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                                                                   EXHIBIT 10.12

                             EMPLOYMENT AGREEMENT



     This agreement is dated and made effective the 17th day of July 2000 (the
"Effective Date") between Wayne Drury ("Executive") and Pyramid Breweries Inc.,
a Washington Corporation ("Company").

     1.   Employment. Company employs Executive and Executive accepts employment
on the terms and conditions in this agreement.

     2.   Duties. Executive is employed in the capacity of Chief Financial
Officer and VP -- Finance & Administration. In this capacity, Executive shall
have primary responsibility for the finance, planning, investor relations,
accounting and reporting, risk management, benefit administration, management
information systems, and legal affairs. Executive shall report directly to, and
take direction from, the Company's Chief Executive Officer. Executive shall
perform the duties customarily performed by the Chief Financial Officer and VP
-- Finance & Administration, provided that Executive's precise duties may be
changed, extended or curtailed, from time to time, at the Chief Executive
Officer's direction, and Executive shall assume and perform the further
reasonable responsibilities and duties that the Chief Executive Officer may
assign from time to time.

     3.   Intensity of Effort; Other Business. Executive shall devote his entire
working time, attention, and efforts to Company's business and affairs, shall
faithfully and diligently serve Company's interests and shall not engage in any
business or employment activity that is not on 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.

     4.   Term. The term of this agreement is of indefinite duration. As stated
in paragraph 9 below, this agreement and Executive's employment relationship may
be terminated at any time, with or without cause.

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

          (a)  Executive's salary shall be $5,000.00 payable every two weeks
(equal to $130,000.00 on an annualized basis). Payday is the Friday following
each two-week period. Executive's salary shall be reviewed annually and adjusted
as determined in the Chief Executive Officer's sole discretion.

          (b)  Executive will be eligible to receive a personal performance
based bonus each year of up to an additional 30% of base salary. The criteria
and pay-out under the bonus program will be determined by the Chief Executive
Officer; will be based on both individual and corporate performance and will be
quarterly and/or annually based. If Executive is not an eligible participant for
the full plan period, pro-rated payment will be made per rules outlined in the
plan document.

          (c)  Executive shall be eligible for stock options and/or other
incentive compensation) only  as stated in Non-Qualified Stock Option Agreements
between the Company and Executive.

          (d)  Executive shall receive a car allowance of $300 per month, plus
reimbursement for gas purchased by employee for business use.

     6.   Benefit Plans. Executive (and qualifying immediate family members
where applicable) shall be eligible to participate in the Company's Employee
Benefit Package offered generally to employees, which currently includes health
insurance through Blue Cross of Washington, life and AD&D insurance, fifty
percent (50%) Company-payment of vision and dental, maternity leave, health
insurance continuation, sick leave, paid vacation, holidays, and 401(k). The
exact terms and conditions of the Company's benefits, including eligibility are
governed by the benefit plans, not this agreement or any summary provided to
Executive.

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     7.   Vacation and Sick Leave. Executive shall be entitled to accrue up to
four weeks (20 days) of paid vacation and five days of paid sick leave per
calendar year (prorated if this agreement begins and/or ends in the middle of a
calendar year). Up to three weeks (15 days) of vacation not used in any calendar
year may be carried over into the next calendar year; otherwise unused vacation
is forfeited at the end of the calendar year. Upon termination of employment for
any reason, Executive shall be paid for earned but unused vacation. Sick leave
may be accumulated up to a maximum of twenty (20) days. Unused sick leave is not
paid upon termination of employment, regardless of the reason.

     8.   Business Expenses. Executive is authorized to incur reasonable travel
and entertainment expenses to promote Company's business. Company shall
reimburse Executive for those expenses. Executive shall provide to Company the
itemized expense account information that Company reasonably requests.

     9.   Termination. Executive's employment may be terminated as follows; in
which event Executive's compensation and benefits shall terminate except as
otherwise provided below:

          (a)  Without Cause or Good Reason. Either party may terminate
Executive's employment at any time by giving fourteen (14) calendar days'
advance written notice of termination to the other without the necessity of
cause or good reason.

