<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 23, 1996
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
FAMOUS DAVE'S OF AMERICA, INC.
(Name of Small Business Issue in its Charter)
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MINNESOTA 5812 41-1782300
(State or other jurisdiction (Primary standard industrial (I.R.S. Employer
of classification code number) Identification Number)
incorporation)
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12700 INDUSTRIAL BOULEVARD, SUITE 60
PLYMOUTH, MINNESOTA 55441
(612) 557-5798
(Address and Telephone Number of Principal Executive Offices)
DAVID W. ANDERSON, CHIEF EXECUTIVE OFFICER
FAMOUS DAVE'S OF AMERICA, INC.
12700 INDUSTRIAL BOULEVARD, SUITE 60
MINNEAPOLIS, MINNESOTA 55441
(612) 557-5798
(Name, Address, and Telephone Number of Agent For Service)
Copies to:
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WILLIAM MOWER, ESQ. GIRARD P. MILLER, ESQ.
DOUGLAS T. HOLOD, ESQ. DOHERTY, RUMBLE & BUTLER, P.A.
MASLON EDELMAN BORMAN & BRAND, 150 SOUTH FIFTH STREET
A PROFESSIONAL LIMITED LIABILITY PARTNERSHIP SUITE 3500
3300 NORWEST CENTER MINNEAPOLIS, MINNESOTA 55402
MINNEAPOLIS, MINNESOTA 55402 (612) 340-5555
(612) 672-8200 FAX (612) 340-5584
FAX (612) 672-8397
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APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: As soon as practicable
after the effective date of this Registration Statement.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
CALCULATION OF REGISTRATION FEE
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TITLE OF EACH CLASS PROPOSED MAXIMUM PROPOSED MAXIMUM
OF SECURITIES TO AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
BE REGISTERED REGISTERED(1) PER UNIT(2) OFFERING PRICE REGISTRATION FEE
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Units each consisting of one share
of Common Stock, $.01 par value,
and one Class A Warrant to
purchase one share of Common
Stock........................... 2,300,000 Units(3) $6.00 $13,800,000 $4,758.62
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Common Stock, $.01 par value(4)... 2,300,000 Shares $8.50 $19,550,000 $6,741.38
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(1) Pursuant to Rule 415 under the Securities Act of 1933, as amended, this
registration statement also covers such additional securities as may become
issuable upon exercise of Class A Warrants.
(2) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457 under the Securities Act of 1933, as amended.
(3) Includes 300,000 Units subject to an option granted to the Underwriter to
cover over-allotments, if any.
(4) Issuable upon exercise of the Class A Warrants.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2
FAMOUS DAVE'S OF AMERICA, INC.
CROSS REFERENCE SHEET
PURSUANT TO RULE 404
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ITEM NUMBER IN CAPTION OR
FORM SB-2 AND TITLE OF ITEM LOCATION IN PROSPECTUS
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Item 1. Front of Registration Statement and
Outside Front Cover of Prospectus....... Front of the Registration Statement and
Outside Front Cover Page of the
Prospectus
Item 2. Inside Front and Outside Back Cover
Pages of Prospectus..................... Inside Front and Outside Back Cover
Pages of Prospectus; Additional
Information
Item 3. Summary Information and Risk Factors.... Prospectus Summary; Risk Factors
Item 4. Use of Proceeds......................... Use of Proceeds
Item 5. Determination of Offering Price......... Outside Front Cover Page; Risk Factors;
Underwriting
Item 6. Dilution................................ Risk Factors; Dilution
Item 7. Selling Security Holders................ Not applicable
Item 8. Plan of Distribution.................... Outside Front Cover Page; Underwriting
Item 9. Legal Proceedings....................... Business
Item 10. Directors, Executive Officers, Promoters
and Control Persons..................... Management
Item 11. Security Ownership of Certain Beneficial
Owners and Management................... Principal Shareholders
Item 12. Description of Securities............... Prospectus Summary; Dividend Policy;
Description of Securities
Item 13. Interest of Named Experts and Counsel... Legal Matters; Experts
Item 14. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities............................. Underwriting
Item 15. Organization Within Last Five Years..... Business; Management's Discussion and
Analysis of Financial Condition and
Results of Operations; Certain
Transactions
Item 16. Description of Business................. Business
Item 17. Management's Discussion and Analysis or
Plan of Operation....................... Management's Discussion and Analysis of
Financial Condition and Results of
Operations
Item 18. Description of Property................. Business
Item 19. Certain Relationships and Related
Transactions............................ Certain Transactions
Item 20. Market for Common Equity and Related
Stockholder Matters..................... Outside Front Cover Page of Prospectus;
Risk Factors; Description of Securities;
Underwriting
Item 21. Executive Compensation.................. Management
Item 22. Financial Statements.................... Financial Statements
Item 23. Changes in and Disagreements with
Accountants on Accounting and Financial
Disclosure.............................. Not applicable
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<PAGE> 3
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy, nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws
of any such State.
SUBJECT TO COMPLETION; DATED AUGUST 23, 1996
Famous Dave's Logo
FAMOUS DAVE'S OF AMERICA, INC.
2,000,000 UNITS
Consisting of 2,000,000 Shares of Common Stock
and 2,000,000 Redeemable Class A Warrants
-------------------------
Famous Dave's of America, Inc. (the "Company") is offering 2,000,000 units
(the "Offering"), each unit consisting of one share of Common Stock (a "Share")
and one redeemable Class A Warrant at an initial public offering price of $6.00
per unit (a "Unit"). The Class A Warrants are immediately exercisable and,
commencing ten trading days after the Effective Date (as hereinafter defined),
transferable separate from the Common Stock. Each Class A Warrant entitles the
holder to purchase at any time until four years following the date that the
Registration Statement relating to this Prospectus has been declared effective
by the Securities and Exchange Commission (the "Effective Date"), one share of
Common Stock at an exercise price of $8.50 per warrant, subject to adjustment.
The Class A Warrants are subject to redemption by the Company for $.01 per
warrant at any time 90 days after the Effective Date, on 30 days' written
notice, provided that the average closing bid price of the Common Stock exceeds
120% of the Exercise Price (subject to adjustment) for any 20 consecutive
trading days prior to such notice. See "Description of Securities."
Prior to this Offering, there has been no market for the Company's
securities. See "Underwriting" for information relating to the factors
considered in determining the Price to Public. The Company has applied for
listing its Common Stock, Class A Warrants and Units on the Nasdaq SmallCap
Market under the symbols DAVE, DAVEW, and DAVEU, respectively.
-------------------------
THIS OFFERING INVOLVES A HIGH DEGREE OF RISK AND SUBSTANTIAL DILUTION. SEE
"RISK FACTORS" COMMENCING ON PAGE 6 AND "DILUTION" ON PAGE 11.
-------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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UNDERWRITING PROCEEDS TO
PRICE TO PUBLIC DISCOUNT(1) COMPANY(2)
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Per Unit................................. $6.00 $0.48 $5.52
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Total (3)(4)............................. $12,000,000 $960,000 $11,040,000
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(1) The Underwriter will receive a sales commission equal to 8% of the Total
Price to Public from the sale of the Units. The Company has also agreed to
pay the Underwriter a nonaccountable expense allowance equal to 2% of the
Total Price to Public. The Company has also agreed to sell to the
Underwriter, for nominal consideration, a 5-year warrant to purchase up to
200,000 shares at 120% of the Price to Public (the "Underwriter's Warrant").
In addition, the Company has agreed to indemnify the Underwriter against
certain liabilities. See "Underwriting."
(2) Before deducting expenses of the offering estimated at $220,000, which does
not include the 2% nonaccountable expense allowance described in Note 1
above and assumes no exercise of the Underwriter's over-allotment option.
(3) The Underwriter has been granted a 45-day option to purchase up to 300,000
additional Units from the Company for the purpose of covering
over-allotments. If the Underwriter purchases all of the Units under the
over-allotment option, the Total Price to Public, Total Underwriting
Discount and Total Proceeds to Company will be $13,800,000, $1,104,000 and
$12,696,000, respectively. See "Underwriting."
(4) At the request of the Company, up to 15% of the Units offered hereby may be
reserved for sale to persons designated by the Company at the Price to
Public.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK,
THE CLASS A WARRANTS AND/OR THE UNITS AT A LEVEL ABOVE THAT WHICH MIGHT
OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
The Units are offered by the Underwriter, subject to receipt and acceptance
by it, its right to reject orders in whole or in part and to certain other
conditions. It is expected that delivery of certificates representing the Units
will be made on or about , 1996 in Minneapolis, Minnesota.
RJ Steichen & Company Logo
The date of this Prospectus is , 1996.
<PAGE> 4
PICTURES
2
<PAGE> 5
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements (including the notes thereto) appearing
elsewhere in this Prospectus. Unless otherwise indicated, the information in
this Prospectus assumes no exercise of Class A Warrants offered hereby or of the
Underwriter's over-allotment option. Investors should carefully consider the
information set forth under the caption "Risk Factors."
THE COMPANY
The business of Famous Dave's of America, Inc. (the "Company") is to
develop, own and operate American roadhouse-style barbeque restaurants under the
name "Famous Dave's Bar-B-Que Shack." The Company presently owns and operates
two restaurants, one located in the Linden Hills neighborhood of Minneapolis
(the "Linden Hills Unit"), and the other in Roseville, Minnesota (the "Roseville
Unit" and, collectively with the Linden Hills Unit, the "Existing Units"). The
Company is also developing a larger restaurant in Calhoun Square in Minneapolis
(the "Calhoun Blues Joint"), which will feature live blues music during certain
evenings and an authentic Chicago blues decor, and is scheduled to open in early
September 1996. The Company is planning to develop two additional restaurants to
be located in Minnetonka, Minnesota (the "Minnetonka Unit") and on West 7th
Street near the Highland Park area of St. Paul (the "Highland Park Unit"). These
two additional units are expected to open from the third quarter of 1996 through
early 1997. The Calhoun Blues Joint and the Minnetonka Unit are presently
planned to be significantly larger than the Existing Units.
While the Company's primary theme for its restaurants is the
roadhouse-style decor, various other themes have been identified and developed.
The Existing Units were designed to be reminiscent of roadhouse-style barbeque
"joints." The Company's nostalgic roadside shack theme is promoted by the
abundant use of rustic antiques and items of Americana from the '20s and '30s.
Two additional themes have been developed, including the larger Calhoun Blues
Joint with live blues music several nights a week, and a north woods log cabin
decor. Consistent in all themes is the use of recorded or live blues music and
award-winning barbeque.
Each restaurant features an assortment of menu items, such as
hickory-smoked St. Louis-style spareribs, Texas beef brisket, herb-roasted
chicken, barbeque sandwiches, and char-grilled burgers, as well as honey-
buttered corn bread, potato salad, cole slaw and "Wilbur"(TM) beans. Homemade
desserts, including Famous Dave's homemade bread pudding, Kahlua(TM) brownies
and strawberry shortcake, are a specialty. The Company's Famous Dave's BBQ
Sauces, which are provided in four regional variations (Rich-N-Sassy(TM), Texas
Pit(TM), Georgia Mustard(TM) and Hot Stuff(TM)), represent signature items for
the Company.
The Company opened the Linden Hills Unit, a 2,900-square-foot facility with
approximately 60 indoor and 40 patio seats, in June 1995 in the primarily
residential Linden Hills neighborhood of south Minneapolis. The Company opened
its second restaurant, a 4,800-square-foot facility with approximately 100
seats, in suburban Roseville, Minnesota, in June 1996. The Calhoun Blues Joint,
an approximately 250-seat, 10,500-square-foot live blues music facility, is
under construction and is scheduled to open in Calhoun Square in the Uptown area
of Minneapolis in September 1996. Two additional restaurants are being planned
for development in the Minneapolis/St. Paul area which are scheduled to open by
early 1997.
The Company was incorporated in March 1994 as a Minnesota corporation. Its
executive offices are located at 12700 Industrial Boulevard, Suite 60,
Minneapolis, Minnesota 55441 and its telephone number is 612-557-5798.
3
<PAGE> 6
THE OFFERING
Securities Offered............ 2,000,000 Units, each Unit consisting of one
share of Common Stock and one redeemable Class
A Warrant at an initial public offering price
of $6.00 per Unit. Each Class A Warrant is
immediately exercisable and, commencing ten
trading days after the Effective Date,
transferable separately from the Common Stock.
Each Class A Warrant entitles the holder to
purchase at any time until four years after the
Effective Date, one share of Common Stock at an
exercise price of $8.50 per Warrant, subject to
adjustment. The Class A Warrants are subject to
redemption by the Company for $.01 per Warrant
at any time 90 days after the Effective Date,
on 30 days written notice, provided that the
average closing bid price of the Common Stock
exceeds 120% of the Exercise Price (subject to
adjustment) for any 20 consecutive trading days
prior to such notice.
Common Stock Outstanding
Before this Offering........ 3,356,250 shares
Common Stock Outstanding
After this Offering......... 5,356,250 shares(1)
Proposed Nasdaq Symbols:
Common Stock................ DAVE
Warrants.................... DAVEW
Units....................... DAVEU
Use of Proceeds............... Approximately $10,000,000 for development and
opening of five to ten new restaurants and the
balance, if any, for working capital purposes.
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(1) Does not include (i) 300,000 Units subject to the Underwriter's
over-allotment option; (ii) 200,000 shares of Common Stock issuable upon
exercise of the Underwriter's Warrant at 120% of the Price to Public; (iii)
2,000,000 shares of Common Stock which are issuable upon the exercise of the
Class A Warrants at an exercise price of $8.50 per warrant; (iv) 700,000
shares of Common Stock reserved for issuance under the Company's 1995 Stock
Option and Compensation Plan, of which 342,500 have been granted; and (v)
50,000 shares of Common Stock issuable upon exercise of directors' stock
options at an exercise price of the higher of 66.67% of the Price to Public
or $3.50 per share.
4
<PAGE> 7
SUMMARY FINANCIAL INFORMATION
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MARCH 14, 1994 TWENTY-SIX WEEKS ENDED
(INCEPTION) TO YEAR ENDED ----------------------------
DECEMBER 31, DECEMBER 31, JUNE 30,
1994(1) 1995(1) 1995(1) JUNE 30, 1996
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STATEMENT OF OPERATIONS DATA:
Sales..................................... $ 0 $ 481,510 $ 23,601 $1,015,856
Cost of sales............................. 0 169,789 13,278 336,600
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Gross profit............................ 0 311,721 10,323 679,256
Restaurant operating expenses............. 0 302,217 45,991 391,232
Depreciation and amortization............. 0 17,009 2,000 36,289
General, administrative and development... 0 332,331 57,040 634,460
Other (income) expense.................... 0 (33,646) 0 5,477
-------------- ------------ ---------- --------------
Net loss................................ $ 0 $ (306,190) $ (94,708) $ (388,202)
=========== ========== ========= ===========
Net loss per share........................ $ 0.00 $ (0.14) $ (0.04) $ (0.18)
=========== ========== ========= ===========
Shares used in per share calculation...... 2,135,417 2,135,417 2,135,417 2,135,417
=========== ========== ========= ===========
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JUNE 30, 1996
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PROFORMA PROFORMA AS
ACTUAL (2) ADJUSTED(2)(3)
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BALANCE SHEET DATA:
Working capital (deficiency).......................... $ (2,239,340) $1,965,660 $12,627,984
Total assets.......................................... 3,511,524 7,716,524 18,296,524
Total liabilities..................................... 3,205,916 3,205,916 3,205,916
Accumulated deficit................................... (694,392) (694,392) (694,392)
Stockholders' equity.................................. 305,608 4,510,608 15,090,608
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(1) The Company began operations at the Linden Hills Unit in June 1995. Prior to
such time, the Company had no operations.
(2) Assumes completion on June 30, 1996 of the sale of 1,356,250 shares of
Common Stock at $3.50 per share for net proceeds of approximately $4,200,000
that actually occurred in July 1996.
(3) As adjusted for the sale of the Units offered hereby and the anticipated
application of the net proceeds therefrom. Does not include: (i) 300,000
Units subject to the Underwriter's over-allotment option; (ii) 200,000
shares of Common Stock issuable upon exercise of the Underwriter's Warrant
at 120% of the Price to Public; (iii) 2,000,000 shares of Common Stock which
are issuable upon the exercise of the Class A Warrants at an exercise price
of $8.50 per warrant; (iv) 700,000 shares of Common Stock reserved for
issuance under the Company's 1995 Stock Option and Compensation Plan, of
which 342,500 have been granted; and (v) 50,000 shares of Common Stock
issuable upon exercise of directors' stock options at an exercise price of
the higher of 66.67% of the Price to Public or $3.50 per share.
5
<PAGE> 8
RISK FACTORS
An investment in the Units offered hereby is highly speculative and
involves a high degree of risk. Investors could lose their entire investment.
Prospective investors should carefully consider the following factors, along
with the other information set forth in this Prospectus, in evaluating the
Company, its business and prospects before purchasing the Units.
LACK OF PROFITABILITY; LACK OF OPERATING HISTORY
The Company opened its first restaurant in June 1995. The Company had a net
loss of $388,202 during the 26 weeks of operations ended June 30, 1996, and a
net loss of $306,190 for the year ended December 31, 1995. The Company had a
working capital deficit of $2,239,340 and an accumulated deficit of $694,392 at
June 30, 1996. Prior to the opening of the Linden Hills Unit, the Company had no
operations or revenues. Accordingly, the Company's operations are subject to all
of the risks inherent in the establishment of a new business enterprise,
including the lack of operating history. The likelihood of success of the
Company must be considered in light of the problems, expenses, difficulties,
complications and delays frequently encountered in connection with the
establishment of any company. Although the Company is satisfied with the
operations of the Existing Units thus far, there can be no assurance that future
operations of such restaurants, or any future restaurants, will be profitable.
Future revenues and profits, if any, will depend upon various factors, including
the market acceptance of the Company's roadhouse and other concepts, the quality
of restaurant operations, and general economic conditions. Frequently,
restaurants, particularly theme-oriented restaurants, experience a decline of
revenue growth or of actual revenues as the restaurant's "initial honeymoon"
period expires and consumers tire of the related theme. There is no assurance
that the Company can operate profitably or that it will successfully implement
its expansion plans, in which case the Company will continue to be dependent on
the revenues of the Existing Units. Furthermore, to the extent that the
Company's expansion strategy is successful, the Company must manage the
transition to multiple site operations, higher volume operations, the control of
overhead expenses and the addition of necessary personnel.
LIMITED MANAGEMENT EXPERIENCE/NEED FOR ADDITIONAL MANAGEMENT
The success of the Company will depend upon the Company's ability to
attract and retain a highly qualified management team. David W. Anderson, the
Company's Chairman and Chief Executive Officer, has limited restaurant and
multi-location restaurant management experience. William L. Timm, the Company's
President, has no previous restaurant experience. Mark A. Payne, the Company's
Vice President, Finance and Chief Financial Officer, has significant financial
and accounting experience but has no prior restaurant-related experience. The
Company will also need to hire other corporate level and management employees to
help implement and operate its expansion plans, including a chief operating
officer with significant multi-unit restaurant experience. The failure to
obtain, or delays in obtaining, key employees could have a material adverse
effect on the Company. See "Management."
LIMITED BASE OF OPERATIONS
The Company currently operates only two restaurants and plans to open at
least five additional restaurants in 1996 and 1997. The combination of the
relatively small number of locations and the significant investment associated
with each new unit may cause the operating results of the Company to fluctuate
significantly and adversely affect the profitability of the Company. Due to this
relatively small number of current and planned locations, poor operating results
at any one unit or a delay in the planned opening of a unit could materially
affect the profitability of the entire Company. Future growth in revenues and
profits will depend to a substantial extent on the Company's ability to increase
the number of its restaurants. Additionally, the Company's history does not
provide any basis for prediction as to whether individual units will tend to
show increases or decreases in comparable unit sales.
6
<PAGE> 9
LIMITED FINANCIAL RESOURCES; ADEQUACY OF PROCEEDS AND NEED FOR ADDITIONAL
FINANCING
The Company's ability to execute its business strategy depends to a
significant degree on its ability to obtain substantial equity capital to
finance the development of additional restaurants. The proceeds of this Offering
will provide the Company with the financing required to develop and open five to
ten additional restaurants and for working capital purposes. The total cost of
developing the Linden Hills Unit was approximately $425,000, which included
$282,000 for the design and construction, $131,000 for equipment, furniture and
fixtures, and $12,000 for other costs. The total cost of developing the
Roseville Unit was approximately $1,110,000, which included $734,000 for the
design and construction, $310,000 for equipment, furniture and fixtures, and
$66,000 for other costs. The Company estimates that the costs of developing
three restaurants presently planned for the Minneapolis/St. Paul area will be
approximately $4.0 million. Although the Company estimates that the proceeds
from this Offering will be sufficient to develop and open at least five
additional units, there can be no assurance that such facilities can be
developed at such estimated costs. If the proceeds of this Offering are not
sufficient to develop such units, the Company may be required to seek additional
funds through an additional offering of the Company's equity securities. If
additional funds are required, there can be no assurance that any additional
funds will be available on terms acceptable to the Company or its shareholders.
New investors may seek and obtain substantially better terms than were granted
its present investors and the issuance of such securities would result in
dilution to the existing shareholders. Furthermore, as the Company prepares to
open additional units, it will expend a relatively higher amount on
administrative expenses than would a mature Company with such operations.
EXPANSION STRATEGY
The Company's ability to open and successfully operate additional units
will also depend upon the hiring and training of skilled restaurant management
personnel and the general ability to successfully manage growth, including
monitoring restaurants and controlling costs, food quality and customer service.
The Company's present senior management has little experience developing and
operating multi-unit facilities. The Company anticipates that the opening of
additional units will give rise to additional expenses associated with managing
operations located in multiple markets. Furthermore, the Company believes that
competition for unit-level management has become increasingly intense as
additional restaurant chains expand to new markets. Achieving consumer awareness
and market acceptance will require substantial efforts and expenditures by the
Company. An extraordinary amount of management's time may be drawn to such
matters and negatively impact operating results. There can be no assurance that
the Company will be able to enter into any other contracts for development of
additional units on terms satisfactory to the Company. Accordingly, there can be
no assurance that the Company will be able to open new units or that, if opened,
those units can be operated profitably. See "Business -- Expansion Strategy."
THE RESTAURANT INDUSTRY AND COMPETITION
The restaurant industry is highly competitive with respect to price,
service, quality and location and, as a result, has a high failure rate. There
are numerous well-established competitors, including national, regional and
local restaurant chains, possessing substantially greater financial, marketing,
personnel and other resources than the Company. Furthermore, to the extent that
barbeque restaurants are frequently viewed as "local," the Company may
experience intense competition or lack of consumer acceptance if it expands into
areas with existing barbeque restaurants. There can be no assurance that the
Company will be able to respond to various competitive factors affecting the
restaurant industry. The restaurant industry is also generally affected by:
changes in consumer preferences, national, regional and local economic
conditions, and demographic trends. The performance of restaurant facilities may
also be affected by factors such as traffic patterns, demographic
considerations, and the type, number and location of competing facilities. In
addition, factors such as inflation, increased labor and employee benefit costs,
and a lack of availability of experienced management and hourly employees may
also adversely affect the restaurant industry in general and the Company's
restaurants in particular. Restaurant operating costs are further affected by
increases in the minimum hourly wage, unemployment tax rates and similar matters
over which the Company has no control. Finally, by the nature of its business,
the Company would be subject to potential liability from serving contaminated or
improperly prepared food.
7
<PAGE> 10
CONCEPT EVOLUTION
The Company presently intends that most of its future restaurants will
feature the roadhouse theme similar to the Linden Hills and Roseville Units.
However, the Famous Dave's concept is evolving and a number of factors could
change this theme as applied in different locations. These factors include
demographic and regional differences, locations that have more or less traffic
than the areas in which those units are located, type of available floor space,
and the availability of specialty items such as antiques. Accordingly, future
units could be larger or smaller than those units, could vary in the mix of
retail/restaurant operations, and could have differences in the application of
the Famous Dave's theme.
LONG-TERM, NON-CANCELABLE LEASES
The Company has entered into long-term leases or subleases with an entity
wholly-owned by David W. Anderson relating to its Existing Units and certain
planned units. These leases are non-cancelable by the Company (except in limited
circumstances) and range in term from seven to ten years. Additional facilities
developed by the Company are likely to be subject to similar long-term,
non-cancelable leases, although the Company currently expects, subject to
available financial resources, that such leases will be entered into with
unrelated parties. If an existing or future unit does not perform at a
profitable level, and the decision is made to close the restaurant, the Company
may nonetheless be committed to perform its obligations under the applicable
lease or sublease, which would include, among other things, payment of the
respective base rent for the balance of the respective lease term. If such a
restaurant closing were to occur at one of these locations, the Company would
lose a unit without necessarily receiving an adequate return on its investment.
See "Business -- Property and Unit Locations" and "Certain Transactions."
TRANSACTIONS WITH MANAGEMENT; CONFLICTS OF INTEREST
There are several transactions between the Company and David W. Anderson,
its Chairman and Chief Executive Officer, that present a conflict of interest.
In addition, Mr. Anderson is a director of Rainforest Cafe, Inc., a theme
restaurant with associated retail operations primarily located in high traffic
shopping malls and theme parks throughout the country. Martin J. O'Dowd, a
director of the Company, is also the President, Chief Operating Officer and a
director of Rainforest Cafe, Inc. and a director of Elephant & Castle Group,
Inc. These two companies may potentially compete against the Company and the
directorships of Messrs. Anderson and O'Dowd could constitute a conflict of
interest. See "Certain Transactions."
CONTROL OF THE COMPANY; DEPENDENCE ON KEY PERSONNEL
Following this offering, David W. Anderson will control approximately 37.3%
of the Company's Common Stock. Therefore, Mr. Anderson will have the ability to
direct its operations and financial affairs and to substantially influence the
election of members of the Board of Directors of the Company. The Company is
also presently highly dependent upon the personal efforts and abilities of its
Chief Executive Officer, David W. Anderson. The loss of the services of Mr.
Anderson could have a substantial adverse effect on the Company's ability to
achieve its objectives. The Company currently has no key man insurance on Mr.
Anderson.
GOVERNMENT REGULATION
The restaurant business is subject to various federal, state and local
government regulations, including those relating to the sale of food and
alcoholic beverages. The failure to maintain food and liquor licenses would have
a material adverse effect on the Company's operating results. In addition,
restaurant operating costs are affected by increases in the minimum hourly wage,
unemployment tax rates, sales taxes and similar costs over which the Company has
no control. Many of the Company's restaurant personnel will be paid at rates
based on the federal minimum wage. Increases in the minimum wage will result in
an increase in the Company's labor costs. The Company also may be subject in
certain states to "dram shop" statutes which generally allow a person injured by
an intoxicated person to recover damages from an establishment that served
alcoholic beverages to such intoxicated person.
8
<PAGE> 11
TRADEMARKS
The Company's ability to successfully implement its Famous Dave's concept
will depend in part upon its ability to protect its trademarks. The Company has
filed a trademark application with the United States Patent and Trademark Office
to register the "Famous Dave's" mark and design. There can be no assurance that
the Company will be granted trademark registration for any or all of the
proposed uses in the Company's applications. In the event the Company's mark is
granted registration, there can be no assurance that the Company can protect
such mark and design against prior users in areas where the Company conducts
operations. There is no assurance that the Company will be able to prevent
competitors from using the same or similar marks, concepts or appearance.
SUBSTANTIAL DILUTION
Purchasers of the securities offered hereby will experience immediate
substantial dilution of $3.29 per Share in the net tangible book value per share
of Common Stock. See "Dilution."
ABSENCE OF DIVIDENDS
At the present time, the Company intends to use any earnings which may be
generated to finance further growth of the Company's business. Accordingly,
investors should not purchase the shares with a view towards receipt of cash
dividends from any Shares.
LACK OF PUBLIC MARKET; DETERMINATION OF OFFERING PRICE
Prior to this Offering, there has been no public market for the Company's
securities. Although the Company has applied for listing of the Units on the
Nasdaq SmallCap Market, there can be no assurance that an active public market
will develop or be sustained. The offering price of the Units offered hereby has
been arbitrarily determined by negotiation between the Company and the
Underwriter and bears no relationship to the Company's current operating
results, book value, net worth or financial statement criteria of value. The
factors considered in determining the offering price included an evaluation by
management of the history of and prospects for the industry in which the Company
competes and the prospects for earnings of the Company. Such factors are largely
subjective, and the Company makes no representation as to any objectively
determinable value of the Units offered hereby. See "Underwriting."
In addition, if the Company fails to maintain its qualification for its
Units to trade on the Nasdaq SmallCap Market, the Units will be subject to
certain rules of the Securities and Exchange Commission relating to "penny
stocks." Such rules require broker-dealers to make a suitability determination
for purchasers and to receive the purchaser's prior written consent for a
purchase transaction, thus restricting the ability of purchasers and
broker-dealers to sell the stock in the open market.
CURRENT PROSPECTUS AND STATE REGISTRATION REQUIRED TO EXERCISE WARRANTS;
POSSIBLE REDEMPTION OF WARRANTS
Purchasers of Units will be able to exercise the Class A Warrants only if a
current prospectus relating to the shares of Common Stock underlying the Class A
Warrants is then in effect and only if such securities are qualified for sale or
exempt from qualification under the applicable securities laws of the states in
which the various holders of Class A Warrants reside. Although the Company will
use its best efforts to (i) maintain the effectiveness of a current prospectus
covering the shares of Common Stock underlying the Class A Warrants and (ii)
maintain the registration of such Common Stock under the securities laws of the
states in which the Company initially qualifies the Units for sale in the
Offering, there can be no assurance that the Company will be able to do so. The
Company will be unable to issue shares of Common Stock to those persons desiring
to exercise their Class A Warrants if a current prospectus covering the
securities issuable upon the exercise of the Class Warrants is not kept
effective or if such securities are not qualified nor exempt from qualification
in the states in which the holders of the Warrants reside. The Class A Warrants
are subject to redemption at any time by the Company at $.01 per Warrant 90 days
after the Effective Date, on 30 days prior written notice, if the average
closing bid price of the Common Stock shall exceed 120% of the Exercise Price
(subject to adjustment), for 20 consecutive trading days, at any time prior to
such notice. If the Class A Warrants are
9
<PAGE> 12
redeemed, Warrant holders will lose their right to exercise the Warrants except
during such 30-day redemption period. Redemption of the Class A Warrants could
force the holders to exercise the Class A Warrants at a time when it may be
disadvantageous for the holders to do so or to sell the Class A Warrants at the
then market price or accept the redemption price, which is likely to be
substantially less than the market value of the Class A Warrants at the time of
redemption. See "Description of Securities -- Class A Warrants."
UNDESIGNATED STOCK
The Company's authorized capital consists of 100,000,000 shares of capital
stock. The Board of Directors, without any action by the Company's stockholders,
is authorized to designate and issue shares in such classes or series (including
classes or series of preferred stock) as it deems appropriate and to establish
the rights, preferences and privileges of such shares, including dividends,
liquidation and voting rights. The Company currently has 3,356,250 shares of
Common Stock outstanding and has authorized the issuance of an additional
2,300,000 shares of Common Stock in contemplation of this Offering. A further
3,250,000 shares of Common Stock have been authorized for the following: (i)
2,000,000 shares issuable upon the exercise of the Class A Warrants being issued
as part of this Offering (2,300,000 if the Underwriter's over-allotment option
is exercised in full), (ii) 200,000 shares issuable upon the exercise of
warrants to purchase one share of Common Stock being issued to the Underwriter,
(iii) 700,000 shares for issuance under the Company's 1995 Stock Option and
Compensation Plan, and (iv) 50,000 shares of Common Stock issuable upon exercise
of Directors' Stock Options. No other class of common stock or preferred stock
is currently designated and there is no current plan to designate or issue any
such securities. The rights of holders of preferred stock and other classes of
common stock that may be issued may be superior to the rights granted to the
holders of the Shares. Further, the ability of the Board of Directors to
designate and issue such undesignated shares could impede or deter an
unsolicited tender offer or takeover proposal regarding the Company and the
issuance of additional shares having preferential rights could adversely affect
the voting power and other rights of holders of Common Stock. See "Management --
Stock Option and Compensation Plan" and "Description of Securities."
SHARES ELIGIBLE FOR FUTURE SALE
The sale, or availability for sale, of substantial amounts of Common Stock
in the public market subsequent to this offering may adversely affect the
prevailing market price of Common Stock and may impair the Company's ability to
raise additional capital by the sale of its equity securities. David W.
Anderson, Chairman and Chief Executive Officer of the Company, has agreed that
he will not sell, grant any option for the sale of, or otherwise dispose of any
equity securities of the Company (or any securities convertible into or
exercisable or exchangeable for equity securities of the Company) for 365 days
after the Effective Date without the prior written consent of the Underwriter.
The Company's other executive officers and directors have agreed to be subject
to the same restrictions for a period of 180 days. See "Description of
Securities -- Shares Eligible for Future Sale."
MINNESOTA ANTI-TAKEOVER LAW
The Company is subject to Minnesota statutes regulating business
combinations and restricting voting rights of certain persons acquiring shares
of the Company, which may hinder or delay a change in control of the Company.
See "Description of Securities."
USE OF PROCEEDS
The net proceeds to be received by the Company from this Offering, after
deducting estimated costs and expenses of the Offering, are estimated to be
approximately $10,580,000 ($12,200,000 if the Underwriter's over-allotment
option is exercised in full). The Company intends to utilize the proceeds to
develop and open five to ten new Units. The Company intends to apply the balance
of the net proceeds, if any, for working capital purposes.
Pending the use of proceeds as described above, the net proceeds will be
invested in short-term interest-bearing securities.
10
<PAGE> 13
DILUTION
At June 30, 1996, the Company's net tangible book value was $269,621 or
approximately $0.13 per share of Common Stock. "Net tangible book value"
represents the tangible assets of the Company less all liabilities. Without
taking into account any further changes in net tangible book value after June
30, 1996, other than to give effect to (i) the sale of all of the Units offered
hereby and (ii) the application of the net proceeds therefrom, the pro forma net
tangible book value as of such date would have been $10,849,621 or approximately
$2.71 per share, assuming the Units are sold. This represents an immediate
increase to existing shareholders in net tangible book value of approximately
$2.58 per share and an immediate dilution to new Shareholders of $3.29 per
share. "Dilution" represents the difference between the amount per share paid by
purchasers in this Offering and pro forma net tangible book value per share of
the Common Stock after this Offering. The following table illustrates the
dilution in net tangible book value per share to new investors as of June 30,
1996.
<TABLE>
<CAPTION>
AMOUNT
------
<S> <C> <C>
Public offering price.......................................... $6.00
Net tangible book value before offering........................ $0.13
Increase in net tangible book value attributable to new
investors.................................................... 2.58
-----
Pro forma net tangible book value after offering............... 2.71
-----
Dilution in net tangible book value to new investors(1)........ $3.29
=====
</TABLE>
- -------------------------
(1) The dilution in net tangible book value per share to new investors,
assuming the Underwriter's over-allotment option is fully exercised, would
be $3.10.
The following tables summarize the differences between the existing
shareholders and the new investors with respect to the number of shares of
Common Stock purchased from the Company, the total cash consideration paid by
each group, and the average cash consideration per share of Common Stock paid by
each group (assuming the entire offering price of the Units is allocated to the
Common Stock).
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
-------------------- ---------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
--------- ------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C>
Existing Shareholder........................ 2,000,000 37.3% $ 1,000,000 5.6% $0.50
Private Placement Investors................. 1,356,250 25.4% 4,746,875 26.8% 3.50
New Investors............................... 2,000,000 37.3% 12,000,000 67.6% 6.00
--------- ----- ----------- -----
Total(1)............................... 5,356,250 100.0% $17,746,875 100.0%
========= ===== =========== =====
</TABLE>
- -------------------------
(1) The foregoing table takes into account the July 1996 sale of 1,356,250
shares of Common Stock at $3.50 per share but does not take into
consideration: (i) 300,000 Units subject to the Underwriter's over-allotment
option; (ii) 200,000 shares of Common Stock issuable upon exercise of the
Underwriter's Warrant at 120% of the initial public offering price; (iii)
2,000,000 shares of Common Stock (2,300,000 shares if the Underwriter's
over-allotment option is exercised in full) which are issuable upon the
exercise of the Class A Warrants at an exercise price of $8.50 per warrant;
(iv) 700,000 shares of Common Stock which are reserved for issuance under
the Company's 1995 Stock Option and Compensation Plan, of which 342,500 have
been granted; and (v) 50,000 shares of Common Stock issuable upon exercise
of directors' stock options at an exercise price of the higher of 66.67% of
the Price to Public or $3.50 per share.
DIVIDEND POLICY
The Company has never declared or paid any cash dividends on its Common
Stock, and the Board of Directors presently intends to retain all earnings, if
any, for use in the Company's business for the foreseeable future. Any future
determination as to declaration and payment of dividends will be made at the
discretion of the Board of Directors.
11
<PAGE> 14
CAPITALIZATION
The following table sets forth the capitalization of the Company as of June
30, 1996, as further adjusted to give effect to the sale of the Units offered
hereby and the anticipated application by the Company of the proceeds therefrom.
See the Consolidated Financial Statements.
<TABLE>
<CAPTION>
AT JUNE 30, 1996
-------------------------------------------
PROFORMA
ACTUAL PROFORMA(1) AS ADJUSTED(2)
--------- ------------ --------------
<S> <C> <C> <C>
Long-term debt(3)....................................... $ 251,981 $ 251,981 $ 251,981
Stockholders' equity:
Common Stock, $.01 par value, 100,000,000 shares
authorized, 2,000,000 shares issued and
outstanding; 3,356,250 shares proforma; 5,356,250
shares as adjusted................................. 20,000 33,563 53,563
Additional paid-in capital............................ 980,000 5,171,437 15,731,437
Accumulated deficit................................... (694,392) (694,392) (694,392)
-------- ---------- -----------
Total stockholders' equity....................... 305,608 4,510,608 15,090,608
-------- ---------- -----------
Total capitalization............................. $ 557,589 $4,762,589 $ 15,342,589
======== ========== ===========
</TABLE>
- -------------------------
(1) Assumes completion on June 30, 1996 of the sale of 1,356,250 shares of
Common Stock at $3.50 per share for net proceeds of approximately $4,200,000
which was completed in July 1996.
(2) As adjusted for the sale of the Units offered hereby and the anticipated
application of the net proceeds therefrom. Does not include (i) 300,000
Units subject to the Underwriter's over-allotment option; (ii) 200,000
shares of Common Stock issuable upon exercise of the Underwriter's Warrant
at 120% of the Price to Public; (iii) 2,000,000 shares of Common Stock which
are issuable upon the exercise of the Class A Warrants at an exercise price
of $8.50 per warrant; (iv) 700,000 shares of Common Stock reserved for
issuance under the Company's 1995 Stock Option and Compensation Plan, of
which 342,500 have been issued; and (v) 50,000 shares of Common Stock
issuable upon exercise of directors' stock options at an exercise price of
the higher of 66.67% of the Price to Public or $3.50 per share.
(3) Long-term debt does not include capital lease financing which was obtained
in August 1996 for up to $1,100,000 for equipment, furniture, fixtures and
leasehold improvements. As of August 15, 1996, approximately $575,000 of the
$1,100,000 in lease financing had been funded.
12
<PAGE> 15
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The Company was formed in March 1994 to develop, own and operate American
roadhouse-style barbeque restaurants under the name "Famous Dave's Bar-B-Que
Shack". The Company opened its first restaurant in the Linden Hills neighborhood
of Minneapolis in June 1995. Prior to opening the Linden Hills Unit, the Company
had no revenues and its activities were devoted solely to development.
The Company opened its second unit in June 1996 in Roseville, Minnesota, a
suburb of Minneapolis/ St. Paul and is presently developing three additional
units in the Minneapolis/St. Paul area.
Future revenues and profits, if any, will depend upon various factors,
including market acceptance of the Famous Dave's concept, the quality of the
restaurant operations, the ability to expand to multi-unit locations and general
economic conditions. The Company's present sources of revenue are limited to its
Linden Hills and Roseville Units. There can be no assurances the Company will
successfully implement its expansion plans, in which case it will continue to be
dependent on the revenues from the Linden Hills and Roseville Units. The Company
also faces all of the risks, expenses and difficulties frequently encountered in
connection with the expansion and development of a new and expanding business.
Furthermore, to the extent that the Company's expansion strategy is successful,
it must manage the transition to multiple site operations, higher volume
operations, the control of overhead expenses and the addition of necessary
personnel.
At January 1, 1996, the Company elected a fiscal year ending on the Sunday
nearest December 31. Prior to January 1, 1996, the Company used a fiscal year
ending on December 31.
RESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1995 AND
FOR THE TWENTY SIX WEEKS ENDED JUNE 30, 1996
The Company had no revenues or operations during the period from March 14,
1994 (the "Inception") to June 19, 1995 (the opening of the Linden Hills Unit).
Accordingly, comparisons with periods prior to June 19, 1995 are not meaningful.
Total Revenues -- The Linden Hills Unit opened in June 1995. The Roseville Unit
opened in June 1996. For the year ended December 31, 1995, the Company had total
sales of $481,510 compared with $1,015,856 for the 26 weeks ended June 30, 1996.
Sales increases are largely attributed to increased guest counts and the June
1996 opening of the Roseville Unit.
Costs and Expenses -- For the year ended December 31, 1995, the Company had a
net loss of $306,190 compared with a net loss of $388,202 for the 26 weeks ended
June 30, 1996. The net loss for each period is largely attributable to
additional expenses incurred as the Company increases its Corporate overhead
structure for the development of additional locations supported by revenues from
primarily a single operating unit.
Results of the Linden Hills Unit -- The following table sets forth the unit
level results from the Company's Linden Hills Unit:
<TABLE>
<CAPTION>
PERIOD FROM
COMMENCEMENT
OF OPERATIONS
(JUNE 19, 1995) 26 WEEKS ENDED
TO DECEMBER 31, 1995 JUNE 30, 1996
-------------------- -------------------
AMOUNT PERCENT AMOUNT PERCENT
-------- ------- -------- -------
<S> <C> <C> <C> <C>
Sales.................................................. $481,510 100.0% $778,968 100.0%
Food and beverage costs................................ 169,789 35.3 256,336 32.9
-------- ----- -------- -----
Gross profit......................................... 311,721 64.7 522,632 67.1
Operating expenses..................................... 302,217 62.8 305,006 39.2
Depreciation and amortization.......................... 17,009 3.5 16,760 2.2
-------- ----- -------- -----
Unit level income (loss)............................... $ (7,505) (1.6)% $200,866 25.7%
======== ===== ======== =====
</TABLE>
13
<PAGE> 16
During the period from the commencement of Linden Hills operations (June
19, 1995) to December 31, 1995, food and beverage costs were $169,789 or 35.3%
of sales compared with $256,336 or 32.9% of sales for the June 30, 1996 period.
