SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-12
BRIAZZ, INC.
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(Name of Registrant as Specified in Its Charter)
N/A
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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[X] No fee required.
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(1) Title of each class of securities to which transaction applies:
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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[ ] Fee paid previously with preliminary materials.
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(1) Amount Previously Paid:
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(4) Date Filed:
[BRIAZZ LOGO]
BRIAZZ, INC.
3901 - 7TH AVENUE SOUTH, SUITE 200
SEATTLE, WA 98108
TELEPHONE: (206) 467-0994 FACSIMILE: (206) 467-1970
April 29, 2002
Dear Shareholder:
On behalf of BRIAZZ, Inc. (the "Company"), I cordially invite you to
attend the 2002 Annual Meeting of Shareholders (the "Annual Meeting") to be held
at 1:00 p.m. on Wednesday, June 5, 2002 at US Bank Centre, 1420 Fifth Avenue,
Fourth Floor, Seattle, Washington 98101.
At the Annual Meeting, the shareholders will be asked to:
1. elect five directors to the Company's Board of Directors (the
"Board"); and
2. vote on a proposal to amend the Company's 1996 Amended Stock Option
Plan; and
3. vote for ratification of the selection of PricewaterhouseCoopers LLP
as independent accountants for the Company.
The Board unanimously recommends that shareholders vote "FOR" these
three proposals.
Whether or not you plan to attend the Annual Meeting, we hope that you
will have your shares represented by marking, signing, dating and returning your
proxy card in the enclosed envelope as soon as possible. Your shares will be
voted in accordance with the instructions you have given in your proxy card. You
may, of course, attend the Annual Meeting and vote in person even if you have
previously returned your proxy card.
On behalf of the Board, I would like to express our appreciation for
your support of the Company. We look forward to seeing you at the meeting.
Sincerely,
/s/ Victor D. Alhadeff
Victor D. Alhadeff
Chief Executive Officer and Chairman of the Board
BRIAZZ, INC.
3901 - 7TH AVENUE SOUTH, SUITE 200
SEATTLE, WA 98108
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON WEDNESDAY, JUNE 5, 2002
To The Shareholders of BRIAZZ, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
BRIAZZ, Inc., a Washington corporation (the "Company"), will be held on
Wednesday, June 5, 2002 at 1:00 p.m local time, at US Bank Centre, 1420 Fifth
Avenue, Fourth Floor, Seattle, Washington 98101, for the following purposes,
which are more fully described in the accompanying Proxy Statement:
1. To elect five directors to the Company's Board of Directors to
serve until the 2003 Annual Meeting of Shareholders or until their
earlier retirement, resignation or removal, or the election of their
successors; and
2. To approve an amendment to the Company's 1996 Amended Stock Option
Plan; and
3. To approve a vote for ratification of the selection of
PricewaterhouseCoopers LLP as independent accountants for the
Company.
Only holders of record of the Company's Common Stock at the close of
business on April 17, 2002 are entitled to notice of, and to vote at, the
meeting or any adjournment or postponement thereof. A list of shareholders as of
that date will be available at the meeting and for ten (10) days prior to the
meeting at the Company's executive office located at 3901 - 7th Avenue South,
Suite 200, Seattle, Washington 98108.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Victor D. Alhadeff
Victor D. Alhadeff
Chief Executive Officer and Chairman
of the Board
Seattle, Washington
April 29, 2002
YOUR VOTE IS IMPORTANT!
ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. WHETHER
OR NOT YOU EXPECT TO ATTEND THE MEETING IN PERSON, WE URGE YOU TO COMPLETE,
SIGN, DATE AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE TO ENSURE YOUR
REPRESENTATION AT THE MEETING. A POSTAGE-PREPAID ENVELOPE IS ALSO ENCLOSED FOR
THAT PURPOSE. SENDING IN YOUR PROXY WILL NOT PREVENT YOU FROM VOTING YOUR SHARES
AT THE MEETING IF YOU DESIRE TO DO SO, AS YOUR PROXY IS REVOCABLE AT YOUR
OPTION.
BRIAZZ, INC.
3901 - 7TH AVENUE SOUTH, SUITE 200
SEATTLE, WA 98108
PROXY STATEMENT FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON WEDNESDAY, JUNE 5, 2002
ANNUAL MEETING AND PROXY SOLICITATION INFORMATION
GENERAL
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors (the "Board") of BRIAZZ, Inc., a Washington
corporation, for use at the Annual Meeting of Shareholders (the "Annual
Meeting") to be held at 1:00 p.m local time on Wednesday, June 5, 2002, at US
Bank Centre, 1420 Fifth Avenue, Fourth Floor, Seattle, Washington 98101, and at
any adjournment or postponement thereof, for the purposes set forth herein and
in the accompanying Notice of Annual Meeting of Shareholders. This Proxy
Statement, a proxy card and our Annual Report, which includes financial
statements for the fiscal year ended December 30, 2001, are being sent to all
shareholders of record as of the close of business on April 17, 2002, on or
about May 10, 2002. Although the Annual Report and this Proxy Statement are
being mailed together, the Annual Report is not part of this Proxy Statement.
All references to "BRIAZZ," "we," "us" and "our" in this Proxy Statement are
references to BRIAZZ, Inc.
QUORUM AND VOTING RIGHTS
At the close of business on April 17, 2002, there were 5,847,310 shares
of our common stock, no par value (the "Common Stock"), outstanding. Each share
is entitled to one vote. Only holders of record of the shares of Common Stock
outstanding at such time will be entitled to notice of and to vote at the
meeting. The presence at the meeting of at least a majority of such shares,
either in person or by proxy, shall constitute a quorum for the transaction of
business. Broker non-votes and shares held by persons abstaining will be counted
in determining whether a quorum is present. Proxies are solicited to give all
shareholders who are entitled to vote on the matters that come before the
meeting the opportunity to do so, whether or not they choose to attend the
meeting in person.
If you are a shareholder of record, you may vote by using the proxy
card enclosed with this Proxy Statement. When your proxy card is returned
properly signed, the shares represented will be voted according to your
directions. You can specify how you want your shares voted on each proposal by
marking the appropriate boxes on the proxy card. The proposals are identified by
number and a general description on the proxy card. Please review the voting
instructions on the proxy card and read the text of the proposals and the
position of the Board in the Proxy Statement prior to marking your vote. If your
proxy card is signed and returned without specifying a vote or an abstention on
any proposal, it will be voted according to the recommendations of the Board on
that proposal. The recommendation of the Board for each proposal is shown on the
proxy card. For the reasons stated in more detail later in the Proxy Statement,
the Board recommends a vote (i) "FOR" the individuals nominated to serve as
directors and (ii) "FOR" the proposal to amend our 1996 Amended Stock Option
Plan (iii) "FOR" the proposal for ratification of the selection of
PricewaterhouseCoopers LLP as independent accounts for the company.
It is not expected that any matters other than those referred to in
this Proxy Statement will be brought before the Annual Meeting. If any other
matters are properly presented for action, however, the
proxies named on the proxy card will be authorized by your proxy to vote on
those other matters in their discretion.
