, including without limitation opening bank accounts, depositing checks,
receiving and transferring funds, and any charges due to "insufficient funds" of
deposited checks and the Bank's standard fee relating thereto, the fees payable
to the collateral examination staff of the Bank, fees and expenses of
accountants, appraisers, financial advisors or other experts or advisors
retained by the Bank, fees and taxes relative to the filing of financing
statements, costs of preparing and recording the Loan Documents and all other
expenses, costs and fees contemplated by this Agreement.

         EXPIRATION DATE:  See Section 1.1.

         FEDERAL FUNDS RATE: For any day, a fluctuating interest rate per annum
equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published for such day (or, if such day is not a Business Day,
for the next preceding Business Day) by the Federal Reserve Bank of New York,
or, if such rate is not so published for any day that is a Business Day, the
average of the quotations for such day on such transactions received by the Bank
from three Federal funds brokers of recognized standing selected by the Bank.

         GOVERNMENTAL AUTHORITY: Any nation or government, or any state or other
political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative functions of or
pertaining to government, any securities exchange and any self-regulatory
organization.

         HAZARDOUS MATERIAL: Any material or substance (a) which, whether by its
nature or use, is now or hereafter defined as a hazardous waste, hazardous
substance, hazardous material, pollutant or contaminant under any Environmental
Law, including, but not limited to, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA"), 42 U.S.C. Section 9601(14)
and (33), the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. Section
6903(5), and the Massachusetts Oil and Hazardous Material Chapter 21E, Section
2, (b) which is toxic, explosive, corrosive, flammable, infectious, radioactive,
carcinogenic, mutagenic or otherwise hazardous to human health or the
environment, (c) which is or contains petroleum or any fraction thereof,
including crude oil, heating oil, gasoline or diesel fuel, or (d) the presence
of which requires investigation or remediation under any Environmental Law.

         INDEBTEDNESS: (a) All obligations for borrowed money or other
extensions of credit whether or not secured or unsecured, absolute or
contingent, including, without limitation, unmatured reimbursement obligations
with respect to letters of credit, bankers acceptance, surety bonds and other
financial guaranties issued for the account of or on behalf of either Borrower
and all obligations representing the deferred purchase price of assets, services
or securities (including related noncompetition, consulting and stock repurchase
obligations), other than trade accounts payable and accrued expenses arising in
the ordinary course of business, (b) all obligations evidenced by bonds, notes,
debentures or other similar instruments, (c) all obligations in respect 


                                     - 3 -

<PAGE>
of mandatory redemption or cash dividend rights on equity interests, (d) all
obligations secured by any mortgage, pledge, security interest or other lien on
property owned or acquired by either Borrower whether or not the obligations
secured thereby shall have been assumed, (d) all obligations arising under
capital leases, and (e) all obligations relating to securitization transactions
and synthetic lease and sale-leaseback transactions. Indebtedness of any Person
shall include any Indebtedness of any partnership in which such Person is a
general partner, except to the extent the terms of such Indebtedness expressly
provide that such Person is not liable therefor.

         INTEREST EXPENSE:  See Section 5.2(c).

         INVESTMENT: As applied to the Borrowers, the purchase or acquisition of
any share of capital stock, partnership interest, evidence of indebtedness or
other equity security or all or substantially all of the assets of any other
person or entity, any loan, advance or extension of credit to, or contribution
to the capital of, any other person or entity, any real estate held for sale or
investment, any commodities futures contracts held other than in connection with
bona fide hedging transactions, any other investment in any other person or
entity, and the making of any commitment or acquisition of any option to make an
Investment.

         LIBOR RATE:  See SCHEDULE B.

         LIBOR LOAN: Any Loan bearing interest at a rate determined with
reference to the LIBOR Rate.

         LIBOR PERIOD:  See SCHEDULE B.

         LIBOR TERMS:  See Section 1.3 and SCHEDULE B.

         LOAN DOCUMENTS:  See Section 3.2.

         LOANS:  See Section 1.1.

         MATERIAL SUBSIDIARY: At any date of determination, any Subsidiary (i)
whose total assets at the last day of the most recently ended fiscal quarter
have a market value equal to or greater than 5% of the consolidated total assets
of the Companies at such date, determined in accordance with generally accepted
accounting principles, (ii) whose Tangible Net Worth at the last day of the most
recently ended fiscal quarter is equal to or greater than 5% of Tangible Net
Worth at such date, or (iii) whose gross revenues with respect to the most
recently ended four-quarter period are equal to or greater than 5% of the
consolidated gross revenues of the Companies for such four-quarter period. The
Material Subsidiaries as of the date of this Agreement are designated as such on
EXHIBIT 3.15.

         MULTIEMPLOYER PLAN:  See Section 3.13.

         NET EQUITY PROCEEDS:  See Section 5.2(d).


                                     - 4 -

<PAGE>
         NET INCOME:  See Section 5.2(e).

         NOTES:  See Section 1.2.

         NOTICE OF BORROWING OR CONVERSION:  See Section 1.4.

         NOTICE OF NEW SUBSIDIARY.  See Section 6.4.

         OBLIGATIONS: Any and all existing and future obligations now or
hereafter owed by the Borrowers to the Bank, whether direct or indirect,
contingent or due or to become due.