The improvement in food and beverage costs as a percentage of sales is due
primarily to improved operating efficiencies.
Restaurant operating expenses were $302,217 or 62.8% of sales during the
period from the commencement of Linden Hills operations (June 19, 1995) to
December 31, 1995 compared to $305,006 or 39.2% of sales during the 26 weeks
ended June 30, 1996. This improvement in restaurant operating expenses as a
percentage of sales is due primarily to improved labor management and other
operating efficiencies and increased sales.
Although no assurances can be given, management believes that the Linden
Hills Unit's current level of sales, trained workforce and general operational
improvements will improve unit level contribution in future periods.
LIQUIDITY AND CAPITAL RESOURCES
The Company has met its capital requirements through revenues from
operations, the sale of Common Stock to and borrowings from its sole
shareholder, David W. Anderson, and the private placement of debt and common
stock. During the period from March 14, 1994 (Inception) through December 31,
1995, the Company sold to Mr. Anderson 2,000,000 shares of Common Stock at $.50
per share. Pursuant to the subscription agreement relating to such purchase,
payments were made totaling $425,270 during part-year 1994 and $574,730 during
the year ended December 31, 1995. Additionally, the Company entered into a
revolving promissory note with Mr. Anderson allowing for advances of up to
$2,000,000. As of June 30, 1996, the Company had outstanding advances totaling
$359,349 under this arrangement. This note was paid in full in August 1996.
In July 1996, the Company completed a private placement of 1,356,250 shares
of Common Stock at $3.50 per share. The net proceeds to the Company were
approximately $4.2 million. Such proceeds have been, and will be, used for
additional unit development and working capital.
For the year ended December 31, 1995, the Company used $227,069 in cash
flow for operating activities and during the 26 weeks ended June 30, 1996, the
Company used $163,899 in cash flow for operating activities.
Since Inception, the Company's principal capital requirements have been the
funding of (i) the development of the Company and the Famous Dave's concept,
(ii) the construction of the Linden Hills and Roseville Units and the
acquisition of the furniture, fixtures and equipment therein and (iii) towards
the development of additional units as described below. Total capital
expenditures for the Linden Hills and Roseville Units were approximately
$425,000 and $1,110,000, respectively.
The Company is presently developing three additional restaurants in the
Minneapolis/St. Paul area. The Company had incurred approximately $995,000 in
the development of these units as of June 30, 1996.
In addition to construction in progress, the Company has capitalized
approximately $39,000 of direct costs relating to the Roseville Unit and units
under construction. It is the Company's policy to amortize the direct costs of
hiring and training the initial work force and other direct costs associated
with opening a new Unit over a twelve-month period, beginning when the facility
is opened, if the recoverability of such costs can be reasonably assured.
Accordingly, initial costs related to the Linden Hills Unit were expensed as
incurred due to the developmental nature of the Unit.
In August 1996, the Company secured access to $1,100,000 of capital lease
financing. This lease financing will be used for equipment, furniture, fixtures
and leasehold improvements. As of August 15, 1996, approximately $575,000 of the
$1,100,000 in lease financing had been funded.
After the completion of these expansion plans, future development and
expansion will be financed through cash flow from operations and other forms of
financing such as the sale of additional equity and debt securities, capital
leases and other credit facilities. There are no assurances that such financing
will be available on terms acceptable or favorable to the Company.
14
<PAGE> 17
BUSINESS
OVERVIEW
The primary business of the Company is to develop, own and operate American
roadhouse-style barbeque restaurants under the name "Famous Dave's Bar-B-Que
Shack." The Company presently owns and operates two roadhouse-themed barbeque
restaurants, one in the Linden Hills neighborhood of Minneapolis and the other
in Roseville, Minnesota (the "Existing Units"). The Company is developing three
additional restaurants: in Calhoun Square in Minneapolis which will offer live
blues music, in Minnetonka, Minnesota, and on West 7th Street near the Highland
Park area of St. Paul, Minnesota. The Calhoun Blues Joint is expected to open in
September 1996 and the Minnetonka Unit is expected to open in early 1997, and
are presently planned to be larger than the Existing Units.
THE FAMOUS DAVE'S CONCEPT AND STRATEGY
Concept Development
The Company was founded by David W. Anderson in March 1994. As a cooking
enthusiast, Mr. Anderson has spent more than 20 years analyzing seasonings,
barbeque sauces, rib recipes, cooking techniques and equipment in the
development of his barbeque. In addition, Mr. Anderson has traveled extensively
throughout the United States, visiting hundreds of barbeque restaurants for the
purposes of researching regional tastes, ambiance, decor, menu development,
plate presentation, and restaurant design before launching his first restaurant
in Hayward, Wisconsin in June 1994 (the "Hayward Facility"). The Hayward
Facility, which is part of a larger resort complex, is not owned by the Company
but by a company wholly-owned by David W. Anderson.
Famous Dave's concept was developed around favorable memories associated
with backyard barbecues. In identifying a potential market niche, Mr. Anderson
has studied the development of certain restaurants that have capitalized on the
growing trend of home replacement meals taking the place of home cooked meals.
The Company hopes to capitalize on this trend, both for dine-in and take-out
meals. The Company believes that the comfortable, appealing decor of its
restaurants and the universal appeal of down-home cooking and barbecue will be
significant advantages in its attempts to penetrate this niche market.
Competitive Differentiation
On a national scale, the Company believes that it faces two major
competitors, Tony Roma's and Damon's. Both restaurant chains feature baked, as
opposed to pit smoked, ribs on a white platter. The Company believes that the
setting of such restaurants is more formal and has a masculine ambiance.
Famous Dave's specializes in real hickory pit smoked barbeque served in
colorful picnic-style baskets in a themed roadhouse-style restaurant with a warm
and inviting family atmosphere.
The Menu
The Company's primary focus is its food. The Company's mission is to
deliver the best barbeque in America. Each restaurant features a limited
assortment of menu items, such as hickory-smoked St. Louis-style spareribs,
Texas beef brisket, herb-roasted chicken, barbeque sandwiches, and char-grilled
burgers, as well as honey-buttered corn bread, potato salad, cole slaw and
"Wilbur"(TM) beans. Homemade desserts, including Famous Dave's bread pudding,
Kahlua(TM) brownies and strawberry shortcake, are a specialty. The Company's
Famous Dave's BBQ Sauces, which are provided in four regional variations
(Rich-N-Sassy(TM), Texas Pit(TM), Georgia Mustard(TM) and Hot Stuff(TM)),
represent signature items of the Company. The Company's Rich-N-Sassy(TM) Famous
Dave's BBQ Sauce was awarded first place in the mild tomato division of the 1995
Kansas City American Royal Barbeque Contest.
Lunch entrees range from $6 to $8 and dinner entrees from $10 to $12. The
average guest check for the four-week period ending August 18, 1996 was
approximately $10 per person. Food portions are generous to increase the
perceived value. Management believes that the Company's food, together with each
restaurant's
15
<PAGE> 18
distinctive decor, have resulted in a high level of repeat business. Presently,
approximately 35% of the Company's business is take-out at the Linden Hills
Unit.
The Company intends to obtain a beer and wine license for most of its
restaurants, with the intention that such beverages will be served along with
meals. The Company does not intend to emphasize sales of beer and wine apart
from meals in most of its restaurants, primarily because the Company feels that
it reduces the number of table turns and therefore profitability. In addition to
a beer and wine license, the Company will obtain a liquor license for the
Calhoun Blues Joint.
Awards and Recognition
The Company's food and restaurants have won the following awards during the
past year:
<TABLE>
<S> <C>
First place (mild tomato category) Best Ribs
American Royal Barbeque Contest Critic's Choice Award
Kansas City, Missouri Minnesota Monthly
October 1995 May 1996
Best Bar-B-Que Joint First Place Award,
Mpls/St. Paul Magazine Best Barbeque Beef Brisket
January 1996 Rib Buddies Cookoff
St. Paul, Minnesota
1996 Diner's Choice Award May 1996
Best New Restaurant
Mpls/St. Paul Magazine
April 1996
</TABLE>
In addition, Governor Arne Carlson of Minnesota has proclaimed Wednesday,
September 4, 1996, to be "Famous Dave's BBQ & Blues Day," to coincide with the
Grand Opening of the Calhoun Blues Joint.
Food Preparation and Delivery
The Company believes that ease of food preparation and delivery will be one
key to its success. While some restaurants require highly compensated and
extensively trained chefs, the food served at each restaurant is prepared in a
basic three-step process that requires minimal training time. Mr. Anderson has
developed prepared seasonings, sauces, bread mixes and other ingredients, which
allow each menu item to be served with minimal preparation. The Company views
this efficient and effective process as critical for its national expansion.
Focus on Customer Satisfaction
The Company is committed to staffing each unit with an experienced
management team and providing its customers with prompt, friendly and efficient
service. The customer's experience is also enhanced by the attitude and
attention of restaurant personnel. The Company recognizes that, in order to
maintain a high level of repeat customers and to attract new business, it must
provide superior customer service.
Famous Dave's maintains a mission statement that its goal is to strive for
"delighted" guests rather than just "satisfied" guests. The Company believes
that a customer establishes his or her opinion within the first seven seconds.
To this end, the Company has focused its property development to maximize first
impressions of sight, smell, sound, and feel. The Company accomplishes this
through the wonderful smell of hickory-smoked barbeque, the lively sounds of
juke joint blues music, the colorful and nostalgic decor, and the varied
textures of rough cut pine, corrugated tin roofs, and antiques.
Distinctive Roadhouse Decor
Each Existing Unit is a "real" barbeque joint, reminiscent of the old
country-style roadhouse barbeque "joints" that dotted rural America 50 years
ago. The Company's nostalgic roadside shack theme is promoted
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<PAGE> 19
by the use of antiques and items of Americana from the '20s and '30s in a rustic
environment. The weathered barn wood walls, cozy, antique-filled Southern
country shack decor, overhead tin roofing and blues tunes in the air are
intended to convey the feeling of a down-home backyard barbeque.
Each restaurant table is covered with a red and white checkered oilcloth
and features salt, pepper and barbeque sauces stored in a six-pack beer
container. A large roll of paper towels accompanies every meal.
The Blues Component
The roadhouse theme is further enhanced by the use of blues music which,
together with the restaurant's decor, provides an entertaining dining
environment. Each restaurant features taped blues music that contributes to the
roadhouse theme. Mr. Anderson's attention to detail includes personal selection
of all music that is played in the restaurants. In addition, the Company's Blues
Joint will feature live blues music featuring the Famous Dave's Blues All-Stars
(the "Blues Band"). The Company believes that the Blues Band, which will have
music on CD's available for sale at each restaurant, will provide significant
marketing exposure for the Company.
PROPERTY AND UNIT LOCATIONS
The following table sets forth certain information about the Company's
Existing and planned restaurants:
<TABLE>
<CAPTION>
APPROXIMATE APPROXIMATE
SQUARE RESTAURANT DATE OPENED OR
LOCATION FOOTAGE SEATS PLANNED TO BE OPENED
- ---------------------------------------------------- ----------- ------------ --------------------
<S> <C> <C> <C>
Linden Hills........................................ 2,900 60 + 40 June 1995
Minneapolis, MN patio seats
Roseville, MN....................................... 4,800 100 June 1996
Calhoun Square...................................... 10,500 250 September 1996
Minneapolis, MN
Minnetonka, MN...................................... 7,300 100 Early 1997
Highland Park....................................... 5,500 100 Spring 1997
St. Paul, MN
</TABLE>
The following units are leased or subleased from S&D Land Holdings, Inc.,
("S&D") a Minnesota corporation wholly-owned by David W. Anderson, the Company's
Chairman and Chief Executive Officer, pursuant to the following terms:
1. Linden Hills. The Linden Hills site contains approximately 2,900 square feet
of restaurant space, including the patio area. The site is subject to a lease
from S&D effective January 1, 1996 for a 10-year term with base rent of
$48,800 per year with annual increases based upon increases in the consumer
price index ("CPI"). The Company also has the right to extend the term for
two five-year periods. In addition to base rent, the Company is responsible
for the payment of all operating costs and real estate taxes.
2. Roseville. S&D is the tenant under an Agreement of Lease and Agreement
Concerning Sublease (collectively, "Lease"). S&D has subleased the Roseville
site to the Company effective January 1, 1996 for $82,200 per year with
annual increases based upon increases in the CPI. The initial term under the
Sublease is seven years. The Company has the right to extend the term for an
additional five-year period. Should the Company so elect to extend, the
Company is obligated to pay percentage rent of 1% of gross sales as
additional rent. The improvements located on the site may revert to the
landlord at the termination of the Sublease. Assignment or subletting of any
interest in the Sublease requires the prior written approval of the landlord.
In addition to base rent and percentage rent, the Company is responsible for
the payment of all operating costs and real estate taxes.
3. Minnetonka. The Minnetonka site is a former restaurant located on
approximately 2.3 acres of land. The Minnetonka site has been leased
effective January 15, 1996 from S&D for a 10-year term with base rent of
17
<PAGE> 20
$124,129 per year with annual increases based upon increases in the CPI. The
Company has the right to extend the term for two five-year periods. The
Company has the right to develop and/or remodel the existing building with
the prior written consent of S&D. In addition to base rent, the Company is
responsible for the payment of all operating costs and real estate taxes.
4. Highland Park. The Highland Park site contains approximately 2.3 acres of
vacant land and was leased from S&D effective January 1, 1996 for a 10-year
term with base rent of $44,900 per year with annual increases based upon
increases in the CPI. The Company also has the right to extend the term for
two five-year periods. The lease allows the Company to develop the site as a
restaurant at the Company's cost and with the prior written consent of S&D.
In addition to base rent, the Company is responsible for the payment of all
operating costs and real estate taxes.
The above-mentioned leases are non-cancelable by the Company. The Company or a
subsidiary also has entered into leases or subleases for the following
properties:
5. Calhoun Square -- Lake and Hennepin BBQ & Blues, Inc., a Minnesota
corporation and a wholly-owned subsidiary of the Company ("LHBB") has entered
into a lease for the Calhoun Square site with Calhoun Square Associates dated
January 5, 1996. The lease runs for a term of 15 years and LHBB has the right
to extend the term for two five-year periods. LHBB is obligated to pay base
rent of $13,293 per month plus percentage rent of 5% of gross sales over
$3,190,320. In addition to base rent and percentage rent, the Company is
responsible for the payment of its pro-rata share of operating costs and real
estate taxes.
6. Corporate Office -- The Company has assumed a lease effective as of August
31, 1996 for 7,800 square feet of office/warehouse space at 12700 Industrial
Park Boulevard in Plymouth, Minnesota. Rent payments due under the lease are
$3,951 per month, which exclude prorations for operating expenses and real
estate taxes. The lease terminates on August 31, 1998.
The Hayward Facility, which is part of a larger resort complex, is not
owned by the Company but by a company wholly-owned by David W. Anderson.
EXPANSION STRATEGY
The Company intends to identify sites to locate its restaurants based on a
variety of factors including local market demographics, site viability,
competition and projected economics of each unit. Initial plans are to continue
to identify and finalize future site opportunities in the Minneapolis/St. Paul
area via land purchases, building and land purchases, land leases and building
and land leases. The Company believes the Minneapolis/St. Paul area can support
up to approximately 10 units, and expects to open the Calhoun Blues Joint in
September 1996 and at least two additional units in the Minneapolis/St. Paul
area in 1997.
Simultaneously, the Company intends to predominantly target additional
major metropolitan markets to broaden and enhance the recognition value of the
concept. Specific cities for expansion will be identified and analyzed as to
potential compatibility with the concept.
OPERATIONS, MANAGEMENT AND EMPLOYEES
The Company's ability to manage multi-location units will be central to its
overall success. The Company believes that its management must include skilled
personnel at all levels. The Company also intends to hire other corporate level
and management employees to help implement and operate its expansion plans,
including a chief operating officer with significant multi-unit restaurant
experience. At the unit level, the Company places specific emphasis on the
position of general manager ("General Manager") and seeks employees with
significant experience and management expertise. The General Manager of each
restaurant reports directly to the President. The Company strives to maintain
quality and consistency in each of its units through the careful training and
supervision of personnel and the establishment of, and adherence to, high
standards relating to personnel performance, food and beverage preparation, and
maintenance of facilities. The Company believes that it has been able to attract
high quality, experienced restaurant and retail management and personnel with
its competitive compensation and bonus programs. Staffing levels vary according
to the time of day and size of the restaurant. In general, each unit has between
30 and 50 employees.
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<PAGE> 21
All managers must complete a training program, during which they are
instructed in areas such as food quality and preparation, customer service, and
employee relations. The Company has also prepared operations manuals relating to
food and beverage quality and service standards. New staff members participate
in approximately three weeks of training under the close supervision of Company
management. Management strives to instill enthusiasm and dedication in its
employees, regularly solicits employee suggestions concerning Company
operations, and endeavors to be responsive to employees' concerns. In addition,
the Company has extensive and varied programs designed to recognize and reward
employees for superior performance. As of August 11, 1996, the Company had
approximately 114 employees, 49 of which were full-time. The Company believes
that its relationship with its employees is good.
PURCHASING
The Company strives to obtain consistent quality items at competitive
prices from reliable sources. Any discontinuance of such favorable pricing could
negatively impact the Company's purchasing abilities. In order to maximize
operating efficiencies and to provide the freshest ingredients for its food
products while obtaining the lowest possible prices for the required quality,
each unit's management team determines the daily quantities of food items needed
and orders such quantities from major suppliers at prices often negotiated
directly with the Company's corporate office. Food and supplies are shipped
directly to the restaurants, although the Company may develop a centralized food
preparation commissary. The Company purchases perishable food products locally.
MARKETING AND PROMOTION; THE RIBMOBILE
To date, the Company has relied primarily upon advertising, publicity and
"word of mouth" advertising to attract customers to its restaurants. The Company
also utilizes distinctive exterior signage and off-site billboards. In addition,
the Company has attempted to create equity in its "Famous Dave's" name by
offering items such as Famous Dave's Bar-B-Que sauces for retail sale at its
restaurants and in approximately 50 grocery stores in the Twin Cities area. The
Company also sells T-shirts, caps and sweatshirts bearing its logo in its
restaurants.
The Company utilizes the Famous Dave's Ribmobile to participate in local
rib festivals and barbeque contests. The Company currently participates in seven
or eight "ribfests" a year. The Company has found that such festivals and
concepts result in favorable publicity.
TRADEMARKS
The Company's ability to successfully implement its Famous Dave's concept
will depend in part upon its ability to protect its trademarks. The Company has
filed a trademark application with the United States Patent and Trademark Office
to register the mark "Famous Dave's" and design. There can be no assurance that
the Company will be granted trademark registration for any or all of the
proposed uses in the Company's applications. In the event the Company's mark is
granted registration, there can be no assurance that the Company can protect
such mark and design against prior users in areas where the Company conducts
operations. There is no assurance that the Company will be able to prevent
competitors from using the same or similar marks, concepts or appearance.
LEGAL PROCEEDINGS
The Company is not a party to any material litigation and is not aware of
any threatened litigation that would have a material adverse effect on its
business.
COMPETITION
The restaurant business is highly competitive and affected by changes in
taste and eating habits of the public, local and national economic conditions
affecting spending habits, and population and traffic patterns. Furthermore, to
the extent that barbeque restaurants are frequently viewed as "local," the
Company may experience intense competition or lack of consumer acceptance if it
expands into areas with existing barbeque
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<PAGE> 22
restaurants. The principal competitive factors in the restaurant industry are
believed to be the quality and price of the food. Location, name recognition,
efficiency of service, advertising, and attractiveness of facilities are also
important for restaurant facilities. Famous Dave's competes on a general basis
with a large variety of national and regional restaurant operations, as well as
locally-owned restaurants, diners, and other establishments that offer
moderately priced food to the public.
REGULATION
Restaurants are subject to licensing and regulation by state and local
health, sanitation, safety, fire, and other authorities and are also subject to
state and local licensing and regulation of the sale of alcoholic beverages and
food. Difficulties in obtaining or failure to obtain required licenses and
approvals will result in delays in, or cancellation of, the opening of
restaurants. The food and liquor licenses are also subject to suspension or
non-renewal if the granting authority determines that the conduct of the holder
does not meet the standards for initial grant or renewal.
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to each of
the directors and executive officers of the Company.
<TABLE>
<CAPTION>
NAME AGE POSITION(S) HELD
- ----------------------------------- --- ---------------------------------------------------
<S> <C> <C>
David W. Anderson.................. 42 Chairman of the Board and Chief Executive Officer
William L. Timm.................... 36 President
Mark A. Payne...................... 37 Vice President, Finance, Chief Financial Officer,
Secretary and Treasurer
Martin J. O'Dowd................... 48 Director
Thomas J. Brosig................... 47 Director
</TABLE>
David W. Anderson, founder of the Company, has been the Chairman of the
Board since its formation. Mr. Anderson is also a founder and a director of
Rainforest Cafe, Inc. In October 1990, Mr. Anderson co-founded Grand Casinos,
Inc. and through March 1996 served as a director and Executive Vice President.
William L. Timm has been President of the Company since March 1996.
Previously, for the past ten years, Mr. Timm has been self-employed in sales and
marketing.
Mark A. Payne has been Vice President, Finance, Chief Financial Officer,
Secretary and Treasurer since August 1996. Previously, and since August 1995 he
was Senior Vice President, Business Development and Acquisitions of ValueVision
International, Inc., a television home shopping network. Prior to that and since
December 1990, he served as Vice President, Finance and Chief Financial Officer
at ValueVision.
Martin J. O'Dowd has been a director of the Company since August 1996.
Since May 1995, Mr. O'Dowd has served as President and Chief Operating Officer
of Rainforest Cafe, Inc. In June 1995 he became a director and Secretary of
Rainforest Cafe, Inc. From July 1987 to May 1995, Mr. O'Dowd was Corporate
Director, Food and Beverage Services, for Holiday Inn Worldwide. From August
1985 to July 1987, Mr. O'Dowd was Vice President and General Operations Manager
for the Hard Rock Cafe in New York. Mr. O'Dowd is also a director of Elephant &
Castle Group, Inc.
Thomas J. Brosig has been a director of the Company since August 1996.
Since August 1994, Mr. Brosig has served as Executive Vice President - Investor
Relations and Special Projects of Grand Casinos, Inc. From its inception until
May 1995, Mr. Brosig served as Secretary of Grand Casinos, Inc., and from May
1993 until August 1994, Mr. Brosig served as its President. Mr. Brosig also
served as Grand Casinos, Inc.'s Chief Operating Officer from October 1991 until
May 1993, and as its Chief Financial Officer from its inception until January
1992. Mr. Brosig is also a director of G-III Apparel Group Ltd. and Game
Financial, Inc.
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<PAGE> 23
EXECUTIVE COMPENSATION
The following table sets forth all cash compensation paid by the Company
for the period from March 14, 1994 (Inception) through December 31, 1995 to the
Company's executive officer:
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
---------------------- ---------------
OTHER ANNUAL AWARD
NAME OF INDIVIDUAL POSITION SALARY COMPENSATION OPTIONS GRANTED
- ----------------------------- ----------------------------- ------ ------------ ---------------
<S> <C> <C> <C> <C>
David W. Anderson............ Chairman of the Board and $0 $0 --
Chief Executive Officer
</TABLE>
EMPLOYMENT AGREEMENTS
David W. Anderson has been retained pursuant to a two-year employment
agreement dated as of March 4, 1996, subject to early termination for variety of
reasons, including voluntary termination by Mr. Anderson. Mr. Anderson will
receive a base salary of $100,000 per year during the first year of employment,
and such subsequent amounts as may be determined by the Company's Board of
Directors. Such agreement also provides that Mr. Anderson will receive six
months' severance if terminated by the Company for a reason other than "cause,"
as defined therein. Mr. Anderson will also receive medical, dental and other
customary benefits. The employment agreement provides that Mr. Anderson will not
compete with the Company for two years if terminated for cause.
William L. Timm has been retained pursuant to a two-year employment
agreement dated as of March 4, 1996, subject to early termination for a variety
of reasons. Mr. Timm will receive a base salary of $100,000 during the first
year of employment and such subsequent amounts as may be determined by the
Company's Board of Directors. Such agreement also provides that Mr. Timm will
receive six months' severance if terminated by the Company for a reason other
than "cause," as defined therein. Mr. Timm will also receive medical, dental and
other customary benefits. The employment agreement provides that Mr. Timm will
not compete with the Company for two years if terminated for cause.
Mark A. Payne has been retained pursuant to a three-year employment
agreement dated as of August 12, 1996, subject to early termination for a
variety of reasons. Mr. Payne will receive a base salary of $125,000 during the
first year of employment and such subsequent amounts as may be determined by the
Company's Board of Directors. Mr. Payne will also receive $25,000 upon the
closing of the Company's initial public offering. Such agreement also provides
that Mr. Payne will receive six months severance if terminated by the Company
for a reason other than "cause," as defined therein, within the first year of
his employment and 12 months severance if terminated by the Company for a reason
other than cause after the first year of employment. Mr. Payne will also receive
medical, dental and other customary benefits. The employment agreement provides
that Mr. Payne will not compete with the Company for two years if terminated for
cause.
The Company intends to retain other management employees pursuant to
employment and consulting agreements. The Company intends to offer stock options
to such employees.
STOCK OPTION AND COMPENSATION PLAN
The Company has reserved for issuance 700,000 shares of Common Stock
pursuant to its 1995 Stock Option and Incentive Compensation Plan (the "Stock
Option Plan"). As of the date of this Prospectus, the Company has granted an
aggregate of 342,500 options.
The Plan is administered by a stock option committee (the "Stock Option
Committee") which has the discretion to determine the number and purchase price
of shares subject to stock options (which price may not be below 85% of the fair
market value of the Common Stock on the date granted), the term of each option,
and the time or times during its term when the option becomes exercisable.
21
<PAGE> 24
BOARD OF DIRECTORS
Each of the Company's directors has been elected to serve until the next
annual meeting of shareholders. The Company's executive officers are appointed
annually by the Company's directors. Each of the Company's directors continues
to serve until his or her successor has been designated and qualified. Directors
currently receive no fees.
DIRECTOR STOCK OPTIONS
As of the Effective Date, the Company granted options to acquire an
aggregate of 50,000 shares of Common Stock for an exercise price equal to the
higher of 66.67% of the Price to Public or $3.50 per share to Messrs. O'Dowd and
Brosig, the Company's two outside directors. These options vest on a pro-rata
basis on the first, second and third anniversaries of the Effective Date and are
exercisable for ten years from the date of grant.
CERTAIN TRANSACTIONS
The Company leases some of its restaurant sites from S&D Land Holdings,
Inc., a Minnesota corporation wholly-owned by David W. Anderson, Chairman and
Chief Executive Officer of the Company. See "Business -- Property and Unit
Locations."
The Company has a $2,000,000 revolving note with David W. Anderson. The
note bears interest at 8%, is unsecured and due on demand. The outstanding
balance on the note was $359,349 at June 30, 1996. This note was paid in full in
August 1996.
Pursuant to a license and trademark agreement between the Company and Grand
Pines Resort, Inc., a Minnesota corporation wholly-owned by David W. Anderson
("Grand Pines"), the Company licenses its trademarks and recipes to Grand Pines
in exchange for a 4% annual royalty fee on gross food sales. Also, pursuant to a
management agreement between the Company and Grand Pines Resort, Inc., the
Company has agreed to provide certain management services relative to the
Hayward Facility in exchange for a fee of 3% of gross food sales.
Any future transactions and loans with officers, directors or 5%
shareholders of the Company's Common Stock will be on terms no less favorable to
the Company than could be obtained from unaffiliated third parties. All future
material affiliated transactions and loans, and any forgiveness of loans, must
be approved by a majority of the independent outside members of the Company's
Board of Directors who do not have an interest in the transactions.
PRINCIPAL SHAREHOLDERS
There are presently 100,000,000 shares of the Company's Common Stock
authorized, of which 3,356,250 shares are issued and outstanding. The following
table sets forth certain information regarding beneficial ownership of the
Company's Common Stock as of the date of this Prospectus, as adjusted to give
effect to the issuance of the securities offered hereby, by (i) each person
known by the Company to be the beneficial owner of more than 5% of the
outstanding Common Stock, (ii) each director of the Company, (iii) each
executive officer of the Company, and (iv) all executive officers and directors
of the Company as a group. See "Description of Securities -- Conversion of
Notes." Unless otherwise indicated, each of the following persons has sole
voting and investment power with respect to the shares of Common Stock set forth
opposite their
22
<PAGE> 25
respective names. The address of directors and executive officers is 12700
Industrial Boulevard, Suite 60, Minneapolis, Minnesota 55441.
<TABLE>
<CAPTION>
PERCENT
-----------------------
SHARES OF PRIOR TO AFTER
NAME COMMON STOCK OFFERING OFFERING(1)
- ----------------------------------------------------------- ------------ -------- -----------
<S> <C> <C> <C>
David W. Anderson.......................................... 2,000,000(2) 59.1% 37.3%
William L. Timm(3)......................................... 0 -- --
Mark A. Payne.............................................. 25,000(4) 0.7 0.5
Martin J. O'Dowd........................................... 13,000 0.4 0.2
Thomas J. Brosig........................................... 20,000 0.6 0.4
OKABENA Partnership K(5)................................... 282,750 8.4 5.3
All officers and directors as a group...................... 2,058,000 60.9 38.2
</TABLE>
- -------------------------
(1) Does not include any Shares that may be purchased in the offering by the
listed persons.
(2) Owned in joint tenancy with his spouse, Kathryn Anderson. Includes 100,000
shares owned by Grand Pines Resorts, Inc., a corporation wholly-owned by Mr.
Anderson. 600,000 of such Shares are subject to an option to purchase for
$1.00 per share held by William L. Timm, the Company's President and Chief
Financial Officer. Such options vest over a five-year period in equal
increments beginning March 1, 1997. Giving effect to such options, Mr.
Anderson's percentage ownership would be 41.7% prior to the offering and
26.1% after the offering.
(3) Does not include 600,000 shares beneficially owned by David W. Anderson
subject to an option held by Mr. Timm to purchase for $1.00 per share. Such
options vest over a five-year period in equal increments beginning March 1,
1997.
(4) Represents shares issuable upon exercise of stock options to be vested on
the Effective Date that will be exercisable within 60 days.
(5) Does not include 10,000 shares owned by Gary S. Kohler, an affiliate. The
address of both such persons is 5140 Norwest Center, 90 South Seventh
Street, Minneapolis, Minnesota 55402.
23
<PAGE> 26
DESCRIPTION OF SECURITIES
UNITS
Each Unit offered hereby consists of one share of Common Stock and one
redeemable Class A Warrant. Warrants are immediately exercisable and, commencing
ten trading days after the Effective Date, separately transferable from the
Common Stock. Each Class A Warrant entitles the holder to purchase at any time,
until the earlier of redemption by the Company or four years following the
Effective Date, one share of Common Stock at an exercise price of $8.50 per
warrant, subject to adjustment.
CAPITAL STOCK
The Company's authorized capital stock consists of 100,000,000 undesignated
shares, $.01 par value per share in the case of Common Stock, and a par value as
determined by the Board of Directors in the case of Preferred Stock. After the
closing of this Offering, there will be issued and outstanding 5,656,250 shares
of Common Stock (if the Underwriter's over-allotment option is exercised in
full).
COMMON STOCK
There are no preemptive, subscription, conversion or redemption rights
pertaining to the Common Stock. The absence of preemptive rights could result in
a dilution of the interest of existing shareholders should additional shares of
Common Stock be issued. Holders of the Common Stock are entitled to receive such
dividends as may be declared by the Board of Directors out of assets legally
available therefor, and to share ratably in the assets of the Company available
upon liquidation.
Each share of Common Stock is entitled to one vote for all purposes and
cumulative voting is not permitted in the election of directors. Accordingly,
the holders of more than 50% of all of the outstanding shares of Common Stock
can elect all of the directors. Significant corporate transactions such as
amendments to the articles of incorporation, mergers, sales of assets and
dissolution or liquidation require approval by the affirmative vote of the
majority of the outstanding shares of Common Stock. Other matters to be voted
upon by the holders of Common Stock normally require the affirmative vote of a
majority of the shares present at the particular shareholders' meeting. The
Company's directors and officers as a group beneficially own approximately 60.9%
of the outstanding Common Stock of the Company. Upon completion of this
Offering, such persons will beneficially own approximately 38.2% of the
outstanding shares (36.2% if the Underwriter's over-allotment option is
exercised in full). See "Principal Shareholders." Accordingly, such persons will
continue to be able to substantially control the Company's affairs, including,
without limitation, the sale of equity or debt securities of the Company, the
appointment of officers, the determination of officers' compensation and the
determination whether to cause a registration statement to be filed. There are
119 holders of record of the Company's Common Stock as of the date of this
Prospectus.
The rights of holders of the shares of Common Stock may become subject in
the future to prior and superior rights and preferences in the event the Board
of Directors establishes one or more additional classes of Common Stock, or one
or more additional series of Preferred Stock. The Board of Directors has no
present plan to establish any such additional class or series.
CLASS A WARRANTS
The Class A Warrants included as part of the Units being offered hereby
will be issued under and governed by the provisions of a Warrant Agreement (the
"Warrant Agreement") between the Company and Norwest Bank Minnesota, N.A., as
Warrant Agent (the "Warrant Agent"). The following summary of the Warrant
Agreement is not complete, and is qualified in its entirety by reference to the
Warrant Agreement, a copy of which has been filed as an exhibit to the
Registration Statement of which this Prospectus is a part.
Commencing ten days after the Effective Date, the shares of Common Stock
and the Class A Warrants offered as part of the Units will be detachable and
separately transferable. One Class A Warrant entitles the holder
("Warrantholder") thereof to purchase one share of Common Stock during the four
years following
24
<PAGE> 27
the Effective Date, subject to earlier redemption, provided that at such time a
current prospectus relating to the shares of Common Stock issuable upon exercise
of the Class A Warrants is in effect and the issuance of such shares is
qualified for sale or exempt from qualification under applicable state
securities laws. Each Class A Warrant will be exercisable at an exercise price
of $8.50 per warrant, subject to adjustment in certain events.
The Class A Warrants are subject to redemption by the Company beginning 90
days after the Effective Date, on not less than 30 days written notice, at a
price of $.01 per warrant at any time following a period of 20 consecutive
trading days where the per share average closing bid price of the Common Stock
exceeds 120% of the Exercise Price (subject to adjustment). For these purposes,
the closing bid price of the Common Stock shall be determined by the closing bid
price as reported by Nasdaq so long as the Common Stock is quoted on Nasdaq and,
if the Common Stock is listed on a national securities exchange, shall be
determined by the last reported sale price on the primary exchange on which the
Common Stock is traded. Holders of Class A Warrants will automatically forfeit
all rights thereunder except the right to receive the $.01 redemption price per
warrant unless the Class A Warrants are exercised before they are redeemed.
The Warrantholders are not entitled to vote, receive dividends, or exercise
any of the rights of holders of shares of Common Stock for any purpose. The
Class A Warrants are in registered form and may be presented for transfer,
exchange or exercise at the office of the Warrant Agent. Although the Company
has applied for listing of the Class A Warrants on the Nasdaq SmallCap Market,
there is currently no established market for the Class A Warrants, and there is
no assurance that any such market will develop.
The Warrant Agreement provides for adjustment of the exercise price and the
number of shares of Common Stock purchasable upon exercise of the Class A
Warrants to protect Warrantholders against dilution in certain events, including
stock dividends, stock splits, reclassification, and any combination of Common
Stock, or the merger, consolidation, or disposition of substantially all the
assets of the Company.
The Class A Warrants may be exercised upon surrender of the certificate
therefor on or prior to the expiration date (or earlier redemption date) at the
offices of the Warrant Agent, with the form of "Election to Purchase" on the
reverse side of the certificate properly completed and executed as indicated,
accompanied by payment of the full exercise price (by certified or cashier's
check payable to the order of the Company) for the number of Class A Warrants
being exercised.
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this Offering, there will be 5,356,250 shares of Common
Stock issued and outstanding (5,656,250 if the Underwriter's over-allotment
option is exercised in full). The shares purchased in this Offering will be
freely tradeable without registration or other restriction under the Securities
Act of 1933, as amended (the "Act"), except for any shares purchased by an
"affiliate" of the Company (as defined in the Act).
All the currently outstanding shares were issued in reliance upon the
"private placement" exemptions provided by the Act and are deemed restricted
securities within the meaning of Rule 144 ("Restricted Shares"). Restricted
Shares may not be sold unless they are registered under the Act or are sold
pursuant to an applicable exemption from registration, including an exemption
under Rule 144. It is expected that 1,356,250 Restricted Shares will become
eligible for sale approximately one year after the Effective Date, assuming all
of the other requirements of Rule 144 have been satisfied.
In general, under Rule 144 as currently in effect, any person (or persons
whose shares are aggregated) including persons deemed to be affiliates, whose
restricted securities have been fully paid for and held for at least two years
from the later of the date of issuance by the Company or acquisition from an
affiliate, may sell such securities in broker's transactions or directly to
market makers, provided that the number of shares sold in any three month period
may not exceed the greater of 1% of the then-outstanding shares of Common Stock
or the average weekly trading volume of the shares of Common Stock in the
over-the-counter market during the four calendar weeks preceding the sale. Sales
under Rule 144 are also subject to certain notice requirements and the
availability of current public information about the Company. After three years
have
25
<PAGE> 28
elapsed from the later of the issuance of restricted securities by the Company
or their acquisition from an affiliate, such securities may be sold without
limitation by persons who are not affiliates under the rule.
In general, under Rule 701 as currently in effect, any employee, consultant
or advisor of the Company who purchases shares from the Company by exercising a
stock option outstanding on the date of the Offering is eligible to resell such
shares 90 days after the date of the Prospectus in reliance on Rule 144, but
need not comply with certain restrictions contained in Rule 144, including the
holding period requirement. As soon as practicable after the Offering, the
Company intends to register 700,000 shares of Common Stock that are reserved for
issuance under the Stock Option Plan. See "Management." After the effective date
of such registration statement, shares issued upon exercise of outstanding
options would generally be eligible for immediate resale in the public market,
subject to vesting under the applicable option agreements.
Following this Offering, the Company cannot predict the effect, if any,
that sales of the Common Stock or the availability of such Common Stock for sale
will have on the market price prevailing from time to time. Nevertheless, sales
by existing shareholders of substantial amounts of Common Stock could adversely
affect prevailing market prices for the Common Stock if and when a public market
exists. The Company and its directors, executive officers and 5% shareholders
have agreed that they will not sell, grant any option for the sale of, or
otherwise dispose of any shares of Common Stock for 365 days after the Effective
Date without the prior written consent of the Underwriter.
MINNESOTA ANTI-TAKEOVER LAW
The Company is governed by the provisions of Sections 302A.671 and 302A.673
of the Minnesota Business Corporation Act. In general, Section 302A.671 provides
that the shares of a corporation acquired in a "control share acquisition" have
no voting rights unless voting rights are approved in a prescribed manner. A
"control share acquisition" is an acquisition, directly or indirectly, of
beneficial ownership of shares that would, when added to all other shares
beneficially owned by the acquiring person, entitle the acquiring person to have
voting power of 20% or more in the election of directors. In general, Section
302A.673 prohibits a publicly-held Minnesota corporation from engaging in a
"business combination" with an "interested shareholder" for a period of four
years after the date of the transaction in which the person became an interested
shareholder, unless the business combination is approved in a prescribed manner.
"Business combination" includes mergers, asset sales and other transactions
resulting in a financial benefit to the interested shareholder. An "interested
shareholder" is a person who is the beneficial owner, directly or indirectly, of
10% or more of the corporation's voting stock or who is an affiliate or
associate of the corporation and at any time within four years prior to the date
in question was the beneficial owner, directly or indirectly, of 10% or more of
the corporation's voting stock.
TRANSFER AGENT AND REGISTRAR
Norwest Bank Minnesota, N.A., is the transfer agent and registrar for the
Common Stock, the Class A Warrants and the Units.
26
<PAGE> 29
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement between
the Company and R.J. Steichen and Company (the "Underwriter"), the Underwriter
has agreed to purchase from the Company, and the Company has agreed to sell to
the Underwriter, 2,000,000 Units.
The Underwriting Agreement provides that the obligations of the Underwriter
are subject to approval of certain legal matters by counsel and to various other
conditions. The nature of the Underwriter's obligations are such that they are
committed to purchase and pay for all of the Units if any are purchased.
The Underwriter proposes to offer the Units directly to the public at the
public offering price set forth on the cover page of this Prospectus, and at
such price less a concession not in excess of $ per Unit to certain other
dealers who are members of the National Association of Securities Dealers, Inc.
After the public offering, the initial offering price and other selling terms
may be changed by the Underwriter. The Underwriter has advised the Company that
it does not intend to confirm sales of Units to any accounts over which it
exercises discretionary authority.
The Company has granted the Underwriter a 45-day over-allotment option to
purchase up to an aggregate of 300,000 additional Units exercisable at the
public offering price less the underwriting discount. The Underwriter may
exercise such option only to cover over-allotments made in connection with the
sale of the Units offered hereby.
David W. Anderson, Chairman and Chief Executive Officer of the Company, has
agreed that he will not sell, grant any option for the sale of, or otherwise
dispose of any equity securities of the Company (or any securities convertible
into or exercisable or exchangeable for equity securities of the Company), for a
period of 365 days after the date hereof without the prior written consent of
the Underwriter. The Company's other executive officers and directors have
agreed to be subject to the same restrictions for a period of 180 days.
Each of the Company and the Underwriter has agreed to indemnify the other
(including officers, directors and control persons of each other) against
certain liabilities, losses and expenses, including liabilities under the Act,
or to contribute to payments that the Underwriter may be required to make in
respect thereof. Insofar as indemnification for liabilities arising under the
Act may be permitted to directors, officers and controlling persons of the small
business issuer pursuant to the foregoing provisions, or otherwise, the small
business issuer has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable.
