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UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549
   AMENDMENT NO. 2
FORM 10-K/A   (MARK ONE) þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934FOR THE YEAR ENDED DECEMBER 31, 2004
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934FOR THE TRANSITION PERIOD FROM___________________TO___________________.
 COMMISSION FILE NUMBER 0-27116   PYRAMID BREWERIES INC.  Washington
    
    91-1258355(State or other jurisdiction of
incorporation or organization)
    
    (IRS Employer
Identification No.)
 91 South Royal Brougham Way, Seattle, WA 98134
(Address of principal executive offices)
(206) 682-8322
(Registrants telephone number, including area code) SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: None SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common Stock, par value $.01 per share   Indicate by check mark whether the registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes
o      
No þ. Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation
S-K is not contained herein, and will not be contained, to the best of registrants knowledge, in
definitive proxy or information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. o Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange
Act Rule 12b-2). Yes o       No þ The aggregate market value of the voting stock held by non-affiliates of the registrant as of
the last business day of the registrants most recently completed second quarter, June 30, 2004,
was $19,534,067. The number of shares outstanding of the registrants common stock as of March 18, 2005, was
8,781,840.   1




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TABLE OF CONTENTS  EXPLANATORY NOTEPART IIIItem 10  Directors and Executive Officers of the CompanyItem 11  Executive CompensationItem 12  Security Ownership of Certain Beneficial Owners and ManagementItem 13  Certain Relationships and Related TransactionsItem 14  Principal Accountant Fees and ServicesPART IVItem 15  Exhibits, Financial Statement Schedules, and Reports on Form 8-KSIGNATURESEXHIBIT INDEXEXHIBIT 31.1EXHIBIT 31.2EXHIBIT 31.3EXHIBIT 32.1EXHIBIT 32.2EXHIBIT 32.3    Table of Contents  
 EXPLANATORY NOTE Pyramid Breweries Inc. (also referred to as the Company, we or our) is filing this Amendment
No. 2 to its Form 10-K for the fiscal year ended December 31, 2004 (the Form 10-K), originally
filed with the Securities and Exchange Commission on March 31, 2005 and amended on Form 10-K/A
filed on April 11, 2005, for the sole purpose of including the information required under Part III.
The Company is also updating the signature page, the Exhibit Index referenced in Item 15 of Part
IV and Exhibits 31.1, 31.2, 31.3, 32.1, 32.2 and 32.3. Pursuant to Rule 12b-15 under the Securities Exchange Act of 1934, as amended, the complete text of
each of Items 10, 11, 12, 13 and 14 of Part III and Item 15 of Item IV, as amended, is set forth
below. The remainder of the Form 10-K is unchanged and is not reproduced in this Amendment No. 2.
This Amendment No. 2 speaks as of the original filing date of the Form 10-K and reflects only the
changes discussed above. No other information included in the Form 10-K, including the Companys
financial statements and the footnotes thereto, has been modified or updated in any way. 2




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PART III 
 Item 10  Directors and Executive Officers of the Company George Hancock (60)  Chairman of the Board Mr. Hancock has been a director of the Company since 1989. Mr. Hancock served as our Chief
Executive Officer from May 1992 until his retirement in December 1999, and as our Chairman of the
Board from January 1997 to December 1999, as well as our interim Chief Executive Officer from
February, 2004 to August, 2004 and Chairman of the Board since February 2004. Mr. Hancock
previously served as our Chairman of the Board from July 1989 until July 1995. He was President of
Penknife Computing, Inc., a computer software company, from 1988 to May 1992. Mr. Hancock was
previously employed by the international accounting firm of Coopers & Lybrand, where he was
primarily responsible for management consulting projects. Mr. Hancock was also the founder of two
startup software companies in England and the United States. He was awarded a Masters in Business
Administration by Cranfield Institute of Technology, England in 1981. He qualified as an accountant
in England in 1967. Scott S. Barnum (49)  Director Mr. Barnum has
been a director since February 1999. Since July, 2002, Mr. Barnum has been Chief
Executive Officer of Cocoa Petes Chocolate Adventures, a premium chocolate company
founded by the creator of Petes Wicked Ale. In February, 2001, he co-founded
Plan B, a consumer marketing consultancy and outsourced marketing department
and was its Managing Partner from February, 2001 to July, 2002. From
January, 1999 to February, 2000, Mr. Barnum was Vice President/General
Manager  International for eBay Inc, an online auction company. From June,
1997 to September, 1998, Mr. Barnum served as President and Chief Operating Officer
of Petes Brewing Company, formerly the nations second largest brewer of
craft beers. His beer background also includes four years with Miller Brewing
Company (Miller), where he held several senior level marketing management appointments
and where he ultimately launched and became General Manager of Millers
specialty beer division. Prior to Miller, Mr. Barnum spent eight years in
brand management with PepsiCo Inc., a food and beverage company, in its
soft drink and snack divisions, both domestically and internationally.
Mr. Barnum earned an MBA from Columbia University and a Bachelors of Business
Administration Degree from Pacific Lutheran University. Kurt Dammeier (46)  Director Mr. Dammeier has been a director since June 1999. Mr. Dammeier also served as our Chairman of
the Board from December 1999 until May 2001. Mr. Dammeier is a private investor and sole Manager of
Sugar Mountain Capital, LLC, a venture capital firm. Mr. Dammeier was President and Chief
Executive Officer of Quebecor Integrated Media, an information services company. Mr. Dammeier
earned a Bachelors Degree from Washington State University in 1982. Scott Svenson (39)  Director Mr. Svenson has
been a director since August 2001. Since January, 2002,
Mr. Svenson has been Chairman and
Managing Partner of The Sienna Group, a private investment group based in Seattle and London.
From February 1999 to October 1999, Mr. Svenson was President of Starbucks Europe, a retail coffee company, during
which time he authored its European Strategic Plan and from May, 1998
to February 1999, was President of Starbucks UK. In 1994 Mr. Svenson co-founded Seattle Coffee
Company, the first gourmet coffee retailer and wholesaler in the UK, which he built to over 70
locations before selling the company to Starbucks in early 1998. Prior to this, Mr. Svenson served
as Deputy Chief Executive of CrestaCare plc, the third largest
long-term healthcare provider in the UK, and as an advisor to high growth, middle market
companies with Apax Partners and Drexel Burnham Lambert. Mr. Svenson earned a Bachelors Degree from
Harvard University. John Lennon (50)  President and Chief Executive Officer, Director Mr. Lennon
has been our President and Chief Executive Officer since
August 2004. From November, 2000 to December 2003, Mr. Lennon
was President and Chief Executive Officer of Becks North America, a $150 million division of
Interbrew, where he had responsibility for the United States, Canada and the Caribbean. Mr. Lennon
has over twenty years experience as a senior executive in marketing, sales and general management,
including ten years leading and managing businesses within the branded consumer goods industry. In
addition to Mr. Lennons work with Becks, he has held senior positions with Diageo, Guinness,
FEMSA, Grand Metropolitan and Nestle. He earned an MBA from Syracuse University and a Bachelors
Degree from the State University of New York. Jim Hilger (43)  Vice President  Finance, Chief Financial Officer and Secretary Mr. Hilger has been our Vice President  Finance, Chief Financial Officer and Secretary since
September 2003. From May, 2000 to July 2003, Mr. Hilger was Chief Executive Officer of WorldCatch, Inc., a Seattle,
Washington based seafood importing company which developed e-commerce solutions for the seafood
industry. As Chief Executive Officer of WorldCatch, Inc., Mr. Hilger had primary responsibility for
all financial and operational aspects of the company, which serviced large retailers, food service
distributors and seafood processing companies. Mr. Hilger also held Chief Financial Officer
positions with WorldCatch, American Gem Seafoods, The Albert Fisher Group, and
Profish International. Mr. Hilger earned an MBA from Pacific Lutheran University and a
Bachelors Degree from Gonzaga University. He is a registered CPA in the state of Washington. 3