         ORGANIZATIONAL DOCUMENTS: (a) With respect to any corporation, its
certificate or articles of incorporation and by-laws, (b) with respect to any
partnership, its partnership certificate and partnership agreement, (c) with
respect to any limited liability company, its certificate of formation and
operating agreement or other comparable agreement and (d) with respect to any
other entity, the documents pursuant to which such entity was formed and
organized.

         ORIGINAL FACILITIES:  See Recitals.

         ORIGINAL REVOLVING NOTE:  See Recitals.

         PARTICIPANT:  See Section 8.9.

         PARTNERSHIP:  See Recitals.

         PARTNERSHIP TRANSFER:  See Recitals.

         PBGC: The Pension Benefit Guaranty Corporation or any entity succeeding
to any or all of its functions under ERISA. ----

         PERMITTED ACQUISITIONS: Any acquisition of stock or assets by a
Borrower or a Subsidiary of a Borrower which has met the following conditions:
(a) the aggregate amount of proceeds of the Loans used in all such acquisitions
since the date of this Agreement shall not exceed $20,000,000, (b) the aggregate
amount paid in cash or cash equivalents by the Companies in connection with all
such acquisitions since the date of this Agreement (whether or not proceeds of
the Loans) shall not exceed $40,000,000, (c) after giving effect to such
acquisition, on a pro forma basis as of the most recently ended fiscal quarter,
the Borrowers shall be in full compliance with all of their obligations set
forth in Section 5 of this Agreement, (d) if such acquisition is a stock
acquisition and the acquired company or companies is not simultaneously being
merged into an acquiring Borrower or Material Subsidiary and is or becomes a
Material Subsidiary, such acquired company or companies shall prior to or upon
becoming a Material Subsidiary execute an unlimited guaranty in form
satisfactory to the Bank, guaranteeing all existing and future obligation of the
Borrowers to the Bank to assure compliance


                                     - 5 -

<PAGE>
with Section 1.12, (e) prior notice of such acquisition shall have been
delivered to the Bank, describing the terms of such acquisition, including the
purchase price thereof, and whether the acquired company or companies are or are
intended to become Material Subsidiaries, and (f) no Default shall exist
hereunder or result from such acquisition.

         PERMITTED ENCUMBRANCES: see Section 6.2.

         PERMITTED INVESTMENTS: As applied to any Company, investments (i) in
notes, bonds or other obligations of the United States of America or any agency
thereof that as to principal and interest constitute direct obligations of or
are guaranteed by the United States of America; (ii) in certificates of deposit
or other deposit instruments or accounts of the Bank or any other banks or trust
companies organized under the laws of the United States or any state thereof
that have capital and surplus of at least $500,000,000; (iii) in mutual funds
investing only in commercial paper that is rated not less than P-2 or A-2 or
their equivalents by Moody's Investors Service, Inc. or Standard & Poor's
Ratings Services, respectively, or their successors; (iv) up to $7,500,000 in
the aggregate in connection with Permitted Acquisitions after the date of this
Agreement, (v) the investments of the Holding Company in its existing
Subsidiaries, and (vi) advances to employees for the purchase of stock options
not to exceed $1,000,000 outstanding at any time in the case of any one employee
and not to exceed $2,000,000 outstanding at any time in the aggregate to all
employees of the Companies.

         PHASE 1 STOCK REPURCHASE: See Section 6.7.

         PHASE  2 STOCK REPURCHASE: See Section 6.7.

         PRIME RATE: The variable per annum rate of interest so designated from
time to time by the Bank as its prime rate. The Prime Rate is a reference rate
and does not necessarily represent the lowest or best rate being charged to any
customer.

         PRIME RATE LOAN: Any Loan bearing interest determined with reference to
the Prime Rate.

         REVOLVING CREDIT PERIOD: The period from the date hereof through and
including the Expiration Date or such earlier date or dates as of which the
Commitment expires or is terminated.

         RESTRUCTURING: See Recitals.

         SEC: The Securities and Exchange Commission and any successor agency
thereof.

         SUBSIDIARIES: (a) Any corporation, association, limited liability
company, joint stock company, business trust or other similar organization of
which 50% or more of the ordinary voting power for the election of a majority of
the members of the board of directors or other governing body of such entity is
held or controlled by any Subsidiary of either Borrower; (b) any other such
organization the management of which is directly or indirectly controlled by any


                                     - 6 -

<PAGE>
Subsidiary of either Borrower through the exercise of voting power or otherwise;
or (c) any joint venture, association, partnership or other entity in which any
Subsidiary of either Borrower has at least a 50% equity interest, directly or
indirectly.

         SUBSIDIARY GUARANTY:  See Section 1.12.

         TANGIBLE NET WORTH:  See Section 5.2(f).

         TEST QUARTER.  See Section 5.1(a).

         TOTAL LIABILITIES:  See Section 5.2(h).