The Company has agreed to sell to the Underwriter, for $50.00, five year
warrants to purchase up to 200,000 shares of Common Stock (the "Underwriter's
Warrant") at 120% of the Price to Public. The Underwriter's Warrant may be
exercised commencing one year after the Effective Date. The exercise price and
the number of shares may, under certain circumstances, be subject to adjustment
pursuant to anti-dilution provisions.
The Company has agreed to pay the Underwriter a nonaccountable expense
allowance equal to 2.0% of the aggregate offering price of the shares or
$240,000 ($276,000 if the Underwriter's over-allotment option is exercised in
full).
In July 1996, the Company sold an aggregate of 1,356,250 shares of Common
Stock in a private placement in which the Underwriter acted as selling agent.
The Underwriter received agent's commissions of approximately $427,000. The
Underwriter was given a one-year right of first refusal with respect to the
Company's initial public offering.
At the request of the Company, up to 15% of the Units offered hereby (the
"Designated Units") may be reserved for sale to persons designated by the
Company. The price of the Designated Units will be the Price to Public set forth
on the cover of this Prospectus.
Prior to the Offering, there exists no public market for the securities of
the Company. The initial public offering price of the Units and the exercise
price of the Warrants have been arbitrarily determined by
27
<PAGE> 30
negotiation between the Company and the Underwriter and bear no relationship to
the Company's current operating results, book value, net worth, financial
statement criteria of value, the history of and prospects for the industry in
which the Company principally competes or the capability of the Company's
management. There can be no assurance, however, that the price at which the
Common Stock, the Class A Warrants or the Units will sell in the public market
after this Offering will not be lower than the price at which it is sold by the
Underwriter.
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon for the
Company by Maslon Edelman Borman & Brand, a Professional Limited Liability
Partnership, Minneapolis, Minnesota. Certain legal matters relating to the sale
of the shares of Common Stock will be passed upon for the Underwriter by
Doherty, Rumble & Butler, P.A., Minneapolis, Minnesota.
EXPERTS
The financial statements for the periods ended December 31, 1994 and 1995
included herein have been audited by Lund Koehler Cox & Company, PLLP,
independent public accountants, as indicated in their report with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in giving said report.
ADDITIONAL INFORMATION
The Company is not a reporting company under the Securities Exchange Act of
1934, as amended. The Company has filed with the Washington, D.C. Office of the
Securities and Exchange Commission (the "Commission") a Registration Statement
on Form SB-2 under the Act with respect to the Common Stock offered hereby. This
Prospectus filed as a part of the Registration Statement does not contain all of
the information contained in the Registration Statement and the exhibits
thereto, certain portions of which have been omitted in accordance with the
rules and regulations of the Commission. For further information with respect to
the Company and the securities offered hereby, reference is made to such
Registration Statement including the exhibits and schedules thereto. Statements
contained in this Prospectus as to the contents of any contract, agreement or
other documents are not necessarily complete, and in each instance, reference is
made to such contract or other document filed as an exhibit to the Registration
Statement, each such statement being qualified in all respects by such
reference. The Registration Statement and exhibits may be inspected without
charge and copied at the Washington office of the Commission, 450 Fifth Street,
N.W., Washington, DC 20549, and copies of such material may be obtained at
prescribed rates from the Commission's Public Reference Section at the same
address.
28
<PAGE> 31
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Public Accountants.............................................. F-2
Consolidated Financial Statements:
Balance Sheets...................................................................... F-3
Statements of Operations............................................................ F-4
Statements of Stockholder's Equity.................................................. F-5
Statements of Cash Flows............................................................ F-6
Notes to Consolidated Financial Statements............................................ F-7
</TABLE>
F-1
<PAGE> 32
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Famous Dave's of America, Inc.:
We have audited the accompanying consolidated balance sheet of Famous
Dave's of America, Inc. and Subsidiary as of December 31, 1995 and the related
consolidated statements of operations, stockholder's equity and cash flows for
the period from March 14, 1994 (inception) to December 31, 1994 and the year
ended December 31, 1995. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Famous
Dave's of America, Inc. and Subsidiary as of December 31, 1995 and the results
of their operations and their cash flows for the period from March 14, 1994
(inception) to December 31, 1994 and the year ended December 31, 1995 in
conformity with generally accepted accounting principles.
LUND KOEHLER COX & COMPANY, PLLP
Minneapolis, Minnesota
August 2, 1996
F-2
<PAGE> 33
FAMOUS DAVE'S OF AMERICA, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30,
1996
DECEMBER 31, -----------
1995
------------ (UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents.......................................... $ 100,297 $ 252,137
Inventories........................................................ 10,921 53,049
Prepaids and other current assets.................................. 69,176 409,409
---------- ----------
Total current assets............................................ 180,394 714,595
---------- ----------
PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET.................. 1,203,265 1,682,654
---------- ----------
OTHER ASSETS:
Construction in progress........................................... 73,487 995,964
Prepaid equity issuance costs...................................... 0 82,324
Pre-opening expenses, net of accumulated amortization of $3,081.... 0 35,987
---------- ----------
Total other assets.............................................. 73,487 1,114,275
---------- ----------
$1,457,146 $ 3,511,524
========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Note payable -- bank............................................... $ 0 $ 1,000,000
Mortgage note payable -- bank...................................... 347,823 0
Note payable -- stockholder........................................ 276,046 359,349
Current portion of capital lease obligation........................ 0 50,224
Accounts payable................................................... 109,974 1,312,154
Accrued rent -- S&D Land Holdings, Inc. (related party)............ 0 82,729
Accrued interest -- stockholder.................................... 0 22,492
Accrued payroll -- stockholder..................................... 0 32,527
Accrued payroll and related withholdings........................... 13,412 42,474
Other current liabilities.......................................... 16,081 51,986
---------- ----------
Total current liabilities....................................... 763,336 2,953,935
CAPITAL LEASE OBLIGATION, NET OF CURRENT PORTION..................... 0 251,981
---------- ----------
Total liabilities............................................... 763,336 3,205,916
---------- ----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDER'S EQUITY:
Common stock, $.01 par value, 100,000,000 shares authorized,
2,000,000 shares issued and outstanding......................... 20,000 20,000
Additional paid-in capital......................................... 980,000 980,000
Accumulated deficit................................................ (306,190) (694,392)
---------- ----------
Total stockholder's equity...................................... 693,810 305,608
---------- ----------
$1,457,146 $ 3,511,524
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE> 34
FAMOUS DAVE'S OF AMERICA, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
TWENTY-SIX WEEKS ENDED
MARCH 14, 1994 ------------------------
(INCEPTION) TO YEAR ENDED JUNE 30, JUNE 30,
DECEMBER 31, DECEMBER 31, 1995 1996
1994 1995 ---------- ----------
-------------- ------------- (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
SALES:
Restaurant............................... $ 0 $ 481,510 $ 23,601 $1,001,055
Retail................................... 0 0 0 14,801
---------- ---------- ---------- ----------
Total sales........................... 0 481,510 23,601 1,015,856
---------- ---------- ---------- ----------
COSTS AND EXPENSES:
Food and beverage costs -- restaurant.... 0 169,789 13,278 326,451
Cost of sales -- retail.................. 0 0 0 10,149
Restaurant operating expenses............ 0 302,217 45,991 391,232
Depreciation and amortization............ 0 17,009 2,000 36,289
General, administrative and
development........................... 0 332,331 57,040 634,460
---------- ---------- ---------- ----------
Total costs and expenses.............. 0 821,346 118,309 1,398,581
---------- ---------- ---------- ----------
Loss from operations.................. 0 (339,836) (94,708) (382,725)
---------- ---------- ---------- ----------
OTHER INCOME (EXPENSE):
Royalty income -- related party.......... 0 33,646 0 17,015
Interest expense......................... 0 0 0 (22,492)
---------- ---------- ---------- ----------
Total other income (expense).......... 0 33,646 0 (5,477)
---------- ---------- ---------- ----------
NET LOSS................................... $ 0 $ (306,190) $ (94,708) $ (388,202)
========== ========== ========== ==========
PROFORMA DATA -- UNAUDITED (SEE NOTE 9)
Historical net loss...................... $ 0 $ (306,190) $ (94,708) $ (388,202)
Proforma provision for income taxes...... 0 0 0 0
---------- ---------- ---------- ----------
Proforma net loss........................ $ 0 $ (306,190) $ (94,708) $ (388,202)
========== ========== ========== ==========
Proforma net loss per common share....... $ 0.00 $ (0.14) $ (0.04) $ (0.18)
========== ========== ========== ==========
Shares used in per share calculations.... 2,135,417 2,135,417 2,135,417 2,135,417
========== ========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE> 35
FAMOUS DAVE'S OF AMERICA, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL STOCK
------------------- PAID-IN SUBSCRIPTION ACCUMULATED
SHARES AMOUNT CAPITAL RECEIVABLE DEFICIT TOTAL
--------- ------- ---------- ------------ ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
BALANCE -- MARCH 14, 1994
(INCEPTION)......... 0 $ 0 $ 0 $ 0 $ 0 $ 0
Issuance of common stock for
$.50 per share............. 2,000,000 20,000 980,000 (1,000,000) -- 0
Payments received on stock
subscription............... -- -- -- 425,270 -- 425,270
Net loss...................... -- -- -- -- 0 0
--------- ------- -------- ----------- --------- ---------
BALANCE -- DECEMBER 31, 1994.... 2,000,000 20,000 980,000 (574,730) 0 425,270
Payments received on stock
subscription............... -- -- -- 574,730 -- 574,730
Net loss...................... -- -- -- -- (306,190) (306,190)
--------- ------- -------- ----------- --------- ---------
BALANCE -- DECEMBER 31, 1995.... 2,000,000 20,000 980,000 0 (306,190) 693,810
Net loss (unaudited).......... -- -- -- -- (388,202) (388,202)
--------- ------- -------- ----------- --------- ---------
BALANCE -- JUNE 30, 1996
(UNAUDITED)......... 2,000,000 $20,000 $ 980,000 $ 0 $(694,392) $ 305,608
========= ======= ======== =========== ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE> 36
FAMOUS DAVE'S OF AMERICA, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
TWENTY-SIX WEEKS ENDED
MARCH 14, 1994 --------------------------
(INCEPTION) TO YEAR ENDED JUNE 30, JUNE 30,
DECEMBER 31, DECEMBER 31, 1995 1996
1994 1995 ----------- -----------
-------------- ------------ (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.................................. $ 0 $ (306,190) $ (94,708) $ (388,202)
Adjustments to reconcile net loss to cash
flows from operating activities:
Depreciation and amortization.......... 0 17,009 2,000 36,289
Changes in working capital items --
Inventories.......................... 0 (10,921) (3,500) (42,128)
Prepaids and other current assets.... (2,742) (66,434) (11,889) (340,233)
Accounts payable..................... 0 109,974 134,652 367,660
Accrued rent -- S&D Land Holdings,
Inc. ............................. 0 0 0 82,729
Accrued interest -- stockholder...... 0 0 0 22,492
Accrued payroll -- stockholder....... 0 0 0 32,527
Accrued payroll and related
withholdings...................... 0 13,412 7,912 29,062
Other current liabilities............ 0 16,081 938 35,905
--------- ---------- --------- -----------
Cash flows from operating
activities...................... (2,742) (227,069) 35,405 (163,899)
--------- ---------- --------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, equipment and
leasehold improvements................. (411,905) (808,369) (369,804) (991,415)
Payment of construction in progress....... 0 (73,487) 0 (87,957)
Payment of pre-opening expenses........... 0 0 0 (39,068)
--------- ---------- --------- -----------
Cash flows from investing
activities...................... (411,905) (881,856) (369,804) (1,118,440)
--------- ---------- --------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from note payable -- bank........ 0 0 0 1,000,000
Proceeds from mortgage note payable --
bank................................... 0 375,000 0 0
Payments on mortgage note payable --
bank................................... 0 (27,177) 0 0
Advances on note payable -- stockholder,
net.................................... 0 276,046 0 516,503
Payments received on stock subscription... 425,270 574,730 429,879 0
Prepaid equity issuance costs paid........ 0 0 0 (82,324)
--------- ---------- --------- -----------
Cash flows from financing
activities...................... 425,270 1,198,599 429,879 1,434,179
--------- ---------- --------- -----------
INCREASE IN CASH AND CASH EQUIVALENTS....... 10,623 89,674 95,480 151,840
CASH AND CASH EQUIVALENTS, BEGINNING........ 0 10,623 10,623 100,297
--------- ---------- --------- -----------
CASH AND CASH EQUIVALENTS, ENDING........... $ 10,623 $ 100,297 $ 106,103 $ 252,137
========= ========== ========= ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE> 37
FAMOUS DAVE'S OF AMERICA, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1994 AND 1995
(INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
(1) NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS -- Famous Dave's of America, Inc. (formerly known as
Famous Dave's of Minneapolis, Inc.) (the Company) was incorporated in the State
of Minnesota on March 14, 1994. The Company develops, owns and operates American
roadhouse style barbeque restaurants (the Units) under the name "Famous Dave's
Bar-B-Que Shack". The Company opened its first Unit in the Linden Hills area of
Minneapolis (the Linden Hills Unit) in June 1995. Prior to opening the Linden
Hills Unit, the Company had no revenues and its activities were devoted solely
to development.
The Company opened its second Unit in June 1996 in Roseville, Minnesota, a
Minneapolis/St. Paul suburb and is presently developing three additional Units
in the Minneapolis/St. Paul area.
PRINCIPLES OF CONSOLIDATION -- The consolidated financial statements
include the accounts of Famous Dave's of America, Inc. and its wholly owned
subsidiary Lake & Hennepin BBQ and Blues, Inc. Lake & Hennepin BBQ and Blues,
Inc. had no operating activity through June 30, 1996. All significant
intercompany transactions have been eliminated in consolidation.
FISCAL YEAR -- Beginning January 1, 1996, the Company adopted a 52/53 week
accounting period ending on the Sunday nearest December 31 of each year. Prior
periods using a calendar year end have not been restated for comparative
purposes as the differences are immaterial.
CASH AND CASH EQUIVALENTS -- The Company includes as cash equivalents
certificates of deposit and all other investments with original maturities of
three months or less which are readily convertible into known amounts of cash.
INVENTORIES -- Inventories are recorded at the lower of cost (first-in,
first-out) or market value.
DEPRECIATION -- Property, equipment and leasehold improvements are recorded
at cost. Improvements are capitalized while repair and maintenance costs are
charged to operations when incurred. Furniture, fixtures and equipment are
depreciated using the straight-line method over their estimated useful lives of
five to seven years. Leasehold improvements are amortized using the
straight-line method over the shorter of their estimated useful lives or the
lease term including option periods.
PREPAID EQUITY ISSUANCE COSTS -- Direct costs of obtaining equity capital
by issuing stock are deducted from the related proceeds, and the net amount is
recorded as contributed stockholders' equity. Costs paid or incurred prior to
the completion of an equity sale are recorded as a prepaid asset until the
completion of the equity offering.
PRE-OPENING EXPENSES -- It is the Company's policy to capitalize the direct
and incremental costs associated with opening a new Unit which consist primarily
of hiring and training the initial workforce and other direct costs. These costs
are amortized over the first twelve months of the Unit's operations if the
recoverability of such costs can be reasonably assured. Expenses incurred prior
to opening the Company's first Unit were charged to operations when incurred due
to the developmental nature of the Unit.
MUSIC PRODUCTION COSTS -- In accordance with Financial Accounting Standards
Board Statement No. 50 "Financial Reporting in the Record and Music Industry",
the Company has expensed all amounts related to music production costs in the
period incurred.
RIB PROMOTIONAL ACTIVITY -- The Company incurs expenses for participation
in rib festivals and other events and records these expenses in the period
incurred net of any related revenues generated by the activity.
INCOME TAXES -- Through March 3, 1996 the Company, with the consent of its
sole stockholder, had elected under the Internal Revenue Code to be an S
Corporation. In lieu of corporation income taxes, a
F-7
<PAGE> 38
FAMOUS DAVE'S OF AMERICA, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
stockholder of an S Corporation is taxed on his proportionate share of the
company's taxable income. See Note 9.
RECENTLY ISSUED ACCOUNTING STANDARD -- During fiscal year 1996 the Company
adopted Financial Accounting Standards Board Statement No. 121 "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of"
(Statement 121). Statement 121 establishes accounting standards for the
recognition and measurement of impairment of long-lived assets, certain
identifiable intangibles, and goodwill either to be held or disposed of. The
adoption of Statement 121 did not have a material impact on the Company's
financial position or results of operations.
MANAGEMENT'S USE OF ESTIMATES -- The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
NET LOSS PER COMMON SHARE -- Net loss per common share is computed by
dividing net loss by the weighted average number of common shares outstanding
and dilutive common equivalent shares assumed to be outstanding during each
period. Common equivalent shares consist of dilutive options to purchase common
stock. However, pursuant to certain rules of the Securities and Exchange
Commission, the calculation also includes equity securities, including options
and warrants, issued within one year of an initial public offering with an issue
price less than the initial public offering price, even if the effect is
anti-dilutive. The treasury stock method was used in determining the dilutive
effect of such issuances.
(2) INVENTORIES
Inventories consisted of the following at:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1995 1996
------------- ---------
<S> <C> <C>
Food and beverage....................................... $ 4,950 $ 19,279
Retail goods............................................ 5,971 33,770
------- -------
$10,921 $ 53,049
======= =======
</TABLE>
(3) PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Property, equipment and leasehold improvements consisted of the following
at:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1995 1996
------------- ----------
<S> <C> <C>
Land, buildings and improvements...................... $ 1,066,447 $1,008,095
Furniture, fixtures and equipment..................... 153,827 584,751
Portable kitchen equipment............................ 0 136,141
Less: accumulated depreciation........................ (17,009) (46,333)
---------- ----------
$ 1,203,265 $1,682,654
========== ==========
</TABLE>
F-8
<PAGE> 39
FAMOUS DAVE'S OF AMERICA, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
(4) CONSTRUCTION IN PROGRESS
Construction in progress consists of direct and indirect costs related to
the Company's uncompleted development of three additional Units in the
Minneapolis/St. Paul area. Total costs incurred were $73,487 and $995,964
(including capitalized interest of $9,067 and $9,067) as of December 31, 1995
and June 30, 1996.
(5) NOTES PAYABLE
NOTE PAYABLE -- BANK -- The Company has a $1,000,000 revolving note due
June 26, 1997, accruing interest at the prime rate (effective rate of 8.25%),
and secured by all the assets of the Company and the personal guaranty of the
sole stockholder. The balance outstanding at June 30, 1996 was $1,000,000.
MORTGAGE NOTE PAYABLE -- BANK -- The Company had a mortgage note maturing
September 1996, accruing interest at 1% over the prime rate (effective rate of
9.75%), secured by a real estate mortgage on the site of its proposed St. Paul,
Minnesota Unit. The balance outstanding at December 31, 1995 was $347,823. This
note was assumed by S&D Land Holdings, Inc. on January 1, 1996. See Note 7.
NOTE PAYABLE -- STOCKHOLDER -- The Company has a $2,000,000 revolving note
with its sole stockholder. The note bears interest at 8%, is unsecured and is
due on demand. Outstanding balances on the note were $276,046 and $359,349 at
December 31, 1995 and June 30, 1996.
(6) CAPITAL LEASE OBLIGATION
The Company leases certain equipment under an agreement that expires June
2001. Interest is provided for at a rate of 11%. The obligation is secured by
the equipment under lease. Prior to signing the lease, the Company made deposits
for this equipment of approximately $156,500 that will be refunded to the
Company by the lessor. In addition, the Company has made, and will be reimbursed
by the lessor for, deposits of $100,000 for equipment to be leased under pending
lease commitments.
Future minimum lease payments for the years ending December 31 are as
follows:
<TABLE>
<S> <C>
1996............................................................... $ 39,130
1997............................................................... 78,259
1998............................................................... 78,259
1999............................................................... 78,259
2000............................................................... 78,259
Thereafter......................................................... 39,129
--------
Total.............................................................. 391,295
Less: amount representing interest................................. (89,090)
--------
Present value of future minimum lease payments..................... 302,205
Less: current portion.............................................. (25,840)
--------
Obligation under capital lease, net of current portion............. $276,365
========
</TABLE>
(7) RELATED PARTY TRANSACTIONS
S&D LAND HOLDINGS, INC. -- On January 1, 1996, the Company transferred the
real estate, excluding improvements, of its Linden Hills Unit and the site of a
proposed Unit in St. Paul, Minnesota to its sole stockholder in exchange for
amounts due to the stockholder and assumption of bank debt (see Note 5) totaling
$781,023. The Company believes the exchange prices approximated the fair market
values of the real estate exchanged. The stockholder concurrently transferred
the real estate to S&D Land Holdings, Inc. (S&D), a company wholly owned by the
stockholder, and entered into leases with the Company for the real estate (see
Note 11). At June 30, 1996, the Company owed S&D $82,729 for rent through June
30, 1996.
F-9
<PAGE> 40
FAMOUS DAVE'S OF AMERICA, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
GRAND PINES RESORTS, INC. -- Grand Pines Resorts, Inc. (Grand Pines), is a
company wholly owned by the sole stockholder of the Company. The Company charges
Grand Pines a royalty of 4% of its food sales. Royalty income was $33,646 and
$17,015 for the year ended December 31, 1995 and the twenty-six weeks ended June
30, 1996. The Company also provides certain management services to Grand Pines
for 3% (4% in 1995) of its food sales. Management services income is netted with
general, administrative and development expenses in the Company's consolidated
statements of operations and was $33,646 and $12,761 for the year ended December
31, 1995 and the twenty-six weeks ended June 30, 1996.
(8) STOCKHOLDER'S EQUITY
STOCK SPLIT -- On June 11, 1996, the Company declared a 2,000-for-1 stock
split. The stock split has been retroactively reflected in the accompanying
consolidated financial statements.
STOCK OPTION PLAN -- The Company adopted a Stock Option and Compensation
Plan (the "Plan") in 1995, pursuant to which options and other awards to acquire
an aggregate of 700,000 shares of the Company's common stock may be granted.
Stock options, stock appreciation rights, restricted stock, other stock and cash
awards may be granted under the Plan. In general, options vest over a period of
five years and expire ten years from the date of grant.
Stock option transactions during 1995 and 1996 were as follows:
<TABLE>
<CAPTION>
SHARES PRICE PER SHARE
------- ---------------
<S> <C> <C>
Outstanding at December 31, 1994....................... 0 $ 0
Granted.............................................. 150,000 1.00
Canceled............................................. 0 0
------- ----------
Outstanding at December 31, 1995....................... 150,000 1.00
Granted.............................................. 25,000 3.50
Canceled............................................. 0 0
------- ----------
Outstanding at June 30, 1996........................... 175,000 $ 1.00 - 3.50
======= ==========
</TABLE>
(9) INCOME TAXES -- UNAUDITED PROFORMA DATA
The Company was an S Corporation through March 3, 1996. Accordingly, losses
incurred through March 3, 1996 have been recognized by the Company's sole
stockholder.
The unaudited proforma data in the accompanying consolidated financial
statements accounts for income taxes as if the Company had been subject to
federal and state income taxes at regular marginal corporate tax rates. The
Company generated net losses for both financial reporting and income tax
purposes.
From March 4, 1996 through June 30, 1996 the Company generated a net
operating loss of approximately $200,000 which, if not used, will expire in
2011. Future changes in the ownership of the Company may place limitations on
the use of this net operating loss carryforward. The Company has recorded a full
valuation allowance against its deferred tax asset due to the uncertainty of
realizing the related benefit.
F-10
<PAGE> 41
FAMOUS DAVE'S OF AMERICA, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
(10) SUPPLEMENTAL CASH FLOWS INFORMATION
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1995 1996
------------ --------
<S> <C> <C>
Cash paid for interest................................................ $9,067 $ 0
====== ========
Non cash investing and financing activities:
Equipment purchased under capital lease obligation.................... $ 0 $302,205
====== ========
Real estate exchanged to retire debt.................................. $ 0 $781,023
====== ========
Construction purchased with accounts payable.......................... $ 0 $834,520
====== ========
</TABLE>
(11) COMMITMENTS AND CONTINGENCIES
OPERATING LEASES -- The Company has entered into various operating leases
as follows:
LEASES WITH S&D LAND HOLDINGS, INC. -- The Company leases the real estate
for certain of its current or proposed Units from S&D Land Holdings, Inc., a
company wholly owned by the Company's sole stockholder. Each lease generally has
a ten-year term with two five-year options to extend and requires the payment of
base rent plus the payment of real estate taxes and operating expenses as
follows:
Linden Hills Unit -- Base rent of $48,800 per year payable monthly,
adjusted annually for inflation. Expires in 2005 with two five-year
extensions available.
Roseville Unit -- Base rent of $82,200 per year payable monthly,
adjusted annually for inflation. Expires in 2002 with one five-year
extension available.
Proposed St. Paul, Minnesota Unit -- Base rent of $44,900 per year
payable monthly, adjusted annually for inflation. Expires in 2005 with two
five-year extensions available.
Proposed Minnetonka, Minnesota Unit -- Base rent of $124,129 per year
payable monthly, adjusted annually for inflation. Expires in 2005 with two
five-year extensions available.
CORPORATE OFFICE -- The Company has a lease for its corporate office space
that expires in 1998. Base rent is $3,951 per month. The Company also is
required to pay its pro rata share of real estate taxes and operating expenses.
PROPOSED MINNEAPOLIS, MINNESOTA UNIT -- The Company leases space for its
proposed Minneapolis, Minnesota Unit under a lease that expires in 2011, but may
be terminated at the Company's election after the first five years. The lease
requires initial base rent of $159,516 per year payable monthly, plus a
percentage rent of 5% of annual gross sales in excess of $3,190,320, payable
annually. The Company has the right to extend the term for two five-year
periods. The Company may receive approximately 18 months of base rent credit and
certain other incentives if it completes its improvements and opens for business
on or before October 1, 1996. In addition to the base and percentage rents, the
lease requires the Company to pay real estate taxes and operating expenses.
F-11
<PAGE> 42
FAMOUS DAVE'S OF AMERICA, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
Future minimum rental payments (excluding percentage rents) for the
operating leases described above are as follows for the years ending December
31:
<TABLE>
<S> <C>
1996.............................................................. $ 395,591
1997.............................................................. 506,957
1998.............................................................. 491,153
1999.............................................................. 459,545
2000.............................................................. 459,545
Thereafter........................................................ 1,367,553
----------
Total............................................................. $3,680,344
==========
</TABLE>
EMPLOYMENT AGREEMENTS -- The Company has employment agreements with three
of its officers. The agreements require minimum annual compensation of $100,000
to $125,000 and have terms of two to three years. All of the contracts require
at least six month severance payments with resulting two year non-competes with
one of the contracts requiring up to twelve months severance.
(12) SUBSEQUENT EVENT
PRIVATE PLACEMENT OF COMMON STOCK -- In July 1996, the Company sold
1,356,250 shares of its common stock in a private placement for $3.50 per share,
and received net proceeds of approximately $4,200,000. The Company has used and
plans to use the net proceeds from this private placement of common stock to
complete the development of its Units and for working capital.
F-12
<PAGE> 43
[PHOTOGRAPHS]
<PAGE> 44
------------------------------------------------------
------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS, AND, IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITER. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION BY
ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED
OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO
SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
---------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Prospectus Summary..................... 3
Risk Factors........................... 6
Use of Proceeds........................ 10
Dilution............................... 11
Dividend Policy........................ 11
Capitalization......................... 12
Management's Discussion and Analysis of
Financial Condition and Results of
Operations........................... 13
Business............................... 15
Management............................. 20
Certain Transactions................... 22
Principal Shareholders................. 22
Description of Securities.............. 24
Underwriting........................... 27
Legal Matters.......................... 28
Experts................................ 28
Additional Information................. 28
Index to Consolidated Financial
Statements........................... F-1
</TABLE>
----------------------------
UNTIL , 1996 (25 DAYS AFTER THE DATE OF THE PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
FAMOUS DAVE'S
OF AMERICA, INC.
FAMOUS DAVE'S LOGO
2,000,000 UNITS
CONSISTING OF 2,000,000 SHARES
OF COMMON STOCK AND 2,000,000
REDEEMABLE CLASS A WARRANTS
------------------------------
PROSPECTUS
------------------------------
RJ STEICHEN & COMPANY LOGO
, 1996
------------------------------------------------------
------------------------------------------------------
<PAGE> 45
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company is governed by Minnesota Statutes Chapter 302A. Minnesota
Statutes Section 302A.521 provides that a corporation shall indemnify any person
made or threatened to be made a party to any proceeding by reason of the former
or present official capacity of such person against judgments, penalties, fines,
including, without limitation, excise taxes assessed against such person with
respect to an employee benefit plan, settlements, and reasonable expenses,
including attorney's fees and disbursements, incurred by such person in
connection with the proceeding, if, with respect to the acts or omissions of
such person complained of in the proceeding, such person has not been
indemnified by another organization or employee benefit plan for the same
expenses with respect to the same acts or omissions; acted in good faith;
received no improper personal benefit and Section 302A.255, if applicable, has
been satisfied; in the case of a criminal proceeding, had no reasonable cause to
believe the conduct was unlawful; and in the case of acts or omissions by
persons in their official capacity for the corporation, reasonably believed that
the conduct was in the best interests of the corporation, or in the case of acts
or omissions by persons in their capacity for other organizations, reasonably
believed that the conduct was not opposed to the best interests of the
corporation.
As permitted by Section 302A.251 of the Minnesota Statutes, the Articles of
Incorporation of the Company provide that a director shall have no personal
liability to the Company and its shareholders for breach of his fiduciary duty
as a director, to the fullest extent permitted by law.
The Underwriting Agreement contains provisions under which the small
business issuer on the one hand, and the Underwriter, on the other hand, have
agreed to indemnify each other (including officers and directors of the small
business issuer and the Underwriter and any person who may be deemed to control
the small business issuer or the Underwriter) against certain liabilities,
including liabilities under the Securities Act of 1933, as amended.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses in connection with the issuance and distribution of
the Units registered hereby, other than underwriting discounts and fees, are set
forth in the following table:
<TABLE>
<S> <C>
SEC registration fee............................................... $ 11,500
NASD filing fee.................................................... 6,000
Nasdaq listing fee................................................. 8,500
Legal fees and expenses............................................ 80,000
Accounting fees and expenses....................................... 40,000
Blue Sky fees and expenses......................................... 20,000
Transfer agent fees and expenses................................... 1,000
Printing and engraving expenses.................................... 35,000
Miscellaneous...................................................... 18,000
--------
Total............................................................ $220,000
========
</TABLE>
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
In connection with additional capitalization of the Company on July 29,
1996, the Company sold and issued an aggregate of 1,356,250 shares of Common
Stock to certain "Accredited Investors" as defined in Regulation D of the
Securities Act of 1933, as amended (the "Securities Act") for a total aggregate
consideration of $4,746,875. R.J. Steichen & Co., Inc., the Underwriter, was
involved in such offering and received Agent's commissions totaling $427,219
pursuant to such offering. The Company believes that each and every such sale
and issuance of such securities was exempt from registration pursuant to Section
4(2) of the Securities Act and Rule 506 promulgated thereunder.
II-1
<PAGE> 46
ITEM 27. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- ---------------------------------------------------------------------------------
<C> <S>
1.1 Form of Underwriting Agreement
1.2 Form of Underwriter's Warrant
3.1 Articles of Incorporation
3.2 By-laws
5 Opinion of Maslon Edelman Borman & Brand, a Professional Limited Liability
Partnership*
10.1 Lease Agreement by and between S&D Land Holdings, Inc., and Famous Dave's of
Minneapolis, Inc. as of January 1, 1996 (Linden Hills)
10.2 Lease Agreement by and between S&D Land Holdings, Inc., and Famous Dave's of
Minneapolis, Inc. as of January 1, 1996 (Highland Park)
10.3 Lease Agreement by and between S&D Land Holdings, Inc., and Famous Dave's of
Minneapolis, Inc. as of January 15, 1996 (Minnetonka)
10.4 Sublease Agreement by and between S&D Land Holdings, Inc., and Famous Dave's of
Minneapolis, Inc. as of January 1, 1996 (Roseville)
10.5 Lease Agreement by and between Calhoun Square Associates Limited Partnership and
Lake & Hennepin BBQ and Blues, Inc. dated January 4, 1996, as amended on March
26, 1996 and as further amended on July 15, 1996 (Calhoun Square)*
10.6 Assignment and Assumption of Lease Agreement by and between Innovative Gaming,
Inc., Carlson Real Estate Company, and Famous Dave's of America, Inc. as of May
13, 1996 and Side Agreement dated May 16, 1996 between Innovative Gaming, Inc.
and Famous Dave's of America, Inc. (corporate headquarters)
10.7 Company's 1995 Stock Option and Compensation Plan
10.8 Employment Agreement between the Company and David W. Anderson dated as of March
4, 1996
10.9 Employment Agreement between the Company and William L. Timm dated as of March 4,
1996
10.10 Employment Agreement between the Company and Mark A. Payne dated as of August 12,
1996
10.11 Trademark License Agreement between Famous Dave's of America, Inc. and Grand
Pines Resorts, Inc.
10.12 Management Agreement dated January 1, 1996 between Famous Dave's Enterprises,
Inc. and Famous Dave's of Minneapolis, Inc.
10.13 Amendment dated August 12, 1996 to the Company's 1995 Stock Option and
Compensation Plan*
24.1 Consent of Maslon Edelman Borman & Brand, a Professional Limited Liability
Partnership (included in Exhibit 5)*
24.2 Consent of Lund Koehler Cox & Company, PLLP
25 Powers of Attorney (included on Page II-5)
</TABLE>
- -------------------------
* To be filed by Pre-effective Amendment.
ITEM 28. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the small business
issuer pursuant to the foregoing provisions or otherwise, the small business
issuer has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the small business issuer of
expenses incurred or paid by a director, officer or controlling person of the
small business issuer in the
II-2
<PAGE> 47
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the small business issuer will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
The undersigned small business issuer hereby undertakes that it will:
(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to (i) include any
prospectus required by Section 10(a)(3) of the Securities Act; (ii) reflect
in the prospectus any facts or events which, individually or together,
represent a fundamental change in the information in the registration
statement; and (iii) include any additional or changed material information
on the plan of distribution.
(2) For determining any liability under the Securities Act, treat the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the small business issuer under Rule 424(b)(1) or
(4) or Rule 497(h) under the Securities Act as part of this registration
statement as of the time the Commission declared it effective.
(3) For determining any liability under the Securities Act, treat each
post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the registration
statement, and that offering of the securities at that time as the initial
bona fide offering of those securities.
The small business issuer hereby undertakes to provide to the Underwriter
at the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriter to
permit prompt delivery to each purchaser.
II-3
<PAGE> 48
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and has authorized this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Minneapolis, State of Minnesota, on August 23, 1996.
FAMOUS DAVE'S OF AMERICA, INC.
By /s/ DAVID W. ANDERSON
------------------------------------
David W. Anderson
Chairman of the Board and
Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Mark A.
Payne or William M. Mower, each or either of them, such person's true and lawful
attorney-in-fact and agent with full power of substitution and resubstitution
for such person and in such person's name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this registration statement, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing necessary or desirable
to be done in and about the premises, as fully to all intents and purposes as
such person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or his substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
In accordance with the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates stated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ----------------------------------- ------------------------------------- ------------------
<C> <S> <C>
/s/ DAVID W. ANDERSON Chairman of the Board and August 23, 1996
- ----------------------------------- Chief Executive Officer
David W. Anderson
/s/ WILLIAM L. TIMM President August 23, 1996
- -----------------------------------
William L. Timm
/s/ MARK A. PAYNE Vice President, Finance and August 23, 1996
- ----------------------------------- Chief Financial Officer, Secretary
Mark A. Payne and Treasurer
/s/ THOMAS J. BROSIG Director August 23, 1996
- -----------------------------------
Thomas J. Brosig
/s/ MARTIN J. O'DOWD Director August 23, 1996
- -----------------------------------
Martin J. O'Dowd
</TABLE>
II-4
<PAGE> 49
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
PAGE
EXHIBIT NO. DESCRIPTION OF EXHIBIT NUMBER
- ----------- ------------------------------------------------------------------------- ------
<C> <S> <C>
1.1 Form of Underwriting Agreement
1.2 Form of Underwriter's Warrant
3.1 Articles of Incorporation
3.2 By-laws
5 Opinion of Maslon Edelman Borman & Brand, a Professional Limited
Liability Partnership*
10.1 Lease Agreement by and between S&D Land Holdings, Inc., and Famous Dave's
of Minneapolis, Inc. as of January 1, 1996 (Linden Hills)
10.2 Lease Agreement by and between S&D Land Holdings, Inc., and Famous Dave's
of Minneapolis, Inc. as of January 1, 1996 (Highland Park)
10.3 Lease Agreement by and between S&D Land Holdings, Inc., and Famous Dave's
of Minneapolis, Inc. as of January 15, 1996 (Minnetonka)
10.4 Sublease Agreement by and between S&D Land Holdings, Inc., and Famous
Dave's of Minneapolis, Inc. as of January 1, 1996 (Roseville)
10.5 Lease Agreement by and between Calhoun Square Associates Limited
Partnership and Lake & Hennepin BBQ and Blues, Inc. dated January 4,
1996, as amended on March 26, 1996 and as further amended on July 15,
1996 (Calhoun Square)*
10.6 Assignment and Assumption of Lease Agreement by and between Innovative
Gaming, Inc., Carlson Real Estate Company, and Famous Dave's of America,
Inc. as of May 13, 1996 and Side Agreement dated May 16, 1996 between
Innovative Gaming, Inc. and Famous Dave's of America, Inc. (corporate
headquarters)
10.7 Company's 1995 Stock Option and Compensation Plan
10.8 Employment Agreement between the Company and David W. Anderson dated as
of March 4, 1996
10.9 Employment Agreement between the Company and William L. Timm dated as of
March 4, 1996
10.10 Employment Agreement between the Company and Mark A. Payne dated as of
August 12, 1996
10.11 Trademark License Agreement between Famous Dave's of America, Inc. and
Grand Pines Resorts, Inc.
10.12 Management Agreement dated January 1, 1996 between Famous Dave's
Enterprises, Inc. and Famous Dave's of Minneapolis, Inc.
10.13 Amendment dated August 12, 1996 to the Company's 1995 Stock Option and
Compensation Plan*
24.1 Consent of Maslon Edelman Borman & Brand, a Professional Limited
Liability Partnership (included in Exhibit 5)*
24.2 Consent of Lund Koehler Cox & Company, PLLP
25 Powers of Attorney (included on Page II-5)
</TABLE>
- -------------------------
* To be filed by Pre-effective Amendment.
<PAGE> 1
EXHIBIT 1.1
2,000,000 UNITS CONSISTING OF 2,000,000 SHARES OF COMMON STOCK
AND
2,000,000 REDEEMABLE CLASS A COMMON STOCK PURCHASE WARRANTS
FAMOUS DAVE'S OF AMERICA, INC.
UNDERWRITING AGREEMENT
____________, 1996
R. J. Steichen & Company
801 Nicollet Mall
1100 Midwest Plaza West
Minneapolis, MN 55402
Ladies and Gentlemen:
Famous Dave's of America, Inc., a Minnesota corporation (the
"COMPANY"), proposes to issue and sell to you (the "UNDERWRITER"), an aggregate
of 2,000,000 Units ("UNITS"), each Unit consisting of one share of Common Stock
("COMMON STOCK") and one Redeemable Class A Common Stock Purchase Warrant (the
"WARRANT") exercisable for a period of four (4) years commencing on the
effective date of the Registration Statement to purchase one share of Common
Stock of the Company at a price of $8.50 per share. The Warrants shall be
immediately exercisable and are detachable and transferable commencing ten (10)
trading days after the effective date of the Registration Statement under the
Act or at any earlier time agreed to by the Underwriter and the Company. The
Warrants shall be redeemable at the option of the Company at $.01 per Warrant
upon thirty (30) days' prior notice in writing of the Company's intention to
redeem, provided that the average closing bid price for the Common Stock shall
have averaged in excess of 120% of the exercise price per share for any 20
consecutive trading days prior to such notice, on the such other terms set
forth in the Preliminary Prospectus (defined herein).
The 2,000,000 Units to be purchased from the Company are referred to
herein as the "FIRM UNITS." In addition, solely for the purpose of covering
overallotments with respect to the Firm Units, the Company proposes to grant to
the Underwriter, for its account, the option to purchase up to an additional
300,000 Units (the "OPTION UNITS"). The Firm Units and any Option Units
purchased pursuant to this Underwriting Agreement are herein referred to as the
"UNITS."
<PAGE> 2
The Company hereby confirms its agreement with respect to the purchase
of the Units by the Underwriter.
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to, and agrees with, the several Underwriter as
follows:
(a) The Company has prepared in conformity in all
material respects with the requirements of the Securities Act of 1933,
as amended (the "ACT"), and the applicable rules and regulations of
the Securities and Exchange Commission (the "COMMISSION") thereunder,
and has filed with the National Office of the Commission in
Washington, D.C., a registration statement on Form SB-2, File No.
333-____________, including a Prospectus relating to the Units, and
will file with the Commission before the effective date of the
registration statement one or more amendments thereto. Copies of such
registration statement and amendments (including all forms of the
preliminary prospectus) have been delivered to you. Any such
preliminary prospectus (as described in Rule 430 under the Act)
included at any time as part of such registration statement is herein
called a "PRELIMINARY PROSPECTUS." As used herein, the term
"REGISTRATION STATEMENT" shall, except where the context otherwise
requires, mean said registration statement (and all exhibits thereto)
as amended by all amendments filed prior to its effective date; and
the term "PROSPECTUS" shall, except where the context otherwise
requires, mean said final prospectus on file with the Commission when
the Registration Statement becomes effective (except that, if the
prospectus filed by the Company pursuant to Rule 424(b) under Act
shall differ from the prospectus included in the Registration
Statement, the term "PROSPECTUS" shall, except where the context
otherwise requires, mean the prospectus so filed pursuant to Rule
424(b) from and after the date on which it shall have been first
used.) Reference herein to the Registration Statement, to any
Preliminary Prospectus, to the Prospectus or to any amendment of or
supplement to the Prospectus includes all documents and information
incorporated therein by reference.