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Gary McGrath (45)  Vice President  Sales Mr. McGrath
was appointed as Vice President  Sales in November 1999.
Mr. McGrath has over 20 years of experience in the alcohol and non-alcohol beverage industry. From 1994 to 1999, he held
the position of General Manager for Millers northwest region, responsible for growing sales,
market share and profit in a seven-state area. Also at Miller, Mr. McGrath worked as Director of
National Accounts, accountable for setting strategy and developing sales in the convenience and
mass merchandise channels. Prior to Miller, he held numerous sales and operating positions with
Pepsi Cola USA, 7UP and Oscar Mayer. Mr. McGrath earned his Graduate Degree from Harvard University
and a Bachelors Degree from Fredonia State University in New York. Patrick Coll (42)  Vice President  Alehouse Operations Mr. Coll has been Vice President  Alehouse Operations since September 2002. Mr. Coll is
responsible for directing the operational performance of the five existing alehouses as well as
successfully opening and directing additional sites as they are developed. Mr. Coll has over 15
years of experience in the restaurant industry ranging from Chef to Opening Project Manager. Most
recently, he held the position of Managing Partner with Essential Food Group from 2001 to 2002, a
restaurant consulting company and Director of Food Service Operations for the Old Navy Division of
Gap Inc, from 1998 to 2001. Prior to Gap Inc., Mr. Coll was with the Real Restaurant Group in
Sausalito, California, responsible for the successful development and opening of restaurant
concepts. Mark House (46)  Vice President  Brewery Operations Mr. House has been Vice President  Brewery Operations since July 2001. Mr. House is
responsible for directing the performance of the five existing breweries as well as purchasing,
transportation, product development, forecasting, and facility issues. Mr. House had been Director
of Corporate Operations since 1999, responsible for quality assurance, product development,
forecasting and distribution. He joined the Company in 1996 as Manager of Distribution/Production.
Prior to joining the Company, Mr. House had 14 years of brewing industry experience with the G.
Heileman Brewing Co. (Heileman). As Distribution Manager for Heileman, House was responsible for
warehousing/distribution, production planning, and customer service for both the Rainier Brewery in
Seattle, Washington and Henry Weinhards Brewery in Portland, Oregon. Mr. House earned a Bachelors
Degree from Washington State University. Independence of the Board of Directors Based on its review of the relationships between the Company and each of its directors, the
Board of Directors has determined that all of the directors, other than Mr. Lennon, our Chief
Executive Officer, and Mr. Hancock, our former Chief Executive Officer, are independent within the
meaning of Nasdaq Marketplace Rule 4200. Board Attendance The Board of Directors met nine times during 2004. Each of the Companys current directors
attended at least 75% of the aggregate number of Board meetings and Board committee meetings of
which he was a member. The Company does not have a specific policy regarding director attendance at the annual
meeting of shareholders; however, all directors are encouraged to attend if available. Messrs.
Hancock, Svenson, Dammeier and Ms. Mootz were present at the 2004 annual meeting. Committees of the Board of Directors Audit Committee The Audit Committee, currently comprised of Messrs. Svenson and Barnum, recommends the
selections of the Companys independent auditors and consults with the independent auditors on the
Companys internal accounting controls. Each current member of the Audit Committee is independent
within the meaning of Nasdaq Marketplace Rule 4200 and financially sophisticated under applicable
Nasdaq rules. The Board of Directors has determined that Mr. Svenson is an audit committee
financial expert, within the meaning of applicable Securities and Exchange Commission rules. On
December 15, 2004, we notified The Nasdaq Stock Market, Inc. (Nasdaq) that a member of our Audit
Committee, Ms. Nancy Mootz, had unexpectedly passed away, and that as a result of Ms. Mootzs
death, we are not in compliance with the audit committee composition requirements set forth in Rule
4350(d)(2)(A) of Nasdaqs Marketplace Rules, which requires a listed issuer to have at least three
independent members on its audit committee. The Companys board is considering its options
regarding this vacancy and understands that, pursuant to Nasdaq Rule 4350(d)(4)(B), the
vacancy must be filled by the date of the Companys next annual meeting. The Audit Committee met
four times during 2004. 4




