<PAGE>
                                                                   EXHIBIT 10.16

                           ALTERNATIVE RATE OPTIONS
                                PROMISSORY NOTE
                              (PRIME RATE, LIBOR)



$2,000,000.00                              Dated as of: DECEMBER 30, 1999
--------------------------------                        ------------------------

BRIAZZ, INC. & VICTOR ALHADEFF                                       ("Borrower)
--------------------------------

U.S.  BANK NATIONAL ASSOCIATION                                       ("Lender")

1.      TYPE OF CREDIT. This Note is given to evidence Borrower's obligation to
repay all sums which Lender may from time to time advance to Borrower
("Advances") under a:

   [_]  single disbursement loan. Amounts loaned to Borrower hereunder will be
        disbursed in a single Advance in the amount shown in Section 2.

   [X]  revolving line of credit. No Advances shall be made which create a
        maximum amount outstanding at any one time which exceeds the maximum
        amount shown in Section 2. However, Advances hereunder may be borrowed,
        repaid and reborrowed, and the aggregate Advances loaned hereunder from
        time to time may exceed such maximum amount.

   [_]  non-revolving line of credit. Each Advance made from time to time
        hereunder shall reduce the maximum amount available shown in Section 2.
        Advances loaned hereunder which are repaid may not be reborrowed.

2.      PRINCIPAL BALANCE. The unpaid principal balance of all Advances
outstanding under this note ("Principal Balance") at one time shall not exceed
$2,000,000.00.
--------------

3.      PROMISE TO PAY. For value received Borrower promises to pay to Lender on
order at 555 SW OAK, PL-7, PORTLAND, OR 97204, the Principal Balance of this
         ------------------------------------
note, with interest thereon at the rate(s) specified in Sections 4 and 11 below.

4.      INTEREST RATE. The interest rate on the Principal Balance outstanding
may vary from time to time pursuant to the provisions of this note. Subject to
the provisions of this note, Borrower shall have the option from time to time of
choosing to pay interest at the rate or rates and for the applicable periods of
time based on the rate options provided herein; provided, however, that once
                                                --------
Borrower notifies Lender of the rate option chosen in accordance with the
provisions of this note, such notice shall be irrevocable. The rate options are
the Prime Borrowing Rate and the LIBOR Borrowing Rate, each as defined herein.

(a)     Definitions.  The following terms shall have the following meanings:

        "Business Day" means any day other than a Saturday, Sunday, or other day
that commercial banks in Portland, Oregon, Minneapolis, Minnesota, New York City
or Seattle, Washington are authorized or required by law to close; provided,
however that when, used in connection with a LIBOR Rate, LIBOR Amount or LIBOR
Interest Period such term shall also exclude any day on which dealings in U.S.
dollar deposits are not carried on in the London interbank market.

        "Dow Jones Page 3750" means the display designated as such on the Dow
Jones Markets Service (formerly known as Telerate) (or such other page as may
replace page 3750 on that service for the purpose of displaying London interbank
offered rates of major banks for United States Dollar deposits).

        "LIBOR Amount" means each principal amount for which Borrower chooses to
have the LIBOR Borrowing Rate apply for any specified LIBOR Interest Period.

        "LIBOR Interest Period" means as to any LIBOR Amount, a period of 1, 2
                                                                          ----
OR 3 months commencing on the date the LIBOR Borrowing Rate becomes applicable
----
thereto; provided, however, that: (i) the first day of each LIBOR Interest
         --------
Period must be a Business Day; (ii) no LIBOR Interest Period shall commence on
or after OCTOBER 31, 2000; (iii) no LIBOR Interest Period shall be selected
         ----------------
which would extend beyond NOVEMBER 30, 2000; (iv) no LIBOR Interest Period
                          -----------------
shall extend beyond the date of any principal payment required under Section 6
of this note, unless the sum of the Prime Rate Amount, plus LIBOR Amounts with
LIBOR Interest Periods ending on or before the scheduled date of such principal
payment, plus principal amounts remaining unborrowed under a line of credit,
equals or exceeds the amount of such principal payment; (v) any LIBOR Interest
Period which would otherwise expire on a day which is not a Business Day, shall
be extended to the next succeeding Business Day, unless the result of such
extension would be to extend such LIBOR Interest Period into another calendar
month, in which event the LIBOR Interest Period shall end on the immediately
preceding Business Day, and (vi) any LIBOR Interest Period that begins on the
last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such LIBOR
Interest Period) shall end on the last Business Day of a calendar month.

