Equipment Lease December 20, 1993

EQUIPMENT LEASE AGREEMENT
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TERMS AND CONDITIONS OF LEASE


1. Lease Equipment. BREWERY LEASING COMPANY ("Lessor") leases to RIVERSIDE BREWING COMPANY ("Lessee") and Lessee hereby leases from Lessor all equipment, and leasehold improvements, if any (collectively, the "Equipment"), listed in Exhibit "A" attached hereto and incorporated herein.


2. Effective Date; Rental Terms. This Lease shall become effective on December 20, 1993. The rental term of this Lease shall commence on December 20, 1993 ("Commencement Date") and terminate on December 19, 2000. All provisions of this Lease shall apply during any extended rental term except as may be otherwise specifically provided in this Lease, or in any subsequent written agreement of the parties modifying this Lease.


3. Rent. Lessee agrees to pay Lessor aggregate rentals equal to $508,935, the sum of all rental payments. Rental payments shall be payable in equal monthly installments of (i) $2,353 beginning on January 1, 1994 and on the same day of each month thereafter through March 1, 1994 and (ii) $6,196 beginning on April 1, 1994 and on the same day of each month thereafter through December 1, 2000 at the office of Lessor set forth herein or to such other place as Lessor may from time to time designate in writing.


4. Security Deposit. Lessor shall retain $-0- as security for the performance by Lessee of its obligations hereunder. Any Security Deposit so taken shall be non-interest bearing. Lessor may, but shall not be obligated to, apply any Security Deposit to cure any default of Lessee hereunder in which event Lessee shall promptly restore any amount so applied. If Lessee is not in default in any of Lessee's obligations hereunder, any Security Deposit will be returned to Lessee at the termination of this Lease.


5. Selection of Equipment; Disclaimer of Warranty. Lessee has selected both the Equipment and the supplier. LESSEE ACKNOWLEDGES THAT LESSOR HAS NO EXPERTISE OR SPECIAL FAMILIARITY ABOUT OR WITH RESPECT TO THE EQUIPMENT. LESSEE AGREES THAT THE EQUIPMENT LEASED HEREUNDER IS LEASED "AS IS" AND IS OF A SIZE, DESIGN AND CAPACITY SELECTED BY LESSEE AND THAT LESSEE IS SATISFIED THAT THE SAME IS SUITABLE FOR LESSEE'S PURPOSES, AND THAT LESSOR HAS MADE NO REPRESENTATION OR WARRANTY WITH RESPECT TO THE SUITABILITY OR DURABILITY OF SAID EQUIPMENT FOR THE PURPOSES AND USES OF LESSEE, OR ANY OTHER REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT THERETO, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. If the Equipment is not properly installed, does not operate as represented or warranted by the supplier and/or manufacturer, or is unsatisfactory for any reason, Lessee shall


1 2 make any claim on account thereof solely against the supplier and or manufacturer and shall, nevertheless, pay Lessor all rental payable under this Lease and shall not set up against Lessee's obligations any such claims as a defense, counterclaim, set-off or otherwise. So long as Lessee is not in breach or default of this Lease, Lessor hereby assigns to Lessee, solely for the purpose of making and prosecuting any such claim at Lessee's expense, all rights which Lessor may have against the supplier and the manufacturer for breach of warranty or other representation respecting any item of Equipment. All proceeds of any warranty recovery by Lessee from the supplier and/or manufacturer of any item of Equipment shall first be used to repair or replace the affected item of Equipment.


LESSEE ACKNOWLEDGES THAT NEITHER THE SUPPLIER NOR ANY SALESMAN, EMPLOYEE, REPRESENTATIVE OR AGENT OF THE SUPPLIER IS AN AGENT OR REPRESENTATIVE OF LESSOR, AND THAT NONE OF THE ABOVE IS AUTHORIZED TO WAIVE OR ALTER ANY TERM, PROVISION OR CONDITION OF THIS LEASE, OR MAKE ANY REPRESENTATION OR WARRANTY WITH RESPECT TO THIS LEASE. NO SALESMAN, EMPLOYEE REPRESENTATIVE OR AGENT OF SUPPLIER IS AUTHORIZED TO WAIVE OR ALTER ANY TERM OR CONDITION OF THIS LEASE, AND NO REPRESENTATION AS TO THE EQUIPMENT, OR ANY OTHER MATTER, BY THE SUPPLIER SHALL IN ANY WAY AFFECT LESSEE'S OBLIGATION TO PAY RENT AND OTHERWISE PREFORM AS SET FORTH IN THIS LEASE.