          (b)  By Company for Cause. Company may terminate Executive's
employment for cause, without advance written notice of termination, by giving
written notice of such termination. Any termination of Executive's employment
for cause must be approved by a majority of the Board other than Executive.
Executive must be given reasonable advance notice of the meeting at which his or
her termination is to be considered, and a reasonable opportunity to address the
Board. For purposes of this agreement "cause" means and is limited to
dishonesty, fraud, commission of a felony or of a crime involving moral
turpitude, harassment or illegal discrimination of any nature, including sexual
harassment, destruction, theft, or unauthorized use or distribution of Company
property or confidential information, fighting with an employee or customer or
vendor, intoxication at work, use of alcohol to an extent that it impairs
Executive's performance of his or her duties, use of illegal drugs at any time,
malfeasance or gross negligence in the performance of Executive's duties,
violation of law in the course of employment, Executive's failure or refusal to
perform his or her duties, Executive's failure or refusal to follow reasonable
instructions or directions, misconduct, or any material beach of Executive's
duties or obligations to Company.

          (c)  Death. Executive's employment shall terminate automatically upon
Executive's death.

          (d)  Permanent Disability. Company may terminate Executive's
employment immediately if Executive becomes permanently disabled. For purposes
of this agreement Executive will be considered "permanently disabled" if, for a
continuous period of twenty-four (24) weeks or more, Executive has been unable
to perform the essential functions of the job because one or more mental or
physical illnesses and/or disabilities, provided that Company may grant
Executive unpaid leave if and to the extent that, in Company's judgment, doing
so is required by law.

     10.  Termination Payments.

          (a)  Termination Without Cause.

               (i)  If Company terminates Executive's employment when neither
cause nor permanent disability exists, Company shall pay Executive, as
liquidated damages and in lieu of all other remedies to which Executive might be
entitled arising out of the termination, termination payments equal to three
month's salary plus a pro rata share of any personal performance bonus for which
Executive is eligible in the year of termination. For the same three-month
period, Company shall continue to provide at the Company's cost, the Company's
medical benefits to employee and qualifying family members. Such

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liquidated damages shall be paid only if Executive executes a full and final
general release of all claims against Company (including Company's officers,
directors, agents, employees and assigns) arising out of Executive's employment
relationship with Company.

               (ii)  In addition, if Company terminates Executive's employment
when neither cause nor permanent disability exists, but Company gives Executive
less than the fourteen (14) days' advance written notice called for above,
Company shall pay Executive, as liquidated damages and in lieu of all other
remedies to which Executive might be entitled arising out of Company's failure
to give fourteen (14) days' advance written notice, termination payments equal
to the additional salary Executive would have received if Company had given
Executive fourteen (14) day's advance written notice of termination.

               (iii) Termination payments shall be paid out at Executive's
normal payroll rate on regular payroll days subject to normal payroll
deductions, commencing first with the termination payments called for by subpart
(ii), if any, followed by the termination payments called for by subpart (i).
Any reimbursable expenses incurred prior to termination will be paid immediately
upon termination.

          (b)  All Other Terminations. In all cases of termination or expiration
of this agreement or of Executive's employment (including, but not limited to, a
termination of Executive by Company for cause of Executive's resignation of
employment), Executive's compensation and benefits shall terminate on the date
the employment ends and Executive shall not be entitled to any termination
payments or damages.

     11.  Confidentiality/Unfair Competition. Executive agrees that Company has
many substantial, legitimate business interests that can be protected only by
Executive agreeing not to compete with Company unfairly. These interests
include, without limitation, Company's contacts and relationships with its
supply sources, Company's reputation and goodwill in the industry, and Company's
rights in its confidential information. Executive agrees that information not
generally known to the public to which Executive has been or will be exposed as
a result of Executive's employment by Company is confidential information that
belongs to Company. This includes information developed by Executive, alone or
with others, or entrusted to Company by its supply sources, customers or others.
Company's confidential information includes, without limitation, information
relating to Company's trade secrets, know-how, procedures, pricing, products,
services, purchasing, accounting, marketing, sales, supply sources, employees,
and customers and active prospects and their related needs. Executive will hold
Company's confidential information in strict confidence and will not disclose or
use it except as authorized by Company and for Company's benefit. Executive also
will not disparage Company or its business or services. Executive will not,
apart from good faith competition, interfere with Company's relationships with
its clients, employees, vendors, bankers or others.