        "LIBOR Rate" means, for any LIBOR Interest Period, the average offered
rate for deposits in United States Dollars (rounded upwards, if necessary, to
the nearest 1/16 of 1%) for delivery of such deposits on the first day of such
LIBOR Interest Period, for the number of months therein, which appears on Dow
Jones Page 3750 as of 11:00 a.m., London time (or such other time as of which
such rate appears) on the day that is two Business Days preceding the first day
of such LIBOR Interest Period; or on the rate for such deposits determined by
Lender at such time based on such other published service of general application
as shall be selected by Lender for such purpose; provided, that in lieu of
determining the rate in the foregoing manner, Lender may determine the rate
based on the rates offered to Lender for deposits in United States Dollars
(rounded upwards, if necessary to the nearest 1/16 of 1% in the interbank
eurodollar market at such time for delivery on the first day of such LIBOR
Interest Period for the number of months therein; and provided, further, that in
any case the LIBOR Rate shall be adjusted to take into account the maximum
reserves required to be maintained for Eurocurrency liabilities by banks during
each such LIBOR Interest Period as specified in Regulation D of the Board of
Governors of the Federal Reserve System or any successor regulation.

        "Prime Rate" means the rate of interest which Lender from time to time
establishes as its prime or reference rate and is not, for example, the lowest
rate of interest which Lender collects from any borrower or class of borrowers.
When the Prime Rate is applicable under Section 4(b) or 11(b), the interest rate
hereunder shall be adjusted without notice effective on the day the Prime Rate
changes, but in no event shall the rate of interest be higher than allowed by
law.

        "Prime Rate Amount" means any portion of the Principal Balance bearing
interest at the Prime Borrowing Rate.

(b)     The Prime Borrowing Rate.

        (i)   The Prime Borrowing Rate is a variable per annum rate equal to the
Prime Rate plus 0.750%.
                -----

        (ii)  Whenever Borrower desires to use the Prime Borrowing Rate option,
Borrower shall give Lender notice orally or in writing in accordance with
Section 15 of this note, which notice shall specify the requested effective date
(which must be a Business Day) and principal amount of the Advance or increase
in the Prime Rate Amount, and whether Borrower is requesting a new Advance under
a line of credit or conversion of a LIBOR Amount to the Prime Borrowing Rate.

        (iii) Subject to Section 11 of this note, interest shall accrue on the
unpaid Principal Balance at the Prime Borrowing Rate unless and except to the
extent that the LIBOR Borrowing Rate is in effect.

(c)     The LIBOR Borrower Rate.

        (i)   The LIBOR Borrowing Rate is the LIBOR Rate plus 3.500% per annum.
                                                              -----

        (ii)  Borrower may obtain LIBOR Borrowing Rate quotes from Lender before
10:00 a.m. (Portland, Oregon time) on any Business Day. Borrower may request an
Advance, conversion of any portion of the Prime Rate Amount to a LIBOR Amount or
a new LIBOR Interest Period for an existing LIBOR Amount, at such rate only by
giving Lender notice in accordance with Section 4(c)(iii) before 10:00 a.m.
(Portland, Oregon time) on such day.

        (iii) Whenever Borrower desires to use the LIBOR Borrowing Rate option,
Borrower shall give Lender irrevocable notice (either in writing or orally and
promptly confirmed in writing) no later than 10:00 a.m. (Portland, Oregon time)
two (2) Business Days prior to the desired effective date of such rate. Any oral
notice shall be given by, and any written notice or confirmation of an oral
notice shall be signed by, the person(s) authorized in Section 15 of this note,
and shall specify the requested effective date of the rate, LIBOR Interest
Period and LIBOR Amount, and whether Borrower is requesting a new Advance at

                                                                     Page 1 of 4
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the LIBOR Borrowing Rate under a line of credit, conversion of all or any
portion of the Prime Rate Amount to a LIBOR Amount, or a new LIBOR Interest
Period for an outstanding LIBOR Amount. Notwithstanding any other term of this
note, Borrower may elect the LIBOR Borrowing Rate in the minimum principal
amount of $500,000.00 and in multiples of $100,000.00 above such amount;
          -----------                     -----------
provided, however, that no more than FOUR _____ separate LIBOR Interest Periods
--------
may be in effect at any one time.