On each matter properly brought before the meeting, shareholders will
be entitled to one vote for each share of Common Stock held. Shareholders do not
have the right to cumulate their votes in the election of directors. Under
Washington law and our Amended and Restated Articles of Incorporation and
Bylaws, if a quorum exists at the meeting: (i) the nominees for directors who
receive the greatest number of votes cast in the election of directors will be
elected and (ii) the proposal to amend our 1996 Amended Stock Option Plan will
be approved if the number of votes cast in favor of the proposal exceeds the
number of votes cast against it and (iii) the proposal for ratification of the
selection of PricewaterhouseCoopers LLP as independent accountants for the
Company will be approved if the number of votes cast in favor of the proposal
exceeds the number of votes cast against it.
Shareholders may abstain from voting for the nominees for director, may
abstain from voting on the proposal to amend our 1996 Amended Stock Option Plan,
and may abstain from voting on the proposal for ratification of the selection of
PricewaterhouseCoopers LLP as independent accountants for the Company. In an
uncontested election of directors, any action other than a vote for a nominee
will have no effect, assuming the presence of a quorum. Abstention from voting
on the proposal to amend the 1996 Amended Stock Option Plan will have no effect,
as approval of this proposal is based solely on the number of votes actually
cast. Abstention from voting on the proposal for ratification of the selection
of PricewaterhouseCoopers LLP as independent accountants for the Company will
have no effect, as approval of this proposal is based solely on the number of
votes actually cast.
Brokerage firms and other intermediaries holding shares of Common Stock
in street name for customers are generally required to vote such shares in the
manner directed by their customers. In the absence of timely directions,
brokerage firms and other intermediaries will generally have discretion to vote
their customers' shares in the election of directors. The failure of a brokerage
firm or other intermediary to vote its customers' shares on the proposal for the
election of directors will have no effect on any proposal as approval of each
proposal is based solely on the number of votes actually cast. Under the rules
of the National Association of Securities Dealers, brokers holding stock for the
accounts of their clients may vote their clients' proxies in their own
discretion.
REVOCABILITY OF PROXIES
If you execute a proxy, you may revoke it by taking one of the
following three actions: (i) by giving written notice of the revocation to our
Secretary at our principal executive offices prior to the commencement of
shareholder voting at the Annual Meeting on Wednesday, June 5, 2002; (ii) by
executing a proxy with a later date and delivering it to our Secretary at our
principal executive offices prior to the commencement of shareholder voting at
the Annual Meeting on Wednesday, June 5, 2002; or (iii) by personally attending
and voting at the meeting.
Soliciation Of Proxies The proxy accompanying this Proxy Statement is solicited
by the Board of Directors. Proxies may be solicited by officers, directors and
regular supervisory and executive employees of Briazz, none of whom will receive
any additional compensation for their services. Briazz does not intend to engage
an outside proxy solicitation firm to render proxy solicitation services.
Solicitations of proxies may be made personally, or by mail, telephone,
telegraph or messenger. We will reimburse brokerage firms and other
intermediaries for their expenses in forwarding proxy materials to beneficial
owners of the Common Stock. All costs of solicitation of proxies will be paid by
Briazz.
SHAREHOLDER PROPOSALS FOR 2003 ANNUAL MEETING
An eligible shareholder who desires to have a qualified proposal
considered for inclusion in the proxy statement and form of proxy prepared in
connection with our 2003 Annual Meeting of Shareholders must deliver a copy of
the proposal to our Secretary at our principal executive offices, no
later than March 26, 2003, and satisfy certain other requirements set forth in
Rule 14a-8 under the Securities Exchange Act of 1934, as amended. A shareholder
must have been a record or beneficial owner of at least one percent of our
outstanding Common Stock, or shares of Common Stock having a market value of at
least $2,000, for a period of at least one year prior to submitting the
proposal, and the shareholder must continue to hold the shares through the date
on which the meeting is held.
A shareholder of record who intends to nominate a director for election
or submit a proposal at the 2003 Annual Meeting that is not eligible for
inclusion in our proxy statement must provide written notice to us, addressed to
our Secretary at our principal executive offices, not later than March 26, 2003.
Any shareholder proposal for next year's annual meeting submitted after March
26, 2003 will not be considered filed on a timely basis with us under SEC Rule
14a-4(c)(1). For proposals that are not timely filed, we retain discretion to
vote proxies we receive. For proposals that are timely filed, we retain
discretion to vote proxies we receive, provided that (1) we include in its proxy
statement advice on the nature of the proposal and how we intend to exercise our
voting discretion and (2) the proponent does not issue a proxy statement.
PROPOSAL 1 - ELECTION OF DIRECTORS
The directors to be elected at the Annual Meeting will serve on the
Board until the 2003 Annual Meeting of Shareholders or until their earlier
retirement, resignation or removal. Victor D. Alhadeff, C. William Vivian,
Richard Fersch, Dan Kourkoumelis, and Charles C. Matteson, Jr., who constitute
the current directors of BRIAZZ, have all been nominated by the Board for
election at the Annual Meeting. The accompanying proxy will be voted for these
nominees, except where you indicate otherwise or authority to so vote is
withheld. Should any of these individuals be unable to serve, the proxy will be
voted for such person(s) as is designated by the Board.
NOMINEES FOR DIRECTOR
Victor D. Alhadeff Age [55]
Mr.Alhadeff has served as our Chairman of the Board since founding
BRIAZZ in 1995, and as our Chief Executive Officer since 1996. Mr.
Alhadeff also served as our President from 1995 to 1996, as our
Secretary from 1995 to 2001 and as our Treasurer from 1996 to 2001. In
1983, Mr. Alhadeff founded Egghead, Inc., a specialty retailer of
personal computer software and accessories. Mr. Alhadeff served as
Chairman of Egghead until 1990, when he purchased Egghead University,
the software training division of Egghead. Egghead University was
renamed Catapult, and Mr. Alhadeff served as its Chairman and Chief
Executive Officer until 1993, when Catapult was purchased by IBM. Prior
to founding Egghead, Mr. Alhadeff founded Equities Northwest Inc.
(ENI), a corporation that formed, marketed and operated oil and gas
partnerships, in 1971, and served as its Chief Executive Officer until
the company was sold in 1983. While Mr. Alhadeff served at Egghead and
ENI, each company, and Mr. Alhadeff, along with other officers and
directors of each company, were the subject of shareholder lawsuits.
All shareholder lawsuits were settled or dismissed. From 1969 to 1971,
Mr. Alhadeff served as a First Lieutenant in the United States Army.
Mr. Alhadeff received a B.A. in Business Administration from the
University of Washington in 1968.
C. William Vivian Age [50]
Mr. Vivian joined us in January 1999 as President and Chief Operating
Officer. In January 1999, he also began serving as a director. From
1997 to 1998, Mr. Vivian was a Senior Vice President of the Cucina
Presto division of Cucina! Cucina!, a restaurant chain. From 1995 to
1997, Mr. Vivian was a Regional Vice President for Noah's Bagels, a
chain of retail bagel bakeries. From 1994 to 1995, Mr. Vivian was a
Zone Director of Operations for Taco Bell, a fast food restaurant
chain. During 1993, Mr. Vivian was Vice President of Operations for
Rally's, a drive-in restaurant chain. Mr. Vivian serves as a director
of Food Lifeline, an affiliate of America's Second Harvest, a
redistributor of food products. Mr. Vivian received a B.A. in Biology
from the University of California, San Diego in 1973 and a Master in
Hotel Administration from Cornell University in 1978.
