August 1, 1996

        Agreement to modify Note dated June 6, 1995 wherein Ukiah  Redevelopment
Agency is named as  Trustor  and  Langley et al is named as  Beneficiary  in the
original amount of $492,872; and the payoff and reconveyance of Note and Deed of
Trust dated  November 15, 1995 wherein  Ukiah  Redevelopment  Agency is named as
Trustor  and Langley et al is named as  Beneficiary  in the  original  amount of
$76,230. Said  note(s)  and  deed(s)  trust  have  been  taken  "subject  to" by
Mendocino Brewing Company in subsequent sale(s).

         Mendocino  Brewing  Company shall place into escrow the sum of $300,000
cash.  Said $76,230 Note and Deed of Trust + accumulated  interest shall be paid
off in full. The balance remaining of said $300,000 shall be paid over to reduce
the  remaining  principal  of the $492,872  Note and Deed of Trust.  The monthly
payment shall be reduced accordingly.

         Cordes et al agrees to subordinate this modified note to a construction
loan from the Savings  Bank of  Mendocino  County in the  approximate  amount of
$2,700,000 and Small Business  Administration insured loan (Creditor to be named
later) in the approximate amount of $1,000,000.

                Mendocino Brewing Company by /s/ Norman Franks
                Langley et al by  /s/  Cordes P. Langley  /s/  Philip G. Langley

        The  Ukiah  Redevelopment  Agency  (RDA),  while  not a  party  to  this
modification  agreement,  is aware of the  terms of same and  agrees  that  said
modification  agreement  does not  change,  modify  or  effect  the June 6, 1995
Supplemental  Escrow  Instructions,  more  particularly  as  those  instructions
require purchase of remainder  acreage;  provided that Langley  acknowledges and
agrees by signing in the space  provided  above  that its sole  recourse  in the
event that the RDA defaults on the installment note for $492,872,  dated June 6,
1995 and modified Aug 1, 1996, is to foreclose  under the original deed of trust
and shall  have no right to  recover  on the note from the RDA by legal  action,
set-off,  counterclaim,  or otherwise even if senior lien holders  foreclose and
take or sell the entire security to satisfy their claims, in whole or in part.

                Ukiah Redevelopment Agency by  /s/  Candace Horsley