         (iv)   If at any time the LIBOR Rate is unascertainable or unavailable
to Lender or if LIBOR Rate loans become unlawful, the option to select the LIBOR
Borrowing Rate shall terminate immediately. If the LIBOR Borrowing Rate is then
in effect, (A) it shall terminate automatically with respect to all LIBOR
Amounts (i) on the last day of each then applicable LIBOR Interest Period, if
Lender may lawfully continue to maintain such loans, or (ii) immediately if
Lender may not lawfully continue to maintain such loans through such day, and
(B) subject to Section 11, the Prime Borrowing Rate automatically shall become
effective as to such amounts upon such termination.

         (v)    If at any time after the date hereof (A) any revision in or
adoption of any applicable law, rule, or regulation or in the interpretation or
administration thereof (i) shall subject Lender or its Eurodollar lending office
to any tax, duty, or other charge, or change the basis of taxation of payments
to Lender with respect to any loans bearing interest based on the LIBOR Rate, or
(ii) shall impose or modify any reserve, insurance, special deposit, or similar
requirements against assets of, deposits with or for the account of, or credit
extended by Lender or its Eurodollar lending office, or impose on Lender or its
Eurodollar lending office any other condition affecting any such loans, and (B)
the result of any of the foregoing is (i) to increase the cost to Lender of
making or maintaining any such loans or (ii) to reduce the amount of any sum
receivable under this note by Lender or its Eurodollar lending office, Borrower
shall pay Lender within 15 days after demand by Lender such additional amount as
will compensate Lender for such increased cost or reduction. The determination
hereunder by Lender of such additional amount shall be conclusive in the absence
of manifest error. If Lender demands compensation under this Section 4(c)(v),
Borrower may upon three (3) Business Days' notice to Lender pay the accrued
interest on all LIBOR Amounts, together with any additional amounts payable
under Section 4(c)(vi). Subject to Section 11, upon Borrowers paying such
accrued interest and additional costs, the Prime Borrowing Rate immediately
shall be effective with respect to the unpaid principal balance of such LIBOR
Amounts.

         (vi)   Borrower will indemnify Lender upon demand against any loss or
expense which Lender may sustain or incur (including, without limitation, any
loss or expense sustained or incurred in obtaining, liquidating or employing
deposits or other funds acquired to effect, fund or maintain any portion of the
loan or any Advance) as a consequence of (A) any failure of Borrower to make any
payment when due of any amount due hereunder, (B) any failure of Borrower to
borrow, if permitted by the terms of this note, continue or convert any portion
of the Prime Rate Amount to a LIBOR Amount, on a date specified therefore in a
notice thereof, or (C) any payment, voluntary or mandatory prepayment or payment
on default or conversion of any LIBOR Amount to the Prime Borrowing Rate, on a
date other than the last day of the applicable LIBOR Interest Period.
Determinations by Lender of the amount required to indemnify Lender shall be
conclusive in the absence of manifest error.

         (vii)  Notwithstanding any provision of this note to the contrary,
Lender shall be entitled to fund and maintain its funding of all or any part of
the loan evidenced by this note in any manner it elects; it being understood,
however, that with respect to any LIBOR amount, all determinations hereunder
shall be made as if Lender had actually funded and maintained each LIBOR amount
during the LIBOR Interest Period applicable to it through the purchase of
deposits having a term corresponding to such LIBOR Interest Period and bearing
an interest rate equal to the LIBOR Rate for such LIBOR Interest Period (whether
or not Lender shall have granted any participations in such LIBOR Amounts).

         (viii) Notwithstanding any other term of this note, Borrower may not
select the LIBOR Borrowing Rate if an event of default hereunder has occurred
and is continuing.