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Compensation Committee The Compensation Committee, currently comprised of Messrs. Barnum and Dammeier, recommends to the
Board salaries and bonuses for the Companys executive officers and administers the Companys 2004
Equity Incentive Plan. The Board of Directors has determined that Messrs. Barnum and Dammeier are
independent within the meaning of Nasdaq Marketplace Rule 4200. The Compensation Committee met two
times in 2004. Code of Ethics and Code of Conduct We have adopted a Code of Ethics that applies to our Chief Executive Officer, Chief Financial
Officer, Controller  Chief Accounting Officer and persons performing similar functions. We have
also adopted a Code of Conduct applicable to all employees, officers and directors. These codes
are posted on our website at http://www.pyramidbrew.com/about/investor.php. We intend to satisfy
the disclosure requirements under Item 5.05 of Form 8-K regarding any amendment to or waiver of the
Code of Ethics with respect to the covered persons by posting such information on our website. Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Exchange Act requires reports relating to the stock ownership of the
Companys directors, executive officers and beneficial owners of more than 10% of any equity
security of the Company to be filed with the SEC. Based solely on its review of copies of these
reports and representations of such reporting persons, the Company believes that the required
Section 16(a) reports during fiscal 2004 for our directors, executive officers and 10% of more
beneficial holders were timely filed, except for a late Form 4
for Nancy Mootz with respect to one transaction. 
 Item 11  Executive Compensation Director Compensation Each non-employee director receives a fee of $1,500 for each Board meeting attended, $750 for
each Audit Committee meeting attended and $500 for all other Committee meetings attended. In
addition, non-employee directors receive a $10,000 annual retainer, which the directors have the
choice to receive in our common stock or cash and the Chairman of the Board receives an additional
$10,000 annual retainer and all other committee chairman receive a $2,500 annual retainer. All
directors are reimbursed for out of pocket expenses for each Board meeting attended, and
non-employee directors also participate in the Non-Employee Directors Stock Option Plan (Director
Plan) and the Non-Employee Stock Compensation Plan. Employee directors are not compensated for
their duties as directors. The Director Plan provides for grants of stock options covering 5,000 shares of common stock
to be made automatically on the date of each annual meeting of shareholders to each of our
non-employee directors, so long as shares of common stock remain available under the Directors
Plan. The exercise price under each option is the fair market value of the common stock on the date
of grant. Each option expires ten years after the date of grant or one year after the death of the
recipient director. A total of 250,000 shares of Common Stock are reserved for future grants of
options under the Directors Plan. During 2004, 20,000 options were granted under the Directors
Plan: 5,000 shares each to Messrs. Barnum, Dammeier, Svenson and Ms. Mootz. The Director Compensation Plan provides for each non-employee Director of the Company annual
compensation of $10,000 payable in shares of the Companys common stock valued at the last sale
price of the stock on the Nasdaq Stock Market on the date of the annual meeting for which the
compensation is payable or in cash at each directors discretion. As of March 31, 2005, 14,982
shares had been issued under this plan. Summary of Cash and
Certain Other Executive Compensation Compensation Summary.The following table summarizes the annual compensation for services
rendered during 2004, 2003, and 2002 for the Companys Chief Executive Officer and its other
executive officers whose salary and bonus exceeded $100,000 in 2004 (Named Executive Officers). 5




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SUMMARY COMPENSATION TABLE Long-TermAnnual Compensation
    
    
    CompensationSecuritiesOther Annual
    
    
    Underlying
    
    
    All OtherName and Principal Position
    
    Year
    
    
    Salary ($)
    
    
    Bonus ($)
    
    
    Compensation ($)
    
    
    Options (#)
    
    
    CompensationJohn Lennon
(1)
    
    
    2004
    
    
    
    93,000
    
    
    
    0
    
    
    
    0
    
    
    $
    420,000
    (2)
    
    
    2,000
    (3)President & Chief Executive
OfficerJim Hilger (4)
    
    
    2004
    
    
    
    145,000
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    6,000
    (5)Vice President, Chief Financial
    
    
    2003
    
    
    
    38,000
    
    
    
    0
    
    
    
    0
    
    
    
    120,000
    
    
    
    0Officer and SecretaryPatrick Coll
(6)
    
    
    2004
    
    
    
    125,000
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    5,000
    (7)Vice President, Alehouse
    
    
    2003
    
    
    
    127,000
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Operations
    
    
    2002
    
    
    
    31,000
    
    
    
    7,000
    
    
    
    0
    
    
    
    100,000
    
    
    