(b) The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus, and each Preliminary
Prospectus, at the time of filing thereof with the Commission, did not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading; PROVIDED, HOWEVER, that none of
the representations and warranties in this subparagraph shall apply to
statements in, or omissions from, any Preliminary Prospectus which are
based upon and conform to written information furnished to the Company
by or on behalf of any Underwriter through either or both of you
specifically for use in the preparation thereof.
(c) When the Registration Statement becomes effective and
at all times subsequent thereto up to each Closing Date and upon the
effective date of any post-effective amendment to the Registration
Statement, the Registration Statement and the Prospectus, and any
amendments thereof or supplements thereto, will in all material
respects conform to the requirements of the Act and of the applicable
rules and regulations of the Commission thereunder (the "RULES AND
REGULATIONS"). When the
2
<PAGE> 3
Registration Statement becomes effective and at all times subsequent
thereto, up to each closing date and the effective date of any past
effective amendment to the Registration Statement, neither the
Registration Statement (as amended, if the Company shall have filed
with the Commission any post-effective amendment thereto), nor the
Prospectus, will include an untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; PROVIDED,
HOWEVER, that the Company makes no representations or warranties as to
information contained in or omitted from the Registration Statement or
the Prospectus, or any such amendment or supplement, in reliance upon
and in conformity with written information furnished to the Company by
either or both of you specifically for use in the preparation thereof.
There is no contract or document required to be described in the
Registration Statement or Prospectus, or to be filed as an exhibit to
the Registration Statement, which was not described or filed as
required.
(d) [Deleted]
(e) Lund Koehler Cox & Company the accountants who have
examined certain financial statements and schedules of the Company,
filed and to be filed with the Commission as part of the Registration
Statement and the Prospectus, are independent public accountants
within the meaning of the Act and the Rules and Regulations. The
financial statements of the Company, together with related notes and
summaries thereof, set forth in the Registration Statement and
Prospectus, in all material respects present fairly the financial
position and results of operations and changes in financial position
of the Company as of the dates and for the periods indicated. All
such financial statements (including the related notes) have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods concerned.
(f) Subsequent to the respective dates as of which
information is given in the Registration Statement and Prospectus, and
other than as described in the Registration Statement and Prospectus,
(i) the Company has not incurred any material liabilities or
obligations, contingent or otherwise, or entered into any material
transaction, except obligations incurred in the ordinary course of
business that in the aggregate are not material; (ii) the Company has
not paid or declared any dividend or other distribution on its Common
Stock; (iii) there has not been any change in the Common Stock or
increase in the long-term debt of the Company (including any
capitalized lease obligation), or any issuance of options, warrants,
or rights to purchase Common Stock of the Company, or any material
adverse change in the business, financial position, results of
operations, key personnel, capitalization, properties, or net worth of
the Company, considered as a whole; and (iv) no material loss or
damage (whether or not insured) to the property of the Company has
been sustained.
(g) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation, with full power and authority to own
its properties and conduct its business as it is currently being
carried on and as described in the Prospectus and is duly qualified to
do business as a
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<PAGE> 4
foreign corporation and is in good standing in all states or
jurisdictions in which the ownership or lease of property or the
conduct of its business requires such qualification and in which the
failure to so qualify would have a material adverse effect on its
business condition (financial or other), or properties. The Company
has all necessary and material authorizations, approvals and orders of
and from all governmental regulatory officials and bodies to own its
properties and conduct its business as described in the Prospectus and
is conducting its business in substantial compliance with all
applicable laws, rules and regulations of the jurisdictions in which
it is conducting business.
(h) The Company is not in violation of its articles of
incorporation, bylaws, or other governing documents and is not in
default in the performance of any obligation, agreement or condition
contained in any lease agreement or in any bond, debenture, note or
any other evidence of indebtedness or in any material contract,
indenture, loan agreement or license where such default would have a
material adverse effect on the business condition (financial or other)
or properties of the Company, considered as a whole which violation or
default has not been waived. The consummation of the transactions
herein contemplated and the fulfillment of the terms hereof will not
conflict with or result in a material breach of any of the terms or
provisions of, or constitute a material default under, the articles of
incorporation or bylaws, or order governing documents of the Company,
or any indenture, mortgage, agreement or other instrument to which the
Company is a party or by which it is bound, or to which any property
of the Company is subject, or conflict with or violate any law or any
order, rule or regulation, applicable to the Company of any court, or
of any federal or state regulatory body or administrative agency,
having jurisdiction over the Company or any of its properties which
conflict, breach or default has not been waived.
(i) The Company has the duly authorized and outstanding
capitalization as set forth in the Prospectus, as of June 30, 1996.
The outstanding Common Stock of the Company are duly authorized and
validly issued, fully paid and nonassessable. The Common Stock of the
Company conform in all material respects in substance to all
statements in relation thereto contained in the Registration Statement
and the Prospectus. The Company has all requisite power and authority
(corporate and other) to issue, sell, and deliver the Units, including
the Common Stock issuable upon exercise of the Warrants in accordance
with and upon the terms and conditions set forth in this Agreement and
in the Registration Statement and Prospectus; and all corporate action
required to be taken by the Company for the due and proper
authorization, issuance, sale, and delivery of the Units, including
the Common Stock issuable upon exercise of the Warrants has been
validly and sufficiently taken.
(j) The Company has full legal power, right and authority
(corporate and other) to enter into this Underwriting Agreement and to
perform and discharge its obligations hereunder, and this Underwriting
Agreement has been duly authorized, executed and delivered on behalf
of the Company and is the valid and binding obligation of the Company,
subject, as to the enforcement of remedies, to applicable bankruptcy,
insolvency, moratorium and other laws affecting the rights of
creditors generally, and
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<PAGE> 5
except as enforceability of the indemnification or contribution
provisions may be limited by federal or state securities laws or
principles of public policy.
(k) The Company will apply the proceeds of the sale of
the Units by it substantially to the purposes set forth in the
Prospectus.
(l) To the best of the Company's knowledge, no approval,
authorization, consent or order of any public board or body (other
than in connection with or in compliance with the provisions of the
Act and the securities or Blue Sky laws of various jurisdictions) is
legally required for the sale of the Units by the Company.
(m) The Company has no subsidiaries.
(n) The Company has good and marketable title, free and
clear of all liens, encumbrances, equities, charges or claims, to all
of the property, real and personal, described in the Registration
Statement and Prospectus as being owned by it, except as otherwise set
forth in the Registration Statement and Prospectus and except for such
as are not in the aggregate material in relation to the property of
the Company considered as a whole and do not materially affect the
value of such property, and, except as otherwise stated in the
Registration Statement and Prospectus, has valid and binding leases to
the real and/or personal property described in the Registration
Statement and Prospectus as under lease to it with such exceptions as
could not materially interfere with the conduct of the business.
(o) There are no actions, suits or proceedings or
investigations pending before any court or governmental agency,
authority or body to which the Company is a party or of which the
business or property of the Company is the subject which, if decided
adversely, would have a material adverse effect on the general
affairs, condition (financial or other), business, properties, net
worth, or results of operations of the Company, and, to the best of
the Company's knowledge, no such actions, suits or proceedings are
threatened.
(p) The Company has not taken or will not take, directly
or indirectly, any action designed to or which has constituted or
which might reasonably be expected to cause or result in the
stabilization or manipulation as defined in the Securities Exchange
Act of 1934, as amended, of the price of the Company's securities to
facilitate the sale or resale of the Units.
(q) The Company has not, directly or indirectly, at any
time during the past five years (i) made any contributions to any
candidate for political office, or failed to disclose fully any
contribution in violation of law, or (ii) made any payment to any
state, Federal or foreign governmental officer or official, or other
person charged with similar public or quasi-public duties, other than
payments required or permitted by applicable law.
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<PAGE> 6
(r) Except as described in the Prospectus and to the best
knowledge of the Company, the Company owns or possesses the right to
utilize all the patents, patent applications, trademarks, service
marks, trade names, trademark registrations, service mark
registrations, copyrights, licenses, inventions, trade secrets, and
similar rights necessary for the present conduct of its business as
described in the Prospectus, without any known conflict with the
asserted rights of others in respect of such matters. Except as may
be stated in the Prospectus, the Company has not received any notice
of any infringement of, or license or similar fees for, any patents,
patent applications, trademarks, service marks, trade names, trademark
registrations, service mark registrations, copyrights, licenses,
inventions, trade secrets, or other similar rights of others, or any
claim with respect thereto, which would have a material adverse effect
on the business of the Company.
(s) The Company has filed all necessary federal, state
and foreign income and franchise tax returns or if not filed, has
obtained all necessary extensions and has paid all taxes as shown as
due on any such returns; and there is no material tax deficiency which
has been asserted against the Company, and, to the best of the
Company's knowledge, the Company has no material obligation to pay any
taxes except as may be stated in the Prospectus.
(t) All prior offers or sales of the securities of the
Company were exempt from registration under the Act and all applicable
state blue sky laws.
(u) No securities of the Company have been sold within
three years prior to the date hereof, except as set out in Item 26 of
Part II of the Registration Statement.
(v) The Company knows of no outstanding claims for
services in the nature of a finder's fee or origination fee with
respect to the sale of the Units or Underwriter's Warrants (defined
hereinafter) hereunder resulting from its acts for which the
Underwriter may be responsible. The Company will indemnify the
Underwriter for and hold the Underwriter harmless against any claim
for such finder's fees or origination fees.
(w) Each contract to which the Company is a party and
which is filed as a part of or incorporated by reference into the
Registration Statement has been duly and validly executed, is in full
force and effect in all material respects in accordance with its
terms, and none of such contracts have been assigned by the Company,
and the Company knows of no present situation or condition or fact
which would prevent compliance by the Company with the terms of such
contracts, as amended to date. Except for amendments or modifications
of such contracts in the ordinary course of business, the Company has
no intention of exercising any right which it may have to cancel any
of its obligations under any of such contracts, and has no knowledge
that any other party to any of such contracts has any intention not to
render full performance under such contracts.
(x) The Company maintains insurance which is in full
force and effect, of the types and in an amount, in the judgment of
the Company and except as otherwise
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<PAGE> 7
disclosed in the Prospectus, which is reasonable for its present
business taking into account its operations and assets, including, but
not limited to, insurance covering all personal property owned or
leased by the Company against theft, damage, destruction, acts of
vandalism and all other risks customarily insured against.
(y) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or
specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain
accountability for assets, (iii) access to assets is permitted only in
accordance with management's general or specific authorization, and
(iv) the recorded accountability for assets is compared with existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences.
2. PURCHASE OF THE UNITS BY THE UNDERWRITER.
(a) On the basis of the representations and warranties
herein contained, but subject to the terms and conditions herein set
forth, the Company agrees to sell to the Underwriter, and the
Underwriter agrees to purchase from the Company, the Firm Units. The
purchase price for each Firm Unit shall be $5.52 per Unit.
(b) The Company hereby grants to the Underwriter, for its
account, an option to purchase from the Company, solely for the
purpose of covering overallotments in the sale of Firm Units, all or
any portion of an aggregate of 300,000 Option Units for a period of 45
days from the date hereof at the same purchase price per Option Unit
as the purchase price per Firm Unit set forth in Section 2(a) above.
3. DELIVERY OF AND PAYMENT FOR UNITS. Delivery of certificates
for the Firm Units and payment therefor shall be made at the offices of Maslon
Edelman Borman & Brand, PLLP (or such other place as mutually may be agreed
upon), at 10:00 a.m., Minneapolis, Minnesota time, on or before the third full
business day following the effective date of the Registration Statement (the
"FIRST CLOSING DATE").
The option to purchase Option Units granted in Section 2(b) hereof may
be exercised at any time or from time-to-time during the 45-day term thereof by
written notice to the Company from you. Such notice shall set forth the
aggregate number of Option Units as to which the option is being exercised, and
the time and date, not earlier than either the First Closing Date or the second
business day after the day on which the option shall have been exercised but
not later than the third full business day after the date of such exercise, as
determined by you, when the Option Units are to be delivered (the "SECOND
CLOSING DATE"). Delivery and payment for such Option Units to be purchased by
you are to be at the offices set forth above for delivery and payment of the
Firm Units. The First Closing Date and the Second Closing Date are sometimes
herein individually called the "CLOSING DATE" and collectively called the
"CLOSING DATES."
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<PAGE> 8
Delivery of facsimile certificates for the Units shall be made by or
on behalf of the Company to you against payment by you of the purchase price
therefor by wire transfer or certified or official bank check to the order of
the Company. The certificates for such Units shall be registered in such names
and denominations as you shall have requested at least two full business days
prior to the applicable Closing Date. Time shall be of the essence and
delivery at the time and place specified in this Agreement is a further
condition to your obligations hereunder.
4. COVENANTS OF THE COMPANY. The Company covenants and agrees
with each Underwriter that:
(a) The Company will use its best efforts to cause the
Registration Statement to become and remain effective, up to each
Closing Date. The Company will notify you promptly of any request by
the Commission for any amendment of or supplement to the Registration
Statement or the Prospectus or for additional information, will
prepare and file with the Commission, promptly upon your request, any
amendments of or supplements to the Registration Statement or
Prospectus which, in your reasonable opinion, may be necessary or
advisable in connection with the distribution of the Units; and will
not file any amendments and supplements to the Registration Statement
as originally filed with the Commission unless it shall first have
delivered copies of such amendments or supplements to you, or file any
such amendment or supplement to which you shall have reasonably
objected in writing to the Company. The Company will immediately
advise you by telephone, confirming such advice in writing (i) when
notice is received from the Commission that the Registration Statement
has become effective, (ii) of any order suspending the effectiveness
of the Registration Statement or of any proceedings or examination
under the Act, as soon as the Company is advised thereof, and (iii) of
any order or communication of any public authority addressed to the
Company suspending or threatening to suspend qualification of the
Units for sale in any state. The Company will use its best efforts to
prevent the issuance of any stop order or other such order, and,
should a stop order or other such order be issued, to obtain as soon
as possible the lifting thereof.
(b) If, at any time when a prospectus relating to the
Units is required to be delivered under the Act, any event shall have
occurred as a result of which, in the opinion of counsel for the
Company or in the reasonable opinion of counsel for you, the
Prospectus, as then amended or supplemented, includes an untrue
statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading, or if it is necessary at any time to amend or
supplement the Prospectus to comply with the Act, the Company will
notify you promptly and prepare and file with the Commission an
appropriate amendment or supplement.
(c) The Company will use its best efforts to take or
cause to be taken all necessary action and furnish to whomever you may
reasonably direct such information as may be required in qualifying
the Units for offering and sale under the Blue Sky or securities laws
of such states as you and the Company shall designate. The Company
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<PAGE> 9
shall not, however, be required to register or qualify as a foreign
corporation or as a dealer in securities or, except as to matters and
transactions related to the offering or sale of the Units, consent to
service of process in any state.
(d) The Company will furnish to each of the several
Underwriter, from time to time and without charge, copies of the
Registration Statement, each Preliminary Prospectus, the Prospectus
(including all documents from which information is incorporated by
reference), and all amendments of and supplements to any of such
documents, in each case as soon as available and in such quantities as
you may from time to time reasonably request for the purposes
contemplated by the Act. The Company authorizes the several
Underwriter and all dealers to whom any of the Units may be sold by
the Underwriter to use the Preliminary Prospectuses and Prospectuses
supplied, as from time to time amended or supplemented, in connection
with the sale of the Units as and to the extent permitted by federal
and applicable state and local securities laws.
(e) The Company will furnish to each of you two copies of
the Registration Statement and all amendments thereof which are signed
and include all exhibits and schedules.
(f) The Company will for a period of five (5) years after
the Effective Date, furnish directly to you, and to each Underwriter
who may so request in writing, as soon as the same shall be sent to
shareholders generally, copies of all annual or interim shareholder
reports of the Company, and will, for the same period, also furnish
each of you, and to each Underwriter who may so request in writing,
with the following:
(i) two copies of any report, application, or
document (other than exhibits, which, however, will be
furnished on request) which the Company shall file with the
Commission or any securities exchange;
(ii) as soon as the same shall be sent to
shareholders generally, copies of each communication which
shall be sent to shareholders; and
(iii) from time to time such other information
concerning the Company as you may reasonably request, provided
that the Company shall not be required to furnish any
information pursuant hereto that is not furnished to its
shareholders or not otherwise made publicly available.
(g) The Company will, for a period of two (2) years after
the Effective Date, furnish directly to you, quarterly profit and loss
statements, reports of the Company's cash flow, and statements of
application of the proceeds of the offering contained in reports or
statements filed by the Company with the Commission.
(h) The Company will make generally available to its
security holders as soon as practicable, but in any event not later
than eighteen months after the effective date of the Registration
Statement, a statement of earnings of the Company (which need not be
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<PAGE> 10
audited) complying with Section 11(a) of the Act and the rules and
regulations of the Commission thereunder (including at the option of
the Company Rule 158).
(i) Whether or not this Agreement becomes effective or is
terminated or cancelled or the sale of the Units to you is
consummated, and regardless of the reason for or cause of any such
termination, cancellation, or failure to consummate, the Company will
pay or cause to be paid (A) all expenses (including any transfer
taxes) incurred in connection with the delivery to you of the Units,
(B) all expenses and fees (including, without limitation, fees and
expenses of the Company's accountants and counsel, excluding, however,
fees of the Underwriter' counsel) in connection with the preparation,
printing, filing, delivery, and shipping of the Registration Statement
(including the financial statements therein and all amendments,
schedules, and exhibits thereto), each Preliminary Prospectus, the
Prospectus, and any amendment thereof or supplement thereto, (C) all
fees and expenses, including all Company counsel fees, (D) fees and
expenses of the Underwriter's counsel, incurred in connection with the
qualification of the Units for offering and sale by the Underwriter or
by dealers under the securities or Blue Sky laws of the states and
other jurisdictions which you and the Company mutually shall designate
in accordance with Section 4(c) hereof, (E) subject to the further
provisions of this Section 4(i), all fees and expenses, including all
counsel fees, excluding, however, fees of the Underwriter's counsel,
incurred in connection with the review of the offering by the National
Association of Securities Dealers, Inc. and listing fees, if any, (F)
all costs and expenses incident to qualification with The Nasdaq
SmallCap Market, (G) postage and express charges and other expenses in
connection with delivery of the Preliminary and Final Prospectus to
the Underwriter, and (G) all other costs and expenses incident to the
performance of their obligations hereunder that are not otherwise
specifically provided for herein. In addition to and not in lieu of
the foregoing, the Company shall pay to the Underwriter on each
Closing Date, for out-of-pocket expenses (including fees of
Underwriter's counsel), a nonaccountable expense allowance equal to
two percent (2%) of the aggregate purchase price for the Units sold to
the Underwriter on each Closing Date. If the Underwriter withdraws
from the sale of the Units as herein proposed for any reason other
than its inability to sell the Units and through no other fault of its
own, or if the sale of the Units as herein proposed is abandoned by
the Company, the Company will reimburse the Underwriter in the amount
of all accountable expenses (including fees and disbursements of
counsel) incurred by the Underwriter in connection with the
contemplated purchase, offer, and sale of the Units, including without
limitation, expenses incurred in their investigation, preparation to
market, and marketing of the Units, and in contemplation of performing
and in performance of its obligations hereunder, up to an aggregate of
$_______________, such expenses and fees to be evidenced by
appropriate receipts, invoices, or other documentation.
(j) The Company will cause each officer and director of
the Company, and Okabena Partnership K, to furnish to the Underwriter,
on or prior to the date of this Agreement, a letter or letters, in
form and substance satisfactory to counsel for the Underwriter,
pursuant to which each such person shall agree not to offer for sale,
sell, distribute or otherwise dispose of any securities of the Company
for a period of twelve
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<PAGE> 11
(12) months from the date hereof as to David W. Anderson, Kathryn W.
Anderson and Okabena Partnership K, and for a period of six (6) months
from the date hereof as to all officers and directors of the Company
not mentioned immediately above.
(k) The Company will not, during the 180 days following
the effective date of the Registration Statement, except with your
prior written consent, offer for sale, sell, distribute, or otherwise
dispose of any Common Stock or sell or grant options, rights, or
warrants with respect to any Common Stock (except for the grants,
options, rights, warrants or convertible securities pursuant to the
Company's 1995 Stock Option and Incentive Compensation Plan),
otherwise than in accordance with this Agreement or as contemplated by
the Prospectus.
(l) The Company authorizes the Underwriter and all
dealers to whom any of the Units may be sold by the Underwriter in
connection with the distribution of the Units, to use the Prospectus
as from time to time amended or supplemented in connection with the
offering and sale of the Units and in accordance with the applicable
provisions of the Act and the applicable Rules and Regulations and
applicable state "blue sky" or securities laws.
(m) The Company shall not request an effective date nor
allow the Registration Statement to be declared effective without the
prior approval of the Underwriter.
(n) Within the time during which the Prospectus is
required to be delivered under the Act, the Company will comply, at
its own expense, with all requirements imposed upon it by the Act, by
the Rules and Regulations, by the Exchange Act, and by any order of
the Commission, so far as necessary to permit the continuance of sales
or dealings in the Units.
(o) The Company agrees to file with the Commission all
required reports on Form SR in accordance with the provisions of Rule
463 promulgated under the Act and to provide a copy of such reports to
the Underwriter and its counsel.
(p) The Company shall file an application and take all
other steps necessary to have the Units listed on The Nasdaq SmallCap
Market on or prior to the effective date of the Registration Statement
under the Act.
(q) The Company will reserve and keep available that
maximum number of its authorized but unissued shares of Common Stock
which are issuable upon exercise of Units and the Underwriter's
Warrant during the term of the Units and the Underwriter's Warrant.
(r) Prior to the Closing Date, no discussions will be
held by officers, directors or any other affiliate or associate of the
Company with any member of the news media and no news release or other
publicity about the Company will be permitted without prior approval
of the Company's and the Underwriter's respective legal counsel.
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(s) The Company shall have obtained a CUSIP number for
the Units (and its components) prior to the effective date of the
Registration Statement under the Act.
(t) The Company shall supply to the Underwriter, and its
legal counsel, at the Company's cost, one complete bound volume of all
of the documents relating to the public offering, within a reasonable
time after the Closing Date, not to exceed four (4) months. The
volume shall be hard cover bound in book format.
(u) The Company will apply the proceeds from the sale of
the Units by it to the purposes and in the manner set forth in the
Registration Statement and, pending such application, shall invest
such net proceeds only in one or more of the following, except as
otherwise provided by prior written consent of the Underwriter: (i)
interest-bearing obligations issued by the United States Government or
issued by an agency or instrumentality of the United States Government
and guaranteed by the United States Government and having a maturity
not in excess of one year, (ii) interest-bearing domestic commercial
paper having a maturity of not more than 365 days and, at the time of
purchase by the Company, rated investment grade by Moody's Investors
Service, Inc. or Standard & Poor's Corporation, (iii) interest-bearing
certificates of deposit issued by a commercial bank chartered by the
United States Government or by any state of the United States having
shareholders' equity of at least $500,000,000 except that the
foregoing notwithstanding, the Company may invest no more than
$100,000 of such net proceeds in certificates of deposit issued by any
such commercial bank regardless of shareholders' equity, and (iv)
shares or other units of interest in a registered open-ended
investment company the assets of which aggregate at least $200,000,000
and are invested solely in so-called "money market" obligations.
5. CONDITIONS OF UNDERWRITER' OBLIGATIONS. The obligations of
the several Underwriter herein shall be subject to the accuracy of the
representations and warranties on the part of the Company herein as of the date
hereof, and as of each Closing Date, to the accuracy of the written statements
of Company officers made pursuant to the provisions hereof, to the performance
by the Company of its obligations hereunder and to the following additional
conditions:
(a) The Registration Statement shall have become
effective not later than 5:00 P.M., Minneapolis, Minnesota time, on
the date of this Agreement or on such later time and date as shall be
satisfactory to the Underwriter, no stop order suspending the
effectiveness of the Registration Statement or any amendment thereof
or supplement or the qualification of the Units for offering or sale
shall have been issued and no proceedings for that purpose shall have
been instituted or shall be pending or, shall be threatened by the
Commission or by any state securities authority, and any request of
the Commission for additional information (to be included in the
Registration Statement or the Prospectus or otherwise) shall have been
complied with to the Underwriter's satisfaction.
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<PAGE> 13
(b) The Underwriter shall not have advised the Company
that the Registration Statement or Prospectus, or any amendment
thereof or supplement thereto, contains an untrue statement of fact
that, in the Underwriter's reasonable opinion, is material, or omits
to state a fact that, in your reasonable opinion, is material and is
required to be stated therein or is necessary to make the statements
therein not misleading provided that this Section 5(b) shall not apply
to statements in, or omissions from, the Registration Statement or
Prospectus, or any amendment thereof or supplement thereto that are
based upon and conform to written information provided by the
Underwriter specifically for use in the Registration Statement or
Prospectus.
(c) On or prior to each Closing Date, the form and
validity of the Units, the legality and sufficiency of the corporate
proceedings and matters relating to the incorporation of the Company
and other matters incident to the issuance of the Units, the form of
the Registration Statement and the Prospectus and of any amendments
thereof or supplements thereto filed prior to such Closing Date (other
than financial statements and schedules and other financial or
statistical data included therein), the authorization, execution, and
delivery of this Agreement and the description of the Units contained
in the Prospectus shall have been reasonably approved by the
Underwriter. In connection with such determination, the Company shall
have furnished to the Underwriter such documents as you may have
requested for the purpose of enabling the Underwriter to pass upon
such matters.
(d) On each Closing Date there shall have been furnished
to the Underwriter, the favorable opinion (addressed to the
Underwriter) of Maslon Edelman Borman & Brand, PLLP, counsel for the
Company, dated such Closing Date, and in form reasonably satisfactory
to counsel for the Underwriter, to the effect that:
(i) The Company is a corporation duly incorporated,
validly existing and in good standing under the laws of the
State of Minnesota, with corporate power and authority to own
or lease its properties and conduct its business as described
in the Prospectus. The Company has no subsidiaries other than
as described in the Prospectus.
(ii) The authorized capital stock of the Company as
of the date of this Agreement is as set forth in the
Prospectus. The outstanding shares of the Common Stock of the
Company have been duly authorized and validly issued and are
fully paid and nonassessable. The Units (and their
components) have been duly authorized and, upon issuance,
delivery and payment therefor as described in this Agreement,
will be validly issued, fully paid and nonassessable. The
shares of Common Stock underlying the Warrants have been duly
authorized and reserved for issuance and when issues, sold and
delivered in accordance with the terms of the Warrant, will be
validly issued, fully paid and nonassessable. The issuance,
sale and delivery of the Underwriter's Warrant has been duly
authorized and the shares (the "WARRANT SHARES") of Common
Stock issuable upon the exercise thereof have been reserved
for issuance upon such exercise. The Warrant Shares, when
issued, sold and delivered in accordance with the terms of
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<PAGE> 14
the Underwriter's Warrant, will be validly issued, fully paid
and nonassessable. No preemptive rights of, or rights of
refusal in favor of, stockholders of the Company exist with
respect to the Units (or any component thereof), the
Underwriter's Warrant or the Warrant Shares, or the issue and
sale thereof, pursuant to the Company's Articles of
Incorporation or Bylaws.
(iii) The authorized securities of the Company
conforms as to legal matters in all material respects to the
description thereof set forth in the Prospectus under the
caption "Description of Securities." The certificates
representing the Warrants and the Common Stock are in proper
form under the Minnesota Business Corporation Act.
(iv) The Registration Statement has become effective
under the Securities Act and, to such counsel's knowledge, no
stop order suspending the effectiveness of the Registration
Statement or suspending or preventing the use of the
Prospectus is in effect and, to our knowledge, no proceedings
for that purpose have been instituted or are pending by the
Commission. The registration of the Company's securities on
Form 8-A has become effective under the Securities Exchange
Act of 1934, as amended, and no stop order suspending the
effectiveness of such registration, and, to such counsel's
knowledge, no proceedings for that purpose have been
instituted or are pending by the Commission.
(v) The Registration Statement and the Prospectus
comply as to form in all material respects with the
requirements of the Securities Act and with the Rules and
Regulations, except the financial statements, the notes
thereto and the related schedules and other financial and
statistical data contained therein, as to which we express no
opinion.
(vi) Counsel knows of no contracts, leases,
documents or pending legal proceedings that are required to be
described in the Prospectus or to be filed as exhibits to the
Registration Statement that are not so described or filed.
(vii) The Underwriting Agreement, the Warrant
Agreement and the Underwriter's Warrant have been duly
authorized by all requisite corporate action, executed and
delivered by the Company and constitute the valid and binding
obligations of the Company enforceable in accordance with
their respective terms.
(viii) The execution and delivery of the Underwriting
Agreement and the issue and sale of the Underwriter's Warrant,
the Units (and their components) and the shares underlying the
Warrant will not violate or conflict with the Articles of
Incorporation or the Bylaws of the Company or any material
provision of any material contract or instrument filed as an
exhibit to the Registration Statement to which the Company is
a party or by which the Company is bound (other than any
violation of or conflict with any financial tests or covenants
contained therein,
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<PAGE> 15
as to which counsel need express no opinion) or any law
of the United States or the State of Minnesota, any rule or
regulation of any governmental authority or regulatory body of
the United States or the State of Minnesota, or any judgment,
order or decree known to us and applicable to the Company of
any court or governmental authority.
(ix) No holders of capital stock of the Company, or
securities convertible into capital stock of the Company, have
the right to cause the Company to include such holder's
capital stock in the Registration Statement pursuant to the
Company's Articles of Incorporation or Bylaws or any contract
or agreement.
(x) No consent, approval, authorization or order of,
and no notice to or filing with, any governmental agency or
body or any court is required to be obtained or made by the
Company for the issue and sale of the Units pursuant to the
Underwriting Agreement, except such as have been obtained or
made and such as may be required under applicable state
securities or blue sky laws or by the National Association of
Securities Dealers, Inc., as to which we express no opinion.
Although counsel to the Company cannot guarantee the
accuracy and completeness of the statements contained in the
Registration Statement or in the Prospectus, on the basis of
discussions and meetings with officers of the Company, representatives
of the Company's independent auditors, the Underwriter and counsel to
the Underwriter, our participation in the preparation of the
Registration Statement and the Prospectus, our examination of the
documents referred to in the Registration Statement and in the
Prospectus, and our procedures forming the basis of the opinions
expressed above, nothing came to our attention that led us to believe
that the Registration Statement, as of the date it was declared
effective, contained an untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, or that the Prospectus, as
of its date or on the date hereof, contained or contains an untrue
statement of a material fact or omitted or omits to state a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading (provided that we express no view with respect to the
content of financial statements, the notes thereto and the related
schedules and other financial or statistical data included in the
Registration Statement or the Prospectus or as to statements in the
Registration Statement or Prospectus which are based on and conform to
written information furnished to the Company by or on your behalf
specifically for use in the preparation thereof).
In rendering such opinion, such counsel may rely (A) as to
questions of the law of jurisdictions other than the State of
Minnesota or the United States upon an opinion or opinions (dated the
Closing Date, addressed to the Underwriter and in form satisfactory to
the Underwriter) of counsel acceptable to the Underwriter and (B) as
to matters of fact, to the extent they deem proper, on certificates of
appropriate officers of
15
<PAGE> 16
the Company, of the transfer agent and registrar for the Units and of
public officials; PROVIDED, such opinions and certificates must be
attached to the opinion of counsel.
(e) At the time of execution of this Agreement, the
Underwriter shall have received from Lund Koehler Cox & Company a
letter dated the date of such execution, in form and substance
satisfactory to the Underwriter, to the effect that they are
independent accountants with respect to the Company within the meaning
of the Act and the applicable published instructions, and Regulations
thereunder, and further stating in effect that:
(i) In their opinion, the audited financial
statements included in the Registration Statement and
Prospectus covered by their report included therein, comply as
to form in all material respects with the applicable
requirements of the Act and the published instructions, and
Regulations, thereunder.
(ii) On the basis of (A) a reading of the minutes
of the shareholders' and directors' meetings of the Company,
since March 14, 1994, (B) inquiries of certain officials of
the Company responsible for financial and accounting matters,
(C) a reading of the Company's monthly operating statements
subsequent to March 14, 1994, and (D) other specified
procedures and inquiries (but not an audit in accordance with
generally accepted auditing standards), nothing came to their
attention causing them to believe that:
(1) that the unaudited financial
statements of the Company, contained in the
Prospectus and any amendment thereof or supplement
thereto, do not comply as to form, in all material
respects, with the applicable accounting requirements
of the Act and the published Rules and Regulations or
were not prepared in conformity with generally-
accepted accounting principles and practices applied
on a basis consistent in all material respects with
those followed in the preparation of, the audited
financial statements of the Company included therein;
or
(2) that the unaudited amounts of
revenues, income before provision for income taxes,
net income and ratio of earnings to fixed charges of
the Company contained in the Prospectus, or any
amendment thereof or supplement thereto, were not
derived from financial statements prepared in
conformity with generally-accepted accounting
principles and practices applied on a basis
consistent in all material respects with those
followed in the preparation of the audited financial
statements of the Company included therein; or
(3) that the unaudited pro forma
financial statements of the Company and
recently-acquired companies, if any, contained in the
Prospectus or any amendment thereof or supplement
thereto, were not properly compiled in accordance
with generally-accepted accounting
16
<PAGE> 17
principles or did not provide for all adjustments
necessary for a fair presentation of the information
purported to be shown thereby; or
(4) with respect to the period
subsequent to June 30, 1996, there were, at a
specified date, not more than five (5) business days
prior to the date of the letter, any changes or any
material increases or decreases in capital stock,
long-term or short-term debt or shareholders' equity,
decreases in net assets, net current assets, or net
worth or any material decrease, as compared with the
corresponding period of the prior year, in revenues
or net income of the Company as compared with the
amounts shown in the June 30, 1996 balance sheet
included in the Registration Statement, except as
disclosed or referred to in the Prospectus and
Registration Statement.
(iii) Certain information set forth on the cover of
the Prospectus and page 3 of the Prospectus, and in the
Prospectus under the headings "Prospectus Summary," "Summary
Financial Information," "Risk Factors," "Use of Proceeds,"
"Dilution," "Capitalization," "Management's Discussion and
Analysis of Financial Condition and Results of Operations,"
"Business," "Management," "Certain Transactions," "Principal
Shareholders," "Description of Securities" and "Shares
Eligible for Future Sale" and that are expressed in dollars
(or percentages derived from dollar amounts) or numbers have
been compared to accounting records of the Company which were
subject to the internal accounting controls of the Company and
are in agreement with such records or computations made
therefrom, excluding any questions of legal interpretation.
(f) The Underwriter shall have received from Lund Koehler
Cox & Company a letter dated as of each Closing Date, to the effect
that such accountants reaffirm, as of such Closing Date, and as though
made on such Closing Date, the statements made in the letter furnished
by such accountants pursuant to subparagraph (e) of this Section 5,
except that the specified date referred to in such letter will be a
date not more than five (5) business days prior to such Closing Date.
(g) At each Closing Date, the Company shall have
performed all material obligations and satisfied all material
conditions on its part to be performed or satisfied on or prior
thereto (except any condition satisfaction of which shall have been
waived as herein provided) and compliance with the provisions of this
subparagraph (g) shall be evidenced by a certificate of an executive
officer of the Company.
(h) On each Closing Date there shall have been furnished
to you a certificate, dated as of such Closing Date and addressed to
the Underwriter, signed by the principal executive officer and
principal financial officer of the Company to the effect that:
(i) the representations and warranties and covenants
of the Company in this Agreement are true and correct in all
material respects as if made at and as of such Closing Date
and the Company has complied in all material respects with
17
<PAGE> 18
all the agreements and satisfied all the material conditions
on its part to be performed or satisfied hereunder at or prior
to such Closing Date;
(ii) no stop order or other order suspending the
effectiveness of the Registration Statement or any amendment
or supplement thereto or the qualification of the Units for
offering or sale has been issued and no proceedings for that
purpose have been instituted or are pending or, to the
knowledge of the respective signers thereof, are threatened by
the Commission or any state or regulatory body;
(iii) neither the Registration Statement, as of the
date it was declared effective, nor the Prospectus, as of its
date and the Closing Date, included any untrue statement of a
material fact or omitted to state a material fact required to
be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not
misleading; (B) since the effective date of the Registration
Statement, no event has occurred which should have been set
forth in an amendment or supplement to the Prospectus which
has not been set forth in such an amendment or supplement; (C)
subsequent to the respective dates as of which information is
given in the Registration Statement and Prospectus and except
as set forth in or contemplated by the Prospectus, the Company
has not incurred any material liability or obligation, direct
or contingent, whether or not in the ordinary course of
business, or entered into any material transaction, outside of
the ordinary course of business, and there has not been any
material change in the Common Stock, or any increase in the
short-term or long-term debt, including any capitalized lease
obligation (other than in the ordinary course of its business
and in an amount which is not material) or any issuance of
options, warrants, convertible securities or other rights to
purchase the Common Stock of the Company or any material
adverse change in the general affairs, business, key
personnel, capitalization or financial position of the Company
considered as a whole (other than the issuance of Common Stock
pursuant to existing options); and subsequent to the date of
the Underwriting Agreement, the Company has not sustained any
material loss or damage to its property or interference with
its business by strike, fire, flood, accident or other
calamity, whether or not any of the foregoing is insured, that
would have a material adverse effect upon the Company
considered as a whole, (D) the projection of the Company
previously presented to the Underwriter showing that the
Company will be able to meet the maintenance requirements for
listing on The Nasdaq National Market for a period of 24
months from the date hereof, were prepared in good faith and
continue to represent the signers' best present estimate of
the Company's financial condition following the Closing of the
sale of the Units.
(i) The Company shall deliver to the Underwriter a Blue
Sky Memorandum reasonably satisfactory to you from Doherty, Rumble &
Butler, P.A., confirming that all requisite action for the offer and
sale of the Units in all jurisdictions requested has been taken.
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<PAGE> 19
(j) The Underwriter shall have received "lock up"
agreements, in form and substance acceptable to the Underwriter, from
(i) David W. Anderson and Kathryn W. Anderson, and Okabena Partnership
K, restricting the sale, assignment or other conveyance of any of
their securities of the Company without the prior written consent of
the Underwriter for a period of twelve (12) months from the effective
date of the Registration Statement under the Act; and (ii) from all
directors and officers of the Company (not included in (i) above)
restricting the sale, assignment or other conveyance of any securities
of the Company without the prior written consent of the Underwriter
for a period of six (6) months from the effective date of the
Registration Statement under the Act.
(k) The Company's Units (and the securities comprising
the Units) shall be listed on The Nasdaq SmallCap Market on or prior
to the effective date of the Registration Statement under the Act.
(l) Prior to the First Closing, the number of issued and
outstanding shares of common stock of the Company shall not exceed
3,356,250 shares, and there shall be no material change in the
capitalization of the Company without the prior written consent of the
Underwriter.
(m) The Company's Units (and the securities comprising
the Units) shall be registered under the Securities Exchange Act of
1934, as amended, pursuant to Form 8-A, on or prior to the effective
date of the Registration Statement under the Act.
(n) The Company shall have furnished to the Underwriter
and Doherty, Rumble & Butler, P.A., counsel for the Underwriter, such
further certificates and documents as the Underwriter's counsel may
reasonably request, relating to the fulfillment of the conditions set
forth in this Section 5.
All such opinions, certificates, letters and documents will be in
compliance with the provisions hereof only if they are reasonably satisfactory
to the Underwriter and to counsel for the Underwriter. The Company will
furnish you with such conformed copies of such opinions, certificates, letters,
and other documents as you shall reasonably request. The Underwriter may waive
in writing the performance of any one or more of the conditions specified in
this Section 5 or extend the time for their performance.
If any of the conditions specified in this Section 5 shall not have
been fulfilled when and as required by this Agreement to be fulfilled, this
Agreement and all obligations of the Underwriter hereunder may be cancelled by
the Underwriter at, or at any time prior to, each Closing Date. Any such
cancellation shall be without liability of the Underwriter to the Company or
any liability of the Company to the Underwriter, except pursuant to Section
4(i) hereof. Notice of such cancellation shall be given to the Company in
writing, or by telefax or telephone confirmed in writing.
The Underwriter may waive in writing the performance of any one or
more of the foregoing conditions or extend the time for their performance.
19
<PAGE> 20
6. EFFECTIVE DATE AND TERMINATION.
(a) This Agreement shall become effective at immediately
after the time at which the Registration Statement shall have become
effective under the Act.
(b) Until the First Closing Date, this Agreement may be
terminated by you by giving notice to the Company, if (i) the Company
shall have sustained a loss or damage by fire, flood, accident, or
other calamity which is material to the property, business, or
condition (financial or other) of the Company considered as a whole,
any properties of the Company shall have become a party or subject to
litigation material to the Company considered as a whole, or there
shall have been, since the respective dates as of which information is
given in the Registration Statement or the Prospectus, any material
adverse change or development in the general affairs, condition
(financial or other), business, key personnel, capitalization,
properties, results of operations or net worth, of the Company
considered as a whole, whether or not arising in the ordinary course
of business, which loss, damage, or change, in your judgment or in the
reasonable judgment of a majority in interest of the several
Underwriter, shall render it inadvisable to proceed with the delivery
of the Units, whether or not such loss shall have been insured, (ii)
trading in securities generally on the New York Stock Exchange or the
American Stock Exchange or the over-the-counter market shall have been
suspended or minimum prices shall have been established on such
exchange or market by the Commission or by such exchange, (iii) a
general banking moratorium shall have been declared by federal or
state authorities, or (iv) there shall have been such a serious,
unusual and material adverse change in general economic, political, or
financial conditions or the effect of international conditions on the
financial markets in the United States shall be such as, in your
reasonable judgment or in the reasonable judgment of such majority in
interest of the several Underwriter, makes it inadvisable to proceed
with the delivery of the Units. Any termination of this Agreement
pursuant to this Section 6 shall be without liability of the Company
to the Underwriter, except as otherwise provided in Sections 4(i)
hereof, 7 and 8 hereof, and without liability of the Underwriter to
the Company, except as provided in Sections 7 and 8 hereof.
(c) Any notice referred to in this Section 6 may be given
at the address specified in Section 11 hereof in writing or by
telegraph or telephone, and if by telegraph or telephone, shall be
immediately confirmed in writing.
7. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless the
Underwriter and each person, if any, who controls the Underwriter
within the meaning of the Act against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter or such
controlling person may become subject, under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of a material fact made by the
Company in Section l hereof or contained (A) in the Registration
Statement, any
20
<PAGE> 21
Preliminary Prospectus, or the Prospectus, or any amendment thereof or
supplement thereto, or (B) in any Blue Sky application or other
document executed by the Company specifically for that purpose or
based upon and conforming to written information furnished by the
Company filed in any state or other jurisdiction in order to qualify
any or all of the Units under the securities laws thereof (any such
application, document or information being hereinafter called a "BLUE
SKY APPLICATION"), or (ii) the omission or alleged omission to state
in the Registration Statement, any Preliminary Prospectus, or the
Prospectus, or any amendment thereof or supplement thereto, or in any
Blue Sky Application a material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and will
reimburse the Underwriter, its officers and directors and each such
controlling person for any legal or other expenses reasonably incurred
by the Underwriter, its officers and directors or such controlling
person in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the
Company will not be liable in any such case to the extent, but only to
the extent, that any such loss, claim, damage or liability arises out
of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in reliance upon and in conformity
with written information furnished to the Company through you or on
your behalf specifically for use in the preparation of the
Registration Statement or any amendment thereof or supplement thereto,
or any such Blue Sky Application or any such Preliminary Prospectus or
the Prospectus or any such amendment thereof or supplement thereto;
and provided, further, that the foregoing indemnity agreement is
subject to the condition that, insofar as it relates to any untrue
statement, alleged untrue statement, omission or alleged omission made
in any Preliminary Prospectus but eliminated or remedied in the
Prospectus (as amended or supplemented), such indemnity agreement
shall not inure to the benefit of the Underwriter (or to the benefit
of any person who controls the Underwriter), if the person asserting
any loss, liability, claim or damage purchased the Units which are the
subject thereof and a copy of the Prospectus (as then supplemented or
amended) was not sent or given to such person with or prior to the
written confirmation of the sale of such Units to such person.
(b) The Underwriter will indemnify and hold harmless the
Company, each of its directors, each of its officers who has signed
the Registration Statement, and each person, if any, who controls the
Company within the meaning of the Act, against any losses, claims,
damages or liabilities, joint or several, to which the Company or any
such director or officer, or controlling person, may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based
upon (i) any untrue statement or alleged untrue statement of a
material fact contained (A) in the Registration Statement, any
Preliminary Prospectus, or the Prospectus, or any amendment thereof,
or supplement thereto, or (B) in any Blue Sky Application, or (ii) the
omission or alleged omission to state in the Registration Statement,
any Preliminary Prospectus, the Prospectus or any amendment thereof or
supplement thereto or in any Blue Sky Application a material fact
required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading, in each case to the extent,
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<PAGE> 22
but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon
and in conformity with written information furnished to the Company
through you specifically for use with reference to the Underwriter in
the preparation of the Registration Statement or any amendment thereof
or supplement thereto or any such Blue Sky Application or any such
Preliminary Prospectus or the Prospectus or any such amendment thereof
or supplement thereto; and will reimburse the Company, any such
director or officer, or controlling person, for any legal or other
expenses reasonably incurred by the Company or any such director or
officer, or controlling person, in connection with investigating or
defending any such loss, claim, damage, liability or action. This
indemnity agreement will be in addition to any liability which the
Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under
this Section 7 of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made
against any indemnifying party under this Section 7, notify in writing
the indemnifying party of the commencement thereof; no indemnification
shall be available to any party who shall fail to give notice as
provided in this Section 7(c) if the party to whom notice was not
given was unaware of the proceeding to which such notice would have
related and was prejudiced by the failure to give such notice, but the
omission so to notify such indemnifying party of any such action, suit
or proceeding shall not relieve it from any liability that it may have
to any indemnified party for contribution or otherwise than under this
section. In case any such action is brought against any indemnified
party, and the indemnified party notifies an indemnifying party of the
commencement thereof, the indemnifying party will be entitled to
participate therein, and, to the extent that it may wish, jointly with
any other indemnifying party similarly notified, to assume the defense
thereof, with counsel who shall be to the reasonable satisfaction of
such indemnified party, and (notwithstanding subparagraph (a) and (b)
of this Section 7) after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof,
the indemnifying party will not be liable to such indemnified party
under this Section 7 for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation except as
provided below. The indemnified party shall have the right to employ
its counsel in any such action, but the fees and expenses of such
counsel shall be at the expense of such indemnified party unless (i)
the employment of counsel by such indemnified party has been
authorized in writing by the indemnifying parties, (ii) the
indemnified party shall have reasonably concluded that there may be a
conflict of interest between the indemnifying parties, or any of them,
and the indemnified party in the conduct of the defense of such action
(in which case the indemnifying parties shall not have the right to
direct the defense of such action on behalf of the indemnified party)
or (iii) the indemnifying parties shall not have employed counsel to
assume the defense of such action within a reasonable time after
notice of the commencement thereof, in each of which cases the fees
and expenses of counsel shall be at the expense of the indemnifying
parties; provided, however, that the indemnifying parties shall not be
liable for the fees and expenses of more than one counsel for the
indemnified parties. Any such indemnifying party shall not be liable
to any such indemnified party on account
22
<PAGE> 23
of any settlement of any claim or action effected by the indemnified
party without the consent of such indemnifying party.
8. CONTRIBUTION. In order to provide for just and equitable
contribution in circumstances in which indemnification provided for in Section
7 is unavailable, each indemnifying party shall contribute to the aggregate
losses, claims, damages, expenses and liabilities to which the indemnified
parties may be subject in such proportion so that the Underwriter is
responsible for that portion (the "UNDERWRITING PORTION") represented by the
percentage that the underwriting commissions appearing on the cover page of the
Prospectus bear to the public offering price (net of Underwriting Commissions)
appearing thereon and the Company is responsible for the remaining portion (the
"RESIDUAL PORTION"); provided, however, (i) that no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) will be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation; and (ii) if such allocation is not permitted by applicable
law, then the relative fault of the Company, its directors, officers and
controlling persons, on the one hand, and the Underwriter, its officers,
directors and its controlling persons, on the other, in connection with the
statements or omissions which resulted in such damages and other relevant
equitable considerations shall also be considered. The relative fault shall be
determined by reference to, among other things, whether in the case of an
untrue statement of a material fact or the omission to state a material fact,
such statement or omission relates to information supplied by the Company or by
the Underwriter and the parties' relative intent, knowledge, access to
information, and opportunity to correct or prevent such untrue statement or
omission. The Company and the Underwriter agree that it would not be just and
equitable if the respective obligations of the Company on the one hand, and the
Underwriter, on the other, to contribute pursuant to this Section 8 were to be
determined by pro rata or per capita allocation of the aggregate damages (even
if the Underwriter, its officers, directors and its controlling persons in the
aggregate were treated as one entity for such purpose) or by any other method
of allocation that does not take account of the equitable considerations
referred to in this Section 8. For purposes of this Section 8, the term
"DAMAGES" shall include any legal or other expense reasonably incurred by the
indemnified party in connection with investigating or defending any action or
claim that is the subject of the contribution provisions of this Section 8.
Notwithstanding the provisions of this Section 8, the Underwriter, its
officers, directors and its controlling persons in the aggregate shall not be
required to contribute any amount in excess of the amount by which the total
purchase price of the Units purchased by it, directly or indirectly, from the
Company pursuant to this Agreement exceeds the amount of any damages that the
Underwriter, its officers, directors and its controlling persons in the
aggregate have otherwise been required to pay by reason of such untrue
statement or omission. For purposes of this Section 8, each person, if any,
who controls the Underwriter within the meaning of the Act shall have the same
rights to contribution as the Underwriter, and each person, if any, who
controls the Company within the meaning of the Act, each officer who shall have
signed the Registration Statement and each director of the Company shall have
the same rights to contribution as the Company. Each party entitled to
contribution agrees that, upon the service of a summons or other initial legal
process upon it in any action instituted against it in respect of which
contribution may be sought, it will promptly give written notice of such
service to the party or parties from whom contribution may be sought, but the
omission so to notify such party or parties of any such service shall not
relieve the party from whom contribution may be sought
23
<PAGE> 24
from any obligation it may have hereunder or otherwise. In case any such
action, suit, or proceeding is brought against any party, and such person so
notifies a contributing party of the commencement thereof, the contributing
party will be entitled to participate therein with the notifying party and any
other contributing party similarly notified.
9. SURVIVAL OF INDEMNITIES, CONTRIBUTION, WARRANTIES AND
REPRESENTATIONS. The respective indemnity and contribution agreements of the
Company and the Underwriter contained in Sections 7 and 8 hereof, the
representations, warranties, and covenants of the Company contained in Sections
1 and 4 hereof and the representations and warranties of the Underwriter
contained in Section 14 hereof shall remain operative and in full force and
effect, regardless of any termination or cancellation of this Agreement or any
investigation made by or on behalf of the Underwriter or the Company or any of
their respective directors or officers, or any controlling person referred to
in said Sections 7 and 8, and shall survive the delivery of, and payment for,
the Units.
10. NOTICES. Except as otherwise expressly provided in this
Agreement, all notices and other communications hereunder shall be in writing
and, if given to the Underwriter, shall be mailed, delivered or telefaxed to R.
J. Steichen & Company, 801 Nicollet Mall, 1100 Midwest Plaza West, Minneapolis,
MN 55402, Attention: President, with a copy to Girard P. Miller, Doherty,
Rumble & Butler, P.A., 150 South Fifth Street, Suite 3500, Minneapolis, MN
55402, or if given to the Company, shall be mailed, delivered or telefaxed to
it at Famous Dave's of America, Inc., 12700 Industrial Boulevard, Suite 60,
Plymouth, MN 55441, Attention: President, with a copy to William M. Mower,
Maslon Edelman Borman & Brand, PLLP, 90 South Seventh Street, Suite 3300,
Minneapolis, MN 55402.
11. UNDERWRITER'S WARRANTS. Upon payment of a purchase price of
$50 by the Underwriter, the Company will issue and deliver to R. J. Steichen &
Company, for its account, Warrants to purchase Units in an amount equal to 10%
of the number of Firm Units purchased by the Underwriter in the offering. Such
Warrants shall be issued on the Closing Date, in an amount equal to 200,000
Units and shall be dated as of the Closing Date. Such Warrants shall be
exercisable commencing one (1) year after the Effective Date for a period of
three years thereafter at a price equal to 120% of the per Unit offering price.
Such Warrant shall contain such terms and conditions as contained in the form
of Underwriter's Warrant attached hereto and labeled Appendix A.
12. INFORMATION FURNISHED BY UNDERWRITER. The statements relating
to stabilization activities of the Underwriter on the inside front cover of the
Preliminary Prospectus and the Prospectus, and under the caption "UNDERWRITING"
in any Preliminary Prospectus and in the Prospectus, and, to the extent the
same relate to you, in any Blue Sky application, constitute the written
information furnished by or on behalf of you referred to in Section 1 hereof
and in paragraphs (a) and (b) of Section 7 hereof.
13. PARTIES. This Agreement is made solely for the benefit of the
Underwriter, the Company, any director, officer, or controlling person referred
to in Sections 7 and 8 hereof, and their respective personal representatives,
successors and assigns, and no other person shall acquire or have any right by
virtue of this Agreement. The term "personal representatives,
24
<PAGE> 25
successors and assigns," as used in this Agreement, shall not include any
purchaser of Units (as such purchaser) from the Underwriter.
14. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE UNDERWRITER.
The Underwriter represents, warrants to and agrees with the Company that:
(a) The Underwriter is a corporation duly incorporated
and validly existing in good standing under the laws of the
jurisdiction in which it is incorporated.
(b) The Underwriter is duly registered as a broker-dealer
under the Securities Exchange Act of 1934, as amended, and under the
Securities laws of Minnesota and of such other states in which it
intends to offer or sell the Units, if such registration is required
in any such other state, and is a member in good standing of the
National Association of Securities Dealers, Inc., and no proceedings
have been initiated or threatened to suspend any such registration or
membership.
(c) The execution, delivery and performance of this
Agreement by the Underwriter, and the consummation of the transactions
contemplated hereby, have been duly authorized by the Underwriter, and
at the time of its execution, performance, or consummation, will not
constitute or result in any breach or violation of any of the terms,
provisions or conditions of, or constitute a default under, any
federal statute or regulation (including, without limitation, the net
capital requirements under Rule 15c-1 of the Securities Exchange Act
of 1934) or any statute or regulation of any state in which it intends
to offer or sell the Units, or any order, judgment, decree, rule or
regulation of any court or governmental agency or body having
jurisdiction over the Underwriter or any of its activities or
property; and other than registration of the Units under the Act and
applicable states securities laws and subject to the favorable review
by the National Association of Securities Dealers, Inc., no consent,
approval, authorization or order of any court or governmental agency
or body is required for the consummation of the transactions
contemplated hereby.
(d) There is not now pending or threatened against any of
the Underwriter or any control person of an Underwriter any action or
proceeding of which you have been advised, either in any court of
competent jurisdiction or before the Commission, National Association
of Securities Dealers, Inc. or the securities authorities of any
state, based upon any action or failure to act on the part of the
Underwriter or any controlling person of an Underwriter that would
restrict the Underwriter's ability to perform its obligations
hereunder.
(e) The Units will be offered by the Underwriter only to
persons resident in Minnesota and such other states as are mutually
designated by the Underwriter and the Company pursuant to Section 4(c)
hereof. All of such persons shall be persons and entities for whom
the purchase of the Units is a suitable investment and the Underwriter
shall employ or engage no Selected Dealer, sales person, agent or
representative in the offer or sale of the Units, which sales person,
agent or representative is not properly
25
<PAGE> 26
registered and licensed for the purpose of such offer or sale. All
such registrations and licenses shall remain in full force and effect
until after the Closing Dates.
(f) The Underwriter agrees that neither the Underwriter
nor any officer or other person employed by the Underwriter or any
Selected Dealer will provide any information or make any
representations to offerees of the Units, other than such information
and representations as are either contained in the Prospectus or the
Registration Statement or are not inconsistent with information set
forth in the Prospectus or the Registration Statement.
(g) The Underwriter agrees that in the event the
Underwriter learns of any circumstances or fact which it believes
would make any Preliminary Prospectus, the Prospectus, or the
Registration Statement inaccurate or misleading in any material
respect, it will immediately bring such circumstances or facts to the
attention of the Company.
15. GOVERNING LAW. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Minnesota.
FAMOUS DAVE'S OF AMERICA, INC.
By _____________________________________________
Its _______________________________________
"COMPANY"
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written:
R. J. STEICHEN & COMPANY
By _________________________________
Authorized Officer
____________________________________
Print Name
"UNDERWRITER"
26
<PAGE> 1
EXHIBIT 1.2
APPENDIX A
UNDERWRITER'S WARRANT
<PAGE> 2
FAMOUS DAVE'S OF AMERICA, INC.
UNIT PURCHASE WARRANT
Famous Dave's of America, Inc., a Minnesota corporation (the
"COMPANY"),hereby agrees that, for value received, R. J. STEICHEN & COMPANY, or
its assigns, is entitled, subject to the terms set forth below, to purchase
from the Company at any time or from time to time after ____________, 1997, and
before 4:30 p.m., Minneapolis, Minnesota time, on __________, 2001, Two Hundred
Thousand (200,000) Units of the Company under terms and conditions identical to
those certain Units issued by the Company pursuant to that certain Registration
Statement on Form SB-2, File No. 333-__________ (the "UNITS"), each Unit
consisting of one share of Common Stock and one Common Stock Purchase Warrant
with an exercise price of $8.50 (the "WARRANTS"), at an exercise price of $7.20
per Unit, subject to adjustment as provided herein; PROVIDED, HOWEVER, the
Company may not redeem any warrant comprising any Unit subject to this Unit
Purchase Warrant until at least forty-five (45) days after this Unit Purchase
Warrant first becomes exercisable by the holder thereof.
1. EXERCISE OF WARRANT. The purchase rights granted by this
Warrant shall be exercised (in minimum quantities of 100 shares) by the holder
surrendering this Warrant with the form of exercise attached hereto duly
executed by such holder, to the Company at its principal office, accompanied by
payment, in cash or by cashier's check payable to the order of the Company, of
the purchase price payable in respect of the Units being purchased. If less
than all of the Units purchasable hereunder is purchased, the Company will,
upon such exercise, execute and deliver to the holder hereof a new Warrant
(dated the date hereof) evidencing the number of Units not so purchased. As
soon as practicable after the exercise of this Warrant and payment of the
purchase price, the Company will cause to be issued in the name of and
delivered to the holder hereof, or as such holder may direct, a certificate or
certificates representing the Units purchased upon such exercise. The Company
may require that such certificate or certificates contain on the face thereof a
legend substantially as follows:
"The transfer of the Units represented by this certificate is
restricted pursuant to the terms of a Unit Purchase Warrant dated
_________________, 1996, issued by Famous Dave's of America, Inc., a
copy of which is available for inspection at the offices of Famous
Dave's of America, Inc. Transfer may not be made except in accordance
with the terms of the Unit Purchase Warrant. In addition, no sale,
offer to sell or transfer of the Units represented by this certificate
shall be made unless a Registration Statement under the Securities Act
of 1933, as amended (the "ACT"), with respect to such Units is then in
effect or an exemption from the registration requirements of the Act is
then in fact applicable to such Units."
___________________________
THIS WARRANT IS SUBJECT TO THE RESTRICTIONS ON TRANSFER SET FORTH AT
THE BOTTOM OF PAGE 7 HEREOF.
<PAGE> 3
2. NEGOTIABILITY AND TRANSFER. This Warrant is issued upon the
following terms, to which each holder hereof consents and agrees:
(a) Except where directed by a court of competent
jurisdiction pursuant to the dissolution or
liquidation of a corporate holder hereof, for the
period ending one year from ________________, 1996,
title to this Warrant may not be sold, transferred,
assigned or hypothecated, except that within such
one-year period title to this Warrant may be
transferred only to R. J. Steichen & Company (the
"UNDERWRITER"), or to a person who is both an officer
and shareholder, or both an officer and employee, of
the Underwriter, or to a successor (or both an officer
and shareholder, or both an officer and employee) in
interest to the business of the Underwriter, by
endorsement (by the holder hereof executing the form
of assignment attached hereto) and delivery in the
same manner as in the case of a negotiable instrument
transferable by endorsement and delivery subject to
the requirements of Section 4 hereof.
(b) Until this Warrant is duly transferred on the books of
the Company, the Company may treat the registered
holder of this Warrant as absolute owner hereof for
all purposes without being affected by any notice to
the contrary.
(c) Each successive holder of this Warrant, or of any
portion of the rights represented thereby, shall be
bound by the terms and conditions set forth herein.
3. ANTIDILUTION ADJUSTMENTS. If the Company shall at any time hereafter
subdivide or combine its outstanding shares of Common Stock, or declare a
dividend payable in Common Stock, the exercise price in effect immediately
prior to the subdivision, combination or record date for such dividend payable
in Common Stock shall forthwith be proportionately increased, in the case of
combination, or proportionately decreased, in the case of subdivision or
declaration of a dividend payable in Common Stock, and the number of Units
purchasable upon exercise of this Warrant, immediately preceding such event,
shall be changed to the number determined by dividing the then current exercise
price by the exercise price as adjusted after such subdivision, combination or
dividend payable in Common Stock and against the number of Units purchasable
upon the exercise of this Warrant immediately preceding such event, so as to
achieve an exercise price and number of Units purchasable after such event
proportional to such exercise price and number of Units purchasable immediately
preceding such event. No adjustment in exercise price shall be required unless
such adjustment would require an increase or decrease of at least five cents
($0.05) in such price; PROVIDED, HOWEVER, that any adjustments which are not
require to be so made shall be carried forward and taken into account in any
subsequent adjustment. All calculations hereunder shall be made to the nearest
cent or to the nearest one-hundredth of a share, as the case may be.
2
<PAGE> 4
No fractional Units are to be issued upon the exercise of the Warrant,
but the Company shall pay a cash adjustment in respect of any fraction of a
Unit which would otherwise be issuable in an amount equal to the same fraction
of the market price per share of Unit's on the day of exercise as determined in
good faith by the Company.
In case of any capital reorganization or any reclassification of the
shares of Common Stock of the Company, or in the case of any consolidation with
or merger of the Company into or with another corporation, or the sale of all
or substantially all of its assets to another corporation, which is effected in
such a manner that the holders of Common Stock shall be entitled to receive
stock, securities or assets with respect to or in exchange for Common Stock,
then, as a part of such reorganization, reclassification, consolidation, merger
or sale, as the case may be, lawful provision shall be made so that the holder
of the Warrant shall have the right thereafter to receive, upon the exercise
hereof, the kind and amount of shares of stock or other securities or property
which the holder would have been entitled to receive if, immediately prior to
such reorganization, reclassification, consolidation, merger or sale, the
holder had held the number of Units which were then purchasable upon the
exercise of the Warrant. In any such case, appropriate adjustment (as
determined in good faith by the Board of Directors of the Company) shall be
made in the application of the provisions set forth herein with respect to the
rights and interest thereafter of the holder of the Warrant, to the end that
the provisions set forth herein (including provisions with respect to
adjustments of the exercise price) shall thereafter be applicable, as nearly as
reasonably may be, in relation to any shares of stock or other property
thereafter deliverable upon the exercise of the Warrant.
When any adjustment is required to be made in the exercise price,
initial or adjusted, the Company shall forthwith determine the new exercise
price, and
(a) prepare and retain on file a statement describing in
reasonable detail the method used in arriving at the new
exercise price; and
(b) cause a copy of such statement to be mailed to the holder of
the Warrant as of a date within ten (10) days after the date
when the circumstances giving rise to the adjustment occurred.
4. REGISTRATION RIGHTS. Prior to making any disposition of the
Warrant or of any Units purchased upon exercise of the Warrant, the holder will
give written notice to the Company describing briefly the manner of any such
proposed disposition. The holder will not make any such disposition until (i)
the Company has notified him that, in the opinion of its counsel, registration
under the Act is not required with respect to such disposition, or (ii) a
Registration Statement covering the proposed distribution has been filed by the
Company and has become effective. The Company agrees that, upon receipt of
written notice from the holder hereof with respect to such proposed
distribution, it will use its best efforts, in the consultation with the
holder's counsel, to ascertain as promptly as possible whether or not
registration is required, and will advise the holder promptly with respect
thereto, and the holder will cooperate in providing the Company with
information necessary to make such determination.
3
<PAGE> 5
If, at any time prior to the expiration of seven (7) years from the
date hereof, the Company shall propose to file any Registration Statement
(other than any registration on Forms S-4, S-8 or any other similarly
inappropriate form or Registration Statement with respect to an initial public
offering in which there are no selling shareholders) under the Securities Act
of 1933, as amended, covering a public offering of the Company's Units or
shares, it will notify the holder hereof at least thirty (30) days prior to
each such filing and will include in the Registration Statement (to the extent
permitted by applicable regulation), the shares purchased by the holder or
purchasable by the holder upon the exercise of the Warrant to the extent
requested by the holder hereof. Notwithstanding the foregoing, the number of
shares of the holders of the Warrants proposed to be registered thereby shall
be reduced pro rata with any other selling shareholder (other than the Company)
upon the reasonable request of the managing underwriter of such offering. If
the Registration Statement or Offering Statement filed pursuant to such thirty
(30) day notice has not become effective within six months following the date
such notice is given to the holder hereof, the Company must again notify such
holder in the manner provided above.
At any time prior to the expiration of five (5) years from the date
hereof, and provided that a registration statement on Form S-3 (or its
equivalent) is then available to the Company, and on a one-time basis only, if
the holders of 50% or more of the Warrants and/or the Units or shares acquired
upon exercise of the Warrants request the registration of the shares on Form
S-3 (or its equivalent), the Company shall promptly thereafter use its best
efforts to effect the registration under the Securities Act of 1933, as
amended, of all such shares which such holders request in writing to be so
registered, and in a manner corresponding to the methods of distribution
described in such holders' request.
All expenses of any such registrations referred to in this Section 4,
except the fees of counsel to such holders and underwriting commissions or
discounts, filing fees, and any transfer or other taxes applicable to such
shares, shall be borne by the Company.
Upon effectiveness of a Registration Statement which includes shares of
Common Stock purchased or purchasable upon the exercise of this Warrant in
accordance with a valid demand under this Section 4, the rights under this
Warrant of all holders to make another such demand shall terminate. Each
purchaser or transferee of a portion of this Warrant is responsible to
determine whether his or her demand rights under this paragraph have been
terminated by such an exercise. Any Warrants issued upon transfers subsequent
to such an exercise shall have all of the demand registration provisions under
this Section 4 deleted.
The Company will mail to each record holder, at the last known post
office address, written notice of any exercise of the rights granted under this
paragraph 4, by certified or registered mail, return receipt requested, and
each holder shall have twenty (20) days from the date of deposit of such notice
in the U.S. Mail to notify the Company in writing whether such holder wishes to
join in such exercise.
The Company will furnish the holder hereof with a reasonable number of
copies of any prospectus included in such filings and will amend or supplement
the same as required during the period of required use thereof. The Company
will maintain, at its expense, the effectiveness
4
<PAGE> 6
of any Registration Statement or the Offering Statement filed by the Company,
whether or not at the request of the holder hereof, for at least six (6) months
following the effective date thereof.
In the case of the filing of any Registration Statement, and to the
extent permissible under the Securities Act of 1933, as amended, and
controlling precedent thereunder, the Company and the holder hereof shall
provide cross indemnification agreements to each other in customary scope
covering the accuracy and completeness of the information furnished by each.
The holder of the Warrant agrees to cooperate with the Company in the
preparation and filing of any such Registration Statement or Offering
Statement, and in the furnishing of information concerning the holder for
inclusion therein, or in any efforts by the Company to establish that the
proposed sale is exempt under the Act as to any proposed distribution.
5. RIGHT TO CONVERT.
(a) The holder of this Warrant shall have the right to
require the Company to convert this Warrant (the
"CONVERSION RIGHT"), at any time after
________________, 1997 and prior to its expiration,
into shares of Common Stock as provided for in this
Section 5. Upon exercise of the Conversion Right, the
Company shall deliver to the holder (without payment
by the holder of any exercise price) that number of
shares of Common Stock equal to the quotient obtained
by dividing (x) the value of the Warrant at the time
the Conversion Right is exercised (determined by
subtracting the aggregate exercise price for the
Warrant Shares in effect immediately prior to the
exercise of the Conversion Right from the aggregate
Fair Market Value (as determined below) for the
Warrant Shares immediately prior to the exercise of
the Conversion Right) by (y) the Fair Market Value of
one share of Common Stock immediately prior to the
exercise of the Conversion Right.
(b) The Conversion Right may be exercised by the holder,
at any time or from time to time, prior to its
expiration, on any business day, by delivering a
written notice (the "CONVERSION NOTICE") to the
Company at the offices of the Company exercising the
Conversion Right and specifying (i) the total number
of shares of Stock the Warrantholder will purchase
pursuant to such conversion, and (ii) a place, and a
date not less than five (5) nor more than twenty (20)
business days from the date of the Conversion Notice,
for the closing of such purchase.
(c) At any closing under Section 5(b) hereof, (i) the
holder will surrender the Warrant, (ii) the Company
will deliver to the holder a certificate or
certificates for the number of shares of Common Stock
issuable upon such conversion, together with cash, in
lieu of any fraction of a share, and (iii) the Company
will deliver to the holder a new Warrant representing
the
5
<PAGE> 7
number of shares, if any, with respect to which the
Warrant shall not have been converted.
(d) "FAIR MARKET VALUE" of a share of Common Stock as of a
particular date (the "DETERMINATION DATE") shall mean:
(i) If the Company's Common Stock is traded on an
exchange or is quoted on The Nasdaq National
Market or Small-Cap Market, then the average
closing or last sale prices, respectively,
reported for the ten (10) business days
immediately preceding the Determination Date.
(ii) If the Company's Common Stock is not traded
on an exchange or on The Nasdaq National
Market or Small-Cap Market, but is traded in
the over-the-counter market, then the average
of the closing bid and asked prices reported
for the ten (10) business days immediately
preceding the Determination Date.
6. NOTICES. The Company shall mail to the registered holder of
the Warrant, at his or her last known post office address appearing on the
books of the Company, not less than fifteen (15) days prior to the date on
which (a) a record will be taken for the purpose of determining the holders of
Units entitled to dividends (other than cash dividends) or subscription rights,
or (b) a record will be taken (or in lieu thereof, the transfer books will be
closed) for the purpose of determining the holders of common stock entitled to
notice of and to vote at a meeting of shareholders at which any capital
reorganization, reclassification of common stock, consolidation, merger,
dissolution, liquidation, winding up or sale of substantially all of the
Company's assets shall be considered and acted upon.
7. RESERVATION OF COMMON STOCK. A number of shares of Common
Stock sufficient to provide for the exercise of the Warrant and the Units
included therein upon the basis herein set forth shall at all times be reserved
for the exercise thereof.
8. MISCELLANEOUS. Whenever reference is made herein to the issue
or sale of shares of Common Stock, the term "COMMON STOCK" shall include any
stock of any class of the Company other than preferred stock that has a fixed
limit on dividends and a fixed amount payable in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Company.
The Company will not, by amendment of its Articles of Incorporation or
through reorganization, consolidation, merger, dissolution or sale of assets,
or by any other voluntary act or deed, avoid or seek to avoid the observance or
performance of any of the covenants, stipulations or conditions to be observed
or performed hereunder by the Company, but will, at all times in good faith,
assist, insofar as it is able, in the carrying out of all provisions hereof and
in the taking of all other action which may be necessary in order to protect
the rights of the holder hereof against dilution.
6
<PAGE> 8
Upon written request of the holder of this Warrant, the Company will
promptly provide such holder with a then current written list of the names and
addresses of all holders of warrants originally issued under the terms of, and
concurrent with, this Warrant.
The representations, warranties and agreements herein contained shall
survive the exercise of this Warrant. References to the "holder of" include
the immediate holder of shares purchased on the exercise of this Warrant, and
the word "holder" shall include the plural thereof. This Unit Purchase Warrant
shall be interpreted under the laws of the State of Minnesota.
All Units or other securities issued upon the exercise of the Warrant
shall be validly issued, fully paid and non-assessable, and the Company will
pay all taxes in respect of the issuer thereof.
Notwithstanding anything contained herein to the contrary, the holder
of this Warrant shall not be deemed a stockholder of the Company for any
purpose whatsoever until and unless this Warrant is duly exercised.
IN WITNESS WHEREOF, this Warrant has been duly executed by Famous
Dave's of America, Inc., this ______ day of _______________, 1996.
FAMOUS DAVE'S OF AMERICA, INC.
By _____________________________________________
Its _______________________________________
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, OR APPLICABLE STATE SECURITIES LAW. THESE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR
SALE, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ASSIGNED OR OTHERWISE
DISPOSED OF, AND NO TRANSFER OF THE SECURITIES WILL BE MADE BY THE
COMPANY OR ITS TRANSFER AGENT, IN THE ABSENCE OF SUCH REGISTRATION OR
AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION
IS NOT REQUIRED.
7
<PAGE> 9
WARRANT EXERCISE FORM
To be signed only upon exercise of Warrant.
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, _________________of the Units of Famous Dave's of America,
Inc. to which such Warrant relates and herewith makes payment of
$__________________ therefor in cash or by certified check, and requests that
such shares be issued and be delivered to, ______ _______________, the address
for which is set forth below the signature of the undersigned.
Dated: _______________________
______________________________ _____________________________________
(Taxpayer's I.D. Number) Signature)
_____________________________________
(Address)
__________________________________________________
ASSIGNMENT FORM
To be signed only upon authorized transfer of Warrant.
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and
transfers unto ____________________________ the right to purchase Units of
Famous Dave's of America, Inc. to which the within Warrant relates and appoints
______________________, attorney, to transfer said right on the books of Famous
Dave's of America, Inc. with full power of substitution in the premises.
Dated: ________________________
_____________________________________
(Signature)
_____________________________________
(Address)
_____________________________________
<PAGE> 10
CASHLESS EXERCISE FORM
(To be executed upon exercise of Warrant pursuant to Section 5)
The undersigned hereby irrevocably elects a cashless exercise of the
right of purchase represented by the within Unit Purchase Warrant for, and to
purchase thereunder, ______________________ shares of Common Stock, as provided
for in Section 5 therein.
If said number of shares shall not be all the shares purchasable under
the within Unit Purchase Warrant, a new Warrant is to be issued in the name of
said undersigned for the balance remaining of the shares purchasable thereunder
rounded up to the next higher number of shares.
Please issue a certificate or certificates for such Common Stock in the
name of, and pay any cash for any fractional shares to:
NAME __________________________________________________________
(Please Print Name)
ADDRESS __________________________________________________________
__________________________________________________________
SOCIAL SECURITY NO. _____________________________________________________
SIGNATURE __________________________________________________________
NOTE: The above signature should correspond exactly
with the name on the first page of this Unit Purchase
Warrant or with the name of the assignee appearing in
the assignment form on the preceding page.
<PAGE> 1
EXHIBIT 3.1
STATE OF MINNESOTA
[MINNESOTA STATE SEAL]
DEPARTMENT OF STATE
This is to acknowledge that the items described below have been accepted by the
Secretary of State of Minnesota on the date noted. Those documents will be
microfilmed and the original will be returned to the submitter within ten
days. The microfilm will be available for public inspection at the office of
the Secretary of State.
- -------------------------------------------------------------------------------
Description of Item Date Accepted RI No. NOT VALID UNTIL RI
NUMBER IS AFFIXED
Art. of Inc. 3/14/94 038180
- -------------------------------------------------------------------------------
Company Name
Diamond Daves of Minneapolis, Inc.
- -------------------------------------------------------------------------------
State of Minnesota
Office of the Secretary of State
Corporation Division by:
180 State Office Building ----------------------------
St. Paul, MN 55155 (612) 296-2803 Evidence of Filing SC-00184-01
<PAGE> 2
ARTICLES OF INCORPORATION
OF
DIAMOND DAVES OF MINNEAPOLIS, INC.
The undersigned hereby creates a corporation under Chapter 302A of the
Minnesota Statutes and adopts the following Articles of Incorporation.
ARTICLE 1
NAME
The name of the Corporation is DIAMOND DAVES OF MINNEAPOLIS, INC.
ARTICLE 2
REGISTERED OFFICE
The address of the registered office of the Corporation is 3300
Norwest Center, 90 South Seventh Street, Minneapolis, Minnesota 55402-4140 c/o
William M. Mower.
ARTICLE 3
CAPITAL
A. The Corporation is authorized to issue one million (1,000,000) shares of
capital stock, having a par value of one cent ($.01) per share in the
case of common stock, and having a par value as determined by the Board
of Directors in the case of preferred stock, to be held, sold and paid
for at such times and in such manner as the Board of Directors may from
time to time determine in accordance with the laws of the State of
Minnesota.
B. In addition to any and all powers conferred upon the Board of Directors
by the laws of the State of Minnesota, the Board of Directors shall have
the authority to establish by resolution more than one class or series
of shares, either preferred or common, and to fix the relative rights,
restrictions and preferences of any such different classes or series,
and the authority to issue shares of a class or series to another class
or series to effectuate share dividend, splits or conversion of the
Corporation's outstanding shares.
C. The Board of Directors shall also have the authority to issue rights to
convert any of the Corporation's securities into shares of stock of
any class or classes, the authority to issue options to purchase or
subscribe for shares of stock of any class or classes, and the authority
to issue share purchase or subscription warrants or any other evidence
of such option rights which set forth the terms, provisions and
conditions thereof, including the price or prices at which such shares
may be subscribed for or purchased. Such options, warrants and rights,
may be transferable or nontransferable and separable or inseparable from
other securities of the Corporation. The Board of Directors is
authorized to fix the terms, provisions and conditions of such options,
warrants and rights, including the conversion basis or
<PAGE> 3
bases and the option price or prices at which shares may be
subscribed for or purchased.
ARTICLE 4
SHAREHOLDER RIGHTS
A. No shareholder of the Corporation shall have any preemptive rights.
B. No shareholder of the Corporation shall have any cumulative voting
rights.
ARTICLE 5
INCORPORATOR
The name and address of the incorporator, who is a natural person of full age,
is:
William M. Mower
3300 Norwest Center
90 South Seventh Street
Minneapolis, Minnesota 55402
ARTICLE 6
WRITTEN ACTION BY LESS THAN ALL OF THE DIRECTORS
Any action required or permitted to be taken at a Board meeting, other
than an action requiring shareholder approval, may be taken by written action
of the Board of Directors if signed by the number of directors that would be
required to take the same action at a meeting at which all directors were
present.
ARTICLE 7
LIMITED LIABILITY OF DIRECTORS
To the fullest extent permitted by law, a director shall have no
personal liability to the Corporation or its shareholders for breach of
fiduciary duty as a director. Any amendment to or repeal of this Article 7
shall not adversely affect any right or protection of a director of the
Corporation for or with respect to any acts or omissions of such director
occurring prior to such amendment or repeal.
IN WITNESS WHEREOF, I have signed my name this 14 day of March, 1994.
----
William M. Mower
-------------------------------
William M. Mower, Incorporator
STATE OF MINNESOTA
DEPARTMENT OF STATE
FILED
MAR 14 1994
Joan Anderson Growe
SECRETARY OF STATE
-2-
<PAGE> 4
State of Minnesota
Office of the Secretary of State
AMENDMENT OF ARTICLES OF INCORPORATION
READ INSTRUCTIONS AT BOTTOM OF PAGE BEFORE COMPLETING THIS FORM
CORPORATE NAME
Diamond Dave's of Minneapolis, Inc.
This amendment is effective on the day it is filed with the Secretary of State,
unless you indicate another date, no later than 30 days after filing with the
Secretary of State, in this box: / /
The following amendments of articles or modifications to the statutory
requirements regulating the above corporation were adopted: (Insert full text
of newly amended or modified article(s), indicating which articles(s) is(are)
being amended or added. If the full text of the amendment will not fit in the
space provided, please do not use this form. Instead, retype the amendment on
a separate sheet or sheets using this format.)
ARTICLE I
----
Name
----
The name of the corporation is Famous Dave's of Minneapolis, Inc.
This amendment has been approved pursuant to chapter 302A, Minnesota Statutes.
I certify that I am authorized to execute this amendment and I further certify
that I understand that by signing this amendment, I am subject to the penalties
of perjury as set forth in section 609.48 as if I had signed this amendment
under oath.
William M. Mower
--------------------------------
(Signature of Authorized Person)
William M. Mower, Attorney
- --------------------------------------------------------------------------------
INSTRUCTIONS: FOR USE BY THE
SECRETARY OF STATE
1. Type or print with dark black ink.
2. Filing fee: $35
3. Make check payable to Secretary of State.
4. Mail or bring completed forms to: STATE OF MINNESOTA
DEPARTMENT OF STATE
Secretary of State FILED
Business Services Division
180 State Office Building JUN 14 1995
Saint Paul, MN 55155 Joan Anderson Growe
(612) 296-2803 Secretary of State
SC-00175-03 (9/88)
<PAGE> 5
4/23
[MINNESOTA MINNESOTA SECRETARY OF STATE
STATE SEAL] AMENDMENT OF ARTICLES OF INCORPORATION
BEFORE COMPLETING THIS FORM, PLEASE READ INSTRUCTIONS LISTED BELOW.
CORPORATE NAME: (List the name of the company prior to any desired name change)
Famous Dave's of Minneapolis, Inc.
- ----------------------------------------------------------------------------
This amendment is effective on the day it is filed with the Secretary of State,
unless you indicate another date, no later than 30 days after filing with the
Secretary of State.
-----------------------
The following amendment(s) of articles regulating the above corporation were
adopted: (Insert full text of newly amended article(s) indicating which
article(s) is (are) being amended or added.) If the full text of the amendment
will not fit in the space provided, attach additional numbered pages. (Total
number of pages including this form .)
ARTICLE 1
-----
The name of the corporation is Famous Dave's BAR-B-QUE, Inc.
This amendment has been approved pursuant to Minnesota Statutes chapter 302A or
317A. I certify that I am authorized to execute this amendment and I further
certify that I understand that by signing this amendment, I am subject to the
penalties of perjury as set forth in section 609.48 as if I had signed this
amendment under oath.
Patricia L. Buffham
--------------------------------------
(Signature of Authorized Person)
INSTRUCTIONS FOR OFFICE USE ONLY
1. Type or print with black ink.
2. A Filing Fee of: $35.00, made STATE OF MINNESOTA
payable to the Secretary of State. DEPARTMENT OF STATE
3. Return completed forms to: FILED
JAN 17 1996
Secretary of State
180 State Office Building Joan Anderson Growe
100 Constitution Ave. SECRETARY OF STATE
St. Paul, MN 55155-1299
(612) 296-2803
08921340 Rev. 8/92
<PAGE> 6
4/23
MINNESOTA SECRETARY OF STATE
AMENDMENT OF ARTICLES OF INCORPORATION
BEFORE COMPLETING THIS FORM, PLEASE READ INSTRUCTIONS LISTED BELOW.
CORPORATE NAME: (List the name of the company prior to any desired name change)
Famous Dave's Bar-B-Que, Inc.
- ----------------------------------------------------------------------
This amendment is effective on the day it is filed with the Secretary of State,
unless you indicate another date, no later than 30 days after filing with the
Secretary of State.
-------------
The following amendment(s) of articles regulating the above corporation were
adopted: (Insert full text of newly amended article(s) indicating which
article(s) is (are) being amended or added.) If the full text of the amendment
will not fit in the space provided, attach additional numbered pages. (Total
number of pages including this form I.)
---
ARTICLE I
---
The name of the Corporation is Famous Dave's of America, Inc.
This amendment has been approved pursuant to Minnesota Statutes chapter 302A or
317A. I certify that I am authorized to execute this amendment and I further
certify that I understand that by signing this amendment, I am subject to the
penalties of perjury as set forth in section 609.48 as if I had signed this
amendment under oath.
Patricia L. Buffham
-------------------------------------
(Signature of Authorized Person)
Patricia L. Buffham
- --------------------------------------------------------------------------------
INSTRUCTIONS FOR OFFICE USE ONLY
1. Type or print with black ink. STATE OF MINNESOTA
2. A Filing Fee of: $35.00, made payable DEPARTMENT OF STATE
to the Secretary of State. FILED
3. Return completed forms to: MAR 04 1996
Secretary of State
180 State Office Building Joan Anderson Growe
100 Constitution Ave. Secretary of State
St. Paul, MN 55155-1299
(612)296-2803
<PAGE> 1
EXHIBIT 3.2
BY-LAWS
OF
DIAMOND DAVES OF MINNEAPOLIS, INC.