                                     - 7 -

<PAGE>
                                   SCHEDULE B

                                   LIBOR TERMS



         A. DEFINITIONS.

         As used in this SCHEDULE A, the following terms have the following
         meanings:

         LIBOR PERIOD: With respect to each LIBOR Loan, the period commencing on
         the date such Loan is made or converted from a Prime Rate Loan, or the
         last day of the immediately preceding LIBOR Period, as to LIBOR Loans
         being continued as such, and ending one month, two months or three
         months thereafter, as the Borrowers may elect in the applicable Notice
         of Borrowing or Conversion; provided that:

         (i) any LIBOR Period (other than a LIBOR Period determined pursuant to
         clause (iv) below) that would otherwise end on a day that is not a
         Business Day shall be extended to the next succeeding Business Day
         unless such Business Day falls in the next calendar month, in which
         case such Interest Period shall end on the immediately preceding
         Business Day;

         (ii) if the Borrowers shall fail to give notice as provided in Section
         1.4, the Borrowers shall be deemed to have requested a conversion of
         the affected LIBOR Loan to a Prime Rate Loan on the last day of the
         then current LIBOR Period with respect thereto;

         (iii) any LIBOR Period relating to a LIBOR Loan that begins on the last
         Business Day of a calendar month (or on a day for which there is no
         numerically corresponding day in the calendar month at the end of such
         Interest Period) shall, subject to clause (iv) below, end on the last
         Business Day of a calendar month;

         (iv) no LIBOR Period may end after the Expiration Date;

         (v) no LIBOR Period shall include a principal repayment date for the
         Loans unless an aggregate principal amount of Loans at least equal to
         the principal amount due on such principal repayment date shall be
         Prime Rate Loans or LIBOR Loans having LIBOR Periods ending on or
         before such date; and

         (vi) notwithstanding clauses (iv) and (v) above, no LIBOR Period shall
         have a duration of less than one month.

         LIBOR RATE: With respect to any LIBOR Loan, the rate per annum as
         determined on the basis of the offered rates for deposits in U.S.
         Dollars, for a period of time comparable to the LIBOR Period for such
         LIBOR Loan which appears on the Telerate page 3750 as of 11:00 a.m.
         London time on the day that is two Business Days preceding the first
         day of

<PAGE>
         such LIBOR Period; provided, however, if the rate described above does
         not appear on the Telerate System on any applicable interest
         determination date, the LIBOR Rate shall be the rate (rounded upward,
         if necessary, to the nearest one hundred-thousandth of a percentage
         point), determined on the basis of the offered rates for deposits in
         U.S. dollars for a period of time comparable to such LIBOR Period which
         are offered by four major banks in the London interbank market at
         approximately 11:00 a.m. London time, on the day that is two Business
         Days preceding the first day of such LIBOR Period as selected by the
         Bank. The principal London office of each of the four major London
         banks will be requested to provide a quotation of its U.S. Dollar
         deposit offered rate. If at least two such quotations are provided, the
         rate for that date will be the arithmetic mean of the quotations. If
         fewer than two quotations are provided as requested, the rate for that
         date will be determined on the basis of the rates quoted for loans in
         U.S. dollars to leading European banks for a period of time comparable
         to such LIBOR Period offered by major banks in New York City at
         approximately 11:00 a.m. New York City time, on the day that is two
         Business Days preceding the first day of such LIBOR Loan. In the event
         that the Bank is unable to obtain any such quotation as provided above,
         it will be deemed that LIBOR Rate for such LIBOR Loan cannot be
         determined. In the event that the Board of Governors of the Federal
         Reserve System shall impose a Reserve Percentage with respect to LIBOR
         deposits of the Bank, then for any period during which such Reserve
         Percentage shall apply, the LIBOR Rate shall be equal to the amount
         determined above divided by an amount equal to 1 minus the Reserve
         Percentage.

         REGULATORY CHANGE: Any change after the date of this Agreement in
         United States federal, state or foreign law or regulation (including
         without limitation Regulation D), including without limitation the
         issuance of any final regulations or guidelines, or the adoption or
         making after such date of any interpretation, directive or request
         applying to a class of banks including the Bank or under any United
         States federal, state or foreign law or regulations (whether or not
         having the force of law and whether or not failure to comply therewith
         would be unlawful) by any court or governmental or monetary authority
         charged with the interpretation thereof.

         REGULATION D: Regulation D of the Board of Governors of the Federal
         Reserve System, as the same may be amended or supplemented from time to
         time.

         RESERVE PERCENTAGE: The maximum aggregate reserve requirement
         (including all basic, supplemental, marginal and other reserves) which
         is imposed on member banks of the Federal Reserve System against
         "Euro-currency Liabilities", as defined in Regulation D."

         B. GENERAL TERMS.

         1. LIBOR LOANS. Each LIBOR Loan shall bear interest on the outstanding
principal amount thereof, for each LIBOR Period applicable thereto, at a rate as
set forth in Section 1.3. Such interest shall be payable for such LIBOR Period
on the last day thereof and when such LIBOR Loan is due (whether at maturity, by
reason of acceleration or otherwise) and,


                                     - 2 -

<PAGE>
if such LIBOR Period is longer than three months, at intervals of three months
after the first day thereof. There shall be no more than five LIBOR Loans
outstanding at any time.