         (ix)   Nothing contained in this note, including without limitation the
determination of any LIBOR Interest Period or Lenders quotation of any LIBOR
Borrowing Rate, shall be construed to prejudice Lenders right, if any, to
decline to make any requested Advance or to require payment on demand.

5.       COMPUTATION OF INTEREST. All interest under Section 4 and Section 11
will be computed at the applicable rate based on a 360-day year and applied to
the actual number of days elapsed.

6.       PAYMENT SCHEDULE.

(a)      Principal.  Principal shall be paid:

    [_]  on demand.
    [X]  on demand, or if no demand, on NOVEMBER 30, 2000.
                                        -----------------
    [_]  on _______________.
    [_]  subject to Section 8, in installments of
                ______________________________ each, plus accrued interest,
         [_]    beginning on _____ and on the same day of each
                ______________________________ thereafter until _______________
                when the entire Principal Balance plus interest thereon shall be
                due and payable. ______________________________ each, including
         [_]    accrued interest, beginning on _____ and on the same day of each
                thereafter until when the entire Principal Balance plus interest
                thereon shall be due and payable.

    [_]  ______________________________.

(b)      Interest.

    (i)  Interest on the Prime Rate Amount shall be paid:

         [X]    on the LAST day of JANUARY. 2000. and on the same day of each
                       ----        -------------
                MONTH thereafter prior to maturity and at maturity.
                -----
         [_]    at maturity.
         [_]    at the time each principal installment is due and at maturity.
         [_]    ________________________
         [_]    ________________________

    (ii) Interest on all LIBOR Amounts shall be paid:

         [_]    on the last day of the applicable LIBOR interest Period, and if
                such LIBOR Interest Period is longer than three months, on the
                last day of each three month period occurring during such LIBOR
                Interest Period, and at maturity.
         [X]    on the LAST day of JANUARY, 2000. and on the same day of each
                       ----        -------------
                MONTH thereafter prior to maturity and at maturity.
                -----
         [_]    at maturity.
         [_]    at the time each principal installment is due and at maturity.
         [_]    __________________________.


7.      PREPAYMENT.

(a)     Prepayments of all or any part of the Prime Rate Amount may be made at
        any time without penalty.

(b)     Except as otherwise specifically set forth herein, Borrower may not
        prepay all or any part of any LIBOR Amount or terminate any LIBOR Amount
        or terminate any LIBOR Borrowing Rate, except on the last day of the
        applicable LIBOR Interest Period.

(c)     Principal prepayments will not postpone the date of or change the amount
        of any regularly scheduled payment. At the time of any principal
        prepayment, all accrued interest, fees, costs and expenses shall also be
        paid.

8.      CHANGE IN PAYMENT AMOUNT. Each time the interest rate on this note
changes the holder of this note may, from time to time, in holder's sole
discretion, increase or decrease the amount of each of the installments
remaining unpaid at the time of such change in rate to an amount holder in its
sole discretion deems necessary to continue amortizing the Principal Balance at
the same rate established by the installment amounts specified in Section 6(a),
or not the installment amount is increased under this Section 8, Borrower
understands that, as a result of increases in the rate of interest the final
payment due, whether or not a "balloon" payment, shall include the entire
Principal Balance and interest thereon then outstanding, and may be
substantially more than the installment specified in Section 6.

                                                                     Page 2 of 4
<PAGE>

9.       ALTERNATE PAYMENT DATE. Notwithstanding any other term of this note, if
in any month there is no day on which a scheduled payment would otherwise be due
(e.g. February 31), such payment shall be paid on the last banking day of that
month.

10.      PAYMENT BY AUTOMATIC DEBIT.

[_]      Borrower hereby authorizes Lender to automatically deduct the amount of
all principal and interest payments from account number 153500076036
                                                        ------------------------
________________________________________________________________________________
with Lender. If there are insufficient funds in the account to pay the automatic
deduction in full, Lender may allow the account to become overdrawn, or Lender
may reverse the automatic deduction. Borrower will pay all the fees on the
account which result from the automatic deductions, including any overdraft and
non-sufficient funds charges, if for any reason Lender does not charge the
account for a payment, or if an automatic payment is reversed, the payment is
still due according to this note. If the account is a Money Market Account, the
number of withdrawals from that account is limited as set out in the account
agreement. Lender may cancel the automatic deduction at any time in its
discretion.