Richard Fersch Age [52]
Mr. Fersch has served as one of our directors since October 1996. From
1993 to 2002, Mr. Fersch served as the President of Eddie Bauer, Inc.,
a retailer of private-label clothing, accessories and home furnishings.
Mr. Fersch joined Eddie Bauer in 1988 as Vice President of Stores and
was promoted to President in 1993.
Dan Kourkoumelis Age [51]
Mr. Kourkoumelis has served as one of our directors since April 1999.
From 1967 through 1998, Mr. Kourkoumelis was employed in various
positions by Quality Food Centers, Inc., a supermarket chain, and he
became one of its directors in April 1991. He was appointed Executive
Vice President of QFC in 1983, Chief Operating Officer in 1987 and
President in 1989 and served as Chief Executive Officer from 1996 to
September 1998. Mr. Kourkoumelis serves as a director of Expeditors
International of Washington, Inc., a logistics company, and The Great
Atlantic & Pacific Tea Company, Inc., a supermarket chain.
Charles C. Matteson, Jr. Age [59]
Mr. Matteson has served as one of our directors since March 2002. From
2001 to 2002, Mr. Matteson has served as the Managing Director and was
a Founding Partner of Spinnaker Capital Partners, LLC, a Private Equity
investment firm in partnership with European banking interests
specializing in Consumer, Franchisable and Food Technology Firms. From
1997 to 2000, Mr. Matteson was an Operations Director and Founding
Partner of Incontrol Systems, LLC, a retail-based healthcare company.
In 1987, Mr. Matteson founded Matteson Companies International, Inc.,
which became one of the largest franchisees for Nutri/System's
medically/professionally supervised weight loss clinics. Mr. Matteson
was the CEO for Matteson Companies International, Inc. from 1987
through 1997.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE "FOR" ALL THE NOMINEES NAMED
IN PROPOSAL 1.
BOARD OF DIRECTORS
Our business is managed under the direction of the Board. We have
determined that the Board shall be composed of eight directors. Five directors
currently serve on the Board, with three vacancies existing. We intend to
appoint individuals to fill the vacancies after we identify suitable candidates.
Each director is elected for a period of one year at the annual meeting of
shareholders and serves until the next annual meeting or until his or her
successor is duly elected and qualified. Proxies may not be voted for a greater
number of persons than the number of nominees named. The Board has
responsibility for establishing broad corporate policies and for our overall
performance. It is not, however, involved in operating details on a day-to-day
basis.
MEETINGS OF THE BOARD
The Board meets on a regularly scheduled basis during the year to
review significant developments affecting us and to act on matters requiring
Board approval. It also holds special meetings when an important matter requires
Board action between regularly scheduled meetings. The Board met five times
during our fiscal year ended December 30, 2001. No incumbent member attended
fewer than 75% of the total number of meetings (including consents) of the Board
and of any Board committees of which he or she was a member during that fiscal
year.
COMPENSATION OF DIRECTORS
Directors who are also our officers or employees do not receive any
compensation for their services as directors. Each non-employee director
receives reimbursement for reasonable expenses of attending board meetings. In
addition, we grant nonqualified stock options to each non-employee director.
During fiscal 2001, we granted options to acquire 10,000 shares of Common Stock
to each of the following directors: Mr. Fersch and Mr. Kourkoumelis. Such
options were fully vested upon grant and are exercisable for $4.70 per share.
COMMITTEES OF THE BOARD
Committees of the Board consist of an Audit Committee and a
Compensation Committee. The Audit Committee, currently composed of Mr. Fersch,
Kourkoumelis and Matteson, reviews, acts on and reports to the Board of
Directors with respect to various auditing and accounting matters, including the
recommendation of our independent auditors, the scope of the annual audits, the
fees to be paid to our auditors, the performance of our auditors, our accounting
practices, internal controls and conflict of interest transactions. The Audit
Committee met five times during the fiscal year ended December 30, 2001. The
Compensation Committee, currently composed of Mr. Fersch, Kourkoumelis, and
Matteson, recommends, reviews and approves the salaries, benefits and stock
incentive plans for our executive officers. The Compensation Committee also
administers our compensation plans. The Compensation Committee met five times
during the fiscal year ended December 30, 2001.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the Board assists the Board in executing its
responsibilities. The Audit Committee is responsible for, among other things,
monitoring the integrity and adequacy of our financial information, control
systems, and reporting practices, and for recommending to the Board for
ratification by the shareholders of the Audit Committee's selection of our
independent auditors.
The Audit Committee is composed of three (3) non-employee members, each
of whom is independent as defined by Rule 4200(a)(15) of the National
Association of Securities Dealers' listing standards. Our independent
accountants, PricewaterhouseCoopers LLP, are responsible for expressing an
opinion on the conformity of our audited financial statements to generally
accepted accounting principles. A copy of the Audit Committee Charter, which was
first adopted by the Board on January 24, 2001, is attached to this Proxy
Statement as Annex A.
The Audit Committee has reviewed and discussed the audited financial
statements with BRIAZZ's management. The Audit Committee has discussed with
PricewaterhouseCoopers LLP certain matters required under Statement on Auditing
Standard No. 61 and has received written disclosures and the letter required by
Independent Standards Board Standard No. 1 from the outside auditors and has
discussed with them their independence.
Audit Fees: The aggregate fees billed by PricewaterhouseCoopers LLP for
professional services rendered for the audit of our financial statements for the
fiscal year ended December 30, 2001, and for review of the financial statements
included in each of BRIAZZ's Form 10-Q's are $118,000.
Financial Information Systems Designs and Implementation Fees:
PricewaterhouseCoopers LLP did not bill for any professional services for
financial information systems design or implementation as described in Paragraph
(c)(4)(ii) or Rule 2-01 of Regulation S-X for the fiscal year ended December 30,
2001.
All Other Fees: Aggregate fees billed for all other services rendered
by PricewaterhouseCoopers LLP, other than the services covered in the two
previous paragraphs, for the fiscal year ended December 30, 2001 are $388,040.
The Audit Committee has considered whether the services provided by
PricewaterhouseCoopers LLP are compatible with maintaining the independence of
PricewaterhouseCoopers LLP and has concluded that the independence of
PricewaterhouseCoopers LLP is maintained and is not compromised by the services
provided.
Based on the review and discussion referred to above, the Audit
Committee recommended to the Board, and the Board approved, that the audited
financial statements be included in our Annual Report on Form 10-K for the
fiscal year ended December 30, 2001, for filing with the SEC.
Respectfully submitted, Audit Committee
Richard Fersch
April 29, 2002 Dan Kourkemelis
Charles Matteson, Jr.
EXECUTIVE OFFICERS AND KEY EMPLOYEES
The following table sets forth information regarding our executive
officers and other key personnel as of April 17, 2002.