         2. REQUIREMENTS OF LAW.

         (a) In the event that any Regulatory Change shall:

                  (i) subject the Bank to any tax of any kind whatsoever with
         respect to this Agreement, either Note or any Loans made by it, or
         change the basis of taxation in respect thereof (other than taxes
         imposed on the overall net income of the Bank);

                  (ii) impose or modify any reserve, compulsory loan assessment,
         special deposit or similar requirement relating to any extensions of
         credit or other assets of, or any deposits with or other liabilities
         of, any office of the Bank (including any of such LIBOR Loans or any
         deposits referred to in the definition of "LIBOR Rate"); or

                  (iii) impose any other conditions affecting this Agreement (or
         any of such extensions of credit, assets, deposits or liabilities);

and the result of any of the foregoing shall be to increase the Bank's costs of
making or maintaining any LIBOR Loans, or the Commitment, or to reduce any
amount receivable by the Bank hereunder in respect of any of its LIBOR Loans or
the Commitment, in each case only to the extent that such additional amounts are
not included in the LIBOR Rate applicable thereto, then the Borrowers shall pay
to the Bank, within 15 days after its demand therefor, such additional amounts
as shall be sufficient to compensate the Bank for such increased costs or
reduced amount receivable.

         3. LIMITATIONS ON LIBOR LOANS; ILLEGALITY.

         (a) Anything herein to the contrary notwithstanding, if, on or prior to
the determination of an interest rate for any LIBOR Loans for any applicable
LIBOR Period, the Bank shall determine (which determination shall be conclusive
absent manifest error) that:

                  (i) by reason of any event affecting United States money
         markets or the London interbank market, quotations of interest rates
         for the relevant deposits are not being provided in the relevant
         amounts or for the relevant maturities for purposes of determining the
         rate of interest for such Loans under this Agreement; or

                  (ii) the rates of interest referred to in the definition of
         "LIBOR Rate", on the basis of which the rate of interest on any LIBOR
         Loans for such period is determined, do not accurately reflect the cost
         to the Bank of making or maintaining such LIBOR Loans for such period;

then the Bank shall give the Borrowers prompt notice thereof (and shall
thereafter give the Borrowers prompt notice of the cessation, if any, of such
condition), and so long as such


                                      - 3 -

<PAGE>
condition remains in effect, the Bank shall be under no obligation to make LIBOR
Loans or to convert Prime Rate Loans into LIBOR Loans and the Borrowers shall,
on the last day(s) of the then current LIBOR Period(s) for any outstanding LIBOR
Loans, either prepay such LIBOR Loans in accordance with Section 4 of this
SCHEDULE B or convert such Loans into Prime Rate Loans in accordance with
Section 1.4.

         (b) Notwithstanding any other provision herein, if any Regulatory
Change shall make it unlawful for the Bank to make or maintain LIBOR Loans as
contemplated by this Agreement, (i) the Bank's commitment hereunder to make
LIBOR Loans, continue LIBOR Loans as such and convert Prime Rate Loans to LIBOR
Loans shall thereupon terminate and (ii) the Loans then outstanding as LIBOR
Loans, if any, shall be converted automatically to Prime Rate Loans on the
respective last days of the then current LIBOR Periods with respect to such
Loans or within such earlier period as required by law. If any such conversion
of a LIBOR Loan occurs on a day which is not the last day of the then current
LIBOR Period with respect thereto, the Borrowers shall pay to such Bank such
amounts, if any, as may be required pursuant to Section 4 of this SCHEDULE B.

         4. PAYMENTS BEFORE END OF LIBOR PERIOD, ETC.

         The Borrowers shall pay to the Bank, upon request of the Bank, such
amount or amounts as shall be sufficient (in the reasonable opinion of the Bank)
to compensate it for any loss (including loss of profit), cost, or expense
incurred as a result of:

         (a) any payment or conversion of a LIBOR Loan on a date other than the
last day of the LIBOR Period for such Loan;

         (b) any failure by the Borrowers to borrow, convert a Prime Rate Loan
into or continue a LIBOR Loan on the date specified by the Borrowers' written
notice;

         (c) any failure by the Borrowers to pay a LIBOR Loan on the date for
payment specified in the Borrowers' written notice.

Without limiting the foregoing, the Borrowers shall pay to the Bank a "yield
maintenance fee" in connection with the prepayment of any LIBOR Loan in an
amount computed as follows: The current rate for United States Treasury
securities (bills on a discounted basis shall be converted to a bond equivalent)
with a maturity date closest to the LIBOR Period for the LIBOR Loan being
prepaid shall be subtracted from the LIBOR Rate in effect at the time of
prepayment. If the result is zero or a negative number, there shall be no yield
maintenance fee. If the result is a positive number, then the resulting
percentage shall be multiplied by the amount of the principal balance being
prepaid. The resulting amount shall be divided by 360 and multiplied by the
number of days remaining in such LIBOR period. Such amount shall be reduced to
present value calculated by using the above referenced United States Treasury
securities rate and the number of days remaining in such LIBOR Period. The
resulting amount shall be the yield maintenance fee due to any Bank upon the
prepayment of such LIBOR Loan. If by reason of an Event of Default, the Banks
elect to declare the Notes to be immediately due and payable, then any yield
maintenance


                                     - 4 -

<PAGE>
fee with respect to the LIBOR Loan then outstanding shall become due and payable
in the same manner as though the Borrowers had elected to prepay such Loan.