    0Mark House
    
    
    2004
    
    
    
    120,000
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    5,000
    (8)Vice President, Brewery
    
    
    2003
    
    
    
    116,000
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Operations
    
    
    2002
    
    
    
    119,000
    
    
    
    31,000
    
    
    
    0
    
    
    
    0
    
    
    
    1,000Gary McGrath
    
    
    2004
    
    
    
    149,000
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    10,000
    (9)Vice President, Sales
    
    
    2003
    
    
    
    150,000
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    4,0002002
    
    
    
    156,000
    
    
    
    35,000
    
    
    
    0
    
    
    
    5,000
    
    
    
    3,000
   (1)
    
    Mr. Lennon has been our President and Chief Executive
Officer since August 2004.(2)
    
    This amount represents 175,000 shares of common stock that will be
issued upon the completion of continuous service requirements pursuant to the terms of
Mr. Lennons employment agreement with the Company entered into on July 16,
2004, valued
based on a value of $2.40 per share, the closing price for a share of the Companys common
stock on that date. Under his employment agreement, Mr. Lennon will be issued 35,000 shares
of restricted stock on each of January 1, 2006, 2007, 2008, 2009 and 2010 based on
Mr. Lennons continuous services to the Company through each such date. The
restricted stock issued on each such date will be subject to a lapsing repurchase
right in favor of the company that will lapse with respect to 1/3 of the shares issued
on each such date on each of the first three anniversaries of the date the shares
were issued. If Mr. Lennons employment is terminated in certain circumstances during
2005, Mr. Lennon will be issued the shares that he would have been entitled to
receive pursuant to his employment agreement on January 1, 2006. If Mr. Lennons
employment is terminated in certain circumstances during any other year, he will
receive a prorated portion of the relevant annual award as of the date his employment is terminated.
Under Mr. Lennons employment agreement, he will also receive up to
175,000 additional shares of restricted stock upon the achievement of certain
performance goals as described under the Long Term Incentive Plan disclosure below.
As of December 31, 2004, Mr. Lennon did not hold any shares of restricted stock.(3)
    
    Consists of $2,000 in a car allowance.(4)
    
    Mr. Hilger has been our Vice
President  Finance, Chief Financial Officer and
Secretary since September 2003.(5)
    
    Consists of $1,000 in contributions made on
the officers behalf to his 401(k) plan and a car allowance of $5,000.(6)
    
    Mr. Coll has been Vice President  Alehouse
Operations since September 2002.(7)
    
    Consists of $5,000 in a car allowance.(8)
    
    Consists of $5,000 in a car allowance.(9)
    
    Consists of $4,000 in contributions made on
the officers behalf to his 401(k) plan and a car allowance of $6,000. Option Exercises and Year End Holdings The following table sets forth information concerning the number and value of options held by
the Named Executive Officers on December 31, 2004. AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES Number of Securities
    
    
    Value of Unexercised In-the-Shares
    
    
    
    
    
    
    Underlying Unexercised
    
    
    Money Options at YearAcquired
    
    
    Value
    
    
    Options at Year End
    
    
    End(5)Name
    
    on Exercise
    
    
    Realized
    
    
    Exercisable
    
    
    Unexercisable
    
    
    Exercisable
    
    
    UnexercisableJohn Lennon
    
    
    0
    
    
    
    0
    
    
    
    
    
    
    
    350,000
    
    
    $
    
    
    
    $
    Jim Hilger (1)
    
    
    0
    
    
    
    0
    
    
    
    47,000
    
    
    
    73,000
    
    
    
    
    
    
    
    Mark House (2)
    
    
    0
    
    
    
    0
    
    
    
    110,000
    
    
    
    
    
    
    
    6,000
    
    
    
    Gary McGrath (3)
    
    
    0
    
    
    
    0
    
    
    
    164,000
    
    
    
    7,000
    
    
    
    16,000
    
    
    
    Patrick Coll (4)
    
    
    0
    
    
    
    0
    
    
    
    79,000
    
    
    
    21,000
    
    
    
    
    
    
    
    
   (1)
    
    The weighted-average exercise price of these options is $2.96 per share of common stock.(2)
    
    The weighted-average exercise price of these options is $2.53 per share of common stock.(3)
    
    The weighted-average exercise price of these options is $2.00 per share of common stock.(4)
    
    The weighted-average exercise price of these options is $2.19 per share of common stock.(5)
    
    Based on the fair market value on December 31, 2004 $2.10 and the exercise price.


LONG-TERM INCENTIVE
PLANS-AWARDS IN LAST FISCAL YEAR

The following table
sets forth information with respect to restricted stock that will be issued to Mr. Lennon
pursuant to his employment agreement upon the achievement of certain performance goals.

Name
    

Numberof
Shares
    
    

Performance
or Other Period UntilMaturation or Payout
    
    

Estimated
Future PayoutsUnder Non-Stock Price-Based
PlansTarget(100%)John
Lennon(1)
    
    
    175,000
    
    
    
    2006-2010
    
    
    
    175,000


|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) |  | Pursuant to the terms of Mr. Lennons employment agreement with the
Company entered into on July 16, 2004, Mr. Lennon will be issued 35,000 shares of
restricted stock on each of January 1, 2006, 2007, 2008, 2009 and 2010 if the Company
has achieved certain performance goals for the year ending immediately prior to each
such date. The restricted stock issued on each such date upon the achievement of the
specified performance goals will be subject to a lapsing repurchase right in favor of
the company that will lapse with respect to 1/3 of the shares issued on each such date
on each of the first three anniversaries of the date the shares were issued. If
Mr. Lennons employment is terminated under certain circumstances pursuant to his
employment agreement during 2005, he will be issued the shares that he would have
been entitled to receive on January 1, 2006 as if the applicable performance goal
had been met. If Mr. Lennons employment is terminated under certain circumstances
pursuant to his employment agreement during any other year, he will be issued shares
representing a prorated portion of the relevant annual performance award as if the
relevant annual performance goal had been reached, prorated to the date his employment
is terminated and granted as of the date his employment is terminated. Under
Mr. Lennons employment agreement, he will also receive up to 175,000 additional
shares of restricted stock upon the completion of continuous service with the Company
as described in the Summary Compensation Table disclosure above.