ARTICLE 1
OFFICES
1.1 Registered Office. The registered office of the Corporation shall be
located within the State of Minnesota as set forth in the Articles of
Incorporation. The Board of Directors shall have authority to change the
registered office of the Corporation and a statement evidencing any such change
shall be filed with the Secretary of State of Minnesota as required by law.
1.2 Offices. The Corporation may have other offices, including its
principal business office, either within or without the State of Minnesota.
ARTICLE 2
CORPORATE SEAL
2.1 Corporate Seal. The Board of Directors shall determine whether or not
the Corporation will adopt a corporate seal. If a corporate seal is adopted,
inscribed on the corporate seal shall be the name of the Corporation and the
words "Corporate Seal," and when so directed by the Board of Directors, a
duplicate of the seal may be kept and used by the Secretary of the Corporation.
ARTICLE 3
SHAREHOLDERS
3.1 Regular Meetings. Regular meetings of the shareholders shall be held
at the Corporation's registered office or at such other place within or without
the State of Minnesota as is designated by the Board of Directors. Regular
meetings may be held annually or on a less frequent periodic basis, as
established by a resolution of the Board of Directors, or may be held on call by
the Board of Directors from time to time as and when the Board determines. At
each regular meeting, the shareholders shall elect qualified successors for
directors who serve for an indefinite term or whose terms have expired or are
due to expire within six (6) months after the date of the meeting, and may
transact such other business which properly comes before them. Notwithstanding
the foregoing, if a regular meeting of the shareholders has not been held for a
period of fifteen (15) months, a shareholder or group of shareholders holding
three percent (3%) or more of the issued and outstanding voting shares of the
Corporation may demand that a regular meeting of the shareholders be held by
giving written notice to the President or Treasurer of the Corporation. Within
thirty (30) days after receipt of the notice, the Board shall cause a regular
meeting of the shareholders to be called and held within ninety (90) days after
receipt of the notice.
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Any regular meeting held pursuant to such a demand by a shareholder or
shareholders shall be held within the county where the principal executive
office of the Corporation is located.
3.2 Special Meeting. Special meetings of the shareholders may be
called by the President, by a Vice-President in the absence of the President,
by the Treasurer, or by the Board of Directors or any two or more members
thereof. Special meetings may also be called by one or more shareholders
holding ten percent (10%) or more of the issued and outstanding voting shares
of the Corporation by delivering to the President or Treasurer a written demand
for a special meeting, which demand shall state the purposes of such meeting.
Within thirty (30) days after receipt of the written demand, the Board of
Directors shall call a special meeting of the shareholders to be held within
ninety (90) days after receipt of the written demand. Any special meeting held
pursuant to such written demand shall be held within the county where the
principal executive office of the Corporation is located.
3.3. Quorum. Business may be transacted at any duly held meeting of
the shareholders at which a quorum is present. The holders of a majority of
the voting power of the shares entitled to vote at a meeting are a quorum. The
shareholders present at the meeting may continue to transact business until
adjournment, even though a number of shareholders withdraw leaving less than a
quorum. If a quorum is not present at any meeting, those shareholders present
have the power to adjourn the meeting from time to time until the requisite
number of voting shares are present. The date, time and place of the
reconvened meeting shall be announced at the time of adjournment and notice of
the reconvened meeting shall be given to all shareholders who were not present
at the time of adjournment. Any business which might have been transacted at
the meeting which was adjourned may be transacted at the reconvened meeting.
3.4 Voting. At each shareholders' meeting, every shareholder
having the right to vote is entitled to vote in person or by proxy.
Shareholders have one (1) vote for each share having voting power standing in
their name on the books of the Corporation, unless otherwise provided in the
Articles of Incorporation, or these By-Laws, or in the terms of the shares.
All elections and questions shall be decided by a majority vote of the number
of shares entitled to vote and represented at any meeting at which there is a
quorum, except as otherwise required by statute, the Articles of Incorporation,
these By-Laws, or by agreement among the shareholders.
3.5 Notice of Meeting. Notice of regular or special meetings of
the shareholders shall be given by an officer or agent of the Corporation to
each shareholder shown on the books of the Corporation to be the holder of
record of shares entitled to vote at the meeting. If the notice is to be
mailed, then the notice must be mailed to each shareholder at the shareholder's
address as shown on the books of the Corporation at least five (5) calendar
days prior to the meeting. If the notice is not mailed, then the notice must
be given at least forty-eight (48) hours prior to the meeting. The notice must
contain the date, time and place of the meeting, and in the case of a special
meeting, must also contain a statement of the purpose of the meeting. In no
event shall notice be given more than sixty (60) days prior to the meeting. If
a plan of merger, exchange, sale or other disposition of all or substantially
all of the assets of the Corporation is to be considered at a meeting of
shareholders, notice of such meeting shall be given to every shareholder,
whether or not entitled to vote, not less than fourteen (14) days prior to the
date of such meeting.
3.6 Proxies. At all meetings of shareholders, a shareholder may
vote by proxy executed in writing by the shareholder or by his duly authorized
attorney-in-fact. Such proxies must be filed with an officer of the
Corporation before or at the time of the meeting. No proxy shall be valid
after eleven (11) months from the date of its execution, unless otherwise
provided in the proxy.
3.7 Closing Transfer Books. The Board of Directors may close the
stock transfer books for a period of time which does not exceed sixty (60) days
preceding any of the following: the date
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<PAGE> 3
of any meeting of shareholders; the payment of dividends; the allotment of
rights; or the change, conversion, or exchange of shares.
3.8 Record Date. In lieu of closing the stock transfer books, the Board
of Directors may fix in advance a date, not exceeding sixty (60) days preceding
the date of any of the events described in Section 3.7, as a record date for
the determination of which shareholders are entitled (i) to notice of and to
vote at any meeting and any meeting subsequent to adjournment, (ii) to receive
any dividend or allotment of rights, or (iii) to exercise the rights in respect
to any change, conversion, or exchange of shares. If a record date is fixed by
the Board of Directors, only those shareholders of record on the record date
shall be entitled to receive notice of and to vote at the meeting and any
meeting subsequent to adjournment or to exercise such rights, as the case may
be, notwithstanding any transfer of any shares on the books of the Corporation
after the record date so fixed. If the share transfer books are not closed and
no record date is fixed for determination of the shareholders of record, then
the date on which notice of the meeting is mailed or the date of adoption of a
resolution of the Board of Directors declaring a dividend, allotment of rights,
change, conversion or exchange of shares, as the case may be, shall be the
record date for such determination.
3.9 Presiding Officer. The President of the Corporation shall preside
over all meetings of the shareholders. In the absence of the President, the
shareholders may choose any person present to act as presiding officer.
3.10 Written Action by Shareholders. Any action which may be taken at a
meeting of the shareholders may be taken without a meeting and notice if a
consent in writing, setting forth the action so taken, is signed by all of the
shareholders entitled to notice of a meeting for such purpose.
ARTICLE 4
DIRECTORS
4.1 General Powers. The property, affairs and business of the
Corporation shall be managed by the Board of Directors which shall initially
consist of Two(2) directors. In addition to the powers and authorities by
these By-Laws expressly conferred upon it, the Board may exercise all such
powers of the Corporation and do all such lawful acts and things as are not by
law, the Articles of Incorporation or these By-Laws directed or required to be
exercised or done by the shareholders.
4.2 Number. The number of directors may be either increased or decreased
by resolution of the shareholders at their regular meetings or at a special
meeting called for that purpose. The number of directors may be increased by
resolution adopted by the affirmative vote of a majority of the Board of
Directors. Any newly created directorships established by the Board of
Directors shall be filled by a majority vote of the directors serving at the
time of increase.
4.3 Qualifications and Term of Office. Directors need not be
shareholders or residents of the State of Minnesota. The Board of Directors
shall be elected by the shareholders at their regular meeting and at any
special shareholders' meeting called for that purpose. A director shall hold
office until the annual meeting for the year in which his or her term expires
and until the director's successor is elected and qualifies, or until the
earlier death, resignation, removal, or disqualification of the director.
4.4 Quorum. A majority of the Board of Directors constitutes a quorum
for the transaction of business; provided, however, that if any vacancies exist
by reason of death,
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<PAGE> 4
resignation, or otherwise, a majority of the remaining directors constitutes a
quorum. If less than a quorum is present at any meeting, a majority of the
directors present may adjourn the meeting from time to time without further
notice.
4.5 Action of Directors. The acts of a majority of the directors present
at a meeting at which a quorum is present are the acts of the Board of
Directors.
4.6 Meetings. Meetings of the Board of Directors may be held from time
to time at any place, within or without the State of Minnesota, that the Board
of Directors may select. If the Board of Directors fails to select a place for
a meeting, the meeting shall be held at the principal executive office of the
Corporation. The President or any director may call a meeting of the Board of
Directors by giving notice to all directors of the date, time and place of the
meeting. If the notice is to be mailed, then the notice must be mailed to each
director at least five (5) calendar days prior to the meeting. If the notice
is not to be mailed, then the notice must be given at least forty-eight (48)
hours prior to the meeting. If the date, time and place of the meeting of the
Board of Directors has been announced at a previous meeting of the Board of
Directors, no additional notice of such meeting is required, except that notice
shall be given to all directors who were not present at the previous meeting.
Notice of the meeting of the Board of Directors need not state the purpose of
the meeting. A director may orally or in writing waive notice of the meeting.
Attendance by a director at a meeting of the Board of Directors also
constitutes a waiver of notice of such meeting, unless the director objects at
the beginning of the meeting to the transaction of business because the meeting
allegedly is not lawfully called or convened and such director does not
participate thereafter in the meeting.
4.7 Meeting by Electronic Communications. A conference among directors
by any means of communication through which the directors may simultaneously
hear each other during the conference constitutes meeting of the Board of
Directors if the number of directors participating in the conference would be
sufficient to constitute a quorum at a meeting, and if the same notice is given
of the conference as would be required for a Board of Directors meeting under
these By-Laws. In any Board of Directors meeting, a director may participate
by any means of communication through which the director, other directors so
participating, and all directors physically present at the meeting may
simultaneously hear each other during the meeting.
4.8 Compensation. Directors may receive such compensation as may be
determined from time to time by resolution of the Board of Directors.
4.9 Committee. By the affirmative vote of a majority of the directors,
the Board of Directors may establish a committee or committees having the
authority of the Board of Directors in the management of the business of the
Corporation to the extent provided in the resolution adopted by the Board of
Directors. A committee shall consist of one or more persons, who need not be
directors, that have been appointed by affirmative vote of a majority of the
directors present. A majority of the members of the committee present at any
meeting of the committee is a quorum for the transaction of business, unless a
larger or smaller proportion or number is provided in the resolution approved
by the Board of Directors. Minutes of any meetings of committees created by
the Board of Directors shall be available upon request to members of the
committee and to any director.
4.10 Action by Absent Director. A director may give advance written
consent or opposition to a proposal to be acted upon at a Board of Directors
meeting by giving a written statement to the President, Treasurer, or any
director which sets forth the proposal to be voted on and contains a statement
of the director's voting preference with regard to the proposal. An advance
written statement does not constitute presence of the director for purposes of
determining a quorum, but the advance written statement shall be counted in the
vote on the subject proposal provided that the proposal acted on at the meeting
is substantially the same or has substantially the same effect
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<PAGE> 5
as the proposal set forth in the advance written statement. The advance
written statement by a director on a proposal shall be included in the records
of the Board of Directors' action on the proposal.
4.11 Removal of Directors by Board of Directors. Any director who
has been elected by the Board of Directors to fill a vacancy on the Board of
Directors, or to fill a directorship created by action of the Board of
Directors, and who has not subsequently been reelected by the shareholders, may
be removed by a majority vote of all directors constituting the Board,
exclusive of the director whose removal is proposed.
4.12 Vacancies. Any vacancy on the Board of Directors may be filled
by vote of the remaining directors, even though less than a quorum.
4.13 Written Action by Less than All of the Directors. Any action
which may be taken at a meeting of the Board of Directors may be taken without
a meeting and notice thereof if a consent in writing setting forth the action
taken is signed by the number of directors required to take the same action at
a duly held meeting of the Board of Directors at which all of the directors are
present. If a written action is signed by less than all the directors, any
director not signing the action will be notified as soon as reasonably possible
of the content of the action and the effective date of the action. Failure to
provide the notice does not invalidate the written action. A director who does
not sign or consent to the written action has no liability for the action or
actions so taken.
4.14 Dissent from Action. A director of the Corporation who is
present at a meeting of the Board of Directors at which any action is taken
shall be presumed to have assented to the action taken unless the director
objects at the beginning of the meeting to the transaction of business because
the meeting is not lawfully called or convened and does not participate
thereafter, or unless the director votes against the action at the meeting, or
is prohibited from voting on the action.
ARTICLE 5
OFFICERS
5.1 Election of Officers. The Board of Directors shall from time
to time, elect a Chief Executive Officer, who may also be designated as
President, and a Chief Financial Officer, who may also be designated as
Treasurer. The Board of Directors may elect, but shall not be required to
elect, a Secretary, one or more Vice Presidents, and a Chairman of the Board.
In addition, the Board of Directors may elect such other officers and agents as
it may deem necessary. The officers shall exercise such powers and perform
such duties as are prescribed by applicable statutes, the Articles of
Incorporation, the By-Laws, or as may be determined from time to time by the
Board of Directors. Any number of offices may be held by the same person.
5.2 Term of Office. The officers shall hold office until their
successors are elected and qualify; provided, however, that any officer may be
removed with or without cause by the affirmative vote of a majority of the
directors present at a Board of Directors meeting at which a quorum is present.
5.3 Chief Executive Officer. The Chief Executive Officer shall:
(a) Have general active management of the business of the
Corporation;
(b) When present, preside at all meetings of the shareholders;
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(c) When present, and if there is not a Chairman of the Board,
preside at all meetings of the Board of Directors;
(d) See that all orders and resolutions of the Board of Directors
are carried into effect;
(e) Sign and deliver in the name of the Corporation any deeds,
mortgages, bonds, contracts or other instruments pertaining to
the business of the Corporation, except in cases in which the
authority to sign and deliver is required by law to be
exercised by another person or is expressly delegated by the
Articles of Incorporation or By-Laws or by the Board of
Directors to some other officer or agent of the Corporation;
(f) Maintain records of and, whenever necessary, certify all
proceedings of the Board of Directors and the shareholders; and
(g) Perform all other duties prescribed by the Board of Directors.
All other officers shall be subject to the direction and authority of the Chief
Executive Officer.
5.4 Chief Financial Officer. The Chief Financial Officer shall:
(a) Keep accurate financial records for the Corporation;
(b) Deposit all money, drafts and checks in the name of and to the
credit of the Corporation in the banks and depositories
designated by the Board of Directors;
(c) Endorse for deposit all notes, checks and drafts received by
the Corporation as ordered by the Board of Directors, making
proper vouchers therefor;
(d) Disburse corporate funds and issue checks and drafts in the
name of the Corporation, as ordered by the Board of Directors;
(e) Render to the Chief Executive Officer and the Board of
Directors, whenever requested, an account of all transactions
by the Chief Financial Officer and of the financial condition
of the Corporation; and
(f) Perform all other duties prescribed by the Board of Directors
or by the Chief Executive Officer.
5.5 Vice President. Each Vice President, if any, shall have such
powers and perform such duties as may be specified in these By-Laws or
prescribed by the Board of Directors. If the Chief Executive Officer is absent
or disabled, the Vice President shall succeed to the President's powers and
duties. If there are two or more Vice Presidents, the order of succession
shall be determined by seniority of election or as otherwise prescribed by the
Board of Directors.
5.6 Secretary. The Secretary, if any, shall attend all meetings
of the shareholders and the Board of Directors. The Secretary shall act as
clerk and shall record all the proceedings of the meetings in the minute book
of the Corporation and shall give proper notice of meetings of shareholders and
the Board of Directors. The Secretary shall keep the seal of the Corporation,
if any, and shall affix the seal to any instrument requiring it and shall
attest the seal, and shall perform such other duties as may be prescribed from
time to time by the Board of Directors.
5.7 Chairman of the Board. The Chairman of the Board, if any,
shall preside at all meetings of the Board of Directors and shall perform such
other duties as may from time to time be assigned by the Board of Directors.
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5.8 Assistant Officers. In the event of absence or disability of
any Vice President, Secretary or the Chief Financial Officer, the assistant to
such officer, if any, shall succeed to the powers and duties of the absent
officer until the principal officer resumes his duties or a replacement is
elected by the Board of Directors. If there are two or more assistants, the
order of succession shall be determined through seniority by the order in which
elected or as otherwise prescribed by the Board of Directors. The assistant
officers shall exercise such other powers and duties as may be delegated to
them from time to time by the Board of Directors or the principal officer under
whom they serve, but at all times shall remain subordinate to the principal
officers they are designated to assist.
ARTICLE 6
INDEMNIFICATION
The Corporation shall indemnify its officers, directors, employees and
agents to the full extent permitted by the laws of the State of Minnesota, as
now in effect, or as the same may be hereafter modified.
ARTICLE 7
SHARES AND THEIR TRANSFER
7.1 Certificates of Shares. Unless the Board of Directors has
provided that the Corporation's shares are to be uncertified, every owner of
shares of the Corporation shall be entitled to a certificate, to be in such form
as the Board of Directors prescribes, certifying the number of shares owned by
such shareholder. The certificates for shares shall be numbered in the order
in which they are issued and shall be signed in the name of the Corporation by
the Chief Executive Officer or a Vice President and by the Secretary or
Assistant Secretary, or the Chief Financial Officer, or any other officer of
the Corporation authorized by the Board of Directors and shall have the
corporate seal, if any, affixed thereto. A record shall be kept of the name
of the person owning the shares represented by each certificate, the
respective issue dated thereof, and in the case of cancellation, the
respective dates of cancellation. Except as provided in Section 7.5 of this
Article 7, every certificate surrendered to the Corporation for exchange or
transfer shall be cancelled, and no other certificate shall be issued in
exchange for any existing certificate until such existing certificate is
cancelled.
7.2 Uncertificated Shares. The Board of Directors by a majority
vote of directors present at a duly called meeting may provide that any or all
shares of classes or series of shares are to be uncertificated shares. In that
case, any shareholder who is issued uncertificated shares shall be provided
with the information legally required to be disclosed in a certificate.
7.3 Issuance of Shares. The Board of Directors is authorized to
issue shares of the capital stock of the Corporation up to the number of shares
authorized by the Articles of Incorporation. Shares may be issued for any
consideration (including without limitation, money or other tangible or
intangible property received by the Corporation or to be received by the
Corporation under a written agreement, or services rendered to the Corporation
or to be rendered to the Corporation under a written agreement) which is
authorized by a resolution approved by the affirmative vote of a majority of
the directors present, valuing all nonmonetary consideration and establishing a
price in money or other consideration, or a minimum price, or a general formula
or establishing a price in money or other consideration, or a minimum price, or
a general formula or method by which the price will be determined. Upon
authorization by resolution approved by the affirmative vote of a majority of
the directors present, the Corporation may, without any new or
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additional consideration, issue shares of its authorized and unissued capital
stock in exchange for or in conversion of its outstanding shares, or issue its
own shares pro rata to its shareholders or the shareholders of one or more
classes or series, to effectuate share dividends or splits, including reverse
share splits. No shares of a class or series shall be issued to the holder of
the shares of another class or series, unless issuance is either expressly
provided for in the Articles of Incorporation or is approved at a meeting by
the affirmative vote of the holders of a majority of the voting power of all
shares of the same class or series as the shares to be issued.
7.4 Transfer of Shares. Transfer of shares on the books of the
Corporation may be authorized only by the shareholder named in the certificates
or the shareholder's representative or duly authorized attorney-in-fact and only
upon surrender for cancellation of the certificate for such shares. The
shareholder in whose name shares stand on the books of the Corporation shall be
considered the owner thereof for all purposes regarding the Corporation.
7.5 Lost Certificates. Any shareholder claiming a certificate for shares
has been lost or destroyed shall make an affidavit or affirmation of that fact
in such form as the Board of Directors may require and shall, if the directors
so require, give the Corporation a bond of indemnity in form and with one or
more sureties satisfactory to the Board of Directors and in an amount determined
by the Board of Directors, to indemnify the Corporation against any claim that
may be made against it on account of the alleged loss or destruction of the
certificate. A new certificate may then be issued in the same tenor for the
same number of shares as the one alleged to have been lost or destroyed.
7.6 Transfer Agent and Registrar. The Board of Directors may appoint one
or more transfer agents or transfer clerks and one or more registrars and may
require all certificates for shares to bear the signature or signatures of any
of them.
7.7 Facsimile Signature. When any certificate is manually signed by a
transfer agent, a transfer clerk, or a registrar appointed by the Board of
Directors to perform such duties, a facsimile or engraved signature of the
officers and facsimile corporate seal, if any, may be inscribed on the
certificate in lieu of the actual signatures and seal.
ARTICLE 8
FINANCIAL AND PROPERTY MANAGEMENT
8.1 Checks. All checks, drafts, other orders for the payment of money,
notes or other evidences of indebtedness issued in the name of the Corporation
shall be signed by the President or Treasurer, or any other officer or officers,
agent or agents of the Corporation, as may from time to time be determined by
resolution of the Board of Directors.
8.2 Deposits. All funds of the Corporation not otherwise employed shall
be deposited from time to time to the credit of the Corporation in such banks,
trust companies, or other depositories as the Board of Directors may select.
8.3 Voting Securities Held by Corporation. The President, or other
officer or agent designated by the Board of Directors, shall have full power and
authority on behalf of the Corporation to attend, act at, and vote at any
meeting of security or interest holders of other corporations or entities in
which the Corporation may hold securities or interests. At the meeting, the
President or other designated agent shall possess and exercise any and all
rights and powers incident to the ownership of the securities or interest which
the Corporation holds.
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ARTICLE 9
AMENDMENTS
The Board of Directors of the Corporation is expressly authorized to make
By-Laws of the Corporation and from time to time to adopt, amend or repeal
By-Laws so made to the extent and in the manner prescribed in the Minnesota
Statutes. The Board of Directors shall not adopt, amend, or repeal a By-Law
fixing a quorum for meetings of shareholders, prescribing procedures for
removing directors or filling vacancies in the Board of Directors, or fixing the
number of directors or their classifications, qualifications, or terms of
office, but may adopt or amend a By-Law to increase the number of directors.
The authority in the Board of Directors is subject to the power of the voting
shareholders to adopt, change or repeal the By-Laws by a vote of shareholders
holding a majority of the shares entitled to vote and present or represented at
any regular meeting or special meeting called for that purpose.
Date of Adoption: March 14, 1994 Kathryn W. Anderson
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Kathryn W. Anderson, Secretary
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EXHIBIT 10.1
LINDEN HILLS SITE
LEASE AGREEMENT
This Lease is made effective January 1, 1996, by S&D Land Holdings,
Inc., a Minnesota corporation ("Landlord"), and Famous Dave's of Minneapolis,
Inc., a Minnesota corporation ("Tenant").
RECITALS:
A. S&D Land Holdings, Inc. ("S&D") is the fee owner of the real
estate legally described as the South 24 feet of Lot 11 and Lots 12 and 13,
Block 22, First Division of Remington Park, ("Property") which Property is
located in Hennepin County, Minnesota.
B. A restaurant building and parking lot ("Improvements") are
located upon the Property (together the Property and Improvements are referred
to as "Premises").
C. Landlord desires to lease the Premises to Tenant and Tenant
desires to lease the Premises from Landlord.
NOW, THEREFORE, the parties agree as follows:
1. Lease Agreement. Landlord hereby leases the Premises to
Tenant and Tenant hereby leases the Premises from Landlord subject to the terms
and conditions contained herein.
2. Term. The term of this Lease shall commence January 1, 1996
("Commencement Date") and, unless earlier terminated or extended as provided
herein, shall terminate on December 31, 2005 ("Initial Term").
3. Extended Term. Tenant shall have the option to extend the
term of this Lease for two terms of five (5) years ("Extended Term") by giving
Landlord written notice not later than (60) days prior to the expiration of the
Initial Term of this Lease so long as Tenant is not in default in the
performance of any covenant, agreement or condition hereunder. If Tenant fails
to give such 60 day written notice, it shall be deemed to have waived its right
to the Extended Terms and shall vacate the Premises at the expiration of the
Initial Term.
4. Rent. Tenant will pay rent of $4,066.66 per month ("Rent") to
Landlord commencing on the Commencement Date and payable in advance on the
first day of each month thereafter during the first Lease year. Rent shall be
increased on January 1, 1997 and each succeeding January 1st thereafter until
the expiration of the Initial Term or any Extended Term according to the
following computation:
Each January 1st, Rent for such calendar year will be
increased (but not decreased) by the percentage difference
between the Consumer Price Index published by the Bureau of
Labor Statistics of the United
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States Department of Labor, U.S. City Average, All items and
Major Group Figures for Urban Wage Earners and Clerical
Workers (1982-84=100) ("CPI") for the preceding month of
December and the CPI for the base year. For purposes of this
Lease, the base year is 1995 ("Base Year") and the price index
for the Base Year shall mean the average of the monthly
indexes for each of the twelve months (12) of the Base Year.
In no event should the Rent payable in any year be reduced
during the next subsequent year due to a decrease in the CPI.
5. Additional Rent. Tenant shall pay before penalty attaches,
all costs of maintenance, repairs, utilities, real estate and any other taxes,
insurance and any and all other expenses necessary in connection with the
operation or maintenance of the Premises ("Additional Rent").
6. Use.
a. Tenant may use and occupy the Premises solely for
restaurant/entertainment purposes and for no other purpose unless Tenant has
first obtained Landlord's written consent. Tenant shall not use or occupy the
Premises for any unlawful purpose, and will comply with all present and future
laws, statutes, ordinances, orders, rules, codes, regulations, decrees and
requirements of all governmental units (including any agency, department,
commission, board, bureau or subdivision thereof) having jurisdiction over the
Premises (collectively "Legal Requirements").
b. Landlord, its agents, contractors or employees may
enter the Premises at reasonable hours to inspect the Premises and at any time
in response to an emergency.
7. Assignment and Subletting.
a. There shall be no Assignment or Subletting of the
Premises by Tenant without in each case, obtaining the prior written consent of
Landlord, which consent may be granted or withheld in Landlord's sole
discretion.
b. Landlord shall have the right to transfer and assign,
in whole or in part, all of its rights and obligations hereunder.
8. Maintenance and Repair.
a. Tenant shall, at all time during the term of this
Lease, at its sole cost and expense, keep and maintain the Premises (including
without limitation all Improvements, fixtures, and equipment on the Premises)
in good order, repair and condition, and will make all repairs and replacements
including, but not limited to heating, ventilating and air conditioning
systems, structural components of the Improvements, down spouts, fire sprinkler
system, dock bumpers, lawn maintenance, pest control and extermination, and
trash pick-up and removal. Tenant shall repair and
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pay for any destruction caused by any act or omission of Tenant or Tenant's
agents, employees, invitees, licensees or visitors, but shall not be obligated
to pay for destruction to the Premises caused by the negligence of Landlord,
its agents or employees.
b. Tenant agrees to maintain, at Tenant's sole cost and
expense all improvements, fixtures and equipment installed in the Premises; to
use the Premises in a prudent and orderly manner; to suffer no waste or injury
to the Premises or any improvements or fixtures therein; and at the expiration
or other termination of this Lease, to surrender the same with all improvements
in the same order and condition in which they were on the Commencement Date, or
in such better condition as they may thereafter be put, except for ordinary
wear and tear and destruction by insured casualty.
c. In the event Tenant fails to make the repairs or
maintain the Premises as required hereunder, Landlord may make such repairs or
perform such maintenance items at the expense of Tenant which expense shall be
collected as Additional Rent.
9. Alterations; Signs; Equipment.
a. Tenant will not make or permit anyone to make any
alterations, decorations, additions or improvements, structural or otherwise,
in or to the Premises without first obtaining the prior written consent of
Landlord which consent shall not be unreasonably withheld or delayed. All
alterations, decorations, additions or improvements shall be made in accordance
with all Legal Requirements and insurance guidelines and shall be performed in
a good and workmanlike manner by contractors approved by Landlord.
b. Upon completion of any alterations, decorations,
additions or improvements, Tenant shall deliver to Landlord evidence of
payment, contractors' affidavits and full and final lien waivers for all labor,
services, or materials performed or supplied in connection with such
alteration, decoration, addition or improvement. Tenant shall indemnify,
defend (at Landlord's request and with counsel approved by Landlord) and hold
Landlord harmless from and against all losses, costs, damages, claims,
liabilities, causes of action and expenses (including attorneys' fees and
disbursements, whether suit is commenced or not) arising out of or relating to
any alterations, decorations, additions or improvements that Tenant or any of
its contractors make to the Premises, including any occasioned by the filing of
any mechanic's, material supplier's, construction or other liens or claims (and
all costs or expenses associated therewith) asserted, filed or arising out of
any such work. Without limiting the generality of the foregoing, Tenant shall
repair or cause to be repaired at its expense all damage caused by any of its
contractors, subcontractors or their employees or agents. Tenant shall
reimburse Landlord for any costs incurred by Landlord to repair any damage
caused by any of Tenant's contractors. Tenant shall also reimburse Landlord
upon demand for any costs Landlord may incur to have an engineer review all
mechanical, structural, electrical, plumbing and life safety systems installed
by any of Tenant's contractors.
c. All alterations, decorations, additions or
improvements in or to the Premises made by Tenant shall become the property of
Landlord upon the expiration or termination of this
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Lease and shall remain upon and be surrendered with the Premises as a part
thereof without disturbance or injury, unless Landlord requires specific items
thereof to be removed by Tenant at Tenant's sole cost and expense, in which
event Tenant shall remove the same prior to the expiration or termination of
this Lease and shall repair any damage caused thereby.
d. Tenant shall not place or maintain any sign,
advertisement or notice on any part of the outside of the Premises or any area
visible from outside the Premises, without first obtaining the prior written
consent of Landlord, which consent shall not be unreasonably withheld or
delayed. All signage approved by Landlord shall be in conformance with all
Legal Requirements.
10. Casualty and Insurance.
a. Substantial Destruction. If the Premises should be
totally destroyed by fire or other casualty so that rebuilding cannot
reasonably be completed within ninety days after such destruction, Tenant's
obligations to pay Rent and Additional Rent shall abate from the date of such
destruction and either Landlord or Tenant shall have the right to terminate
this Lease by giving written notice thereof to each other within thirty (30)
days after the date of such destruction.
b. Partial Destruction. If the Premises should be
partially damaged by fire or other casualty, and rebuilding or repairs can
reasonably be completed within ninety days from the date of the destruction
(without taking into account the availability of funds or insurance proceeds),
this Lease shall not terminate, and Tenant shall at its sole risk and expense
proceed with reasonable diligence to rebuild or repair the building or other
improvements to substantially the same condition in which they existed prior to
the destruction. There shall be no abatement of Rent or Additional Rent
following such destruction. In the event that Tenant fails to complete the
necessary repairs or rebuilding within one hundred eighty (180) days from the
date of the destruction (force majeure excepted), Landlord may at its option
terminate this Lease by delivering written notice of termination to Tenant,
whereupon all rights and obligations under this Lease shall cease to exist.
c. Insurance. Tenant shall maintain at its expense
standard fire and extended coverage, or "all risk" policy of insurance covering
one hundred percent (100%) replacement cost on (i) the Premises, (ii) all of
its personal property, including removable trade fixtures, located in the
Premises and (ii) all of the Improvements and any improvements (including
fixtures) made by, for or on behalf of Tenant. Landlord shall be named as an
additional loss payee with respect to the insurance described herein.
Tenant shall maintain commercial general liability occurrence
policy insurance with the premiums thereon fully paid on or before the due
dates which affords minimum protection (which may be affected by primary and/or
excess coverage) of not less than $2,000,000 combined single limit provided
Tenant shall carry such greater limits of coverage as Landlord may deem
reasonable from time to time. Landlord shall be named as an additional insured
on Tenant's policy. Tenant shall deliver to Landlord certificates evidencing
maintenance of the insurance required herein.
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d. Insurance Carrier. Any insurance required under this
Section shall be issued by a company authorized to do business in the State of
Minnesota and having an A.M. Best & Company, Inc. rating of A or higher and a
financial size category of not less than X and shall require thirty (30) days
advance notice to Landlord before cancellation or alteration. Tenant shall
deliver to Landlord certificates evidencing the insurance required herein.
e. Waiver of Subrogation. Landlord and Tenant each
hereby waive and release each other from any loss or damages arising from any
cause covered by insurance against each other, their agents, officers and
employees, by any reason, regardless of cause or origin, including the
negligence or willful misconduct of Landlord or Tenant and their agents,
officers and employees. Tenant agrees to immediately give its insurance
company which has issued policies of insurance covering all risk of direct
physical loss, written notice of the terms of the mutual waivers contained in
this section and to have the insurance policy properly endorsed, if necessary,
to prevent the invalidation of the insurance coverages by reason of the mutual
waivers.
11. Condemnation.
a. Total Taking. If, by exercise of the right of
eminent domain or by conveyance made in response to the threat of the exercise
of that right (in either case a "taking"), all of the Premises are taken or if
so much of the Premises are taken that the Premises (even if the restorations
described in subparagraph (b) were to be made) cannot be used by Tenant for the
purposes for which they were used immediately before the taking, this Lease
will end on the earlier of the vesting of title to the Premises in the
condemning authority, or the taking of possession of the Premises by the
condemning authority (in either case the "Ending Date"). If this Lease ends
according to this subparagraph (a), prepaid rent will be appropriately prorated
to the Ending Date. The award in a taking subject to this subparagraph (a)
will be allocated according to subparagraph (d).
b. Partial Taking. If, after a taking, so much of the
Premises remains that the Premises can be used for substantially the same
purposes for which they were used immediately before the taking, (i) this Lease
will end on the Ending Date as to the part of the Premises that is taken, (ii)
prepaid rent will be appropriately allocated to the part of the Premises that
is taken and prorated to the Ending Date, (iii) beginning on the day after the
Ending Date, Rent for so much of the Premises as remains will be reduced in the
proportion of the floor area of the building remaining after the taking to the
floor area of the building before the taking, (iv) at its cost, Tenant will
restore so much of the Premises as remains to a sound architectural unit
substantially suitable for the purposes for which they were used immediately
before the taking, using good workmanship and new first class materials, all
according to Section 9, (v) upon the completion of restoration according to
clause (iv), Landlord will pay Tenant the lesser of the net award made to
Landlord on account of the taking (after deducting from the total award,
attorneys', appraisers' and other costs incurred in connection with obtaining
the award, and amounts paid to the holders of mortgages affecting the Premises)
or Tenant's actual out-of-pocket cost of restoring the Premises, and (vi)
Landlord will keep the balance of the net award.
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c. Tenant's Award. In connection with any taking
subject to subparagraph (a) or (b), Tenant may prosecute its own claim by
separate proceedings against the condemning authority for damages legally due
to it (such as the loss of fixtures that Tenant was entitled to remove, and
moving expenses) only so long as Tenant's award does not diminish or otherwise
adversely affect Landlord's award.
d. Allocation of an Award for a Total Taking. If this
Lease ends according to subparagraph (a), the condemnation award will be paid
in the order in this subparagraph to the extent it is sufficient:
i. First, Landlord will be reimbursed for its
attorneys' fees, appraisal fees, and other costs incurred in prosecuting the
claim for an award;
ii. Second, Landlord will be paid for lost Rent
and the value of the reversion (excluding any future Extended Terms) as of the
Ending Date;
iii. Third, Tenant will be paid its adjusted book
value as of the date of the taking of its improvements (excluding trade
fixtures) made to the Premises. In computing its adjusted book value,
improvements will be conclusively presumed to have been depreciated or
amortized for federal income tax purposes over their useful lives with a
reasonable salvage value;
iv. Fourth, the balance will be divided equally
between Landlord and Tenant.
12. Default.
a. Any one of the following events shall constitute an
event of default ("Event of Default"):
i. Tenant shall fail to pay any installment of
Rent and/or Additional Rent as herein provided, and such default shall continue
for a period of five (5) days after notice from Landlord;
ii. Tenant shall violate or fail to perform any
of the other conditions, covenants or agreements herein made by Tenant and such
default shall continue for thirty (30) days after notice from Landlord;
provided, however, that if the nature of such default is such that Tenant can
cure the default, but not within thirty (30) days, then the Event of Default
shall be suspended for a period not in excess of thirty (30) additional days so
long as Tenant commences to cure the default within said thirty (30) day period
and thereafter diligently and continuously prosecutes the curing of the default
to completion with such additional thirty (30) day period, and so long as
continuation of the default does not create material risk to the Premises or to
persons using the Premises;
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iii. Tenant shall fail to commence occupancy of
the Premises promptly upon the Commencement Date or shall vacate or abandon the
Premises or any portion thereof at any time during the Initial Term or any
Extended Terms thereof; or
iv. If (1) the interest of Tenant under this
Lease shall be levied upon under execution or other legal process, (2) any
petition shall be filed by or against Tenant to declare Tenant bankrupt or to
delay, reduce or modify Tenant's debts or obligations, (3) Tenant shall be
declared insolvent according to law, or (4) any assignment of Tenant's property
shall be made for the benefit of creditors, or a receiver or trustee is
appointed for Tenant or its property (provided that no such levy, execution,
legal process or petition filed against Tenant shall constitute a breach of
this Lease if Tenant shall vigorously contest the same by appropriate
proceedings and shall remove or vacate the same within thirty (30) days from
the date of its creation, service or filing).
v. If Tenant is a partnership or other entity
and Tenant shall be dissolved or otherwise liquidated, except in connection
with a merger, consolidation or other reorganization resulting in continuation
of Tenant's business substantially as previously conducted, then Landlord may
treat the occurrence of any one or more of the foregoing events as a breach of
this Lease and thereupon, at Landlord's option, may have any one or more of the
following described remedies in addition to all other rights and remedies
provided at law or in equity.
b. If an Event of Default shall have occurred and be
continuing:
i. Landlord may terminate this Lease and
forthwith repossess the Premises and be entitled to recover as damages a sum of
money equal to the total of (i) the cost of recovering the Premises (including
attorneys' fees, disbursements of counsel and any costs of suit), (ii) the
unpaid Rent earned at the time of termination, plus interest thereon at the
Interest Rate, (iii) the present value (discounted at the rate published from
time to time as the discount rate for the Federal Reserve Bank of Minneapolis)
of the balance of the Rent and/or Additional Rent for the remainder of the Term
less the present value (discounted at the same rate) of the amount Tenant
reasonably demonstrates that Landlord would in all likelihood receive from
leasing the Premises to another tenant for said period, taking into account the
cost of reletting, the then-current market conditions, the time the Premises
was vacant and other similar costs, and (iv) any other sum of money and damages
owed by Tenant to Landlord.
ii. Landlord may terminate Tenant's right of
possession (without terminating this Lease) and may repossess the Premises by
unlawful detainer suit or otherwise, without thereby releasing Tenant from any
liability hereunder and without demand or notice of any kind to Tenant and
without terminating this Lease, in which event Landlord may, but shall be under
no obligation to do so, relet the same for the account of Tenant for such rent
and upon such terms as shall be satisfactory to Landlord. For the purpose of
such reletting Landlord is authorized to decorate or to make any repairs,
changes, alterations or additions to the Premises as may be reasonably
necessary or desirable in Landlord's judgment, and (i) if Landlord shall fail
or refuse to relet the Premises, or (ii) if the same are relet and a sufficient
sum shall not be realized from such
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reletting (after first deducting therefrom, for retention by Landlord), the
unpaid Rent due hereunder earned but unpaid at the time of reletting plus
interest thereon at the Interest Rate, the cost of recovering possession
(including attorneys' fees, disbursements of counsel and any costs of suit),
all of the costs and expenses of such decorations, repairs, changes,
alterations and additions, the expense of such reletting and the cost of
collection of the rent accruing therefrom) to satisfy the Rent provided for in
this Lease to be paid, then (i) Tenant shall pay to Landlord as damages if the
Premises are not relet, a sum equal to the amount of the Rent reserved in this
Lease for such period or periods, plus the cost of recovering possession of the
Premises (including attorneys' fees and any costs of suit), the unpaid Rent
earned at the time of repossession plus interest thereon at the Interest Rate,
and the costs incurred in any attempt by Landlord to relet the Premises, or
(ii) if the Premises have been relet, the Tenant shall satisfy and pay any such
deficiency. Any such payments due Landlord shall be made upon demand therefor
from time to time and Tenant agrees that Landlord may file suit to recover any
sums falling due under the terms of this Section 12 from time to time. No
delivery to or recovery by Landlord of any portion due Landlord hereunder shall
be any defense in any action to recover any amount not theretofore reduced to
judgment in favor of Landlord, nor shall such reletting be construed as an
election on the part of Landlord to terminate this Lease unless a written
notice of such intention be given to Tenant by Landlord. Notwithstanding any
such reletting without termination, Landlord may at any time thereafter elect
to terminate this Lease for such previous breach.
c. In the event of a breach by Tenant of any of the
agreements, conditions, covenants or terms hereof, Landlord shall have the
right of injunction to restrain the same and the right to invoke any remedy
allowed by law or in equity whether or not other remedies, indemnities or
reimbursements are herein provided. The rights and remedies given to Landlord
in this Lease are distinct, separate and cumulative remedies, and no one of
them, whether or not exercised by Landlord, shall be deemed to be in exclusion
of any of the others.
d. In the interest of minimizing the time and expense of
any litigation between the parties hereto, Landlord and Tenant each hereby do
waive the right to trial by jury in any action, proceeding or counterclaim
brought by either of the parties hereto against the other on any matters
whatsoever arising out of or in any way connected with this Lease, the
relationship of Landlord and Tenant, Tenant's use or occupancy of the Premises,
and/or any claim of injury or damage, or for the enforcement of any remedy.
e. In addition to all other remedies of Landlord,
Landlord shall be entitled to reimbursement upon demand of all attorneys' fees
and disbursements of counsel incurred by Landlord in connection with any Event
of Default, whether suit is initiated or not.
f. Landlord shall in no event be considered to be in
default of Landlord's obligations hereunder until the expiration of a
reasonable time after notice of default from Tenant.