                                     - 5 -

<PAGE>

                                   EXHIBIT 1.2

                              REVOLVING CREDIT NOTE


$45,000,000                                                Boston, Massachusetts
                                                           July 1, 2002


         FOR VALUE RECEIVED, THE BOSTON BEER COMPANY, INC. and BOSTON BEER
CORPORATION, each a Massachusetts corporation (the "Borrowers"), hereby jointly
and severally promise to pay to FLEET NATIONAL BANK (the "Bank"), or order, the
principal amount of $45,000,000, or, if less, the aggregate unpaid principal
amount of Loans hereunder made by the Bank to the Borrowers under the Second
Amended and Restated Credit Agreement of even date herewith by and among the
Borrowers and the Bank (as amended or extended from time to time, the "Loan
Agreement"), together with interest thereon at the rate provided in the Loan
Agreement, payable on the dates and in such amounts as specified in the Loan
Agreement, and at the final maturity of this Note, whether by payment or
prepayment, acceleration or otherwise, without set-off, deduction or
counterclaim. The principal amount hereof may be advanced, repaid and readvanced
in accordance with the terms of the Loan Agreement.

         Overdue principal (whether on the due date of a Loan, by reason of
acceleration or otherwise) and, to the extent permitted by applicable law,
overdue interest and fees or any other amounts payable under the Loan Agreement
(including without limitation overadvances) due to the Borrowers' failure to pay
the same in full shall bear interest from and including the due date thereof
until paid, at a rate per annum equal to 4% above the rate then applicable to
Prime Rate Loans, which interest shall be compounded daily and payable on
demand. In addition, if the entire amount of any required principal and/or
interest is not paid in full within ten days after the same is due, the
Borrowers shall pay to the Bank a late fee equal to 5% of the required payment.

         The outstanding principal amount of this Note and accrued and unpaid
interest thereon shall be due and payable as provided in the Loan Agreement. The
Borrowers have the right in certain circumstances to prepay this Note in whole
or in part subject to the terms and conditions provided in the Loan Agreement.

         All payments under this Note shall be made at the head office of the
Bank at 100 Federal Street, Boston, Massachusetts 02110 (or at such other place
as the Bank may designate to the Borrowers from time to time in writing) in
lawful money of the United States of America in federal or other immediately
available funds.

         This Note is one of the "Notes" referred to in and is entitled to the
benefits of the Loan Agreement (including the Schedules thereto) and all other
instruments evidencing and/or securing the indebtedness hereunder, which Loan
Agreement and other instruments are hereby made part of this Note and are deemed
incorporated herein in full; but neither this reference to

<PAGE>
the Loan Agreement nor any provision thereof shall affect or impair the absolute
and unconditional obligation of the Borrowers to pay the principal of and
interest on this Note as herein provided. The occurrence or existence of an
"Event of Default" as defined in the Loan Agreement shall constitute a default
under this Note and shall entitle the Bank to accelerate the entire indebtedness
hereunder and to take such other action as may be provided for in the Loan
Agreement or any other instrument or agreement evidencing and/or securing this
Note.

         The Borrowers hereby waives presentment, demand, notice of dishonor,
protest and all other demands and notices in connection with the delivery,
acceptance, performance and enforcement of this Note.

         All agreements between one or both of the Borrowers (on the one hand)
and the Bank (on the other hand) are hereby expressly limited so that in no
contingency or event whatsoever, whether by reason of acceleration of maturity
of this Note or otherwise, shall the amount paid or agreed to be paid to the
Bank for the use or the forbearance of the Obligations represented by this Note
exceed the maximum permissible under applicable law. As used herein, the term
"applicable law" shall mean the law in effect as of the date hereof; provided,
however, that in the event there is a change in the law which results in a
higher permissible rate of interest, then this Note shall be governed by such
new law as of its effective date. In this regard, it is expressly agreed that it
is the intent of the Borrowers and the Bank in the execution, delivery and
acceptance of this Note to contract in strict compliance with the laws of the
Commonwealth of Massachusetts from time to time in effect. If, under any
circumstances whatsoever, performance or fulfillment of any provision of this
Note or any of the other Loan Documents at the time such provision is to be
performed or fulfilled shall involve exceeding the limit of validity prescribed
by applicable law, then the obligation so to be performed or fulfilled shall be
reduced automatically to the limits of such validity, and if under any
circumstances whatsoever the Bank should ever receive as interest an amount
which would exceed the highest lawful rate, such amount which would be excessive
interest shall be applied to the reduction of the principal balance evidenced by
this Note and not to the payment of interest.

         If this Note shall not be paid when due and shall be placed by the
holder hereof in the hands of any attorney for collection, through legal
proceedings or otherwise, the Borrowers will pay reasonable attorneys' fees to
the holder hereof together with reasonable costs and expenses of collection,
including, without limitation, any such reasonable attorneys' fees, costs and
expenses relating to any proceedings with respect to the bankruptcy,
reorganization, insolvency, readjustment of debt, dissolution or liquidation of
either of the Borrowers or any party to any instrument or agreement securing
this Note, all as provided in the Loan Agreement.

         EACH BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES
THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED ON THIS NOTE OR
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE OR ANY RELATED DOCUMENTS
OR OUT OF ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR
WRITTEN) OR ACTIONS OF THE BANK RELATING TO THE ADMINISTRATION OF THE LOANS OR
ENFORCEMENT OF THE RELATED LOAN DOCUMENTS, AND AGREES THAT


                                     - 2 -

<PAGE>
SUCH BORROWER WILL NOT SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION
IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. EXCEPT AS PROHIBITED BY
LAW, EACH BORROWER HEREBY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN
ANY LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY
DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. EACH BORROWER CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE BANK HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT THE BANK WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVER. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR
THE BANK TO ACCEPT THIS NOTE AND TO MAKE LOANS AS CONTEMPLATED IN THE LOAN
AGREEMENT.


