EMPLOYMENT AGREEMENT



     This agreement is entered into this 9th day of November, to be effective as

of the 1st day of July, 2006 between Scott Barnum ("Executive") and Pyramid

Breweries Inc., a Washington corporation (the "Company").



     1. Employment. The Company agrees to employ Executive, and Executive

accepts employment, on the terms and conditions in this agreement.



     2. Duties. Executive shall be employed in the capacity of President and

Chief Executive Officer of the Company. Executive shall perform the duties

customarily performed by a president and chief executive officer, including

having the primary responsibility for the strategic direction, operational

planning, and execution of all aspects of the Company's business. In addition,

Executive shall have such other executive and managerial powers and duties with

respect to the Company and its subsidiaries as may reasonably be assigned to him

by the Company's Board of Directors, consistent with his duties and

responsibilities as President and Chief Executive Officer. Executive shall

report directly to the Company's Board of Directors. Furthermore, he will be a

Director himself and be expected to perform the normal duties of a member of a

public company's board of directors. Executive shall perform his duties at the

Company's Seattle headquarters or other mutually agreed locations while on

business travel status. During the term of this agreement, Executive shall be

based in Seattle and Berkeley.



     3. Intensity of Effort; Other Business. Executive shall devote his entire

working time, attention, and efforts to the Company's business and affairs,

shall faithfully and diligently serve the Company's interests and shall not

engage in any business or employment activity that is not on the Company's

behalf (whether or not pursued for gain or profit) except for (a) activities

approved in writing in advance by the Board and (b) passive investments that do

not involve Executive providing any advice or services to the businesses in

which the investments are made and (c) subject to approval by the Board, which

shall not unreasonably be withheld, service as a member of the board of

directors of one or more corporations not in competition with the Company or as

a member of the board of directors of any nonprofit corporation



     4. Term. The term of this agreement is of indefinite duration. As stated in

paragraph 10 below, and subject to paragraph 12 below (Termination Payments),

this agreement and Executive's employment relationship may be terminated at any

time, with or without Cause (as defined below).



     5. Compensation. Executive's compensation will be as follows:





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          (a) Salary. The Company shall pay Executive a base salary in the gross

amount of $220,000 per annum (in addition to stock grants as provided below).

The base salary will be payable bi-weekly in arrears, by direct bank transfer

("Annual Base Pay"). Payday is the Friday following each two-week period.

Executive's performance and Annual Base Pay will be reviewed on or about January

1, 2007, and on or about January 1 each year thereafter. Executive's Annual Base

Pay is subject to change as determined in the sole discretion of the Board of

Directors Compensation Committee ("Compensation Committee").



          (b) Employee Stock Purchase Plan. Executive shall be eligible for

participation in the Employee Stock Purchase Plan on the first day of

employment.



          (c) Stock Awards. Subject to approval by the Company's Compensation

Committee, the Executive will be entitled to the following equity compensation

awards, all of which will be granted under the Company's 2004 Equity Incentive

Plan (the "Plan"):



               (i) Base Award. Executive will be granted a stock award for

50,000 shares on January 1, 2007 pursuant to the terms and conditions of an

award agreement in substantially the form attached as Exhibit A to this

Agreement (the "Base Award Agreement"), and such award will be subject to the

Base Award Agreement, the Plan and this agreement. . Each annual Base Award will

be accompanied by a one-time payroll gross-up, payable to the Executive, equal

to the personal income taxes resulting from and due at the time of vesting of

the earned Performance Award, based on Pyramid's stock price and tax regulations

in force at the time of vesting. As more particularly set forth in the Base

Award Agreement, (A) these shares will be subject to forfeiture in the event

Executive's employment with the Company terminates under certain circumstances,

(B) such forfeiture restrictions will lapse (i.e., the shares will vest) in 20%

installments (each, an "Annual Installment") beginning on January 1, 2008 and on

the next four anniversaries of that date; and (C) if Executive's employment is

terminated by the Company without Cause or by Executive for Good Reason, or as a

result of Executive's death or Disability (all as defined below), the forfeiture

restrictions will lapse with respect to a prorated portion of the Annual

Installment for the year in which such termination occurs based on the date

Executive's employment is terminated;



               (ii) Annual Performance Awards. Executive will be entitled to

receive the following equity compensation awards (each, a "Performance Award")

based on the Company's achievement of certain performance goals as follows:



                    (A) upon the filing of the Company's Annual Report on Form

10-K ("10-K") for the year ended December 31, 2006 (or, if the Company is no





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longer subject to the reporting requirements under Section 13 or 15(d) of the

Securities Exchange Act of 1934, as amended, upon the completion of the audit of

the Company's financial statements for 2006), 7,000 shares if the Company

achieves an increase in return on average net equity for the six months ending

December 31, 2006 adjusted for extraordinary one-time expenses consistent with

the administration of the annual Officer Incentive Compensation Plan bonus in

subsection (5d) below, of at least 100 basis points as compared to return on

average net equity for the six months ending December 31, 2005;



                    (B) upon the filing of the Company's 10-K for the year ended

December 31, 2007 (or, if the Company is no longer subject to the reporting

requirements under Section 13 or 15(d) of the Securities Exchange Act of 1934,

as amended, upon the completion of the audit of the Company's financial

statements for 2007), 14,000 shares if the Company achieves an increase in

return on average net equity for the year ending December 31, 2007 adjusted for

extraordinary one-time expenses consistent with the administration of the annual

Officer Incentive Compensation Plan bonus in subsection (5d) below, of at least

200 basis points as compared to return on average net equity for the year ending

December 31, 2006;



                    (C) upon the filing of the Company's 10-K for the year ended

December 31, 2008 (or, if the Company is no longer subject to the reporting

requirements under Section 13 or 15(d) of the Securities Exchange Act of 1934,

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