Provided, however, if no account number is entered above, Borrower does not want
to make payments by automatic debit.

11.      DEFAULT.

(a)      Without prejudice to any right of Lender to require payment on demand
or to decline to make any requested Advance, each of the following shall be an
event of default: (i) Borrower falls to make any payment when due, (ii) Borrower
falls to perform or comply with any term, covenant or obligation in this note or
any agreement related to this note, or in any other agreement or loan Borrower
has with Lender or any affiliate of Lender, (iii) Borrower defaults under any
loan, extension of credit, security agreement, purchase or sales agreement, or
any other agreement, in favor of any other creditor or person that may
materially affect any of Borrower's property or Borrowers ability to repay this
note or perform Borrowers obligations under this note or any related documents,
(iv) Any representation or statement made or furnished to Lender by Borrower or
on Borrowers behalf is false or misleading in any material respect either now or
at the time made or furnished, (v) Borrower dies, becomes insolvent, liquidates
or dissolves, a receiver is appointed for any part of Borrower's property,
Borrower makes an assignment for the benefit of creditors, or any proceeding is
commenced either by Borrower or against Borrower under any bankruptcy or
insolvency laws, (vi) Any creditor tries to take any of Borrower's property on
or in which Lender has a lien or security interest. This includes a garnishment
of any of Borrower's accounts with Lender, (vii) Any of the events described in
this default section occurs with respect to any general partner in Borrower or
any guarantor of this note, or any guaranty of Borrowers indebtedness to Lender
ceases to be, or is asserted not to be, in full force and effect., (viii) There
is any material adverse change in the financial condition or management of
Borrower or Lender in good faith deems itself insecure with respect to the
payment or performance of Borrowers obligations to Lender. If this note is
payable on demand, the inclusion of specific events of default shall not
prejudice Lenders right to require payment on demand or to decline to make any
requested Advance.

(b)      Without prejudice to any right of Lender to require payment on demand,
upon the occurrence of an event of default, Lender may declare the entire unpaid
Principal Balance on this note and all accrued unpaid interest immediately due
and payable, without notice; provided, however, that if any proceeding under any
bankruptcy or insolvency law is commenced by or against Borrower, the
availability of Advances shall be immediately terminated without notice and the
entire Principal Balance and all accrued interest shall, without notice, become
immediately due and payable, upon default, including failure to pay upon final
maturity, Lender, at its option, may also, if permitted under applicable law,
increase the interest rate on this note to a rate equal to the Prime Borrowing
Rate plus 5%. The interest rate will not exceed the maximum rate permitted by
applicable law. In addition, it any payment of principal or interest is 15 or
more days past due, Borrower will be charged a late charge of 5% of the
delinquent payment.

12.      EVIDENCE OF PRINCIPAL BALANCE; PAYMENT ON DEMAND. Holder's records
shall, at any time, be conclusive evidence of the unpaid Principal Balance and
interest owing on this note: Notwithstanding any other provisions of this note,
in the event holder makes Advances hereunder which result in an unpaid Principal
Balance on this note which at any time exceeds the maximum amount specified in
Section 2, Borrower agrees that all such Advances, with interest, shall be
payable on demand.

13.      LINE OF CREDIT PROVISIONS. If the type of credit indicated in Section 1
is a revolving line of credit or a non-revolving line of credit, Borrower agrees
that Lender is under no obligation and has not committed to make any Advances
hereunder. Each Advance hereunder shall be made at the sole option of Lender.

14.      DEMAND NOTE. If this note is payable on demand, Borrower acknowledges
and agrees that (a) Lender is entitled to demand Borrowers immediate payment in
full of all amounts owing hereunder and (b) neither anything to the contrary
contained herein or in any other loan documents (including but not limited to,
provisions relating to defaults, rights of cure, default rate of interest,
installment payments, late charges, periodic review of Borrowers financial
condition, and covenants) nor any act of Lender pursuant to any such provisions
shall limit or impair Lenders right or ability to require Borrower's payment in
full of all amounts owing hereunder immediately upon Lender's demand.