NAME AGE POSITION
---- --- --------
Victor D. Alhadeff [55] Chief Executive Officer and Chairman of the Board
C. William Vivian [50] President, Chief Operating Officer and Director
Tracy Warner [39] Vice President Finance, Chief Financial Officer, Treasurer
and Secretary
Nancy Lazara [46] Vice President Food
Joel Sjostrom [41] Vice President Retail Operations
J. Montgomery Chellis [37] Vice President Branded Sales
Victor D. Alhadeff, Chief Executive Officer and Chairman of the Board.
See "Nominees for Director."
C. William Vivian, President and Chief Operating Officer. See "Nominees
for Director."
Tracy L. Warner, Vice President Finance, Chief Financial Officer,
Treasurer and Secretary. Ms. Warner has served as our Vice President Finance
since August 1999, as our Chief Financial Officer since August 2000 and as our
Treasurer and Secretary since January 2001. From June 1999 to August 1999,
Ms. Warner served as our Controller. Prior to joining BRIAZZ, Ms. Warner served
as Corporate Controller for The Armco Group, a property management company, from
1998 to 1999; Director of Finance/Controller for Oberto Sausage Company, a
manufacturer of meat snacks, from 1997 to 1998; Assistant Treasurer/Controller
for Philip Services, an international recycling and disposal company, from 1993
to 1997; and Senior Auditor for Coopers & Lybrand, a public accounting firm,
from 1987 to 1993. Ms. Warner received a B.A. in Business Economics from the
University of California, Santa Barbara in 1987.
Nancy Lazara, Vice President Food. Ms. Lazara has served as our Vice
President Food since joining BRIAZZ in 1998. Ms. Lazara is responsible for menu
strategy, product development, quality assurance and product purchasing. Prior
to joining us, Ms. Lazara was Vice President of Product Development for H-E-B
Grocery Company, a San Antonio-based supermarket chain, from 1989 to 1996; and
Vice President, Food Services for Larry's Markets, a Seattle-based supermarket
chain, from 1984 to 1989. Ms. Lazara received a Grande Diplome from Le Cordon
Bleu Cooking School in France in 1975.
Joel Sjostrom, Vice President Retail Operations. Mr. Sjostrom has
served as our Vice President Retail Operations since January 2000. Mr. Sjostrom
was previously our Regional Vice President, California from 1998 to January
2000, and our California Market Manager from 1997 to 1998. From 1986 to 1997,
Mr. Sjostrom served as a Regional Manager at Baker's Square, a restaurant chain.
Mr. Sjostrom received a B.A. in Marketing and Management from the University of
Minnesota in 1986.
J. Montgomery Chellis, Vice President Branded Sales. Mr. Chellis has
served as our Vice President Branded Sales since joining BRIAZZ in August of
2001. Since April 2001, Mr. Chellis has been the Regional Director West for the
newly formed Kraft/Nabisco organization. Prior to that, Mr. Chellis was with
Nabisco since 1996, where he was the Northwest Region Sales Manager. Mr. Chellis
received his degree his B.A. from Central Washington University in 1988.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
BRIAZZ's Compensation Committee is currently composed of Mr. Fersch,
Kourkoumelis, and Matteson. Paul Vigano served as a member of our Compensation
Committee until he resigned as a director in December 2001. No member of the
Compensation Committee is an officer or employee of BRIAZZ. No executive officer
of BRIAZZ serves as a member of the board or compensation committee of any
entity that has one or more executive officers serving as a member of our Board
or Compensation Committee. In addition, no interlocking relationship exists
between any member of our Compensation Committee and any member of the
compensation committee of any other company, nor has any such interlocking
relationship existed in the past.
VOTING SECURITIES AND PRINCIPAL HOLDERS
OWNERSHIP INFORMATION
The following table sets forth certain information known to BRIAZZ with
respect to the beneficial ownership of our Common Stock as of April 17, 2002, by
(i) each person known by us to be the beneficial owner of more than five percent
(5%) of the outstanding Common Stock, (ii) each of our directors, (iii) each of
our named executive officers, and (iv) all directors and officers as a group.
Except as otherwise indicated, we believe that the beneficial owners of the
Common Stock listed below, based on information furnished by such owners, have
sole investment and voting power with respect to such shares, subject to
community property laws where applicable.
DIRECTORS, NAMED EXECUTIVE OFFICERS NUMBER OF SHARES % OF TOTAL SHARES
AND 5% SHAREHOLDERS(2) BENEFICIALLY OWNED(1) OWNED
---------------------- --------------------- -------------------
Victor D. Alhadeff 878,973 (3) 15.4%
Richard Fersch 21,726 (4) *
Dan Kourkoumelis 38,334 (5) *
C. William Vivian 41,195 (6) *
Charles C. Matteson, Jr. 0 *
Tracy L. Warner 10,500 (7) *
Nancy Lazara 18,764 (8) *
Joel Sjostrom 18,795 (9) *
J. Montgomery Chellis 0 *
All directors and executive officers (9 persons) 1,048,287 (10) 17.9%
Whitney Equity Partners, L.P. 836,021 (11) 14.3%
Jack Benaroya 676,152 (12) 11.6%
Alhadeff Limited Partnership II 473,807 (3) 8.1%
Howard Schultz 387,997 (13) 6.6%
* Represents beneficial ownership of less than one percent (1%) of the
Common Stock.
(1) Beneficial ownership is determined in accordance with the rules of the
SEC, based on factors including voting and investment power with
respect to shares. Common Stock subject to options and warrants
currently exercisable, or exercisable within 60 days after April 17,
2002, are deemed outstanding for computing the percentage ownership of
the person holding such options or warrants, but are not deemed
outstanding for computing the percentage ownership for any other
person. Applicable percentage ownership is based on the aggregate
Common Stock outstanding as of April 17, 2002, which was 5,847,310,
together with the applicable options and warrants of such shareholder.
(2) Unless otherwise indicated, the address of each beneficial owner is the
address of BRIAZZ.
(3) Represents, with respect to Mr. Alhadeff, 252,019 shares held directly,
101,430 shares issuable upon exercise of warrants exercisable at $5.74
per share, 71,717 shares issuable upon the exercise of stock options,
of which 33,039 are exercisable at $1.50 per share, 28,578 are
exercisable at $4.70 per share, 1,630 are exercisable at $6.00 per
share and 100 are exercisable at $1,632 per share, and 473,807 shares
held by Alhadeff Limited Partnership II, and represents with respect to
Alhadeff Limited Partnership II, such 473,807 shares.
(4) Represents 5,200 shares held directly, 1,599 shares issuable upon
exercise of warrants exercisable at $6.00 per share and 21,726 shares
issuable upon exercise of stock options, of which 1,667 are exercisable
at $1.50 per share, 10,000 are exercisable at $4.70 per share, 10,000
are exercisable at $6.00 per share, 34 are exercisable at $600.00 per
share and 25 are exercisable at $1,800.00 per share.
(5) Represents shares issuable upon exercise of stock options, of which
18,167 are exercisable at $1.50 per share, 10,000 are exercisable at
$4.70 per share, 10,000 are exercisable at $6.00 per share and 167 are
exercisable at $1,800.00 per share.