Employment Contracts, Termination of Employment and Change of Control Agreements

The
Company entered into an employment agreement with Mr. Lennon
dated effective July 16, 2004, whereby
he serves as a Director and Chief Executive Officer of the Company.
Mr. Lennons employment agreement provides an
annual base salary of $250,000 plus a car allowance. Mr. Lennon also may receive a personal
performance bonus in accordance with the Officer Incentive Plan in effect. Mr. Lennon was also provided a relocation budget
of $100,000 to cover relocation expenses. If Mr. Lennons employment is terminated without cause,
he will receive his annual base salary for a period of one year following the date of such
termination.

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In addition Mr. Lennon
will receive restricted stock awards for up to 350,000 shares of the Company stock pursuant
to the terms of his employment agreement. Mr. Lennon will be issued restricted stock awards
for 35,000 shares on each of January 1, 2006 and the next four anniversaries of that date. If
Mr. Lennons employment is terminated by the Company without cause or by Mr. Lennon
for good
reason, or as a result of Mr. Lennons death or disability, Mr. Lennon
will be issued a prorated
portion of the relevant annual restricted stock award as of the date his employment is
terminated. Mr. Lennon will be issued restricted stock awards for an additional
35,000 shares on each of January 1, 2006 and the next four anniversaries of that date
based on the Companys achievement of certain performance goals. If Mr. Lennons
employment
is terminated by the Company without cause or by Mr. Lennon for good reason, or as a result
of Mr. Lennons death or disability, Mr. Lennon will be issued a prorated
portion of the
relevant annual performance award as if the relevant annual performance goal had been
reached, prorated to the date his employment is terminated and granted as of the date
his employment is terminated: These restricted stock awards will be issued outside of the
Companys equity incentive plans, including the Companys 2004 Equity Incentive Plan
(the 2004 Plan), but subject to the terms and conditions of the Plan. The restricted
stock awards will be subject to a forfeiture restriction that will lapse on the first
anniversary of their respective dates of issuance. In addition, the forfeiture restriction
will lapse on an accelerated basis under certain circumstances in the event of a company
transaction or change in control as provided in the Plan. On March 30, 2005 the Board approved an amendment to the Employment Agreement between John
Lennon and the Company dated July 15, 2004 to provide that if Mr. Lennons employment with the
Company is terminated without cause or for good reason during 2005, Mr. Lennon will receive the
full amount of the restricted stock awards that would otherwise be made on January 1, 2006 as if
the conditions to such awards had been satisfied, and such awards will be fully vested. We entered into an employment agreement with Mr. McGrath on October 25, 1999. The agreement
provides for a base compensation plus quarterly and annual bonuses based on the Company and Mr.
McGrath achieving certain performance targets set by the Chief Executive Officer. The total amount
of these annual bonuses can total up to 30% of Mr. McGraths base compensation. If Mr. McGrath is
terminated without cause (as defined in the agreement), he is entitled to three months base salary
plus a pro rata portion of any incentive bonuses earned during the year of termination. Under the 2004 Plan, to
maintain all of the participants rights in the event of a company transaction that is not a
change in control or a related party transaction (as those terms are defined in the 2004 Plan),
unless the compensation committee determines otherwise at the time of grant with respect to a
 particular award or elects to cash out awards: 
    
    all outstanding awards become fully and immediately exercisable,
and any restrictions or forfeiture provisions lapse, immediately prior to the company
transaction, unless such awards are converted, assumed, or replaced by the
successor company; and
    
    performance awards earned and outstanding become payable in full at
target levels and deferrals or other restrictions not waived by the compensation
committee shall remain in effect. In addition, under the
2004 Plan, to maintain all of the participants rights in the event of a change
in control, unless the compensation committee determines otherwise with respect to
a particular award: 
    
    any options and stock appreciation rights shall become
fully exercisable and vested to the full extent of the original grant;
    
    any restrictions and deferral limitations applicable to any restricted
stock or stock units shall lapse;
    
    all performance shares and performance units shall be
considered to be earned and payable in full at target levels, and any
deferral or other restriction shall lapse and such performance stock and
performance units shall be immediately settled or distributed;
    
    any restrictions and deferral limitations and other conditions applicable
to any other awards shall lapse, and such other awards shall become free of all restrictions,
limitations or conditions and become fully vested and transferable to the full extent of
the original grant; and
    
    the compensation committee can provide a cash-out right for
awards in connection with a change in control. If certain corporate
transactions occur (such as a merger, consolidation or acquisition by another corporation
of all or substantially all of our assets), each outstanding option to purchase shares
under the Employee Stock Purchase Plan will be assumed or an equivalent option substituted
by a successor company or its parent. If the successor company refuses to assume or
substitute for the option, the offering period during which a participant may purchase
stock will be shortened to a specified date before the proposed transaction. In the event
of a proposed liquidation or dissolution of the Company, the offering period during which
a participant may purchase stock will be shortened to a specified date before the date of
the proposed liquidation or dissolution. 
 Item 12  Security Ownership of Certain Beneficial Owners and Management Security Ownership of Certain Beneficial Owners and Management The following table sets forth certain information regarding the beneficial ownership of our
common stock as of March 18, 2005, for (i) each person known to the Company to own beneficially
more than 5% of the common stock, (ii) each of the Companys directors and Named Executive
Officers, and (iii) all of the Companys executive officers and directors as a group. Except as
otherwise noted, the named beneficial owner has sole voting and investment power. Except as
otherwise noted, the address of the named shareholder is c/o Pyramid Breweries Inc., 91 South Royal
Brougham Way, Seattle, Washington 98134. Shares of CommonStock BeneficiallyOwnedName
    
