BDM CONSTRUCTION
COMPANY INC.

835 Piner Rd., Suite 0
Post Office Box 3847
Santa Rosa, California
95402-3847

CL 376515

(707) 523-1722
Fax (707) 526-4980





PROMISSORY NOTE


July 31, 1996, Hopland, California. For valuable consideration, receipt of which
is hereby acknowledged, the borrower hereto agrees as follows:


1. BORROWER'S PROMISE TO PAY: For consideration  received, We promise to pay the
sum of  $60,000.00  together  with  interest,  all due and  payable on or before
August 31, 1996, by 5:00 p.m. without notice or demand, as provided for herein.

2. LOAN  COSTS/SECURITY:  In consideration of BDM Construction  Company,  Inc.'s
loan of the funds  herein,  borrower  agrees to pay  $60,600.00,  principal  and
interest, provided that the loan is paid by the due date. Interest will continue
to accrue at a rate of 12% per  annum.  A late  charge of $50.00 per day will be
added for each day that the loan is not paid.

Borrower  additionally  authorizes BDM  Construction  Company Inc. to offset all
costs and attorney's  fees incurred in connection  with the  preparation of this
agreement  and  ancillary  documents  including  a U.C.C.  financing  statement,
together with any collection costs.

Should any payment  due not be received by its due date,  interest on the unpaid
balance  shall accrue at the rate of 1.5% per month until paid in full,  this is
in addition to all up front loan costs described herein.  Borrower  additionally
acknowledges  that this note is  secured  by a UCC- I Filing  covering a Krohnes
Labeler valued at approximately $108,000.00,  currently stored at 290 East Gobbi
Street in Ukiah, California.




/s/  Norman Franks
MENDOCINO BREWING COMPANY