(6) Represents shares issuable upon exercise of stock options, of which
27,309 are exercisable at $1.50 per share, 12,663 are exercisable at
$4.70 per share, 1,087 are exercisable at $6.00 per share and 136 are
exercisable at $1,800.00 per share.
(7) Represents shares issuable upon exercise of stock options, of which
5,000 shares are exercisable at $1.50 per share, 4,964 are exercisable
at $4.70 per share and 536 are exercisable at $6.00 per share.
(8) Represents shares issuable upon exercise of stock options, of which
13,183 are exercisable at $1.50 per share, 18,764 are exercisable at
$4.70 per share, 539 are exercisable at $6.00 per share, 34 are
exercisable at $1,632.00 per share and 48 are exercisable at $1,800.00
per share.
(9) Represents 1,300 shares held directly and 17,495 shares issuable upon
exercise of stock options, of which 11,961 are exercisable at $1.50 per
share, 4,987 are exercisable at $4.70 per share, 513 are exercisable at
$6.00 per share, 5 are exercisable at $1,632.00 per share and 29 are
exercisable at $1,800.00 per share.
(10) Includes 802,001 shares subject to options exercisable within 60 days
of April 17, 2002.
(11) Represents shares beneficially owned by Whitney Equity Partners, L.P.
Represents 617,358 shares held directly, 196,971 shares issuable upon
exercise of warrants exercisable at $5.74 per share and 21,692 shares
issuable upon exercise of stock options held by Peter Castleman, a
Managing Director of Whitney & Co., of which 1,667 are exercisable at
$1.50 per share, 10,000 are exercisable at $4.70 per share, 10,000 are
exercisable at $6.00 per share and 25 are exercisable at $1,800.00 per
share. The name of the general partner of Whitney Equity Partners, L.P.
is J. H. Whitney Equity Partners, L.L.C., a Delaware limited liability
company, whose business address is 177 Broad Street, Stamford, CT
06901. The names and business address of the members of J. H. Whitney
Equity Partners, L.L.C. are as follows: Peter M. Castleman, Jeffrey R.
Jay, William Laverack, Jr., Daniel J. O'Brien and Michael R Stone, the
business address of each of whom is 177 Broad Street, Stamford, CT
06901.
(12) Represents 492,961 shares held directly and 183,191 shares issuable
upon exercise of warrants exercisable at $5.74 per share. The address
for Mr. Benaroya is c/o Benaroya Capital Company, L.L.C., 1001 Fourth
Avenue, Suite 4700, Seattle, Washington 98154.
(13) Represents 271,190 shares held directly, 104,470 shares issuable upon
exercise of warrants exercisable at $5.74 per share and 12,337 shares
issuable upon exercise of stock options, of which 1,667 are exercisable
at $1.50 per share, 10,000 are exercisable at $6.00 per share, 167 are
exercisable at $600.00 per share, 261 are exercisable at $1,632.00 per
share and 242 shares are exercisable at $3,900.00. The address for Mr.
Schultz is c/o Starbucks Corporation, 2401 Utah Avenue South, Seattle,
Washington 98134.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities and Exchange Act of 1934, as amended
(the "Exchange Act"), requires that our officers and directors, and persons who
own more than ten percent (10%) of a registered class of the Company's equity
securities, file reports of ownership and changes of ownership with the
Securities and Exchange Commission (the "SEC"). Officers, directors and greater
than ten percent (10%) shareholders are required by SEC regulation to furnish us
with copies of all such reports they file.
Based solely on our review of the copies of such reports received by
us, and on written representations by our officers and directors regarding their
compliance with the applicable reporting requirements under Section 16(a) of the
Exchange Act, we believe that, with respect to the fiscal year ended December
30, 2001, our officers and directors, and all of the persons known to us to own
more than ten percent (10%) of our Common Stock, filed all required reports on a
timely basis, except as follows:
Mr. Fersch filed one late Form 4 and Mr. Benaroya failed to file one Form 4 with
respect to the automatic conversion of preferred stock and preferred stock
warrants into common stock and common stock warrants pursuant to our initial
public offering.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
At fiscal year-end, Mr. Alhadeff, our Chief Executive Officer and
Chairman of the Board, was a co-obligor on our $2,000,000 operating line of
credit with U.S. Bank National Association. Mr. Alhadeff receives no
compensation from us for serving in this capacity. The line of credit currently
has no balance outstanding and expired April 15, 2002.
We are a party to a lease agreement dated November 6, 1998 with
Benaroya Capital Company, LLC, pursuant to which we have agreed to lease a 517
square foot retail space in Metropolitan Park West, 1100 Olive Way, Seattle,
Washington for the period from November 15, 1998 to May 31, 2003. Our monthly
rent is the lesser of $1,300 or 6% of our gross sales. During the fiscal year
ended December 30, 2001, we paid Benaroya Capital a total of $26,205 in
connection with our lease obligations. We anticipate that our future rent
obligations from December 31, 2001 to May 31, 2003 will be a maximum of $22,100
under the calculation described above. Benaroya Capital is controlled by Jack
Benaroya, one of our principal shareholders.
Starbucks Corporation currently supplies the coffee for our cafes.
During fiscal 2001, we purchased a total of $471,256 in coffee and
coffee-related supplies from Starbucks. Mr. Schultz, one of our principal
shareholders and a former director, is the Chairman and Chief Global Strategist
of Starbucks.
COMPENSATION AND BENEFITS
EXECUTIVE OFFICER COMPENSATION
The following table sets forth the compensation paid to our Chief
Executive Officer and four most highly compensated executive officers for the
fiscal years ended December 31, 2000 and December 30, 2001.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION SECURITIES
------------------------------ UNDERLYING
NAME AND PRINCIPAL POSITION SALARY BONUS OPTIONS
- --------------------------- ------ ----- -------
Victor D. Alhadeff 2001 $150,000 $0 122,833
Chief Executive Officer and 2000 150,000 0 12,500
Chairman of the Board
C. William Vivian 2001 209,999 0 129,998
President and Chief Operating 2000 194,369 0 8,334
Officer
Tracy L. Warner 2001 124,231 0 22,000
Vice President Finance, Chief 2000 106,923 0 10,000
Financial Officer, Treasurer and
Secretary
Nancy Lazara 2001 115,750 0 21,998
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION SECURITIES
------------------------------ UNDERLYING
NAME AND PRINCIPAL POSITION SALARY BONUS OPTIONS
- --------------------------- ------ ----- -------
Vice President Food 2000 112,223 0 5,000
Joel Sjostrom 2001 117,431 0 21,997
Vice President Retail Operations 2000 111,130 0 10,001
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information regarding stock
option grants to our Chief Executive Officer and four most highly compensated
executive officers during the year ended December 30, 2001. The potential
realizable value is calculated based on the assumption that the Common Stock
appreciates at the annual rate shown, compounded annually, from the date of
grant until the expiration of its term. These numbers are calculated based on
SEC requirements and do not reflect our projection or estimate of future stock
price growth. Potential realizable values are computed by:
- multiplying the number of shares of Common Stock subject to a
given option by the exercise price;
- assuming that the aggregate stock value derived from that
calculation compounds at the annual five percent (5%) or ten
percent (10%) rate shown in the table for the entire ten-year
term of the option; and
- subtracting from that result the aggregate option exercise
price.