     12.  Possession of Materials. Executive agrees that upon conclusion of
employment or request by Company, Executive shall turn over to Company all
documents, files, office supplies and any other material or work product in
Executive's possession or control that were created pursuant to or derived from
Executive's services or Company.

     13.  Non-raiding of Employees. Executive recognizes that Company's
workforce is a vital part of its business. Therefore, Executive agrees that for
twelve (12) months after Executive's employment with Company ends, regardless of
the reason it ends, Executive will not solicit, directly or indirectly, any
employee to leave his or her employment with Company. For purposes of this
agreement, the phrase "shall not solicit, directly or indirectly," includes,
without limitation, that Executive (a) shall not identify any Company employees
to any third party as potential candidates for employment, such as by disclosing
the names, backgrounds and qualifications of any Company employees; (b) shall
not personally or through any other person approach, recruit or otherwise
solicit employees of Company to work for any other employer; and (c) shall not
participate in any pre-employment interviews with any person who was employed by
Company while Executive was employed or retained by Company.

     14.  Dispute Resolution. Company and Executive agree to resolve all
disputes arising out of

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their employment relationship by the following alternate dispute resolution
process: (a) Company and Executive agree to seek a fair and prompt negotiated
resolution; but if this is not successful, (b) all disputes shall be resolved by
binding arbitration; provided that during this process, (c) at the request of
either party, not made later than seventy-five (75) days after the initial
arbitration demand, the parties agree to attempt to resolve any dispute by non-
binding third-party intervention including either mediation or evaluation or
both (but without delaying the arbitration hearing date). By entering into this
contract, both parties give up their right to have the dispute decided in court
by a judge or jury. The provisions of the Washington arbitration statute,
Chapter 7.04 RCW, are incorporated herein to the extent not inconsistent with
the other terms of this agreement.

          (a)  Binding Arbitration. Any controversy or claim arising out of or
connected with Executive's employment at Company, including but not limited to
claims for compensation or severance and claims of wrongful termination, age,
sex, racial or other discrimination, or civil rights violations shall be
determined by arbitration commenced in accordance with RCW 7.04.060, provided
that the total award by a single arbitrator (as opposed to a majority of three
arbitrators) shall not exceed Two Hundred Fifty Thousand Dollars ($250,000). If
either party assets in good faith that it is entitled to an award over Two
Hundred Fifty Thousand Dollars ($250,000), there shall be three (3) arbitrators.
The location of the arbitration shall be Seattle, Washington, or such other city
to which the parties may agree. If Company and Executive cannot agree on the
arbitrator(s), then the arbitrator(s) shall be selected by the administrator of
the American Arbitration Association (AAA) office nearest the city where the
arbitration is to be conducted. Each arbitrator shall be an attorney with at
least 15 years' experience in commercial law or judicial arbitration experience.
All statutes of limitations, which would otherwise be applicable, shall apply to
any arbitration proceeding hereunder. Any issue about whether a controversy or
claim is covered by this agreement shall be determined by the arbitrator(s).

          (b)  Procedures. The arbitration shall be conducted in accordance with
this agreement using as appropriate the AAA Employment Dispute Resolution Rules
in effect on the date hereof. There shall be no discovery or dispositive motion
practice (such as motions for summary judgment or to dismiss or the like) except
that the arbitrator(s) shall authorize such discovery as may be shown to be
necessary to ensure a fair hearing, and no such discovery shall extend the time
limits contained herein. The arbitrator(s) shall not be bound by the rules of
evidence or of civil procedure, but rather may consider such writings and oral
presentations as reasonable business people would use in the conduct of their
day-to-day affairs, and may require both parties to submit some or all of their
respective cases by written declaration or such other manner of presentation as
the arbitrator(s) may determine to be appropriate. The parties agree to limit
live testimony and cross-examination to the extent necessary to ensure a fair
hearing on material issues.