                                     - 3 -

<PAGE>
         This instrument shall have the effect of an instrument executed under
seal and shall be governed by and construed in accordance with the laws of the
Commonwealth of Massachusetts (without giving effect to any conflicts of laws
provisions contained therein).


                                   THE BOSTON BEER COMPANY, INC.


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


                                   BOSTON BEER CORPORATION


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



[SIGNATURE PAGE TO REVOLVING CREDIT NOTE]

<PAGE>
                                   EXHIBIT 1.4

                        NOTICE OF BORROWING OR CONVERSION



Fleet National Bank
100 Federal Street                                           Date:
Boston, Massachusetts  02110                                      --------------
Attention:  Thomas F. Brennan, Senior Vice President

    Re:  Second Amended and Restated Credit Agreement dated as of July 1, 2002
         (as amended from time to time, the "Agreement") between Fleet National
         Bank, as the "Bank", and The Boston Beer Company, Inc. and Boston Beer
         Corporation (collectively, the "Borrowers")

Dear Mr. Brennan:

     Please accept this notice as the election of the Borrowers as follows [each
Loan must be in the amount of $100,000 or an integral multiple thereof]:

           A new Loan request in the principal amount of $             to
     ----  be borrowed as a [Prime Rate Loan/LIBOR Loan]. [Such LIBOR
           Rate option is selected for a term of:

                  one month
           -----
                  two months
           -----
                  three months from the date the Loan is funded.]
           -----

           Conversion or continuation of a portion of the outstanding
           Loans in the principal amount of $          from a [Prime Rate
           Loan/LIBOR Loan] to a [Prime Rate Loan/LIBOR Loan]. [Such
           LIBOR Rate option is selected for a term of: 

                 one month 
           ---- 
                 two months 
           ---- 
                 three months from the date of such conversion or continuation.]
           ---- 

     This Notice of Borrowing or Conversion is issued in accordance with the
provisions of Section 1.4 of the Loan Agreement and of the LIBOR Terms and is
subject to all other terms and conditions of the Loan Agreement.

     The representations and warranties contained in the Agreement are true and
accurate on and as of the effective date of such advance, conversion or
continuation as though made at and as of such date (except to the extent that
such representations and warranties expressly relate to an earlier date); and no
Default has occurred and is continuing or will result from such advance,

<PAGE>
conversion or continuance. The undersigned represents and warrants that he is
authorized to execute and deliver this Notice on behalf of the Borrowers.

                                      THE BOSTON BEER COMPANY, INC.
                                      and BOSTON BEER CORPORATION

                                      By:
                                         --------------------------------------
                                          Duly authorized signatory as to both

<PAGE>
                                   EXHIBIT 2.1


                     $45,000,000 REVOLVING CREDIT FINANCING

                                       OF

                          THE BOSTON BEER COMPANY, INC.

                                       AND

                             BOSTON BEER CORPORATION

                                       BY

                               FLEET NATIONAL BANK

                                  JULY 1, 2002


                                AGENDA OF CLOSING


<TABLE>
<CAPTION>
                                                                                             Responsible
                                                                                                Counsel
                                                                                                -------
<S>       <C>                                                                      <C>
1.        Second Amended and Restated Credit Agreement between the Bank and the    Agreement:  E&A
          Borrowers                                                                Disclosure Exhibits: HWD

2.        $45,000,000 Revolving Credit Note                                        E&A

3.        Guaranties of all Material Subsidiaries (see Annex 1)                    E&A

4.        Certificate of Insurance                                                 HWD

5.        Officer's Certificate certifying as to (and attaching) the Holding       HWD
          Company's (a) corporate charter, (b) by-laws, (c) directors'
          votes authorizing all transactions contemplated by the Loan
          Documents, and certifying as to the incumbency of the officers
          signing on behalf of the Holding Company
</TABLE>



<PAGE>

<TABLE>
<S>       <C>                                                                      <C>

6.        Officer's Certificate certifying as to (and attaching) the Principal     HWD 
          Operating Company's (a) corporate charter, (b) bylaws and (c)
          directors' votes authorizing all transactions contemplated by the Loan
          Documents; and certifying as to the incumbency of the officers signing
          on behalf of the Principal Operating Company

7.        Officer's Certificates certifying as to (and attaching) each Material    HWD 
          Subsidiary's (a) corporate charter or declaration of trust, as
          applicable, (b) bylaws, and (c) director's votes authorizing all
          transactions contemplated by the Subsidiary Guaranties; and certifying
          as to the incumbency of the officers signing on behalf of such
          Material Subsidiary

8.        Certificates of legal existence, corporate good standing and foreign     HWD
          qualification of each Borrower and Material Subsidiary

9.        UCC searches against the Borrowers and each Material Subsidiary          HWD

10.       Opinion of General Counsel to the Borrowers                              HWD
          and the Material Subsidiaries
</TABLE>



                           ABBREVIATIONS


Borrowers                 The Boston Beer Company, Inc. (the "Holding Company")
                          and Boston Beer Corporation (the "Principal Operating
                          Company")

Bank                      Fleet National Bank

E&A                       Edwards & Angell, LLP, special counsel to the Bank

HWD                       Hutchins, Wheeler & Dittmar

Material Subsidiaries     See Annex 1


                                     - 2 -

<PAGE>
                                     ANNEX 1


                    Material Subsidiaries as of July 1, 2002


                       Samuel Adams Brewery Company, Ltd.