13. Landlord's Right to Cure Defaults; Late Payments.
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If Tenant defaults in the making of any payment, or in the doing of
any act herein required to be made or done by Tenant, or does or suffers any
act prohibited herein, then Landlord may, but shall not be required to, make
such payment or do such act, or correct any damage caused by such prohibited
act and enter the Premises as appropriate in connection therewith. Tenant
shall reimburse Landlord on demand for all costs and expenses incurred by
Landlord in curing any such default plus a charge of ten percent (10%) of the
amount of such costs and expenses, together with interest thereon at the
Interest Rate from the date such sums are incurred by Landlord.
Notwithstanding the foregoing, the making of any such payment or the doing of
any such act by Landlord shall not operate to cure such default or to estop
Landlord from the pursuit of any remedy to which Landlord would otherwise be
entitled. If any installment of Rent is not paid by Tenant when due and
payable: (i) a one-time late charge in the amount of five percent (5%) of the
delinquent installment shall become immediately due and payable as compensation
to Landlord for administrative costs; and (ii) the unpaid balance due Landlord
shall bear interest at the Interest Rate from the date such installment became
due and payable to the date of payment thereof by Tenant, and such interest
shall constitute Additional Rent hereunder which shall be immediately due and
payable.
14. Covenant of Quiet Enjoyment. Subject to other terms of this
Lease, if Tenant shall pay the rent and comply with the terms and conditions of
this Lease to be performed by Tenant, Tenant shall, during the Term hereby
created, freely, peaceably and quietly occupy and enjoy the full possession of
the Premises, provided Landlord shall not be liable for any breach of such
covenants resulting from the actions or inaction of the Landlord.
15. Indemnification, Waiver and Release.
a. Indemnification. Tenant shall indemnify and hold
Landlord, its officers, directors, shareholders, agents and employees harmless
from and against any and all demands, claims, fines, damages, losses,
liabilities, liens, judgments and expenses (including, without limitation,
attorneys' fees and court costs) incurred in connection with or arising from:
(i) the use or occupancy of the Premises by Tenant or any person claiming under
Tenant; (ii) any activity, work or thing done or permitted or suffered by
Tenant to be done in or about the Premises; (iii) any acts, omissions or
negligence of Tenant or any person claiming under Tenant or the contractors,
agents, employees, invitees or visitors of Tenant or any such person; (iv) any
breach, violation or nonperformance by Tenant, any person claiming under Tenant
or the employees, agents, contractors, invitees, or visitors of Tenant, (v) any
injury or damage to the person, property or business of Tenant, its employees,
agents, contractors, invitees, visitors, or any other person entering upon the
Premises under the express or implied invitation of Tenant; or (vi) any
actions taken by Landlord to enforce the foregoing right of indemnification
against Tenant, except if any of the above-listed events are the result of the
gross negligence or willful misconduct of Landlord, its directors, officers,
shareholders, agents or employees. If any action or proceeding is brought
against Landlord, its officers, shareholders, agents or employees by reason of
any such claim, Tenant, upon notice from Landlord, shall defend the claim at
Tenant's expense with counsel reasonably satisfactory to Landlord.
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b. Waiver and Release. Tenant waives and releases all
claims against Landlord, its officers, shareholders, agents and employees with
respect to all matters arising out of Tenant's use and occupancy of the
Premises, except if the result of the gross negligence or wilful misconduct of
Landlord, its directors, officers, shareholders, agents or employees.
16. Mutual Estoppel. Either party may request from the other
party, an estoppel certificate to be executed in recordable form and to any
person designated in a written request which (a) ratifies this Lease; (b)
states the commencement and termination dates; and (c) certifies (i) that this
Lease is in full force and effect and has not been assigned, modified,
supplemented or amended (except by such writings as shall be stated), (ii) that
all conditions under this Lease to be performed have been satisfied (stating
exceptions, if any), (iii) that no defenses or offsets against the enforcement
of this Lease exist (or stating those claimed): (iv) as to advance Rent, if
any, paid by Tenant, (v) the date to which Rent has been paid, (vi) the amount
of security deposited with Landlord, and such other information as may
reasonably be requested. Persons receiving such estoppel certificates shall be
entitled to rely upon them.
17. Hazardous Waste. Tenant shall not, without the prior written
consent of Landlord, cause or permit, knowingly or unknowingly, any Hazardous
Material (hereinafter defined) to be brought or remain upon, kept, used,
discharged, leaked, or emitted in or about, or treated at the Premises. As
used in this Lease, "Hazardous Material(s)" shall mean any hazardous, toxic or
radioactive substance, material, matter or waste which is or becomes regulated
by any federal, state or local law, ordinance, order, rule, regulation, code or
any other governmental restriction or requirement, and shall include asbestos,
petroleum products and the terms "Hazardous Substance" and "Hazardous Waste" as
defined in the Comprehensive Environmental Response, Compensation and Liability
Act, as amended 42 U.S.C. Section 9601 et seq. ("CERCLA"), and the Resource
Conservation and Recovery Act, as amended, 42 U.S.C. Section 6901 et seq.
("RCRA"). To obtain Landlord's consent, Tenant shall prepare and
"Environmental Audit" for Landlord's review. Such Environmental Audit shall
list: (1) the name(s) of each Hazardous Material and a Material Safety Data
Sheet (MSDS) as required by the Occupational Safety and Health Act; (2) the
volume proposed to be used, stored and/or treated at the Premises; (3) the
purpose of such Hazardous Material; (4) the proposed on-premises storage
location(s); (5) the name(s) of the proposed off-premises disposal entity; and
(6) an emergency preparedness plan in the event of a release. Additionally,
the Environmental Audit shall include copies of all required federal, state,
and local permits concerning or related to the proposed use, storage, or
treatment of any Hazardous Material(s) at the Premises. Tenant shall submit a
new Environmental Audit whenever it proposes to use, store, or treat a new
Hazardous Material at the Premises or when the volume of existing Hazardous
Materials to be used, stored, or treated at the Premises expands by ten percent
(10%) during any thirty (30) day period. If Landlord, in its reasonable
judgment, finds the Environmental Audit acceptable, then Landlord shall deliver
to Tenant Landlord's written consent. Notwithstanding such consent, Landlord
may revoke its consent upon: (1) Tenant's failure to remain in full compliance
with applicable environmental permits and/or any other requirements under any
federal, state, or local law, ordinance, order, rule, regulation, code or any
other governmental restriction or requirement (including but not limited to
CERCLA and RCRA) related to environmental safety, human health, or employee
safety; (2) the Tenant's business
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operations pose or potentially pose a human health risk to other tenants; or
(3) the Tenant expands its use, storage, or treatment of any Hazardous
Material(s) in a manner inconsistent with the safe operation of a shopping
center. Should Landlord consent in writing to Tenant bringing, using, storing
or treating any Hazardous Material(s) in or upon the Premises, Tenant shall
strictly obey and adhere to any and all federal, state or local laws,
ordinances, orders, rules, regulations, codes or any other governmental
restrictions or requirements (including but not limited to CERCLA and RCRA)
which in any way regulate, govern or impact Tenant's possession, use, storage,
treatment or disposal of said Hazardous Material(s). In addition, Tenant
represents and warrants to Landlord that (1) Tenant shall apply for and remain
in compliance with any and all federal, state or local permits in regard to
Hazardous Materials; (2) Tenant shall report to any and all applicable
governmental authorities any release of reportable quantities of any Hazardous
Material(s) as required by any and all federal, state or local laws,
ordinances, orders, rules, regulations, codes or any other governmental
restrictions or requirements; (3) Tenant, within five (5) days of receipt,
shall send to Landlord a copy of any notice, order, inspection report, or other
document issued by any governmental authority relevant to the Tenant's
compliance status with environmental or health and safety laws; and, (4) Tenant
shall remove from the Premises all Hazardous Materials at the termination of
this Lease.
18. Governing Law. The provisions of this Lease shall be governed
by the laws of the State of Minnesota. This Lease may not be amended except in
writing signed by all of the parties. No waiver of any provision hereunder
shall be effective unless in writing signed by the party waiving its rights.
19. Complete Agreement. This Lease constitutes the entire
agreement between Landlord and Tenant, and there are no other oral or written
agreements or inducements between them with respect to the Premises.
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IN WITNESS WHEREOF, the parties hereto have executed this Lease
Agreement as of the date first written above.
S&D LAND HOLDINGS, INC.,
a Minnesota corporation
By
------------------------------------
Its
------------------------------------
FAMOUS DAVE'S OF MINNEAPOLIS, INC.,
a Minnesota corporation
By
------------------------------------
Its
------------------------------------
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<PAGE> 1
EXHIBIT 10.2
HIGHLAND PARK SITE
LEASE AGREEMENT
This Lease is made effective January 1, 1996, by S&D Land Holdings,
Inc., a Minnesota corporation ("Landlord"), and Famous Dave's of Minneapolis,
Inc., a Minnesota corporation ("Tenant").
RECITALS:
A. S&D Land Holdings, Inc. ("S&D") is the fee owner of
approximately 2.3 acres of vacant land legally described as ("Premises"):
Parcel 1: Lots 2, 3 and 4, Block 1, Hathaway Addition
Parcel 2: Lots 1, 2 and 3, Block 1, Oasis Addition to St. Paul
Parcel 3: Lots 1, 2 and 3, Block 1, Major's Addition, Ramsey
County, Minnesota and that part of the Northeasterly 1/2 of
Leland Street, vacated, lying between the extensions across
said street of the Northwesterly line of said Lot 1 and the
Southeasterly line of said Lot 3
Parcel 4: That part of vacated alley adjacent to Lot 3, Block
1, Oasis Addition to St. Paul, accruing thereto
which Premises is located in Ramsey County, Minnesota.
B. Landlord desires to lease the Premises to Tenant and Tenant
desires to lease the Premises from Landlord.
C. Tenant desires to construct a barbeque restaurant on the
Premises.
NOW, THEREFORE, the parties agree as follows:
1. Lease Agreement. Landlord hereby leases the Premises to
Tenant and Tenant hereby leases the Premises from Landlord subject to the terms
and conditions contained herein.
2. Term. The term of this Lease shall commence January 1, 1996
("Commencement Date") and, unless earlier terminated or extended as provided
herein, shall terminate on December 31, 2005 ("Initial Term").
3. Extended Term. Tenant shall have the option to extend the
term of this Lease for two terms of five (5) years ("Extended Term") by giving
Landlord written notice not later than (60) days prior to the expiration of the
Initial Term of this Lease so long as Tenant is not in default in the
performance of any covenant, agreement or condition hereunder. If Tenant fails
to give such 60 day
<PAGE> 2
written notice, it shall be deemed to have waived its right to the Extended
Terms and shall vacate the Premises at the expiration of the Initial Term.
4. Rent. Tenant will pay rent of $3,741.66 per month ("Rent") to
Landlord commencing on the Commencement Date and payable in advance on the
first day of each month thereafter during the first Lease year. Rent shall be
increased on January 1, 1997 and each succeeding January 1st thereafter until
the expiration of the Initial Term or any Extended Term according to the
following computation:
Each January 1st, Rent for such calendar year will be
increased (but not decreased) by the percentage difference
between the Consumer Price Index published by the Bureau of
Labor Statistics of the United States Department of Labor,
U.S. City Average, All items and Major Group Figures for Urban
Wage Earners and Clerical Workers (1982-84=100) ("CPI") for
the preceding month of December and the CPI for the base year.
For purposes of this Lease, the base year is 1995 ("Base
Year") and the price index for the Base Year shall mean the
average of the monthly indexes for each of the twelve months
(12) of the Base Year. In no event should the Rent payable in
any year be reduced during the next subsequent year due to a
decrease in the CPI.
5. Additional Rent. Tenant shall pay before penalty attaches,
all costs of maintenance, repairs, utilities, real estate and any other taxes,
insurance and any and all other expenses necessary in connection with the
operation or maintenance of the Premises ("Additional Rent").
6. Development and Use of Premises.
a. Tenant may construct and develop the Premises into a
restaurant/entertainment facility ("Improvements") at Tenants sole cost and
expense and in accordance with all Legal Requirements. Construction of the
Improvements shall not commence until Landlord has approved the plans and
specifications thereof. Landlord shall proceed with diligence to review the
plans and specifications and immediately notify Tenant of its approval or
disapproval. Tenant, at its cost and expense, shall obtain Builders Risk and
workers compensation insurance during construction of the Improvements. Tenant
shall comply with the requirements set forth in Section 9 in connection with
construction of Improvements.
b. Tenant may use and occupy the Premises solely for
restaurant/entertainment purposes and for no other purpose unless Tenant has
first obtained Landlord's written consent. Tenant shall not use or occupy the
Premises for any unlawful purpose, and will comply with all present and future
laws, statutes, ordinances, orders, rules, codes, regulations, decrees and
requirements of all governmental units (including any agency, department,
commission, board, bureau or subdivision thereof) having jurisdiction over the
Premises (collectively "Legal Requirements").
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<PAGE> 3
c. Landlord, its agents, contractors or employees may
enter the Premises at reasonable hours to inspect the Premises and at any time
in response to an emergency.
7. Assignment and Subletting.
a. There shall be no Assignment or Subletting of the
Premises by Tenant without in each case, obtaining the prior written consent of
Landlord, which consent may be granted or withheld in Landlord's sole
discretion.
b. Landlord shall have the right to transfer and assign,
in whole or in part, all of its rights and obligations hereunder.
8. Maintenance and Repair.
a. Tenant shall, at all time during the term of this
Lease, at its sole cost and expense, keep and maintain the Premises (including
without limitation all Improvements, fixtures, and equipment on the Premises)
in good order, repair and condition, and will make all repairs and replacements
including, but not limited to heating, ventilating and air conditioning
systems, structural components of the Improvements, down spouts, fire sprinkler
system, dock bumpers, lawn maintenance, pest control and extermination, and
trash pick-up and removal. Tenant shall repair and pay for any destruction
caused by any act or omission of Tenant or Tenant's agents, employees,
invitees, licensees or visitors, but shall not be obligated to pay for
destruction to the Premises caused by the negligence of Landlord, its agents or
employees.
b. Tenant agrees to maintain, at Tenant's sole cost and
expense all Improvements, fixtures and equipment installed in the Premises; to
use the Premises in a prudent and orderly manner; to suffer no waste or injury
to the Premises or any Improvements or fixtures therein; and at the expiration
or other termination of this Lease, to surrender the same with all Improvements
in first class condition, except for ordinary wear and tear and destruction by
insured casualty.
c. In the event Tenant fails to make the repairs or
maintain the Premises as required hereunder, Landlord may make such repairs or
perform such maintenance items at the expense of Tenant which expense shall be
collected as Additional Rent.
9. Alterations; Signs; Equipment.
a. Tenant will not make or permit anyone to make any
alterations, decorations, additions or improvements, structural or otherwise,
in or to the Premises without first obtaining the prior written consent of
Landlord which consent shall not be unreasonably withheld or delayed. All
alterations, decorations, additions or improvements shall be made in accordance
with all Legal Requirements and insurance guidelines and shall be performed in
a good and workmanlike manner by contractors approved by Landlord.
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<PAGE> 4
b. Upon completion of any alterations, decorations,
additions or Improvements, Tenant shall deliver to Landlord evidence of
payment, contractors' affidavits and full and final lien waivers for all labor,
services, or materials performed or supplied in connection with such
alteration, decoration, addition or Improvement. Tenant shall indemnify,
defend (at Landlord's request and with counsel approved by Landlord) and hold
Landlord harmless from and against all losses, costs, damages, claims,
liabilities, causes of action and expenses (including attorneys' fees and
disbursements, whether suit is commenced or not) arising out of or relating to
any alterations, decorations, additions or Improvements that Tenant or any of
its contractors make to the Premises, including any occasioned by the filing of
any mechanic's, material supplier's, construction or other liens or claims (and
all costs or expenses associated therewith) asserted, filed or arising out of
any such work. Without limiting the generality of the foregoing, Tenant shall
repair or cause to be repaired at its expense all damage caused by any of its
contractors, subcontractors or their employees or agents. Tenant shall
reimburse Landlord for any costs incurred by Landlord to repair any damage
caused by any of Tenant's contractors. Tenant shall also reimburse Landlord
upon demand for any costs Landlord may incur to have an engineer review all
mechanical, structural, electrical, plumbing and life safety systems installed
by any of Tenant's contractors.
c. All alterations, decorations, additions or
Improvements in or to the Premises made by Tenant shall become the property of
Landlord upon the expiration or termination of this Lease and shall remain upon
and be surrendered with the Premises as a part thereof without disturbance or
injury, unless Landlord requires specific items thereof to be removed by Tenant
at Tenant's sole cost and expense, in which event Tenant shall remove the same
prior to the expiration or termination of this Lease and shall repair any
damage caused thereby.
d. Tenant shall not place or maintain any sign,
advertisement or notice on any part of the outside of the Premises or any area
visible from outside the Premises, without first obtaining the prior written
consent of Landlord, which consent shall not be unreasonably withheld or
delayed. All signage approved by Landlord shall be in conformance with all
Legal Requirements.
10. Casualty and Insurance.
a. Substantial Destruction. If the Premises should be
totally destroyed by fire or other casualty so that rebuilding cannot
reasonably be completed within ninety days after such destruction, Tenant's
obligations to pay Rent and Additional Rent shall abate from the date of such
destruction and either Landlord or Tenant shall have the right to terminate
this Lease by giving written notice thereof to each other within thirty (30)
days after the date of such destruction.
b. Partial Destruction. If the Premises should be
partially damaged by fire or other casualty, and rebuilding or repairs can
reasonably be completed within ninety days from the date of the destruction
(without taking into account the availability of funds or insurance proceeds),
this Lease shall not terminate, and Tenant shall at its sole risk and expense
proceed with reasonable diligence to rebuild or repair the building or other
improvements to substantially the same condition in which they existed prior to
the destruction. There shall be no abatement of Rent or Additional
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<PAGE> 5
Rent following such destruction. In the event that Tenant fails to complete
the necessary repairs or rebuilding within one hundred eighty (180) days from
the date of the destruction (force majeure excepted), Landlord may at its
option terminate this Lease by delivering written notice of termination to
Tenant, whereupon all rights and obligations under this Lease shall cease to
exist.
c. Insurance. Tenant shall maintain at its expense
standard fire and extended coverage, or "all risk" policy of insurance covering
one hundred percent (100%) replacement cost on (i) the Premises, (ii) all of
its personal property, including removable trade fixtures, located in the
Premises and (ii) all of the Improvements and any improvements (including
fixtures) made by, for or on behalf of Tenant. Landlord shall be named as an
additional loss payee with respect to the insurance described herein.
Tenant shall maintain commercial general liability occurrence
policy insurance with the premiums thereon fully paid on or before the due
dates which affords minimum protection (which may be affected by primary and/or
excess coverage) of not less than $2,000,000 combined single limit provided
Tenant shall carry such greater limits of coverage as Landlord may deem
reasonable from time to time. Landlord shall be named as an additional insured
on Tenant's policy. Tenant shall deliver to Landlord certificates evidencing
maintenance of the insurance required herein.
d. Insurance Carrier. Any insurance required under this
Section shall be issued by a company authorized to do business in the State of
Minnesota and having an A.M. Best & Company, Inc. rating of A or higher and a
financial size category of not less than X and shall require thirty (30) days
advance notice to Landlord before cancellation or alteration. Tenant shall
deliver to Landlord certificates evidencing maintenance of the insurance
required herein.
e. Waiver of Subrogation. Landlord and Tenant each
hereby waive and release each other from any loss or damages arising from any
cause covered by insurance against each other, their agents, officers and
employees, by any reason, regardless of cause or origin, including the
negligence or willful misconduct of Landlord or Tenant and their agents,
officers and employees. Tenant agrees to immediately give its insurance
company which has issued policies of insurance covering all risk of direct
physical loss, written notice of the terms of the mutual waivers contained in
this section and to have the insurance policy properly endorsed, if necessary,
to prevent the invalidation of the insurance coverages by reason of the mutual
waivers.
11. Condemnation.
a. Total Taking. If, by exercise of the right of
eminent domain or by conveyance made in response to the threat of the exercise
of that right (in either case a "taking"), all of the Premises are taken or if
so much of the Premises are taken that the Premises (even if the restorations
described in subparagraph (b) were to be made) cannot be used by Tenant for the
purposes for which they were used immediately before the taking, this Lease
will end on the earlier of the vesting of title to the Premises in the
condemning authority, or the taking of possession of the Premises by the
condemning authority (in either case the"Ending Date"). If this Lease ends
according to this
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<PAGE> 6
subparagraph (a), prepaid rent will be appropriately prorated to the Ending
Date. The award in a taking subject to this subparagraph (a) will be allocated
according to subparagraph (d).
b. Partial Taking. If, after a taking, so much of the
Premises remains that the Premises can be used for substantially the same
purposes for which they were used immediately before the taking, (i) this Lease
will end on the Ending Date as to the part of the Premises that is taken, (ii)
prepaid rent will be appropriately allocated to the part of the Premises that
is taken and prorated to the Ending Date, (iii) beginning on the day after the
Ending Date, Rent for so much of the Premises as remains will be reduced in the
proportion of the floor area of the building remaining after the taking to the
floor area of the building before the taking, (iv) at its cost, Tenant will
restore so much of the Premises as remains to a sound architectural unit
substantially suitable for the purposes for which they were used immediately
before the taking, using good workmanship and new first class materials, all
according to Section 9, (v) upon the completion of restoration according to
clause (iv), Landlord will pay Tenant the lesser of the net award made to
Landlord on account of the taking (after deducting from the total award,
attorneys', appraisers' and other costs incurred in connection with obtaining
the award, and amounts paid to the holders of mortgages affecting the Premises)
or Tenant's actual out-of-pocket cost of restoring the Premises, and (vi)
Landlord will keep the balance of the net award.
c. Tenant's Award. In connection with any taking
subject to subparagraph (a) or (b), Tenant may prosecute its own claim by
separate proceedings against the condemning authority for damages legally due
to it (such as the loss of fixtures that Tenant was entitled to remove, and
moving expenses) only so long as Tenant's award does not diminish or otherwise
adversely affect Landlord's award.
d. Allocation of an Award for a Total Taking. If this
Lease ends according to subparagraph (a), the condemnation award will be paid
in the order in this subparagraph to the extent it is sufficient:
i. First, Landlord will be reimbursed for its
attorneys' fees, appraisal fees, and other costs incurred in prosecuting the
claim for an award;
ii. Second, Landlord will be paid for lost Rent
and the value of the reversion (excluding any future Extended Terms) as of the
Ending Date;
iii. Third, Tenant will be paid its adjusted book
value as of the date of the taking of its improvements (excluding trade
fixtures) made to the Premises. In computing its adjusted book value,
improvements will be conclusively presumed to have been depreciated or
amortized for federal income tax purposes over their useful lives with a
reasonable salvage value;
iv. Fourth, the balance will be divided equally
between Landlord and Tenant.
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<PAGE> 7
12. Default.
a. Any one of the following events shall constitute an
event of default ("Event of Default"):
i. Tenant shall fail to pay any installment of
Rent and/or Additional Rent as herein provided, and such default shall continue
for a period of five (5) days after notice from Landlord;
ii. Tenant shall violate or fail to perform any
of the other conditions, covenants or agreements herein made by Tenant and such
default shall continue for thirty (30) days after notice from Landlord;
provided, however, that if the nature of such default is such that Tenant can
cure the default, but not within thirty (30) days, then the Event of Default
shall be suspended for a period not in excess of thirty (30) additional days so
long as Tenant commences to cure the default within said thirty (30) day period
and thereafter diligently and continuously prosecutes the curing of the default
to completion with such additional thirty (30) day period, and so long as
continuation of the default does not create material risk to the Premises or to
persons using the Premises;
iii. Tenant shall fail to commence occupancy of
the Premises promptly upon the Commencement Date or shall vacate or abandon the
Premises or any portion thereof at any time during the Initial Term or any
Extended Terms thereof; or
iv. If (1) the interest of Tenant under this
Lease shall be levied upon under execution or other legal process, (2) any
petition shall be filed by or against Tenant to declare Tenant bankrupt or to
delay, reduce or modify Tenant's debts or obligations, (3) Tenant shall be
declared insolvent according to law, or (4) any assignment of Tenant's property
shall be made for the benefit of creditors, or a receiver or trustee is
appointed for Tenant or its property (provided that no such levy, execution,
legal process or petition filed against Tenant shall constitute a breach of
this Lease if Tenant shall vigorously contest the same by appropriate
proceedings and shall remove or vacate the same within thirty (30) days from
the date of its creation, service or filing).
v. If Tenant is a partnership or other entity
and Tenant shall be dissolved or otherwise liquidated, except in connection
with a merger, consolidation or other reorganization resulting in continuation
of Tenant's business substantially as previously conducted, then Landlord may
treat the occurrence of any one or more of the foregoing events as a breach of
this Lease and thereupon, at Landlord's option, may have any one or more of the
following described remedies in addition to all other rights and remedies
provided at law or in equity.
b. If an Event of Default shall have occurred and be
continuing:
i. Landlord may terminate this Lease and
forthwith repossess the Premises and be entitled to recover as damages a sum of
money equal to the total of (i) the cost of recovering the Premises (including
attorneys' fees, disbursements of counsel and any costs of suit),
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(ii) the unpaid Rent earned at the time of termination, plus interest thereon
at the Interest Rate, (iii) the present value (discounted at the rate published
from time to time as the discount rate for the Federal Reserve Bank of
Minneapolis) of the balance of the Rent and/or Additional Rent for the
remainder of the Term less the present value (discounted at the same rate) of
the amount Tenant reasonably demonstrates that Landlord would in all likelihood
receive from leasing the Premises to another tenant for said period, taking
into account the cost of reletting, the then-current market conditions, the
time the Premises was vacant and other similar costs, and (iv) any other sum of
money and damages owed by Tenant to Landlord.
ii. Landlord may terminate Tenant's right of
possession (without terminating this Lease) and may repossess the Premises by
unlawful detainer suit or otherwise, without thereby releasing Tenant from any
liability hereunder and without demand or notice of any kind to Tenant and
without terminating this Lease, in which event Landlord may, but shall be under
no obligation to do so, relet the same for the account of Tenant for such rent
and upon such terms as shall be satisfactory to Landlord. For the purpose of
such reletting Landlord is authorized to decorate or to make any repairs,
changes, alterations or additions to the Premises as may be reasonably
necessary or desirable in Landlord's judgment, and (i) if Landlord shall fail
or refuse to relet the Premises, or (ii) if the same are relet and a sufficient
sum shall not be realized from such reletting (after first deducting therefrom,
for retention by Landlord), the unpaid Rent due hereunder earned but unpaid at
the time of reletting plus interest thereon at the Interest Rate, the cost of
recovering possession (including attorneys' fees, disbursements of counsel and
any costs of suit), all of the costs and expenses of such decorations, repairs,
changes, alterations and additions, the expense of such reletting and the cost
of collection of the rent accruing therefrom) to satisfy the Rent provided for
in this Lease to be paid, then (i) Tenant shall pay to Landlord as damages if
the Premises are not relet, a sum equal to the amount of the Rent reserved in
this Lease for such period or periods, plus the cost of recovering possession
of the Premises (including attorneys' fees and any costs of suit), the unpaid
Rent earned at the time of repossession plus interest thereon at the Interest
Rate, and the costs incurred in any attempt by Landlord to relet the Premises,
or (ii) if the Premises have been relet, the Tenant shall satisfy and pay any
such deficiency. Any such payments due Landlord shall be made upon demand
therefor from time to time and Tenant agrees that Landlord may file suit to
recover any sums falling due under the terms of this Section 12 from time to
time. No delivery to or recovery by Landlord of any portion due Landlord
hereunder shall be any defense in any action to recover any amount not
theretofore reduced to judgment in favor of Landlord, nor shall such reletting
be construed as an election on the part of Landlord to terminate this Lease
unless a written notice of such intention be given to Tenant by Landlord.
Notwithstanding any such reletting without termination, Landlord may at any
time thereafter elect to terminate this Lease for such previous breach.
c. In the event of a breach by Tenant of any of the
agreements, conditions, covenants or terms hereof, Landlord shall have the
right of injunction to restrain the same and the right to invoke any remedy
allowed by law or in equity whether or not other remedies, indemnities or
reimbursements are herein provided. The rights and remedies given to Landlord
in this Lease are
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<PAGE> 9
distinct, separate and cumulative remedies, and no one of them, whether or not
exercised by Landlord, shall be deemed to be in exclusion of any of the others.
d. In the interest of minimizing the time and expense of
any litigation between the parties hereto, Landlord and Tenant each hereby do
waive the right to trial by jury in any action, proceeding or counterclaim
brought by either of the parties hereto against the other on any matters
whatsoever arising out of or in any way connected with this Lease, the
relationship of Landlord and Tenant, Tenant's use or occupancy of the Premises,
and/or any claim of injury or damage, or for the enforcement of any remedy.
e. In addition to all other remedies of Landlord,
Landlord shall be entitled to reimbursement upon demand of all attorneys' fees
and disbursements of counsel incurred by Landlord in connection with any Event
of Default, whether suit is initiated or not.
f. Landlord shall in no event be considered to be in
default of Landlord's obligations hereunder until the expiration of a
reasonable time after notice of default from Tenant.
13. Landlord's Right to Cure Defaults; Late Payments.
If Tenant defaults in the making of any payment, or in the doing of
any act herein required to be made or done by Tenant, or does or suffers any
act prohibited herein, then Landlord may, but shall not be required to, make
such payment or do such act, or correct any damage caused by such prohibited
act and enter the Premises as appropriate in connection therewith. Tenant
shall reimburse Landlord on demand for all costs and expenses incurred by
Landlord in curing any such default plus a charge of ten percent (10%) of the
amount of such costs and expenses, together with interest thereon at the
Interest Rate from the date such sums are incurred by Landlord.
Notwithstanding the foregoing, the making of any such payment or the doing of
any such act by Landlord shall not operate to cure such default or to estop
Landlord from the pursuit of any remedy to which Landlord would otherwise be
entitled. If any installment of Rent is not paid by Tenant when due and
payable: (i) a one-time late charge in the amount of five percent (5%) of the
delinquent installment shall become immediately due and payable as compensation
to Landlord for administrative costs; and (ii) the unpaid balance due Landlord
shall bear interest at the Interest Rate from the date such installment became
due and payable to the date of payment thereof by Tenant, and such interest
shall constitute Additional Rent hereunder which shall be immediately due and
payable.
14. Covenant of Quiet Enjoyment. Subject to other terms of this
Lease, if Tenant shall pay the rent and comply with the terms and conditions of
this Lease to be performed by Tenant, Tenant shall, during the Term hereby
created, freely, peaceably and quietly occupy and enjoy the full possession of
the Premises, provided Landlord shall not be liable for any breach of such
covenants resulting from the actions or inaction of the Landlord.
15. Indemnification, Waiver and Release.
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a. Indemnification. Tenant shall indemnify and hold
Landlord, its officers, directors, shareholders, agents and employees harmless
from and against any and all demands, claims, fines, damages, losses,
liabilities, liens, judgments and expenses (including, without limitation,
attorneys' fees and court costs) incurred in connection with or arising from:
(i) the use or occupancy of the Premises by Tenant or any person claiming under
Tenant; (ii) any activity, work or thing done or permitted or suffered by
Tenant to be done in or about the Premises; (iii) any acts, omissions or
negligence of Tenant or any person claiming under Tenant or the contractors,
agents, employees, invitees or visitors of Tenant or any such person; (iv) any
breach, violation or nonperformance by Tenant, any person claiming under Tenant
or the employees, agents, contractors, invitees, or visitors of Tenant, (v) any
injury or damage to the person, property or business of Tenant, its employees,
agents, contractors, invitees, visitors, or any other person entering upon the
Premises under the express or implied invitation of Tenant; or (vi) any
actions taken by Landlord to enforce the foregoing right of indemnification
against Tenant, except if any of the above-listed events are the result of the
gross negligence or willful misconduct of Landlord, its directors, officers,
shareholders, agents or employees. If any action or proceeding is brought
against Landlord, its officers, shareholders, agents or employees by reason of
any such claim, Tenant, upon notice from Landlord, shall defend the claim at
Tenant's expense with counsel reasonably satisfactory to Landlord.
b. Waiver and Release. Tenant waives and releases all
claims against Landlord, its officers, shareholders, agents and employees with
respect to all matters arising out of Tenant's use and occupancy of the
Premises, except if the result of the gross negligence or wilful misconduct of
Landlord, its directors, officers, shareholders, agents or employees.
16. Mutual Estoppel. Either party may request from the other
party, an estoppel certificate to be executed in recordable form and to any
person designated in a written request which (a) ratifies this Lease; (b)
states the commencement and termination dates; and (c) certifies (i) that this
Lease is in full force and effect and has not been assigned, modified,
supplemented or amended (except by such writings as shall be stated), (ii) that
all conditions under this Lease to be performed have been satisfied (stating
exceptions, if any), (iii) that no defenses or offsets against the enforcement
of this Lease exist (or stating those claimed): (iv) as to advance rent, if
any, paid by Tenant, (v) the date to which Rent has been paid, (vi) the amount
of security deposited with Landlord, and such other information as may
reasonably be requested. Persons receiving such estoppel certificates shall be
entitled to rely upon them.
17. Hazardous Waste. Tenant shall not, without the prior written
consent of Landlord, cause or permit, knowingly or unknowingly, any Hazardous
Material (hereinafter defined) to be brought or remain upon, kept, used,
discharged, leaked, or emitted in or about, or treated at the Premises. As
used in this Lease, "Hazardous Material(s)" shall mean any hazardous, toxic or
radioactive substance, material, matter or waste which is or becomes regulated
by any federal, state or local law, ordinance, order, rule, regulation, code or
any other governmental restriction or requirement, and shall include asbestos,
petroleum products and the terms "Hazardous Substance" and "Hazardous Waste" as
defined in the Comprehensive Environmental Response, Compensation
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and Liability Act, as amended 42 U.S.C. Section 9601 et seq. ("CERCLA"), and
the Resource Conservation and Recovery Act, as amended, 42 U.S.C. Section
6901 et seq. ("RCRA"). To obtain Landlord's consent, Tenant shall prepare and
"Environmental Audit" for Landlord's review. Such Environmental Audit shall
list: (1) the name(s) of each Hazardous Material and a Material Safety Data
Sheet (MSDS) as required by the Occupational Safety and Health Act; (2) the
volume proposed to be used, stored and/or treated at the Premises; (3) the
purpose of such Hazardous Material; (4) the proposed on-premises storage
location(s); (5) the name(s) of the proposed off-premises disposal entity; and
(6) an emergency preparedness plan in the event of a release. Additionally,
the Environmental Audit shall include copies of all required federal, state,
and local permits concerning or related to the proposed use, storage, or
treatment of any Hazardous Material(s) at the Premises. Tenant shall submit a
new Environmental Audit whenever it proposes to use, store, or treat a new
Hazardous Material at the Premises or when the volume of existing Hazardous
Materials to be used, stored, or treated at the Premises expands by ten percent
(10%) during any thirty (30) day period. If Landlord, in its reasonable
judgment, finds the Environmental Audit acceptable, then Landlord shall deliver
to Tenant Landlord's written consent. Notwithstanding such consent, Landlord
may revoke its consent upon: (1) Tenant's failure to remain in full compliance
with applicable environmental permits and/or any other requirements under any
federal, state, or local law, ordinance, order, rule, regulation, code or any
other governmental restriction or requirement (including but not limited to
CERCLA and RCRA) related to environmental safety, human health, or employee
safety; (2) the Tenant's business operations pose or potentially pose a human
health risk to other tenants; or (3) the Tenant expands its use, storage, or
treatment of any Hazardous Material(s) in a manner inconsistent with the safe
operation of a shopping center. Should Landlord consent in writing to Tenant
bringing, using, storing or treating any Hazardous Material(s) in or upon the
Premises, Tenant shall strictly obey and adhere to any and all federal, state
or local laws, ordinances, orders, rules, regulations, codes or any other
governmental restrictions or requirements (including but not limited to CERCLA
and RCRA) which in any way regulate, govern or impact Tenant's possession, use,
storage, treatment or disposal of said Hazardous Material(s). In addition,
Tenant represents and warrants to Landlord that (1) Tenant shall apply for and
remain in compliance with any and all federal, state or local permits in regard
to Hazardous Materials; (2) Tenant shall report to any and all applicable
governmental authorities any release of reportable quantities of any Hazardous
Material(s) as required by any and all federal, state or local laws,
ordinances, orders, rules, regulations, codes or any other governmental
restrictions or requirements; (3) Tenant, within five (5) days of receipt,
shall send to Landlord a copy of any notice, order, inspection report, or other
document issued by any governmental authority relevant to the Tenant's
compliance status with environmental or health and safety laws; and, (4) Tenant
shall remove from the Premises all Hazardous Materials at the termination of
this Lease.
18. Governing Law. The provisions of this Lease shall be governed
by the laws of the State of Minnesota. This Lease may not be amended except in
writing signed by all of the parties. No waiver of any provision hereunder
shall be effective unless in writing signed by the party waiving its rights.
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19. Complete Agreement. This Lease constitutes the entire
agreement between Landlord and Tenant, and there are no other oral or written
agreements or inducements between them with respect to the Premises.
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IN WITNESS WHEREOF, the parties hereto have executed this Lease
Agreement as of the date first written above.
S&D LAND HOLDINGS, INC.,
a Minnesota corporation
By_______________________________
Its______________________________
FAMOUS DAVE'S OF MINNEAPOLIS, INC.,
a Minnesota corporation
By________________________________
Its_______________________________
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EXHIBIT 10.3
MINNETONKA SITE
LEASE AGREEMENT
This Lease is made effective January 15, 1996, by S&D Land Holdings,
Inc., a Minnesota corporation ("Landlord"), and Famous Dave's of Minneapolis,
Inc., a Minnesota corporation ("Tenant").
RECITALS:
A. S&D Land Holdings, Inc. ("S&D") is the fee owner of the real
estate legally described as Lot 2, Block 1, Tower Hill Addition and the West 45
feet of Lot 3, Block 1, Tower Hill Addition containing approximately 102,575
square feet ("Property") which Property is located at Interstate 494 and
Highway 7 in Hennepin County, Minnetonka, Minnesota.
B. A restaurant building and parking lot ("Improvements") are
located upon the Property (together the Property and Improvements are referred
to as "Premises").
C. Landlord desires to lease the Premises to Tenant and Tenant
desires to lease the Premises from Landlord.
NOW, THEREFORE, the parties agree as follows:
1. Lease Agreement. Landlord hereby leases the Premises to
Tenant and Tenant hereby leases the Premises from Landlord subject to the terms
and conditions contained herein.
2. Term. The term of this Lease shall commence January 15, 1996
("Commencement Date") and, unless earlier terminated or extended as provided
herein, shall terminate on January 14, 2006 ("Initial Term").
3. Extended Term. Tenant shall have the option to extend the
term of this Lease for two terms of five (5) years ("Extended Term") by giving
Landlord written notice not later than (60) days prior to the expiration of the
Initial Term of this Lease so long as Tenant is not in default in the
performance of any covenant, agreement or condition hereunder. If Tenant fails
to give such 60 day written notice, it shall be deemed to have waived its right
to the Extended Terms and shall vacate the Premises at the expiration of the
Initial Term.
4. Rent. Tenant will pay rent of $10,344.08 per month ("Rent")
to Landlord commencing on the Commencement Date and payable in advance on the
first day of each month thereafter during the first Lease year. Rent shall be
increased on January 15, 1997 and each succeeding January 15th thereafter until
the expiration of the Initial Term or any Extended Term according to the
following computation:
Each January 15th, Rent for such calendar year will be
increased (but not decreased) by the percentage difference
between the Consumer
<PAGE> 2
Price Index published by the Bureau of Labor Statistics
of the United States Department of Labor, U.S. City Average,
All items and Major Group Figures for Urban Wage Earners and
Clerical Workers (1982-84=100) ("CPI") for the preceding month
of December and the CPI for the base year. For purposes of
this Lease, the base year is 1995 ("Base Year") and the price
index for the Base Year shall mean the average of the monthly
indexes for each of the twelve months (12) of the Base Year.
In no event should the Rent payable in any year be reduced
during the next subsequent year due to a decrease in the CPI.
5. Additional Rent. Tenant shall pay before penalty attaches,
all costs of maintenance, repairs, utilities, real estate and any other taxes,
insurance and any and all other expenses necessary in connection with the
operation or maintenance of the Premises ("Additional Rent").
6. Use.
a. Tenant may use and occupy the Premises solely for
restaurant/entertainment purposes and for no other purpose unless Tenant has
first obtained Landlord's written consent. Tenant shall not use or occupy the
Premises for any unlawful purpose, and will comply with all present and future
laws, statutes, ordinances, orders, rules, codes, regulations, decrees and
requirements of all governmental units (including any agency, department,
commission, board, bureau or subdivision thereof) having jurisdiction over the
Premises (collectively "Legal Requirements").
b. Landlord, its agents, contractors or employees may
enter the Premises at reasonable hours to inspect the Premises and at any time
in response to an emergency.
7. Assignment and Subletting.
a. There shall be no Assignment or Subletting of the
Premises by Tenant without in each case, obtaining the prior written consent of
Landlord, which consent may be granted or withheld in Landlord's sole
discretion.
b. Landlord shall have the right to transfer and assign,
in whole or in part, all of its rights and obligations hereunder.
8. Maintenance and Repair.
a. Tenant shall, at all time during the term of this
Lease, at its sole cost and expense, keep and maintain the Premises (including
without limitation all Improvements, fixtures, and equipment on the Premises)
in good order, repair and condition, and will make all repairs and replacements
including, but not limited to heating, ventilating and air conditioning
systems, structural components of the Improvements, down spouts, fire sprinkler
system, dock bumpers, lawn
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maintenance, pest control and extermination, and trash pick-up and removal.
Tenant shall repair and pay for any destruction caused by any act or omission
of Tenant or Tenant's agents, employees, invitees, licensees or visitors, but
shall not be obligated to pay for destruction to the Premises caused by the
negligence of Landlord, its agents or employees.
b. Tenant agrees to maintain, at Tenant's sole cost and
expense all improvements, fixtures and equipment installed in the Premises; to
use the Premises in a prudent and orderly manner; to suffer no waste or injury
to the Premises or any improvements or fixtures therein; and at the expiration
or other termination of this Lease, to surrender the same with all improvements
in the same order and condition in which they were on the Commencement Date, or
in such better condition as they may thereafter be put, except for ordinary
wear and tear and destruction by insured casualty.
c. In the event Tenant fails to make the repairs or
maintain the Premises as required hereunder, Landlord may make such repairs or
perform such maintenance items at the expense of Tenant which expense shall be
collected as Additional Rent.