    Number (1)
    
    
    PercentKurt Dammeier (2)
    
    
    1,527,675
    
    
    
    17.4
    %George Hancock (3)
    
    
    1,112,178
    
    
    
    12.7Gary McGrath (4)
    
    
    159,354
    
    
    
    1.8Mark House (5)
    
    
    114,739
    
    
    
    1.3John Lennon
    
    
    0
    
    
    
    *Scott Svenson (6)
    
    
    73,542
    
    
    
    *Patrick Coll (7)
    
    
    79,000
    
    
    
    *Scott Barnum (8)
    
    
    45,322
    
    
    
    *James Hilger (9)
    
    
    52,000
    
    
    
    *All
executive officers and directors as a group (9 persons) (10)
    
    
    3,163,310
    
    
    
    36.0
    %
   *
    
    Less than 1%(1)
    
    Includes shares of common stock subject to stock options or other convertible securities that
are currently exercisable for or convertible into shares of our common stock, or that will be
exercisable for or convertible into shares of our common stock within 60 days after March 18,
2005. These securities are deemed to be outstanding and beneficially owned by the person
holding such stock options or other convertible securities for the purpose of computing the
percentage ownership of such person, but are not treated as outstanding for the purpose of
computing the percentage ownership of any other person.(2)
    
    Includes 15,000 shares issuable upon exercise of stock options that are currently exercisable
or will become exercisable within 60 days of March 18, 2005.(3)
    
    Includes 20,000 shares issuable upon exercise of stock options that are currently exercisable
or will become exercisable within 60 days of March 18, 2005.(4)
    
    Includes 158,000 shares issuable upon exercise of stock options that are currently
exercisable or will become exercisable within 60 days of March 18, 2005.(5)
    
    Includes 115,000 shares issuable upon exercise of stock options that are currently
exercisable or will become exercisable within 60 days of March 18, 2005.(6)
    
    Includes 15,000 shares issuable upon exercise of stock options that are currently exercisable
or will become exercisable within 60 days of March 18, 2005.(7)
    
    Includes 79,000 shares issuable upon exercise of stock options that are currently exercisable
or will become exercisable within 60 days of March 18, 2005. 7




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(8)
    
    Includes 20,000 shares issuable upon exercise of stock options that are currently exercisable
or will become exercisable within 60 days of March 18, 2005.(9)
    
    Includes 50,000 shares issuable upon exercise of stock options that are currently exercisable
or will become exercisable within 60 days of March 18, 2005.(10)
    
    Includes 463,000 shares issuable upon exercise of stock options that are currently
exercisable or will become exercisable within 60 days of March 18, 2005. Equity Compensation Plan Information The following table sets forth information regarding our common stock that may be issued upon
the exercise of options, warrants and other rights granted to employees, consultants or directors
under all of our existing equity compensation plans, as of December 31, 2004. Number of securities
    
    
    
    
    
    
    Number ofto be issued upon
    
    
    Weighted average
    
    
    securities remaining available forexercise of
    
    
    exercise price of
    
    
    future issuance under equityPlan Category
    
    outstanding options
    
    
    outstanding options
    
    
    compensation plansEquity compensation
plans approved by
security holders
    
    
    1,035,000
    
    
    $
    3.21
    
    
    
    1,822,248
    (1)(2)Equity compensation
plans not approved
by security holders
    
    
    0
    
    
    
    N/A
    
    
    
    0Total
    
    
    1,035,000
    
    
    $
    3.21
    
    
    
    1,822,248
   (1)
    
    Of these shares, 497,530 are available for purchase under the 2003 Employee Stock Purchase
Plan, 110,018 are available under the Amended and Restated Non-Employee Director Stock Option Plan,
135,000 are available under the Directors Compensation Plan and 1,079,700 are available under the
2004 Equity Incentive Plan as of December 31, 2004. Shares
available under the Directors Compensation Plan are payable in shares
of the Companys stock. Shares available for issuance under the
2004 Equity Incentive Plan may be issued as stock options, stock
awards, restricted stock units, rights to purchase stock, warrants,
stock appreciation rights or performance shares.(2)
    