OPTION GRANTS IN FISCAL 2001
INDIVIDUAL GRANTS
----------------------------------------------------------
POTENTIAL REALIZABLE VALUE
% OF TOTAL AT ASSUMED ANNUAL RATES OF
NUMBER OF OPTIONS STOCK PRICE APPRECIATION
SECURITIES GRANTED TO EXERCISE FOR OPTION TERM
UNDERLYING EMPLOYEES IN PRICE (PER -----------------------------
OPTIONS FISCAL YEAR SHARE) EXPIRATION
NAME GRANTED(1) (2) (3) DATE 5% 10%
- ------------------------- ----------- -------------- ---------- ---------- ------------ -----------
Victor D. Alhadeff 114,314 24.6% $4.70 June 7, 2011 $0 $0
6,519 1.4% $6.00 Jan. 24, 2011 0 0
2,000 0.4% $2.34 July 31, 2011 0 0
C. William Vivian 50,652 10.9% $4.70 June 7, 2011 0 0
4,346 0.9% $6.00 Jan. 24, 2011 0 0
75,000 16.1% $2.34 July 31, 2011 0 0
Tracy L. Warner 19,858 4.3% $4.70 June 7, 2011 0 0
2,142 0.5% $6.00 Jan. 24, 2011 0 0
Nancy Lazara 19,842 4.3% $4.70 June 7, 2011 0 0
2,156 0.5% $6.00 Jan. 24, 2011 0 0
Joel Sjostrom 19,948 4.3% $4.70 June 7, 2011 0 0
2,049 0.4% $6.00 Jan. 24, 2011 0 0
(1) All options vest as to 25% on each of the first four anniversaries of
the date of grant.
(2) During the fiscal year ended December 30, 2001, options to purchase
464,550 shares were issued to employees.
(3) The exercise price per share was equal to the fair market value of the
Common Stock on the date of grant as determined by the Board of
Directors.
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table sets forth for our Chief Executive Officer and four
most highly compensated executive officers the number of shares acquired upon
exercise of stock options during the year ended December 30, 2001 and the number
of shares subject to exercisable and unexercisable stock options held at
December 30, 2001.
AGGREGATED OPTION EXERCISES IN FISCAL 2001
AND YEAR-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS AT
AT DECEMBER 30, 2001 DECEMBER 30, 2001(1)
-------------------- --------------------
SHARES ACQUIRED VALUE
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- -------- ----------- ------------- ----------- -------------
Victor D. Alhadeff - - 41,509 160,491 - -
C. William Vivian - - 22,921 157,079 - -
Tracy L. Warner - - 10,000 37,000 - -
Nancy Lazara - - 10,438 31,562 - -
Joel Sjostrom - - 10,215 36,785 - -
(1) The closing price of the Common Stock on December 28, 2001, the last
trading day prior to December 30, 2001, was $0.89 per share. As of
December 30, 2001, no options were in-the-money.
EMPLOYMENT AGREEMENTS
Pursuant to our employment agreement with C. William Vivian, dated July
1999, Mr. Vivian has agreed to act as our President and Chief Operating Officer,
working primarily from our base of operations in Seattle, Washington and any
future base of operations located within 50 miles of Seattle, Washington.
Mr. Vivian's compensation under the agreement includes a base annual
salary of $140,000 beginning in January 1999, which was increased to $152,000
in 1999, to $200,000 in 2000, and to $210,000 in 2001, and which is subject to
annual review. Increases in Mr. Vivian's base salary may be made in our sole
discretion. Mr. Vivian is eligible to participate in an incentive bonus plan
adopted by the compensation committee, with an annual potential bonus of 30% of
Mr. Vivian's base salary, which was increased to 35% in the senior management
team annual incentive plan for fiscal 2000. Mr. Vivian is also eligible to
receive annual vacation leave, reimbursement of reasonable travel costs and use
of a company car, as further described in the agreement.
Mr. Vivian's employment agreement may be terminated by either party
without cause (as defined in the agreement). In the event that we terminate Mr.
Vivian's employment without cause, we agree to provide Mr. Vivian with monthly
separation payments equal to Mr. Vivian's base monthly salary, for a period of
12 months, subject to Mr. Vivian providing us with a waiver and release of all
claims.
We have entered into a non-competition agreement with our Chief
Executive Officer and Chairman of the Board, Victor D. Alhadeff, dated October
18, 1996. This agreement provides that during the term of his employment with
BRIAZZ and for two years thereafter, Mr. Alhadeff will not act as an
agent of, own (except for less than 5% of a competitor's equity interests) or
participate in the management of any of our competitors, without geographical
limitation, or induce any of our employees, consultants or agents to leave
BRIAZZ.
REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors recommends,
reviews and approves the salaries, benefits and stock incentive plans for our
executive officers, and for reviewing and approving compensation recommendations
made by the Chief Executive Officer for the other officers and key employees.
The Committee is also responsible for administering all of our compensation
plans.
BRIAZZ administers several incentive-based programs for our executive
officers and other employees.
- The Compensation Committee awards stock options to employees pursuant
to our 1996 Amended Stock Option Plan based upon the employee's
salary, level of responsibility and length of service. Senior
management-level employees, including our named executive officers,
are eligible to receive an initial grant of stock options on the
employee's hire date and performance-based annual grants as determined
on a case-by-case basis;
- The Compensation Committee administers annual cash incentive plans
that are targeted toward specific groups of employees, including
senior management, managers, supervisors, sales specialists and other
salaried employees. The 2001 bonus plan for eligible officers and
executives was based soley on Briazz exceeding the budgeted pre-tax
earnings. Eligible officers and executives could earn 30-35% of their
annual base salary if Briazz meets specific financial goals. None of
the eligible officers and executives received any compensation from
this plan since Briazz did not exceed it pre-tax budget . The 2002
bonus plan remains the same, except for those officers and executives
with operational responsibilities. The bonus plan for officers and
executives with operational responsibilities will be based on the
roll-up of their units ability to exceed pre-tax contributions and the
company exceeding pre-tax contributions;
- Eligible employees may also participate in our 2001 Employee Stock
Purchase Plan, which permits eligible employees to purchase Common
Stock through payroll deductions of up to 10% of their cash
compensation per year, during six month offering periods. The price of
Common Stock issued under the plan is the lesser of 85% of the fair
market value on the first day of the offering period and 85% of the
fair market value on the last day of the offering period.
Under the Omnibus Budget Reconciliation Act of 1993, the federal income
tax deduction for certain types of compensation paid to the chief executive
officer and four other most highly compensated executive officers of publicly
held companies is limited to $1 million per officer per fiscal year unless such
compensation meets certain requirements. The Committee is aware of this
limitation and believes no compensation paid by BRIAZZ during 2002 will exceed
the $1 million limitation.
Respectfully submitted, Compensation Committee
Richard Fersch
April 29, 2002 Dan Kourkoumelis
Charles Matteson, Jr.