15.      REQUESTS FOR ADVANCES.

(a)      Any Advance may be made or interest rate option selected upon the
request of Borrower (if an individual), any of the undersigned (if Borrower
consists of more than one individual), any person or persons authorized in
subsection (b) of this Section 15, and any person or persons otherwise
authorized to execute and deliver promissory notes to Lender on behalf of
Borrower.

(b)      Borrower hereby authorizes any one of the following individuals to
request Advances and to select interest rate options:

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________
unless Lender is otherwise instructed in writing.

(c)      All Advances shall be disbursed by deposit directly to Borrowers
account number with Lender, or by cashiers check issued to Borrower.

(d)      Borrower agrees that Lender shall have no obligation to verify the
identity of any person making any request pursuant to this Section 15, and
Borrower assumes all risks of the validity and authorization of such requests.
In consideration of Lender agreeing, at its sole discretion, to make Advances
upon such requests, Borrower promises to pay holder, in accordance with the
provisions of this note, the Principal Balance together with interest thereon
and other sums due hereunder, although any Advances may have been requested by a
person or persons not authorized to do so.

16.      PERIODIC REVIEW. Lender will review Borrower's credit accommodations
periodically. At the time of the review, Borrower will furnish Lender with any
additional information regarding Borrower's financial condition and business
operations that Lender requests. This information may include but is not limited
to, financial statements, tax returns, lists of assets and liabilities, agings
of receivables and payables, inventory schedules, budgets and forecasts. If upon
review, Lender, in its sole discretion, determines that there has been a
material adverse change in Borrower's financial condition, Borrower will be in
default. Upon default, Lender shall have all rights specified herein.

17.      NOTICES. Any notice hereunder may be given by ordinary mail, postage
paid and addressed to Borrower at the last known address of Borrower as shown on
holder's records. If Borrower consists of more than one person, notification of
any of said persons shall be complete notification of all.

18.      ATTORNEY FEES. Whether or not litigation or arbitration is commenced,
Borrower promises to pay all costs of collecting overdue amounts. Without
limiting the foregoing, in the event that holder consults an attorney regarding
the enforcement of any of its rights under this note or any document securing
the same, or if this note is placed in the hands of an attorney for collection
or if suit or litigation is brought to enforce this note or any document
securing the same, Borrower promises to pay all costs thereof including such
additional sums as the court or arbitrator(s) may adjudge reasonable as attorney
fees, including without limitation, costs and attorney fees incurred in any
appellate court, in any proceeding under the bankruptcy code, or in any
receivership and post-judgment attorney fees incurred in enforcing any judgment.

19.      WAIVERS; CONSENT. Each party hereto, whether maker, co-maker, guarantor
or otherwise, waives diligence, demand, presentment for payment, notice of non-
payment, protest and notice of protest and waives all defenses based on
suretyship or impairment of collateral. Without notice to Borrower and without
diminishing or affecting Lender's rights or Borrower's obligations hereunder,
Lender may deal in any manner with any person who at any time is liable for, or
provides any real or personal property collateral for, any indebtedness of
Borrower to Lender, including the indebtedness of Borrower to Lender, including
the indebtedness evidenced by this note. Without the foregoing, Lender may, in
its sole discretion: (a) make secured or unsecured loans to Borrower and agree
to any number of waivers, modifications, extensions and renewals of any length
of such loans, including the loan evidenced by this note; (b) impair, release
(with or without substitution of new collateral), fail to perfect a security
interest in, fail to preserve the value of, fail to dispose of in accordance
with applicable law, any collateral provided by any person; (c) sue, fail to
sue, agree to sue, release, and settle of compromise with, any person.

20.      JOINT AND SEVERAL LIABILITY. All undertakings of the undersigned
Borrowers are joint and several and are binding upon any marital community of
which any of the undersigned are members. Holder's rights and remedies under
this note shall be cumulative.


                                                                     Page 3 of 4
<PAGE>

21.      SEVERABILITY. If any term or provision of this note is declared by a
court of competent jurisdiction to be illegal, invalid or unenforceable for any
reason whatsoever, such illegality, invalidity or unenforceability shall not
affect the balance of the terms and provisions hereof, which terms and
provisions shall remain binding and enforceable, and this note shall be
construed as if such illegal, invalid or unenforceable provision had not been
contained herein.