    Pursuant to the Amended and Restated Non-Employee Director Stock Option Plan, each non-employee
director receives an automatic grant of a stock option to purchase 5,000 shares of Common Stock
automatically on the date of each annual shareholders meeting. 
 Item 13  Certain Relationships and Related Transactions During 2001, the Company granted Mr. Martin Kelly, our former Chief Executive Officer, 150,000
stock options at an exercise price of $2.125 pursuant to a stock purchase and restriction
agreement. On the date of the grant, the closing price of the Companys common stock on the Nasdaq
Stock Market was $2.62. Mr. Kelly agreed to immediately exercise those options and all other
options held by him. Concurrently, the Company agreed to accept a $787,000 full recourse note from
Mr. Kelly in payment of the exercise price for the 387,400 options to purchase shares of the
Companys common stock. In addition, the Company paid withholding taxes of $115,000 due on the
exercise of the options and received from Mr. Kelly an additional full recourse note for the amount
of the withholding taxes. On February 26, 2004 the Company announced that Mr. Kelly was stepping
down as Chief Executive Officer. Mr. Kellys last official day was March 10th, 2004.
Per the full recourse note agreement dated June 2001 with Mr. Kelly, upon termination he had the
right to require the Company to buy-back the 387,400 shares collateralizing the promissory notes
and pay any balances owed under the notes, with any net cash balance made payable to Mr. Kelly. On
April 9, 2004, Mr. Kelly exercised his right and the Company repurchased the 387,400 shares at a
five day average market price of $3.18 per share. The total sales value of $1,233,000 was applied
to the notes payable in the amount of $843,000, to interest balances in the amount of $25,000 and
the balance of $365,000 was paid to Mr. Kelly. The information provided in Item 11 under the headings Director Compensation and Employment
Contracts, Termination of Employment and Change of Control Agreements is hereby incorporated by
reference into this Item 13. 
 Item 14  Principal Accountant Fees and Services The aggregate fees billed by Moss Adams LLP and KPMG LLP for professional services rendered
for the audit of the Companys annual financial statements for the fiscal years ended December 31,
2004 and 2003 are as follows: Moss Adams LLP
    
    
    KPMG LLP (1)2004
    
    
    2003
    
    
    2004
    
    
    2003Audit Fees (2)
    
    $
    0
    
    
    $
    0
    
    
    $
    53,000
    
    
    $
    83,000Audit-Related Fees
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Tax Fees (3)
    
    
    0
    
    
    
    0
    
    
    
    21,000
    
    
    
    87,000All Other Fees (4)
    
    
    19,000
    
    
    
    0
    
    
    
    14,000
    
    
    
    7,000Total Fees
    
    $
    19,000
    
    
    $
    0
    
    
    $
    88,000
    
    
    $
    177,000
 8




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(1)
    
    Effective December 14, 2004, we dismissed KPMG LLP as our independent accountant and
engaged Moss Adams LLP to serve as our independent accountants for the fiscal year ended December
31, 2004.(2)
    
    Audit services billed in 2004 and 2003 consisted of the audit of our annual financial
statements, review of quarterly financial statements, consents and other services related to
filings with the SEC.(3)
    
    Tax services billed in 2004 and 2003 consisted of the following:  (a)
    Fees for tax compliance services totaled $21,000 in 2004 and $25,000 in 2003. Tax
compliance services are services rendered, based upon facts already in existence or
transactions already occurred, to document and compute amounts to be included in tax
filings. Such services consisted of federal and state income tax return assistance.(b)
    Fees for tax planning and advice services totaled $0 in 2004 and $5,000 in 2003.
Tax planning and advice are services rendered with respect to proposed transactions,
earnings and profit calculations for dividend classification or that structure a
transaction to obtain a particular tax result.(c)
    Fees for a review of Washington State sales and use tax payments made by the
Company dating back five years (1998  2002) for the purpose of identifying possible
overpayments and opportunities for refund, and included a review of the Washington state
law regarding the machinery and equipment exemption and the resale exemption as it
applies to Pyramid Breweries Inc. Findings-based fees for the application and receipt of
a refund related to the state tax exemptions totaled $57,000 in 2003. (4)
    
    All other fees billed by KPMG in 2004 and 2003 consisted of fees associate with due
diligence related to the acquisition of the Portland Brewing Company assets. All other fees paid to
Moss Adams in 2004 consisted of liabilities the Company assumed from Portland Brewing Company as
part of the asset acquisition. Audit Committee Pre-Approval Policy The Audit Committee has adopted a policy for the pre-approval of all audit and non-audit
services provided by our independent accountants. The policy is designed to ensure that the
provision of these services does not impair the accountants independence. Under the policy, any
services provided by the independent accountants, including audit, audit-related, tax and other
services, must be specifically pre-approved by the Audit Committee. The Audit Committee may delegate pre-approval authority to one or more of its members. The
member or members to whom such authority is delegated are required to report any pre-approval
decisions to the Audit Committee at its next scheduled meeting. The Audit Committee does not
delegate responsibilities to pre-approve services performed by the independent accountants to
management. For 2004, all audit and non-audit services provided by our independent accountants were
pre-approved. 
 PART IV 
 Item 15  Exhibits, Financial Statement Schedules, and Reports on Form 8-K Documents filed as part of this report are as follows:  1.
    Financial Statements: See listing of Financial Statements included as in Item 8 of Part II
of the 10-K/A filed April 11. 2005.2.
    Financial Statement Schedules: None. Exhibits: The required exhibits are included at the end of the Annual Report on Form 10-K and
are described in the Exhibit Index immediately preceding the first exhibit. 9




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SIGNATURES Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized. May 4, 2005 Pyramid Breweries Inc.
(Registrant)By:
    /s/ JAMES K. HILGERJames K. HilgerVice President and Chief Financial Officer 10




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EXHIBIT INDEX The following exhibits are filed as part of this Annual Report on Form 10-K or are
incorporated herein by reference. Where an exhibit is incorporated by reference, the number, which
follows the description of the exhibit, indicates the document to which cross reference is made.
See the end of this exhibit index for a listing of cross-referenced documents. EXHIBITNO.
    