PERFORMANCE GRAPH
The following chart presents a comparison of the cumulative total
return to shareholders since the date of BRIAZZ's initial public offering (May
2, 2001) of our Common Stock, the Nasdaq Composite Index, and the S&P Small Cap
Restaurant Index. The graph assumes an initial investment of $100 and
reinvestment of all dividends, if any. The stock performance shown on the graph
below is not necessarily indicative of future price performance.
[LINE GRAPH]
37018 37073 37164 37255
----- ----- ----- -----
Briazz 100 33.93939394 14.54545455 10.78787879
Nasdaq National Market Composite Index 100 98.82073084 67.97854034 89.63052941
S&P Small Cap Restaurant Index 100 93.44768718 93.75660515 120.5918218
PROPOSAL 2 - AMENDMENT OF THE 1996 AMENDED STOCK OPTION PLAN
The Board of Directors has approved and recommended that the
shareholders adopt an amendment to the BRIAZZ, Inc. 1996 Amended Stock Option
Plan to provide for the issuance of up to 1,165,000 shares of common stock
pursuant to the plan which is an increase of 165,000 shares. The following is a
summary of the material provisions of the 1996 Amended Stock Option Plan.
The 1996 Amended Stock Option Plan was initially adopted by our Board
of Directors and approved by our shareholders in December 1995 and was last
amended in January 2001. The plan currently provides for the issuance of up to
1,000,000 shares of common stock upon the exercise of options granted
thereunder, subject to adjustment for stock dividends, stock splits, reverse
stock splits and other similar changes in our capitalization.
Under the plan, stock options may be granted to employees, directors
and such other persons as the plan administrator may select. As of December 30,
2001, BRIAZZ had 452 employees and directors, each of whom was eligible to
receive stock options under the plan. The plan administrator has not determined
the number of stock options that will be granted to our directors, named
executive officers or other employees if the proposed amendment is approved or
the number of stock options that would have been granted to such persons during
fiscal 2001 had such amendment then been in effect.
We have implemented a stock option program under the terms of the plan
that we refer to as our "Fresh Options" program. The Fresh Options program
currently provides for all hourly employees to receive a one-time grant of
non-qualified stock options (within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended) after working 1,300 hours. The number of
shares covered by the option is based on the employee's wages. Additional
options may be granted to employees who remain employed for more than three
years. Fresh Options are granted two times per year, on May 1st and November
1st.
Management-level employees are eligible to receive an initial grant of
stock options at the next semi-annual grant date after the date of hire. The
number of shares covered by the option is based on the manager's salary level.
If an hourly employee is promoted to the management level, an option to purchase
additional shares is granted in an amount equal to that granted to a newly hired
manager.
Senior management-level employees are eligible to receive an initial
grant of stock options on the employee's hire date and performance-based annual
grants as determined on a case-by-case basis.
DIRECTORS ARE ELIGIBLE TO RECEIVE AN INITIAL GRANT OF NON-QUALIFIED
STOCK OPTIONS WHEN ELECTED OR APPOINTED TO THE BOARD.
On March 3, 1997, the Board of Directors authorized the compensation
committee to serve as the plan administrator. The exercise price per share for
options granted pursuant to the plan is the fair market value of the shares on
the date of grant, as determined by the plan administrator. Options typically
vest in equal annual installments over a four-year period. No options vest in
any year in which the optionee, if an employee, works less than a minimum of 500
hours.
With certain exceptions, each outstanding option terminates, to the
extent not previously exercised, upon the occurrence of the first of the
following events:
- the expiration of the term of the option, which is specified by the
plan administrator at the time
of grant (generally ten years; or, with respect to incentive stock
options granted to greater-than-ten-percent shareholders, a maximum of
five years);
- the date of an optionee's termination of employment or contractual
relationship with us for cause;
- the expiration of three months from the date of an optionee's
termination of employment or contractual relationship with us for any
reason other than cause, death or disability, unless, in the case of a
non-qualified stock option, extended by the plan administrator until a
date no later than the expiration date of the option; or
- the expiration of one year from the date of an optionee's cessation of
employment or contractual relationship with us by reason of death or
disability, unless, in the case of a non-qualified stock option, the
exercise period is extended by the plan administrator until a date not
later than the expiration date of the option.
Upon exercise, the exercise price may be paid in cash or by:
- with the approval of the plan administrator, delivering shares of
common stock previously held;
- having shares withheld or sold or margined from the number of shares to
be received; or
- complying with any other payment mechanisms the plan administrator may
approve.
The plan administrator may amend, modify or terminate the plan, or
modify or amend options granted under the plan, except that no amendment with
respect to an outstanding option that has the effect of reducing the holder's
benefits may be made over the objection of the holder (other than those
provisions triggering acceleration of vesting of outstanding options).
As of December 30, 2001, options to acquire 908,129 shares of common
stock were outstanding and options to acquire 316,707 shares of common stock
were exercisable under the plan. In 2001, 3,897 options were exercised. Of the
outstanding options: 4,211 were at an exercise price of $0.95 per share; 419,029
were at an exercise price of $1.50 per share; 102,000 were at an exercise price
of $2.34; 308,136 were at an exercise price of $4.70 per share; 72,770 were at
an exercise price of $6.00 per share; 301 were at an exercise price of $600.00;
681 were at an exercise price of $1,632.00 per share; 759 were at an exercise
price of $1,800.00 per share; and 242 were at an exercise price of $3,900.00 per
share.
THE BOARD HAS UNANIMOUSLY APPROVED THE AMENDMENT TO THE 1996 AMENDED
STOCK OPTION PLAN TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK THAT MAY BE
ISSUED THEREUNDER FROM 1,000,000 TO 1,165,000 AND RECOMMENDS A VOTE "FOR"
APPROVAL OF THE AMENDMENT OF THE PLAN.
PROPOSAL 3 - RATIFICATION OF INDEPENDENT ACCOUNTANTS
The Company has selected PricewaterhouseCoopers LLP as its independent
accountants for the fiscal year ending December 29, 2002.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE "FOR" APPROVAL FOR RATIFICATION
OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT ACCOUNTANTS FOR THE COMPANY.
AUDITORS
Representatives of PricewaterhouseCoopers LLP, independent public
auditors for BRIAZZ for fiscal 2001 and the current fiscal year, will be present
at the meeting, will have an opportunity to make a statement, and will be
available to respond to appropriate questions.
OTHER BUSINESS
The Board does not intend to bring any other business before the
meeting, and, so far as is known to the Board, no matters are to be brought
before the meeting except as specified in the Notice of Annual Meeting of
Shareholders. However, as to any other business that may properly come before
the meeting, it is intended that proxies, in the form enclosed, will be voted in
respect thereof in accordance with the judgment of the persons voting such
proxies.
IT IS IMPORTANT THAT PROXIES ARE RETURNED PROMPTLY AND THAT YOUR SHARES
ARE REPRESENTED. SHAREHOLDERS ARE URGED TO MARK, SIGN AND DATE THE ENCLOSED
PROXY CARD AND MAIL IT PROMPTLY IN THE ENCLOSED RETURN ENVELOPE.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Victor D. Alhadeff
Victor D. Alhadeff
Chief Executive Officer and
Chairman of the Board
April 29, 2002
Seattle, Washington
APPENDIX A
BRIAZZ, INC.