22.      ARBITRATION.

(a)      Either Lender or Borrower may require that all disputes, claims,
counterclaims and defenses, including those based on or arising from any alleged
tort ("Claims") relating in any way to this note or any transaction of which
this note is a part (the "Loan"), be settled by binding arbitration in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association and Title 9 of the U.S. Code. All Claims will be subject to the
statutes of limitation applicable if they were litigated. This provision is void
if the Loan, at the time of the proposed submission to arbitration, is secured
by real property located outside of Oregon or Washington, or if the effect of
the arbitration procedure (as opposed to any Claims of Borrower) would be to
materially impair Lenders ability to realize on any collateral securing the
Loan.

(b)      If arbitration occurs and each party's Claim is less than $100,000, one
neutral arbitrator will decide all issues; if any party's Claim is $100,000 or
more, three neutral arbitrators will decide all issues. All arbitrators will be
active Washington State Bar members in good standing. All arbitration hearings
will be held in Seattle, Washington. In addition to all other powers, the
arbitrator(s) shall have the exclusive right to determine all issues of
arbitrability. Judgment on any arbitration award may be entered in any court
with jurisdiction.

(c)      If either party Institutes any judicial proceeding relating to the
Loan, such action shall not be a waiver of the right to submit any Claim to
arbitration. In addition, each has the right before, during and after any
arbitration to exercise any number of the following remedies, in any order or
concurrently: (i) setoff, (ii) self-help repossession; (iii) judicial or non-
judicial foreclosure against real or personal property collateral; and (iv)
provisional remedies, including injunction, appointment of receiver, attachment,
claim and delivery and replevin.

23.      GOVERNING LAW. This note shall be governed by and construed and
enforced in accordance with the laws of the State of Washington without regard
to conflicts of law principles; provided, however, that to the extent that
                                --------
Lender has greater rights or remedies under Federal law, this provision shall
not be deemed to deprive Lender of such rights and remedies as may be available
under Federal law.

24.       YEAR 2000. Borrower has reviewed and assessed its business operations
and computer systems and applications to address the "year 2000 problem" (that
is, that computer applications and equipment used by Borrower, directly or
indirectly through third parties, may be unable to properly perform date-
sensitive functions before, during and after January 1, 2000). Borrower
reasonably believes that the year 2000 problem will not result in a material
adverse change in Borrower's business condition (financial or otherwise),
operations, properties or prospects or ability to repay Lender. Borrower agrees
that this representation will be true and correct on and shall be deemed made by
Borrower on each date Borrower requests any advance under this Agreement or Note
or delivers any information to Lender. Borrower will promptly deliver to Lender
such information relating to this representation as Lender requests from time to
time.

25.      RENEWAL AND EXTENSION. This Note is given in renewal and extension and
not in novation of the following described indebtedness: That certain Promissory
Note dated March 5, 1998, in the amount of $2,000,000.00, executed by Borrower
payable to Lender. It is further agreed that all liens and security interest
securing said indebtedness are hereby renewed and extended to secure the Note
and all renewals, extensions and modifications thereof.

26.      DISCLOSURE.

         Oral agreements or oral commitments to loan money, extend credit, or to
         -----------------------------------------------------------------------
forbear from enforcing repayment of a debt are not enforceable under Washington
--------------------------------------------------------------------------------
law.
---

EACH OF THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS
DOCUMENT.

BRIAZZ. INC.                                    /s/ VICTOR ALHADEFF
--------------------------                --------------------------------------
Borrower Name                             Victor Alhadeff

/s/ VICTOR ALHADEFF
------------------------------------------------
By: Victor Alhadeff        Title: CEO



________________________________________________________________________________
For valuable consideration, Lender agrees to the terms of the arbitration
provision set forth in this note.

                                  U.S. BANK NATIONAL ASSOCIATION

                                  By:/s/ MARYANN CUSSEY
                                     -------------------------------------------
                                  Title: Vice President
                                        ----------------------------------------
                                  Date:  1/7/00
                                       -----------------------------------------




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