          (c)  Hearing; Law; Appeal Limited. The arbitrator(s) shall take such
steps as may be necessary to hold a private hearing within one hundred twenty
(120) days of the initial request for arbitration and to conclude the hearing
within two (2) days; and the arbitrator(s)'s written decision shall be made not
later than fourteen (14) calendar days after the hearing. The parties agree that
they have included these time limits in order to expedite the proceeding, but
they are not jurisdictional, and the arbitrator(s) may for good cause allow
reasonable extensions or delays, which shall not affect the validity of the
award. The written decision shall contain a brief statement of the claim(s)
determined and the award made on each claim. In making the decision and award
the arbitrator(s) shall apply applicable substantive law. Absent fraud,
collusion or willful misconduct by an arbitrator, the award shall be final and
judgment may be entered in any court having jurisdiction thereof. The
arbitrator(s) may award injunctive relief or any other remedy available from a
judge, including the joinder of parties or consolidation of this arbitration
with any other involving common issues of law or fact or which may promote
judicial economy, and may award attorneys' fees and costs to the prevailing
party, but shall not have the power to award attorneys' fees and costs to the
prevailing party, but shall not have the power to award punitive or exemplary
damages. The decision and award of the arbitrators need not be unanimous;
rather, the decision and award of two (2) arbitrators shall be final.

          (d)  Injunctive Relief. In the case of a breach of any of Executive's
obligations to Company, Company may request a court of competent jurisdiction to
issue such temporary or interim relief

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(including temporary restraining orders and preliminary injunctions) as may be
appropriate, either before arbitration is commenced or pending the outcome of
arbitration. No such request shall be a waiver of the right to submit any claim
or controversy to arbitration. Any issues of law or fact, which arise in
connection with such request, shall, at Company's election, be determined by
arbitration in accordance with subparagraph (a) through (c) above.

     15.  Attorneys' Fees; Venue and Jurisdiction. In any lawsuit or arbitration
arising out of or relating to this agreement or Executive's employment,
including without limitation arising from any alleged tort or statutory
violation, the prevailing party shall recover reasonable costs and attorneys'
fees, including on appeal. Venue and jurisdiction of any lawsuit involving this
agreement or Executive's employment shall exist exclusively in state and federal
courts in King County, Washington, unless injunctive relief is sought by Company
and, in Company's judgment, that relief might not be effective unless obtained
in some other venue. The provisions of this section are subject to and do not
supersede the dispute resolution provisions described above.

     16.  Governing Law. This agreement shall be governed by the internal laws
of the state of Washington without giving effect to provisions thereof related
to choice of laws or conflict of laws.

     17.  Saving Provision. If any part of this agreement is held to be
unenforceable, it shall not affect any other part. If any part of this agreement
is held to be unenforceable as written, it shall be enforced to the maximum
extent allowed by applicable law. The confidentiality, possession of materials,
non-competition and non-raiding provisions of this agreement shall survive after
Executive's employment by Company ends, regardless of the reason it ends, and
shall be enforceable regardless of any claim Executive may have against Company.

     18.  Waiver. No waiver of any provision of this agreement shall be valid
unless in writing, signed by the party against whom the waiver is sought to be
enforced. The waiver of any breach of this agreement or failure to enforce any
provision of this agreement shall not waive any later breach.

     19.  Assignment; Successors. Company may assign its rights and delegate its
duties under this agreement. Executive may not assign his or her rights or
delegate his or her duties under this agreement.

     20.  Binding Effect. This agreement is binding upon the parties and their
personal representatives, heirs, successors and assigns.

     21.  Counterparts. This agreement may be executed in any number of
counterparts, each of which shall be an original and all of which, taken
together, shall constitute a single agreement.

     22.  Complete Agreement. This agreement, together with the Employee Stock
Option Agreement(s) dated July 17, 2000 is the final and complete expression of
the parties' agreement relating to Executive's employment. Only a writing signed
by both parties may amend this agreement; it may not be amended orally or by
course of dealing. The parties are not entering into this agreement relying on
anything not set out in this agreement. This agreement shall control over any
contrary policies or procedures of Company, whether in effect now or adopted
later. Company's policies and procedures that do not conflict with this
agreement, whether in effect now or adopted later, shall apply or not apply to
Executive as determined by Company in its discretion.

DATED this 21st day of June, 2000.


EXECUTIVE: /s/ L. Wayne Drury

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COMPANY:       PYRAMID BREWERIES INC.


               By /s/ R. Martin Kelly
                  -------------------------------
               Its: Chief Executive Officer

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