                          Malt Holdings Business Trust

                     Hops Financial Holdings Business Trust

<PAGE>
                                   EXHIBIT 3.7


                                   LITIGATION


                                      None

<PAGE>
                                  EXHIBIT 3.14


                              ENVIRONMENTAL MATTERS


                                      None.

<PAGE>
                                  EXHIBIT 3.15


                                    OWNERSHIP


               [BOSTON BEER COMPANY AND SUBSIDIARIES FLOW CHART]

<PAGE>
                                   EXHIBIT 4.1

              OFFICER'S COMPLIANCE CERTIFICATE FOR PERIOD ENDED []

         THE BOSTON BEER COMPANY, INC. and BOSTON BEER CORPORATION (together,
the "Borrowers") HEREBY JOINTLY AND SEVERALLY CERTIFY that:

         This Report is furnished pursuant to Section 4.1(c) of the Second
Amended and Restated Credit Agreement dated as of July 1, 2002 by and among the
Borrowers and Fleet National Bank, as amended from time to time (the
"Agreement"). Unless otherwise defined herein, the terms used in this Report
have the meanings assigned to them in the Agreement.

         As required by Section 4.1[(a)] or [(b)] of the Agreement, the
Borrowers' financial statements for the [year/quarter] ended , 200__ (the
"Financial Statements"), prepared in accordance with generally accepted
accounting principles consistently applied, accompany this Report. The Financial
Statements present fairly the financial position of the Borrowers and their
Subsidiaries as at the date thereof and the results of operations for the period
covered thereby [(subject only to normal recurring year-end adjustments)].

         Based on the Financial Statements provided with this Report, the
figures set forth in SCHEDULE A hereto for determining compliance by the
Borrowers with the financial covenants contained in Section 5 of the Agreement
for the applicable reporting periods are true, complete and correct.

         The activities of the Borrowers during the periods covered by such
Financial Statements have been reviewed by the Chief Financial Officer of the
Borrowers or by employees or agents under his or her immediate supervision.
Based on such review, to the best knowledge and belief of the undersigned, and
as of the date of this Report, the representations and warranties contained in
the Agreement are true and accurate as of the date hereof (except to the extent
that such representations and warranties relate to an earlier date) and no
Default has occurred.*

         WITNESS my hand this             day of          , 200___.
                              -----------        ---------

                                     THE BOSTON BEER COMPANY, INC. and
                                     BOSTON BEER CORPORATION


                                     By:
                                        ---------------------------------------
                                          Chief Financial Officer

*        If a Default has occurred as of or prior to such date, this paragraph
         is to be modified with an appropriate statement as to the nature
         thereof, the period of existence thereof and what action the Borrowers
         have taken, is taking, or proposes to take with respect thereto.

<PAGE>
                                  Schedule A to
                   Compliance Certificate for Period Ended []


<TABLE>
<S>      <C>                                                                             <C>
1.       MINIMUM TANGIBLE NET WORTH (Section 5.1(a))

         (a)      Actual Tangible Net Worth

                  (i)         Total Assets                                               $
                                                                                          ----------------

                  (ii)        minus goodwill                                             $
                                                                                          ----------------

                  (iii)       minus intangible items                                     $
                                                                                          ----------------

                  (iv)        minus reserves not already deducted                        $
                                                                                          ----------------

                  (v)         minus write-up in book value of assets                     $
                                                                                          ----------------

                  (vi)        minus value of minority interests                          $
                                                                                          ----------------
                              (excluding Permitted Acquisitions)

                  (vii)       minus Total Liabilities                                    $
                                                                                          ----------------

                  Actual Tangible Net Worth                                              $
                                                                                          ----------------

         (b)      Net Income                                                             $
                                                                                          ----------------

         (c)      Net Equity Proceeds                                                    $
                                                                                          ----------------

                  (i)         Equity Proceeds                                            $
                                                                                          ----------------

                  (ii)        minus Phase 1 Stock Repurchases                            $
                                                                                          ----------------

                  (iii)       minus Phase 2 Stock Repurchases                            $
                                                                                          ----------------
                              (only if exclusion is approved by the Bank)

                  Actual Net Equity Proceeds                                             $
                                                                                          ----------------

         (d)      Minimum Tangible Net Worth required                                    $
                                                                                          ----------------
                  ($68,000,000, or prior quarter's Minimum Tangible Net Worth
                  plus 50% positive Net Income step up in each fiscal quarter
                  plus Net Equity Proceeds)

2.       LEVERAGE (Section 5.1(b))
</TABLE>


<PAGE>

<TABLE>
<S>      <C>                                                                             <C>
         (a)      Actual Ratio of Total Liabilities to Tangible Net Worth:

                  (i)   Total Liabilities                                                $
                                                                                          ----------------

                  (ii)  Tangible Net Worth                                               $
                                                                                          ----------------