AUDIT COMMITTEE CHARTER
The Audit Committee (the "Committee") is a committee of the Board of
Directors (the "Board") of BRIAZZ, Inc. (the "Company") designed to assist the
Board in monitoring (1) the integrity of the financial statements of the
Company, (2) the adequacy of the Company's internal controls, (3) the
independence and performance of the Company's Outside Auditors, and (4) conflict
of interest transactions.
I. ROLES AND RESPONSIBILITIES
A. MAINTENANCE OF CHARTER. The Committee shall review and
reassess the adequacy of this formal written charter on at
least an annual basis.
B. FINANCIAL REPORTING. The Committee shall review and make
recommendations to the Board regarding the adequacy of the
Company's financial statements and compliance of such
statements with financial standards. In particular, and
without limiting such responsibilities, the Committee shall:
With respect to the Annual Financial Statements:
- Review and discuss the Company's audited financial statements
with management and with the Company's outside auditors.
- Review an analysis prepared by management and the independent
auditor of significant financial reporting issues and judgments
made in connection with the preparation of the Company's audited
financial statements.
- Discuss with the outside auditor the matter required to be
discussed by Statement on Auditing Standards No. 61 (as may be
modified or supplemented) relating to the conduct of the audit.
- Based on the forgoing, indicate to the Board whether the
Committee recommends that the audited financial statements be
included in the Company's Annual Report on Form 10-K.
- Prepare the report required by the rules of the Securities and
Exchange Commission to be included in the Company's annual proxy
statement.
With respect to Quarterly Financial Statements:
- Review with management and the outside auditors the Company's
quarterly financial statements prior to the filing of its Form
10-Q. The review may be conducted through a designated
representative member of the Committee.
C. INTERNAL CONTROLS. The Committee shall evaluate and report to the Board
regarding the adequacy of the Company's financial controls. In
particular, the Committee shall:
- Ensure that the outside auditors are aware that the Committee is
to be informed of all control problems identified.
- Review with the Company's counsel legal matters that may have a
material impact on the financial statements.
- Review the effectiveness of systems for monitoring compliance
with laws and regulations relating to financial reporting,
including any issues that might implicate Section 10A of the
Securities Exchange Act of 1934.
- Receive periodic updates from management, legal counsel, and
Independent Auditors concerning financial compliance.
D. RELATIONSHIP WITH OUTSIDE AUDITORS. The Committee shall:
- Interview, evaluate, and making recommendations to the Board
with respect to the retention of, or replacement of, outside
auditors.
- Ensure receipt from outside auditors of a formal written
statement delineating all relationships between the outside
auditor and the Company, consistent with Independence Standards
Board Standard I.
- Actively engage in a dialog with the outside auditors with
respect to any disclosed relationships or services that may
impact the objectivity and independence of the outside auditors.
- Take, or recommend that the Board take, appropriate action to
oversee the independence of the outside auditors.
- Review and approve the fees to be paid to the outside auditor.
Notwithstanding the foregoing, the outside auditors shall be
ultimately accountable to the Board and the Committee, as
representatives of shareholders. The Board, upon recommendation
from the Committee, shall have ultimate authority and
responsibility to select, evaluate, and, where appropriate,
replace the outside auditor (or to nominate the outside auditor
to be proposed for shareholder approval in any proxy statement).
E. CONFLICT OF INTEREST TRANSACTIONS. The Committee shall:
- Review potential conflict of interest situations, including
transactions between the Company and its officers, directors and
significant shareholders not in their capacities as such.
- Make recommendations to the Board regarding the disposition of
conflict of interest transactions in accordance with applicable
law, including Minnesota Statutes Section 302A.255 if
applicable.
II. MEMBERSHIP REQUIREMENTS
- The audit Committee (the "Committee") shall consist of at lease
three directors chosen by the Board of Directors (the "Board").
- Each member of the Committee shall be able to read and
understand fundamental financial statements, including the
Company's balance sheet, income statement, and cash flow
statement or will become able to do so within a reasonable
period of time after his or her appointment to the Committee.
- At least one member of the Committee shall have past employment
experience in finance or accounting, requisite professional
certification in accounting, or comparable experience or
background (such as a position as a chief executive officer,
chief financial officer or other senior officer with financial
oversight responsibilities) which results in financial
sophistication, recognized financial or accounting expertise.
- All Committee members shall be independent directors as defined
in Rule 4200(a)(15) of the NASDAQ.
III. STRUCTURE
- The Committee shall appoint one of its members to act as a
Chairperson, either generally or with respect to each meeting.
- The Committee Chairperson shall review and approve an agenda in
advance of each meeting.
- The Committee shall meet at least twice annually, or more
frequently as circumstances dictate.
- The Committee shall have the authority to retain special legal,
accounting or other consultants to advise the Committee.
- The Committee may request any officer or employee of the Company
or the Company's outside counsel or independent auditor to
attend a meeting of the Committee or to meet with any members
of, or consultants to, the Committee.
While the Audit Committee has the responsibilities and powers
set forth in this Charter, it is not the duty of the Audit
Committee to plan or conduct audits or to determine that the
Company's financial statements are complete and accurate and are
in accordance with generally accepted accounting principles.
This is the responsibility of management and the independent
auditor. Nor is it the duty of the Audit Committee to conduct
investigations, to resolve disagreements, if any, between
management and the independent auditor or to assure compliance
with laws and regulations and the Company's Corporate Policies.
BRIAZZ, INC.
3901 - 7TH AVENUE SOUTH, SUITE 200
SEATTLE, WA 98108
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Victor D. Alhadeff and Tracy L. Warner
as Proxies, each with the power to appoint his or her substitute, and hereby
authorizes them to represent and to vote, as designated below, all the shares of
Common Stock of BRIAZZ, Inc. held of record by the undersigned at the close of
business on April 17, 2002 at the Annual Meeting of Shareholders to be held on
Wednesday, June 5, 2002, or any adjournment or postponement thereof.
Please mark your votes [X] as indicated.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS 1, 2 AND 3.
1. ELECTION OF DIRECTORS:
FOR Victor D. Alhadeff [ ]
WITHHOLD AUTHORITY to vote for Victor D. Alhadeff [ ]
FOR Richard Fersch [ ]
WITHHOLD AUTHORITY to vote for Richard Fersch [ ]
FOR Dan Kourkoumelis [ ]
WITHHOLD AUTHORITY to vote for Dan Kourkoumelis [ ]
FOR C. William Vivian [ ]
WITHHOLD AUTHORITY to vote for C. William Vivian [ ]
FOR Charles C. Matteson, Jr. [ ]
WITHHOLD AUTHORITY to vote for Charles C. Matteson, Jr. [ ]
FOR the nominee listed below: [ ]
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FOR the nominee listed below: [ ]
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FOR the nominee listed below: [ ]
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2. PROPOSAL TO AMEND THE 1996 AMENDED STOCK OPTION PLAN.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. RATIFICATION OF INDEPENDENT ACCOUNTANTS.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. In their discretion the Proxies are authorized to vote upon such
other business as may property come before the meeting.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
Please sign exactly as name appears below. When shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other authorized
officer. If a partnership, please sign in partnership name by authorized person.
Date: 2002
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Signature
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Signature, if held jointly