6. Delivery; Acceptance. Lessee has accepted the Equipment. Lessee agrees to hold Lessor harmless from specific performance of this Lease and from damages if the Equipment is unsatisfactory for any reason whatsoever.


7. Location; Inspection; Use Possession. The Equipment has been delivered to Lessee and installed by Lessee, at Lessee's own expense, and shall be kept at Lessee's premises located at 3397 7th Street, Riverside, California 92501. Lessee shall not remove the Equipment from the aforementioned location without Lessor's prior written consent. Lessor hereby warrants and represents that the Equipment will be used for business purposes and not for personal, family or household purposes, and Lessee acknowledges that Lessor has relied upon this representation in entering into this Lease. Lessee shall use the Equipment in a careful and proper manner and shall comply with all laws, regulations and ordinances relating to its possession, use or maintenance. Lessee shall affix and maintain labels, if supplied by Lessor, upon a visible place on each item of Equipment. Lessor shall have the right from time to time, during reasonable business hours, to enter upon the Lessee's premises for the purpose of inspecting the Equipment. So long as Lessee is not in default with regard to the payment of any obligation owing to Lessor as defined herein, or with regard to any warranty or representation by Lessee to Lessor or with regard to any term or condition of this Lease, then Lessee may remain in possession of the Equipment and have the use thereof.


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8. Alterations; Maintenance. Lessee shall, at Lessee's own expense, maintain the Equipment in good operating condition, repair and appearance, furnish all parts and labor required to keep the Equipment in such condition, protect same from deterioration other than normal wear and tear, and only use the Equipment in the regular course of Lessee's business and within normal capacity. For the purpose of assuring Lessor that the Equipment will be properly serviced, Lessee shall cause the Equipment to be maintained by the supplier pursuant to the supplier's standard preventative maintenance contract, if any. Lessee shall not make any modifications, alterations or additions to the Equipment without prior written consent of Lessor, and the, all such modifications, alterations and additions shall belong to Lessor and shall be returned to Lessor with the Equipment upon the expiration or earlier termination of this Lease.


9. Insurance. Lessee shall obtain, maintain and keep the Equipment insured against all risks of loss or damage from every cause whatsoever in an amount not less than the greater or actual cash value of the aggregate amount of all unpaid rentals at any time for the then entire unexpired portion of the term of this Lease without deductible and without co-insurance. Lessee shall also obtain and maintain for the term of this Lease, comprehensive public liability insurance, with a severability of interest endorsement or its equivalent, covering liability for bodily injury, including death, and property damage resulting from the purchase, ownership, leasing, maintenance, use, operation or return of the Equipment in an amount satisfactory to Lessor. Lessor, its successors or assigns, shall be the sole named payee with respect to insurance for damage to or loss of the Equipment and shall be named additional insured on the public liability insurance. Lessee shall pay all premiums for such insurance and shall deliver to Lessor the original policy or policies of insurance, certificates of insurance, or other evidence satisfactory to Lessor evidencing the insurance required thereby, along with proof, satisfactory to Lessor, of the payment of the premium therefor; provided, however, that Lessor shall be under no duty to ascertain the existence of or to examine such insurance policy or to advise Lessee in the event such insurance coverage shall not comply with the requirements hereof. All insurance shall provide for at least thirty (30) days advance written notice to Lessor before any cancellation or material modification thereof. Lessee hereby irrevocably appoints Lessor as Lessee's attorney-in-fact to make claim for, receive payment of, and execute and endorse all documents, checks or drafts received in payment for loss or damage under any such insurance policy. Lessee agrees if Lessee shall fail to procure, maintain and pay for such insurance, Lessor shall have the right, but not the obligation, to obtain such insurance on behalf of and at the expense of Lessee in the event Lessor does obtain such insurance, Lessee agrees to pay all costs thereof with the next rental payment.


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10. Risk of Loss. Lessee shall bear the entire risk of loss, theft, destruction, damage or disrepair of the Equipment or any part thereof for any cause whatsoever. No such loss, damage, theft, destruction or disrepair of the Equipment shall relieve Lessee of the obligation to pay rent or from any other obligation under this Lease. In the event of any of the above, Lessee, at Lessee's own expense and at Lessor's option, shall either (a) repair the Equipment, returning same to its previous condition, unless unrepairable, or (b) replace same with like Equipment of equivalent value, in good condition and acceptable to Lessor, which shall become the property of the Lessor; or (c) immediately pay Lessor all rent due and to become due under this Lease or such amount as may be allocated by Lessor, in its s ...