                  (iii) Actual Ratio of Total Liabilities to Tangible Net Worth                 _____:1.00

         (b)      Maximum Ratio of Total Liabilities to Tangible Net Worth
                  permitted                                                                      1.00:1.00

3.       TOTAL FUNDED DEBT/EBITDA RATIO (Section 5.1(c))
         (rolling four-quarter test)

         (a)      Actual Ratio of Total Funded Debt to EBITDA:

                  (i)         Actual Total Funded Debt (as of last day of period)        $
                                                                                          ----------------

                  (ii)        EBITDA for four fiscal quarters ended [  ]:

                              (1)        Net Income                                      $
                                                                                          ----------------

                              (2)        plus taxes in respect of income and profits     $
                                                                                          ----------------

                              (3)        plus Interest Expense                           $
                                                                                          ----------------

                              (4)        plus depreciation, amortization

                                         and other non-cash charges                      $
                                                                                          ----------------

                              EBITDA Total                                               $
                                                                                          ----------------

                  (iii)       Actual Ratio of Total Funded Debt to
                              EBITDA                                                            _____:1.00

         (b)      Maximum Ratio of Total Funded Debt to EBITDA permitted                         2.50:1.00

4.       PROFITABILITY (Section 5.1(d)) (rolling four-quarter test)

         (a)      Actual Net Income for four fiscal quarters ended [  ]                  $
                                                                                          ----------------

         (b)      Minimum required Net Income for such period                                $1.00
</TABLE>



                                      -2-

<PAGE>
                                  SCHEDULE 6.4

                      NOTICE OF FORMATION OF NEW SUBSIDIARY



Fleet National Bank
100 Federal Street                      Date:
                                             --------------
Boston, Massachusetts  02110
Attention:  Thomas F. Brennan, Senior Vice President

         Re:      Second Amended and Restated Credit Agreement dated as of July
                  1, 2002 (as amended from time to time, the "Agreement")
                  between Fleet National Bank, as the "Bank", and The Boston
                  Beer Company, Inc. and Boston Beer Corporation (collectively,
                  the "Borrowers")

Dear Mr. Brennan:

         The purpose of this letter is to notify the Bank that a new Subsidiary
will be formed on _________, 20__ [must be at least 10 days following Bank's
receipt of this notice] as follows:

         1. The legal name of the new Subsidiary is _________________ (the
"Subsidiary").

         2. The Subsidiary is a [corporation/limited partnership/limited
liability company] formed or organized in the [State/Commonwealth] of
_________________ and is qualified to do business as a foreign entity in
_______________ and _______________.

         3. After giving effect to the formation of the Subsidiary on the date
hereof, (a) the representations and warranties contained in the Agreement will
be true and accurate on and as of such date as though made at and as of such
date (except to the extent that such representations and warranties expressly
relate to an earlier date), (b) no Default will exist and (c) no Default can
reasonably be expected to result therefrom.

         4. The proposed ownership structure of the Subsidiary is described
below: ______________.

         5. As of the date the Subsidiary is formed it [will/will not]
constitute a Material Subsidiary. (Please attach a detailed calculation of the
Subsidiary's contribution to Tangible Net Worth for the most recently ended
fiscal quarter.)

<PAGE>
         6. If a Material Subsidiary as of the date of its formation, the
Subsidiary will execute and deliver a Subsidiary Guaranty, as required under
Sections 1.12 and 6.4 of the Agreement.

         The undersigned represents and warrants that he or she is authorized to
execute and deliver this Notice on behalf of the Borrowers.

                                      THE BOSTON BEER COMPANY, INC. and
                                      BOSTON BEER CORPORATION

                                      By:
                                         --------------------------------------
                                          Duly authorized signatory as to both






<PAGE>

                                                                    Exhibit 99.1
  


                           CERTIFICATION PURSUANT TO
                            18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                 SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

  
I, Martin F. Roper, President and Chief Executive Officer of The Boston Beer
Company, Inc. (the Company), certify that: 

     1. the Quarterly Report on Form 10-Q of the Company to which this
        certification is an exhibit for the quarter ended June 29, 2002 (the
        "Report") fully complies with the requirements of section 13(a) or
        15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or
        78o(d)). 

     2. the information contained in the Report fairly presents, in all material
        respects, the financial condition and results of operations of the
        Company as of June 29, 2002 and for the period then ended. 
  

/s/ Martin F. Roper                 
-----------------------------
Martin F. Roper 
President and Chief Executive  
Officer 
August 13, 2002 






<PAGE>

                                                                    Exhibit 99.2
  

                           CERTIFICATION PURSUANT TO
                            18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                 SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

  
I, Richard P. Lindsay, Chief Financial Officer and Treasurer of The Boston Beer
Company, Inc. (the Company), certify that: 

     1. the Quarterly Report on Form 10-Q of the Company to which this
        certification is an exhibit for the quarter ended June 29, 2002 (the
        "Report") fully complies with the requirements of section 13(a) or 15(d)
        of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)). 

     2. the information contained in the Report fairly presents, in all material
        respects, the financial condition and results of operations of the
        Company as of June 29, 2002 and for the period then ended. 
  

/s/ Richard P. Lindsay         
-------------------------------
Richard P. Lindsay 
Chief Financial Officer and 
Treasurer 
August 13, 2002