    DESCRIPTION3.1
    
    Amended and Restated Articles of Incorporation of Registrant (9)3.2
    
    Form of Amended and Restated Bylaws of Registrant (9)3.3
    
    Rights Agreement between ChaseMellon Shareholder Services LLC and the Registrant dated June 14,
1999 (2)4.1(1)
    
    Form of Common Stock Certificate (1)4.4*
    
    Directors Compensation Plan (5)10.1
    
    Lease between Harold W. Hill and the Registrant dated April 13, 1994 (1)10.2
    
    Addendum of Lease between Harold W. Hill and the Registrant dated November 28, 1994 (1)10.3
    
    Second Addendum of Lease between 1201 Building L.L.C. and the Registrant dated June 26, 1995 (1)10.4
    
    Distribution Agreement between the Registrant and Western Washington Beverage dated August 24,
1995 (1)10.5*
    
    Registrants Non-Employee Director Stock Option Plan (1)10.6*
    
    Form of Non-Qualified Stock Option Agreement (1)10.7*
    
    Employment Agreement between the Registrant and Gary McGrath (3)10.8
    
    Assignment, Assumption and Consent Agreement between KLP Properties, Inc., Faultline Brewing
Company, Inc., and the Registrant dated October 26, 2001 (4)10.9
    
    Sublease between KLP Properties, Inc. and Faultline Brewing Company, Inc. dated April 3, 1996 (4)10.10
    
    Lease between Peter Vasconi and the James and Maura Belka Trust dated December 28, 1995 (4)10.11
    
    Commercial Lease between County Supervisors Association of California and Pyramid Breweries,
Inc. dated April 15, 2002 (6)10.12*
    
    Registrants 2003 Employee Stock Purchase Plan (6)10.13*
    
    Registrants Non-Employee Director Stock Compensation Plan. (6)10.14
    
    Asset Purchase Agreement between Pyramid Breweries Inc., Portland Brewing Company and PBC
Acquisition, LLC dated January 26, 2004 (7)10.15*
    
    Employment Agreement between Registrant and John Lennon +10.16
    
    Registrants 2004 Equity Incentive Plan (8)10.17
    
    Promissory Note from Pyramid Gilman Street Property, LLC to Morgan Stanley Capital Inc. +10.18
    
    Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing between
Pyramid Gilman Street Property, LLC and Morgan Stanley Mortgage Capital Inc +10.19
    
    Reserve and Security Agreement between Pyramid Gilman Street Property, LLC and Morgan Stanley
Mortgage Capital Inc. +10.20
    
    Guaranty of Recourse Obligations of Borrower from Pyramid Breweries, Inc. to Morgan Stanley
Mortgage Capital Inc. +10.21*
    
    Amended and Restated Employment Agreement between Registrant and Martin Kelly dated June 19,
2001 (10)10.22
    
    Commercial Lease between Esther Podlesak, Trustee of the John A. and Esther Podlesak 1990 Family
Trust and Pyramid Breweries California, Inc. dated November 1, 1995 (1)10.23
    
    Assignment, Assumption and Consent Agreement between Esther Podlesak, Trustee of the John A. and
Esther Podlesak 1990 Family Trust, Pyramid Breweries California, Inc. and Pyramid Breweries Inc.
dated November 17, 1995 (1)10.24*
    
    2005 Officer Incentive Compensation Plan Policy +10.25*
    
    Amendment No. 1 to Employment Agreement between Registrant and John Lennon +23.1
    
    Consent of Moss Adams LLP +23.2
    
    Consent of KPMG LLP +
 11




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EXHIBITNO.
    
    DESCRIPTION31.1
    
    Certification Pursuant to 18 U.S.C Section 1350, as Adopted Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002: John J. Lennon, President and Chief Executive Officer31.2
    
    Certification Pursuant to 18 U.S.C Section 1350, as Adopted Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002: James K. Hilger, Vice-President and Chief Financial Officer31.3
    
    Certification Pursuant to 18 U.S.C Section 1350, as Adopted Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002: Jason W. Rees, Controller and Chief Accounting Officer32.1
    
    Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002: John Lennon, President and Chief Executive Officer32.2
    
    Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002: James K. Hilger, Vice-President and Chief Financial Officer32.3
    
    Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002: Jason W. Rees, Controller and Chief Accounting Officer
   *
    
    Indicates management contract or compensatory plan or arrangement+
    
    Previously filed with the Registrants Annual Report on Form 10-K for the year ended
December 31, 2004, as amended April 11, 2005.(1)
    
    Incorporated by reference to the exhibits filed as part of the Registration Statement on
Form S-1 of Pyramid Breweries Inc. (File No. 33-97834).(2)
    
    Incorporated by reference to the Current Report on Form 8-K dated June 17, 1999.(3)
    
    Incorporated by reference to the Registrants Annual Report on Form 10-K for the year
ended December 31, 1999.(4)
    
    Incorporated by reference to the Registrants Annual Report on Form 10-K for the year
ended December 31, 2001.(5)
    
    Incorporated by reference to the Registrants Form S-8 dated June 26, 2002(6)
    
    Incorporated by reference to the Registrants Annual Report on Form 10-K for the year
ended December 31, 2002.(7)
    
    Incorporated by reference to the Current Report on Form 8-K January 28, 2004.(8)
    
    Incorporated by reference to the Registrants Form S-8 dated July 22, 2004.(9)
    
    Incorporated by reference to the Registrants Annual Report on Form 10-K/A for the year
ended December 31, 2003, as amended December 10, 2004.(10)
    
    Incorporated by reference to the Registrants Quarterly Report on Form 10-Q for the
quarter ended June 30, 2001. 12