9. Alterations; Signs; Equipment.
a. Tenant will not make or permit anyone to make any
alterations, decorations, additions or improvements, structural or otherwise,
in or to the Premises without first obtaining the prior written consent of
Landlord which consent shall not be unreasonably withheld or delayed. All
alterations, decorations, additions or improvements shall be made in accordance
with all Legal Requirements and insurance guidelines and shall be performed in
a good and workmanlike manner by contractors approved by Landlord.
b. Upon completion of any alterations, decorations,
additions or improvements, Tenant shall deliver to Landlord evidence of
payment, contractors' affidavits and full and final lien waivers for all labor,
services, or materials performed or supplied in connection with such
alteration, decoration, addition or improvement. Tenant shall indemnify,
defend (at Landlord's request and with counsel approved by Landlord) and hold
Landlord harmless from and against all losses, costs, damages, claims,
liabilities, causes of action and expenses (including attorneys' fees and
disbursements, whether suit is commenced or not) arising out of or relating to
any alterations, decorations, additions or improvements that Tenant or any of
its contractors make to the Premises, including any occasioned by the filing of
any mechanic's, material supplier's, construction or other liens or claims (and
all costs or expenses associated therewith) asserted, filed or arising out of
any such work. Without limiting the generality of the foregoing, Tenant shall
repair or cause to be repaired at its expense all damage caused by any of its
contractors, subcontractors or their employees or agents. Tenant shall
reimburse Landlord for any costs incurred by Landlord to repair any damage
caused by any of Tenant's contractors. Tenant shall also reimburse Landlord
upon demand for any costs Landlord may incur to have an engineer review all
mechanical, structural, electrical, plumbing and life safety systems installed
by any of Tenant's contractors.
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<PAGE> 4
c. All alterations, decorations, additions or
improvements in or to the Premises made by Tenant shall become the property of
Landlord upon the expiration or termination of this Lease and shall remain upon
and be surrendered with the Premises as a part thereof without disturbance or
injury, unless Landlord requires specific items thereof to be removed by Tenant
at Tenant's sole cost and expense, in which event Tenant shall remove the same
prior to the expiration or termination of this Lease and shall repair any
damage caused thereby.
d. Tenant shall not place or maintain any sign,
advertisement or notice on any part of the outside of the Premises or any area
visible from outside the Premises, without first obtaining the prior written
consent of Landlord, which consent shall not be unreasonably withheld or
delayed. All signage approved by Landlord shall be in conformance with all
Legal Requirements.
10. Casualty and Insurance.
a. Substantial Destruction. If the Premises should be
totally destroyed by fire or other casualty so that rebuilding cannot
reasonably be completed within ninety days after such destruction, Tenant's
obligations to pay Rent and Additional Rent shall abate from the date of such
destruction and either Landlord or Tenant shall have the right to terminate
this Lease by giving written notice thereof to each other within thirty (30)
days after the date of such destruction.
b. Partial Destruction. If the Premises should be
partially damaged by fire or other casualty, and rebuilding or repairs can
reasonably be completed within ninety days from the date of the destruction
(without taking into account the availability of funds or insurance proceeds),
this Lease shall not terminate, and Tenant shall at its sole risk and expense
proceed with reasonable diligence to rebuild or repair the building or other
improvements to substantially the same condition in which they existed prior to
the destruction. There shall be no abatement of Rent or Additional Rent
following such destruction. In the event that Tenant fails to complete the
necessary repairs or rebuilding within one hundred eighty (180) days from the
date of the destruction (force majeure excepted), Landlord may at its option
terminate this Lease by delivering written notice of termination to Tenant,
whereupon all rights and obligations under this Lease shall cease to exist.
c. Insurance. Tenant shall maintain at its expense
standard fire and extended coverage, or "all risk" policy of insurance covering
one hundred percent (100%) replacement cost on (i) the Premises, (ii) all of
its personal property, including removable trade fixtures, located in the
Premises and (ii) all of the Improvements and any improvements (including
fixtures) made by, for or on behalf of Tenant. Landlord shall be named as an
additional loss payee with respect to the insurance described herein.
Tenant shall maintain commercial general liability occurrence
policy insurance with the premiums thereon fully paid on or before the due
dates which affords minimum protection (which may be affected by primary and/or
excess coverage) of not less than $2,000,000 combined single limit provided
Tenant shall carry such greater limits of coverage as Landlord may deem
reasonable from
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<PAGE> 5
time to time. Landlord shall be named as an additional insured on Tenant's
policy. Tenant shall deliver to Landlord certificates evidencing maintenance of
the insurance required herein.
d. Insurance Carrier. Any insurance required under this
Section shall be issued by a company authorized to do business in the State of
Minnesota and having an A.M. Best & Company, Inc. rating of A or higher and a
financial size category of not less than X and shall require thirty (30) days
advance notice to Landlord before cancellation or alteration. Tenant shall
deliver to Landlord certificates evidencing the insurance required herein.
e. Waiver of Subrogation. Landlord and Tenant each
hereby waive and release each other from any loss or damages arising from any
cause covered by insurance against each other, their agents, officers and
employees, by any reason, regardless of cause or origin, including the
negligence or willful misconduct of Landlord or Tenant and their agents,
officers and employees. Tenant agrees to immediately give its insurance
company which has issued policies of insurance covering all risk of direct
physical loss, written notice of the terms of the mutual waivers contained in
this section and to have the insurance policy properly endorsed, if necessary,
to prevent the invalidation of the insurance coverages by reason of the mutual
waivers.
11. Condemnation.
a. Total Taking. If, by exercise of the right of
eminent domain or by conveyance made in response to the threat of the exercise
of that right (in either case a "taking"), all of the Premises are taken or if
so much of the Premises are taken that the Premises (even if the restorations
described in subparagraph (b) were to be made) cannot be used by Tenant for the
purposes for which they were used immediately before the taking, this Lease
will end on the earlier of the vesting of title to the Premises in the
condemning authority, or the taking of possession of the Premises by the
condemning authority (in either case the "Ending Date"). If this Lease ends
according to this subparagraph (a), prepaid rent will be appropriately prorated
to the Ending Date. The award in a taking subject to this subparagraph (a)
will be allocated according to subparagraph (d).
b. Partial Taking. If, after a taking, so much of the
Premises remains that the Premises can be used for substantially the same
purposes for which they were used immediately before the taking, (i) this Lease
will end on the Ending Date as to the part of the Premises that is taken, (ii)
prepaid rent will be appropriately allocated to the part of the Premises that
is taken and prorated to the Ending Date, (iii) beginning on the day after the
Ending Date, Rent for so much of the Premises as remains will be reduced in the
proportion of the floor area of the building remaining after the taking to the
floor area of the building before the taking, (iv) at its cost, Tenant will
restore so much of the Premises as remains to a sound architectural unit
substantially suitable for the purposes for which they were used immediately
before the taking, using good workmanship and new first class materials, all
according to Section 9, (v) upon the completion of restoration according to
clause (iv), Landlord will pay Tenant the lesser of the net award made to
Landlord on account of the taking (after deducting from the total award,
attorneys', appraisers' and other costs incurred in connection with obtaining
the award, and amounts paid to the holders of mortgages affecting the
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<PAGE> 6
Premises) or Tenant's actual out-of-pocket cost of restoring the Premises, and
(vi) Landlord will keep the balance of the net award.
c. Tenant's Award. In connection with any taking
subject to subparagraph (a) or (b), Tenant may prosecute its own claim by
separate proceedings against the condemning authority for damages legally due
to it (such as the loss of fixtures that Tenant was entitled to remove, and
moving expenses) only so long as Tenant's award does not diminish or otherwise
adversely affect Landlord's award.
d. Allocation of an Award for a Total Taking. If this
Lease ends according to subparagraph (a), the condemnation award will be paid
in the order in this subparagraph to the extent it is sufficient:
i. First, Landlord will be reimbursed for its
attorneys' fees, appraisal fees, and other costs incurred in prosecuting the
claim for an award;
ii. Second, Landlord will be paid for lost Rent
and the value of the reversion (excluding any future Extended Terms) as of the
Ending Date;
iii. Third, Tenant will be paid its adjusted book
value as of the date of the taking of its improvements (excluding trade
fixtures) made to the Premises. In computing its adjusted book value,
improvements will be conclusively presumed to have been depreciated or
amortized for federal income tax purposes over their useful lives with a
reasonable salvage value;
iv. Fourth, the balance will be divided equally
between Landlord and Tenant.
12. Default.
a. Any one of the following events shall constitute an
event of default ("Event of Default"):
i. Tenant shall fail to pay any installment of
Rent and/or Additional Rent as herein provided, and such default shall continue
for a period of five (5) days after notice from Landlord;
ii. Tenant shall violate or fail to perform any
of the other conditions, covenants or agreements herein made by Tenant and such
default shall continue for thirty (30) days after notice from Landlord;
provided, however, that if the nature of such default is such that Tenant can
cure the default, but not within thirty (30) days, then the Event of Default
shall be suspended for a period not in excess of thirty (30) additional days so
long as Tenant commences to cure the default within said thirty (30) day period
and thereafter diligently and continuously prosecutes the curing of
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the default to completion with such additional thirty (30) day period, and
so long as continuation of the default does not create material risk to the
Premises or to persons using the Premises;
iii. Tenant shall fail to commence occupancy of
the Premises promptly upon the Commencement Date or shall vacate or abandon the
Premises or any portion thereof at any time during the Initial Term or any
Extended Terms thereof; or
iv. If (1) the interest of Tenant under this
Lease shall be levied upon under execution or other legal process, (2) any
petition shall be filed by or against Tenant to declare Tenant bankrupt or to
delay, reduce or modify Tenant's debts or obligations, (3) Tenant shall be
declared insolvent according to law, or (4) any assignment of Tenant's property
shall be made for the benefit of creditors, or a receiver or trustee is
appointed for Tenant or its property (provided that no such levy, execution,
legal process or petition filed against Tenant shall constitute a breach of
this Lease if Tenant shall vigorously contest the same by appropriate
proceedings and shall remove or vacate the same within thirty (30) days from
the date of its creation, service or filing).
v. If Tenant is a partnership or other entity
and Tenant shall be dissolved or otherwise liquidated, except in connection
with a merger, consolidation or other reorganization resulting in continuation
of Tenant's business substantially as previously conducted, then Landlord may
treat the occurrence of any one or more of the foregoing events as a breach of
this Lease and thereupon, at Landlord's option, may have any one or more of the
following described remedies in addition to all other rights and remedies
provided at law or in equity.
b. If an Event of Default shall have occurred and be
continuing:
i. Landlord may terminate this Lease and
forthwith repossess the Premises and be entitled to recover as damages a sum of
money equal to the total of (i) the cost of recovering the Premises (including
attorneys' fees, disbursements of counsel and any costs of suit), (ii) the
unpaid Rent earned at the time of termination, plus interest thereon at the
Interest Rate, (iii) the present value (discounted at the rate published from
time to time as the discount rate for the Federal Reserve Bank of Minneapolis)
of the balance of the Rent and/or Additional Rent for the remainder of the Term
less the present value (discounted at the same rate) of the amount Tenant
reasonably demonstrates that Landlord would in all likelihood receive from
leasing the Premises to another tenant for said period, taking into account the
cost of reletting, the then-current market conditions, the time the Premises
was vacant and other similar costs, and (iv) any other sum of money and damages
owed by Tenant to Landlord.
ii. Landlord may terminate Tenant's right of
possession (without terminating this Lease) and may repossess the Premises by
unlawful detainer suit or otherwise, without thereby releasing Tenant from any
liability hereunder and without demand or notice of any kind to Tenant and
without terminating this Lease, in which event Landlord may, but shall be under
no obligation to do so, relet the same for the account of Tenant for such rent
and upon such terms as shall be satisfactory to Landlord. For the purpose of
such reletting Landlord is authorized to
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decorate or to make any repairs, changes, alterations or additions to the
Premises as may be reasonably necessary or desirable in Landlord's judgment,
and (i) if Landlord shall fail or refuse to relet the Premises, or (ii) if the
same are relet and a sufficient sum shall not be realized from such reletting
(after first deducting therefrom, for retention by Landlord), the unpaid Rent
due hereunder earned but unpaid at the time of reletting plus interest thereon
at the Interest Rate, the cost of recovering possession (including attorneys'
fees, disbursements of counsel and any costs of suit), all of the costs and
expenses of such decorations, repairs, changes, alterations and additions, the
expense of such reletting and the cost of collection of the rent accruing
therefrom) to satisfy the Rent provided for in this Lease to be paid, then (i)
Tenant shall pay to Landlord as damages if the Premises are not relet, a sum
equal to the amount of the Rent reserved in this Lease for such period or
periods, plus the cost of recovering possession of the Premises (including
attorneys' fees and any costs of suit), the unpaid Rent earned at the time of
repossession plus interest thereon at the Interest Rate, and the costs incurred
in any attempt by Landlord to relet the Premises, or (ii) if the Premises have
been relet, the Tenant shall satisfy and pay any such deficiency. Any such
payments due Landlord shall be made upon demand therefor from time to time and
Tenant agrees that Landlord may file suit to recover any sums falling due under
the terms of this Section 12 from time to time. No delivery to or recovery by
Landlord of any portion due Landlord hereunder shall be any defense in any
action to recover any amount not theretofore reduced to judgment in favor of
Landlord, nor shall such reletting be construed as an election on the part of
Landlord to terminate this Lease unless a written notice of such intention be
given to Tenant by Landlord. Notwithstanding any such reletting without
termination, Landlord may at any time thereafter elect to terminate this Lease
for such previous breach.
c. In the event of a breach by Tenant of any of the
agreements, conditions, covenants or terms hereof, Landlord shall have the
right of injunction to restrain the same and the right to invoke any remedy
allowed by law or in equity whether or not other remedies, indemnities or
reimbursements are herein provided. The rights and remedies given to Landlord
in this Lease are distinct, separate and cumulative remedies, and no one of
them, whether or not exercised by Landlord, shall be deemed to be in exclusion
of any of the others.
d. In the interest of minimizing the time and expense of
any litigation between the parties hereto, Landlord and Tenant each hereby do
waive the right to trial by jury in any action, proceeding or counterclaim
brought by either of the parties hereto against the other on any matters
whatsoever arising out of or in any way connected with this Lease, the
relationship of Landlord and Tenant, Tenant's use or occupancy of the Premises,
and/or any claim of injury or damage, or for the enforcement of any remedy.
e. In addition to all other remedies of Landlord,
Landlord shall be entitled to reimbursement upon demand of all attorneys' fees
and disbursements of counsel incurred by Landlord in connection with any Event
of Default, whether suit is initiated or not.
f. Landlord shall in no event be considered to be in
default of Landlord's obligations hereunder until the expiration of a
reasonable time after notice of default from Tenant.
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13. Landlord's Right to Cure Defaults; Late Payments.
If Tenant defaults in the making of any payment, or in the doing of
any act herein required to be made or done by Tenant, or does or suffers any
act prohibited herein, then Landlord may, but shall not be required to, make
such payment or do such act, or correct any damage caused by such prohibited
act and enter the Premises as appropriate in connection therewith. Tenant
shall reimburse Landlord on demand for all costs and expenses incurred by
Landlord in curing any such default plus a charge of ten percent (10%) of the
amount of such costs and expenses, together with interest thereon at the
Interest Rate from the date such sums are incurred by Landlord.
Notwithstanding the foregoing, the making of any such payment or the doing of
any such act by Landlord shall not operate to cure such default or to estop
Landlord from the pursuit of any remedy to which Landlord would otherwise be
entitled. If any installment of Rent is not paid by Tenant when due and
payable: (i) a one-time late charge in the amount of five percent (5%) of the
delinquent installment shall become immediately due and payable as compensation
to Landlord for administrative costs; and (ii) the unpaid balance due Landlord
shall bear interest at the Interest Rate from the date such installment became
due and payable to the date of payment thereof by Tenant, and such interest
shall constitute Additional Rent hereunder which shall be immediately due and
payable.
14. Covenant of Quiet Enjoyment. Subject to other terms of this
Lease, if Tenant shall pay the rent and comply with the terms and conditions of
this Lease to be performed by Tenant, Tenant shall, during the Term hereby
created, freely, peaceably and quietly occupy and enjoy the full possession of
the Premises, provided Landlord shall not be liable for any breach of such
covenants resulting from the actions or inaction of the Landlord.
15. Indemnification, Waiver and Release.
a. Indemnification. Tenant shall indemnify and hold
Landlord, its officers, directors, shareholders, agents and employees harmless
from and against any and all demands, claims, fines, damages, losses,
liabilities, liens, judgments and expenses (including, without limitation,
attorneys' fees and court costs) incurred in connection with or arising from:
(i) the use or occupancy of the Premises by Tenant or any person claiming under
Tenant; (ii) any activity, work or thing done or permitted or suffered by
Tenant to be done in or about the Premises; (iii) any acts, omissions or
negligence of Tenant or any person claiming under Tenant or the contractors,
agents, employees, invitees or visitors of Tenant or any such person; (iv) any
breach, violation or nonperformance by Tenant, any person claiming under Tenant
or the employees, agents, contractors, invitees, or visitors of Tenant, (v) any
injury or damage to the person, property or business of Tenant, its employees,
agents, contractors, invitees, visitors, or any other person entering upon the
Premises under the express or implied invitation of Tenant; or (vi) any
actions taken by Landlord to enforce the foregoing right of indemnification
against Tenant, except if any of the above- listed events are the result of the
gross negligence or willful misconduct of Landlord, its directors, officers,
shareholders, agents or employees. If any action or proceeding is brought
against Landlord, its officers, shareholders, agents or employees by reason of
any such claim, Tenant, upon notice from Landlord, shall defend the claim at
Tenant's expense with counsel reasonably satisfactory to Landlord.
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b. Waiver and Release. Tenant waives and releases all
claims against Landlord, its officers, shareholders, agents and employees with
respect to all matters arising out of Tenant's use and occupancy of the
Premises, except if the result of the gross negligence or wilful misconduct of
Landlord, its directors, officers, shareholders, agents or employees.
16. Mutual Estoppel. Either party may request from the other
party, an estoppel certificate to be executed in recordable form and to any
person designated in a written request which (a) ratifies this Lease; (b)
states the commencement and termination dates; and (c) certifies (i) that this
Lease is in full force and effect and has not been assigned, modified,
supplemented or amended (except by such writings as shall be stated), (ii) that
all conditions under this Lease to be performed have been satisfied (stating
exceptions, if any), (iii) that no defenses or offsets against the enforcement
of this Lease exist (or stating those claimed): (iv) as to advance rent, if
any, paid by Tenant, (v) the date to which Rent has been paid, (vi) the amount
of security deposited with Landlord, and such other information as may
reasonably be requested. Persons receiving such estoppel certificates shall be
entitled to rely upon them.
17. Hazardous Waste. Tenant shall not, without the prior written
consent of Landlord, cause or permit, knowingly or unknowingly, any Hazardous
Material (hereinafter defined) to be brought or remain upon, kept, used,
discharged, leaked, or emitted in or about, or treated at the Premises. As
used in this Lease, "Hazardous Material(s)" shall mean any hazardous, toxic or
radioactive substance, material, matter or waste which is or becomes regulated
by any federal, state or local law, ordinance, order, rule, regulation, code or
any other governmental restriction or requirement, and shall include asbestos,
petroleum products and the terms "Hazardous Substance" and "Hazardous Waste" as
defined in the Comprehensive Environmental Response, Compensation and Liability
Act, as amended 42 U.S.C. Section 9601 et seq. ("CERCLA"), and the Resource
Conservation and Recovery Act, as amended, 42 U.S.C. Section 6901 et seq.
("RCRA"). To obtain Landlord's consent, Tenant shall prepare and
"Environmental Audit" for Landlord's review. Such Environmental Audit shall
list: (1) the name(s) of each Hazardous Material and a Material Safety Data
Sheet (MSDS) as required by the Occupational Safety and Health Act; (2) the
volume proposed to be used, stored and/or treated at the Premises; (3) the
purpose of such Hazardous Material; (4) the proposed on-premises storage
location(s); (5) the name(s) of the proposed off-premises disposal entity; and
(6) an emergency preparedness plan in the event of a release. Additionally,
the Environmental Audit shall include copies of all required federal, state,
and local permits concerning or related to the proposed use, storage, or
treatment of any Hazardous Material(s) at the Premises. Tenant shall submit a
new Environmental Audit whenever it proposes to use, store, or treat a new
Hazardous Material at the Premises or when the volume of existing Hazardous
Materials to be used, stored, or treated at the Premises expands by ten percent
(10%) during any thirty (30) day period. If Landlord, in its reasonable
judgment, finds the Environmental Audit acceptable, then Landlord shall deliver
to Tenant Landlord's written consent. Notwithstanding such consent, Landlord
may revoke its consent upon: (1) Tenant's failure to remain in full compliance
with applicable environmental permits and/or any other requirements under any
federal, state, or local law, ordinance, order, rule, regulation, code or any
other governmental restriction or requirement (including but not limited to
CERCLA and RCRA)
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<PAGE> 11
related to environmental safety, human health, or employee safety; (2) the
Tenant's business operations pose or potentially pose a human health risk to
other tenants; or (3) the Tenant expands its use, storage, or treatment of any
Hazardous Material(s) in a manner inconsistent with the safe operation of a
shopping center. Should Landlord consent in writing to Tenant bringing, using,
storing or treating any Hazardous Material(s) in or upon the Premises, Tenant
shall strictly obey and adhere to any and all federal, state or local laws,
ordinances, orders, rules, regulations, codes or any other governmental
restrictions or requirements (including but not limited to CERCLA and RCRA)
which in any way regulate, govern or impact Tenant's possession, use, storage,
treatment or disposal of said Hazardous Material(s). In addition, Tenant
represents and warrants to Landlord that (1) Tenant shall apply for and remain
in compliance with any and all federal, state or local permits in regard to
Hazardous Materials; (2) Tenant shall report to any and all applicable
governmental authorities any release of reportable quantities of any Hazardous
Material(s) as required by any and all federal, state or local laws,
ordinances, orders, rules, regulations, codes or any other governmental
restrictions or requirements; (3) Tenant, within five (5) days of receipt,
shall send to Landlord a copy of any notice, order, inspection report, or other
document issued by any governmental authority relevant to the Tenant's
compliance status with environmental or health and safety laws; and, (4) Tenant
shall remove from the Premises all Hazardous Materials at the termination of
this Lease.
18. Governing Law. The provisions of this Lease shall be governed
by the laws of the State of Minnesota. This Lease may not be amended except in
writing signed by all of the parties. No waiver of any provision hereunder
shall be effective unless in writing signed by the party waiving its rights.
19. Complete Agreement. This Lease constitutes the entire
agreement between Landlord and Tenant, and there are no other oral or written
agreements or inducements between them with respect to the Premises.
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IN WITNESS WHEREOF, the parties hereto have executed this Lease
Agreement as of the date first written above.
S&D LAND HOLDINGS, INC.,
a Minnesota corporation
By ___________________________________
Its___________________________________
FAMOUS DAVE'S OF MINNEAPOLIS INC.,
a Minnesota corporation
By ___________________________________
Its___________________________________
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<PAGE> 1
EXHIBIT 10.4
ROSEVILLE SITE
SUBLEASE AGREEMENT
This Sublease is made effective January 1, 1996, by S&D Land Holdings,
Inc., a Minnesota corporation ("Sublandlord"), and Famous Dave s of
Minneapolis, Inc., a Minnesota corporation ("Subtenant").
RECITALS:
A. S&D Land Holdings, Inc. ( S&D ) has assumed the obligations
of Lessee under that certain Agreement of Lease dated November 29, 1972 and
Tenant under that certain Agreement Concerning Sublease dated March
19, 1987 (hereinafter, collectively Lease ). H. Richard Knutson and Jane
E. Knutson are the fee owners and Landlords ( Owner ) under said Lease
covering the real estate located at 2131 North Snelling Avenue in the City of
Roseville, Ramsey County, Minnesota ( Property ).
B. A restaurant building and parking lot ( Improvements ) are located
upon the Property (together the Property and Improvements are referred
to as Premises ).
C. Sublandlord desires to sublease the Premises to Subtenant
and Subtenant desires to sublease the Premises from Sublandlord.
NOW, THEREFORE, the parties agree as follows:
1. Lease Agreement. This Sublease incorporates all of the terms and
conditions of the Lease and Subtenant shall abide by all of the terms
thereof. In the event the terms and conditions of the Lease are inconsistent
with the Sublease, the Sublease shall control, provided however in no event
shall the obligations of the Subtenant under this Sublease be less than the
obligations of Sublandlord under the Lease. This Sublease is subject to all
terms, conditions and requirements of the Lease. Except as otherwise
provided in this Sublease, all defined terms in the Lease shall have the
same meaning in this Sublease. The terms and conditions of the Lease shall
be construed and apply to this Sublease as though the Landlord under the
Lease were the Sublandlord under this Sublease and the Tenant under the
Lease were the Subtenant under this Sublease. Sublandlord shall have all of
the rights and remedies against the Subtenant that the Landlord has against
the Sublandlord. Subtenant shall indemnify and hold Sublandlord harmless
from and against all liability arising out of the use and/or possession of
the Premises by the Subtenant and any violation of the Lease or this
Sublease by Subtenant. Subtenant represents that it has read the Lease and
is familiar with the terms and conditions thereof.
2. Sublease Agreement. Sublandlord hereby subleases the Premises to
Subtenant and Subtenant hereby subleases the Premises from Sublandlord subject
to the terms and conditions contained herein.
<PAGE> 2
3. Term. The term of this Sublease shall commence January 1, 1996
(Commencement Date ), and unless earlier terminated or extended as provided
herein, and shall terminate on May 31, 2003 ( Initial Term ).
4. Renewal Term.
a. Sublandlord shall exercise its option to extend the Third
Extended Term in accordance with the provisions contained in Article 3 of
the Agreement of Lease.
b. Subtenant has the right to extend the Sublease for one (1) five
year term ( Renewal Term ) by giving Sublandlord at least four hundred thirty
(430) days advance written notice ( Renewal Notice ) of its election to so
extend. In such event, Sublandlord shall immediately exercise its option to
extend the Fourth Extended Term in accordance with the provisions contained in
Article 3 of the Agreement Concerning Sublease.
5. Rent.
a. Subtenant will pay rent of Six Thousand Eight Hundred Fifty
dollars ($6,850) per month ( Rent ) to Sublandlord commencing on the
Commencement Date and payable in advance on the first day of each month
thereafter during the first Sublease year. Rent shall be increased on
January 1, 1997 and each succeeding January 1st thereafter until the
expiration of the Initial Term or any Renewal Term according to the
following computation:
Each January 1st, Rent for such calendar year will be increased (but
not decreased) by the percentage difference between the Consumer
Price Index published by the Bureau of Labor Statistics of the
United States Department of Labor, U.S. City Average, All items and
Major Group Figures for Urban Wage Earners and Clerical Workers
(1982-84=100) ( CPI ) for the preceding month of December and the
CPI for the base year. For purposes of this Sublease, the base
year is 1995 ("Base Year") and the price index for the Base Year
shall mean the average of the monthly indexes for each of the
twelve months (12) of the Base Year. In no event should the Rent
payable in any year be reduced during the next subsequent
year due to a decrease in the CPI.
6. Additional Rent.
a. Subtenant agrees to pay all Rent required to be paid under
the Lease in the amounts and at the times specified therein;
b. Subtenant shall pay before penalty attaches, all costs of
maintenance, repairs, utilities, real estate and any other taxes, insurance
and any and all other expenses necessary in
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<PAGE> 3
connection with the operation or maintenance of the Premises (the amount
specified in this section being referred to as Additional Rent ).
7. Use.
a. Subtenant may use and occupy the Premises solely for
restaurant/entertainment purposes and for no other purpose unless
Subtenant has first obtained Sublandlord s written consent. Subtenant
shall not use or occupy the Premises for any unlawful purpose, and will
comply with all present and future laws, statutes, ordinances, orders,
rules, codes, regulations, decrees and requirements of all governmental units
(including any agency, department, commission, board, bureau or
subdivision thereof) having jurisdiction over the Premises (collectively
"Legal Requirements").
b. Sublandlord, its agents, contractors or employees may enter
the Premises at reasonable hours to inspect the Premises and at any time
in response to an emergency.
8. Assignment and Subletting.
a. There shall be no Assignment or Subletting of the Premises by
Subtenant without in each case, obtaining the prior written consent of
Sublandlord, which consent may be granted or withheld in Sublandlord's sole
discretion.
b. Sublandlord shall have the right to transfer and assign, in
whole or in part, all of its rights and obligations hereunder.
9. Maintenance and Repair.
a. Subtenant shall, at all time during the term of this
Sublease, at its sole cost and expense, keep and maintain the Premises
(including without limitation all Improvements, fixtures, and equipment on
the Premises) in good order, repair and condition, and will make all
repairs and replacements including, but not limited to heating,
ventilating and air conditioning systems, structural components of the
Improvements, down spouts, fire sprinkler system, dock bumpers, lawn
maintenance, pest control and extermination, and trash pick-up and removal.
Subtenant shall repair and pay for any destruction caused by any act or
omission of Subtenant or Subtenant's agents, employees, invitees, licensees
or visitors, but shall not be obligated to pay for destruction to the
Premises caused by the negligence of Sublandlord, its agents or employees.
b. Subtenant agrees to maintain, at Subtenant's sole cost and
expense all improvements, fixtures and equipment installed in the
Premises; to use the Premises in a prudent and orderly manner; to suffer no
waste or injury to the Premises or any improvements or fixtures therein; and
at the expiration or other termination of this Sublease, to surrender the
same with all improvements in the same order and condition in which they
were on the Commencement Date, or in such better condition as they may
thereafter be put, except for ordinary wear and tear and destruction by insured
casualty.
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<PAGE> 4
c. In the event Subtenant fails to make the repairs or maintain
the Premises as required hereunder, Sublandlord may make such repairs or
perform such maintenance items at the expense of Subtenant which
expense shall be collected as Additional Rent.
10. Alterations; Signs; Equipment.
a. Subtenant will not make or permit anyone to make any
alterations, decorations, additions or improvements, structural or
otherwise, in or to the Premises without first obtaining the prior written
consent of Sublandlord which consent shall not be unreasonably withheld or
delayed. All alterations, decorations, additions or improvements shall
be made in accordance with all Legal Requirements and insurance guidelines
and shall be performed in a good and workmanlike manner by contractors
approved by Sublandlord.
b. Upon completion of any alterations, decorations, additions or
improvements, Subtenant shall deliver to Sublandlord evidence of payment,
contractors' affidavits and full and final lien waivers for all labor,
services, or materials performed or supplied in connection with such
alteration, decoration, addition or improvement. Subtenant shall
indemnify, defend (at Sublandlord's request and with counsel approved by
Sublandlord) and hold Sublandlord harmless from and against all losses, costs,
damages, claims, liabilities, causes of action and expenses (including
attorneys' fees and disbursements, whether suit is commenced or not)
arising out of or relating to any alterations, decorations, additions or
improvements that Subtenant or any of its contractors make to the Premises,
including any occasioned by the filing of any mechanic's, material supplier s,
construction or other liens or claims (and all costs or expenses associated
therewith) asserted, filed or arising out of any such work. Without
limiting the generality of the foregoing, Subtenant shall repair or cause to
be repaired at its expense all damage caused by any of its contractors,
subcontractors or their employees or agents. Subtenant shall reimburse
Sublandlord for any costs incurred by Sublandlord to repair any damage
caused by any of Subtenant's contractors. Subtenant shall also
reimburse Sublandlord upon demand for any costs Sublandlord may incur to
have an engineer review all mechanical, structural, electrical, plumbing and
life safety systems installed by any of Subtenant's contractors.
c. All alterations, decorations, additions or improvements
in or to the Premises made by Subtenant shall become the property of
Sublandlord upon the expiration or termination of this Sublease and shall
remain upon and be surrendered with the Premises as a part thereof without
disturbance or injury, unless Sublandlord requires Subtenant to demolish the
Improvements at Subtenant's sole cost and expense, in which event Subtenant
shall demolish the same prior to the expiration or termination of this
Sublease and shall repair any damage to the Property caused thereby.
d. Subtenant shall not place or maintain any sign, advertisement
or notice on any part of the outside of the Premises or any area
visible from outside the Premises, without first obtaining the prior written
consent of Sublandlord, which consent shall not be unreasonably withheld
or delayed. All signage approved by Sublandlord shall be in conformance
with all Legal Requirements.
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<PAGE> 5
11. Casualty and Insurance.
a. Substantial Destruction. If the Premises should be totally
destroyed by fire or other casualty so that rebuilding cannot reasonably be
completed within ninety days after such destruction, Subtenant's
obligations to pay Rent and Additional Rent shall abate from the date of
such destruction, and either Sublandlord or Subtenant shall have the right to
terminate this Sublease by giving written notice thereof to each other
within thirty (30) days after the date of such destruction.
b. Partial Destruction. If the Premises should be partially
damaged by fire or other casualty, and rebuilding or repairs can reasonably
be completed within ninety days from the date of the destruction (without
taking into account the availability of funds or insurance proceeds), this
Sublease shall not terminate, and Subtenant shall at its sole risk and
expense proceed with reasonable diligence to rebuild or repair the
building or other improvements to substantially the same condition in
which they existed prior to the destruction. There shall be no abatement of
Rent or Additional Rent following such destruction. In the event that
Subtenant fails to complete the necessary repairs or rebuilding within one
hundred eighty (180) days from the date of the destruction (force majeure
excepted), Sublandlord may at its option terminate this Sublease by
delivering written notice of termination to Subtenant, whereupon all rights
and obligations under this Sublease shall cease to exist.
c. Insurance. Subtenant shall maintain at its expense
standard fire and extended coverage, or all risk policy of insurance
covering one hundred percent (100%) replacement cost on (i) the Premises,
(ii) all of its personal property, including removable trade fixtures,
located in the Premises and (ii) all of the Improvements and any
improvements (including fixtures) made by, for or on behalf of Subtenant.
Sublandlord and Owner shall be named as an additional loss payee with respect
to the insurance described herein.
Subtenant shall maintain commercial general liability occurrence
policy insurance with the premiums thereon fully paid on or before the due
dates which affords minimum protection (which may be affected by primary
and/or excess coverage) of not less than Two Million dollars ($2,000,000)
combined single limit provided Subtenant shall carry such greater limits of
coverage as Sublandlord may deem reasonable from time to time. Sublandlord
and Owner shall be named as an additional insured on Subtenant's policy.
Subtenant shall deliver to Sublandlord certificates evidencing maintenance
of the insurance required herein.
d. Insurance Carrier. Any insurance required under this Section
shall be issued by a company authorized to do business in the State of
Minnesota and having an A.M. Best & Company, Inc. rating of A or higher and
a financial size category of not less than X and shall require thirty (30)
days advance notice to Sublandlord and Owner before cancellation or
alteration. Subtenant shall deliver to Sublandlord and Owner certificates
evidencing maintenance of the insurance required herein.
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<PAGE> 6
e. Waiver of Subrogation. Sublandlord and Subtenant each hereby
waive and release each other from any loss or damages arising from any cause
covered by insurance against each other, their agents, officers and
employees, by any reason, regardless of cause or origin, including the
negligence or willful misconduct of Sublandlord or Subtenant and their
agents, officers and employees. Subtenant agrees to immediately give
its insurance company which has issued policies of insurance covering all risk
of direct physical loss, written notice of the terms of the mutual waivers
contained in this section and to have the insurance policy properly
endorsed, if necessary, to prevent the invalidation of the insurance
coverages by reason of the mutual waivers.
12. Condemnation.
a. Total Taking. If, by exercise of the right of eminent
domain or by conveyance made in response to the threat of the exercise of that
right (in either case a "taking" ), all of the Premises are taken or if so
much of the Premises are taken that the Premises (even if the
restorations described in subparagraph (b) were to be made) cannot be used by
Subtenant for the purposes for which they were used immediately before the
taking, this Sublease will end on the earlier of the vesting of title to the
Premises in the condemning authority, or the taking of possession of the
Premises by the condemning authority (in either case the "Ending Date"). The
award in a taking subject to this subparagraph (a) will be allocated according
to subparagraph (d).
b. Partial Taking. If, after a taking, so much of the Premises
remains that the Premises can be used for substantially the same
purposes for which they were used immediately before the taking, (i)
this Sublease will end on the Ending Date as to the part of the Premises that
is taken, (ii) beginning on the day after the Ending Date, Rent for so much
of the Premises as remains will be reduced in the proportion of the floor
area of the building remaining after the taking to the floor area of the
building before the taking, (iii) at its cost, Subtenant will restore so much
of the Premises as remains to a sound architectural unit substantially
suitable for the purposes for which they were used immediately before the
taking, using good workmanship and new first class materials, all according
to Sections 9 and 10, (iv) upon the completion of restoration according
to clause (iv), Sublandlord will pay Subtenant the lesser of the net award
made to Sublandlord on account of the taking (after deducting from the
total award, attorney's , appraiser's and other costs incurred in connection
with obtaining the award, and amounts paid to the holders of mortgages
affecting the Premises) or Subtenant's actual out-of-pocket cost of
restoring the Premises, and (v) Sublandlord will keep the balance of the net
award.
c. Subtenant's Award. In connection with any taking subject to
subparagraph (a) or (b), Subtenant may prosecute its own claim by separate
proceedings against the condemning authority for damages legally due to
it (such as the loss of fixtures that Subtenant was entitled to remove,
and moving expenses) only so long as Subtenant's award does not diminish or
otherwise adversely affect Sublandlord's award.
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<PAGE> 7
d. Allocation of an Award for a Total Taking. If this
Sublease ends according to subparagraph (a), the condemnation award
will be paid in the order in this subparagraph to the extent it is sufficient:
i. First, Sublandlord will be reimbursed for its attorneys'
fees, appraisal fees, and other costs incurred in prosecuting the claim for
an award;
ii. Second, Sublandlord will be paid for lost Rent and
Additional Rent and the value of the reversion (excluding any future
Renewal Term) as of the Ending Date;
iii. Third, Subtenant will be paid its adjusted book value
as of the date of the taking of Subtenants improvements (excluding
trade fixtures) made to the Premises. In computing its adjusted book
value, improvements will be conclusively presumed to have been depreciated
or amortized for federal income tax purposes over their useful lives
with a reasonable salvage value;
iv. Fourth, the balance will be divided equally between
Sublandlord and Subtenant.
13. Default.
a. Any one of the following events shall constitute an event of
default ("Event of Default"):
i. Subtenant shall fail to pay any installment of Rent
and/or Additional Rent as herein provided, and such default shall continue
for a period of five (5) days after notice from Sublandlord;
ii. Subtenant shall violate or fail to perform any of the
other conditions, covenants or agreements herein made by Subtenant and such
default shall continue for thirty (30) days after notice from Sublandlord;
provided, however, that if the nature of such default is such that
Subtenant can cure the default, but not within thirty (30) days, then
the Event of Default shall be suspended for a period not in excess of thirty
(30) additional days so long as Subtenant commences to cure the default
within said thirty (30) day period and thereafter diligently and
continuously prosecutes the curing of the default to completion with such
additional thirty (30) day period, and so long as continuation of the default
does not create material risk to the Premises or to persons using the Premises;
iii. Subtenant shall fail to commence occupancy of the Premises
promptly upon the Commencement Date or shall vacate or abandon the Premises or
any portion thereof at any time during the Initial Term or any Renewal Term
thereof; or
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<PAGE> 8
iv. If (1) the interest of Subtenant under this Sublease
shall be levied upon under execution or other legal process, (2) any
petition shall be filed by or against Subtenant to declare Subtenant bankrupt
or to delay, reduce or modify Subtenant's debts or obligations, (3)
Subtenant shall be declared insolvent according to law, or (4) any assignment
of Subtenant's property shall be made for the benefit of creditors, or
a receiver or trustee is appointed for Subtenant or its property (provided
that no such levy, execution, legal process or petition filed against
Subtenant shall constitute a breach of this Sublease if Subtenant
shall vigorously contest the same by appropriate proceedings and shall
remove or vacate the same within thirty (30) days from the date of its
creation, service or filing).
v. If Subtenant is a partnership or other entity and Subtenant
shall be dissolved or otherwise liquidated, except in connection with a
merger, consolidation or other reorganization resulting in continuation
of Subtenant's business substantially as previously conducted, then Sublandlord
may treat the occurrence of any one or more of the foregoing events as a
breach of this Sublease and thereupon, at Sublandlord's option, may have any
one or more of the following described remedies in addition to all other
rights and remedies provided at law or in equity.
b. If an Event of Default shall have occurred and be continuing:
i. Sublandlord may terminate this Sublease and forthwith
repossess the Premises and be entitled to recover as damages a sum of money
equal to the total of (i) the cost of recovering the Premises (including
attorneys' fees, disbursements of counsel and any costs of suit), (ii) the
unpaid Rent and Additional Rent earned at the time of termination, plus
interest thereon at the then prevailing interest rate, (iii) the present
value (discounted at the rate published from time to time as the discount rate
for the Federal Reserve Bank of Minneapolis) of the balance of the Rent and/or
Additional Rent for the remainder of the term less the present value
(discounted at the same rate) of the amount Subtenant reasonably demonstrates
that Sublandlord would in all likelihood receive from leasing the
Premises to another tenant for said period, taking into account the cost of
reletting, the then-current market conditions, the time the Premises was
vacant and other similar costs, and (iv) any other sum of money and damages
owed by Subtenant to Sublandlord.
ii. Sublandlord may terminate Subtenant's right of
possession (without terminating this Sublease) and may repossess the
Premises by unlawful detainer suit or otherwise, without thereby releasing
Subtenant from any liability hereunder and without demand or notice of any
kind to Subtenant and without terminating this Sublease, in which event
Sublandlord may, but shall be under no obligation to do so, relet the same
for the account of Subtenant for such rent and upon such terms as shall be
satisfactory to Sublandlord. For the purpose of such reletting
Sublandlord is authorized to decorate or to make any repairs, changes,
alterations or additions to the Premises as may be reasonably necessary or
desirable in Sublandlord's judgment, and (i) if Sublandlord shall fail or
refuse to relet the Premises, or (ii) if the same are relet and a
sufficient sum shall not be realized from such reletting (after first
deducting therefrom, for retention by Sublandlord), the unpaid Rent and
Additional Rent due hereunder earned but unpaid at the time of reletting
plus interest thereon at the then prevailing interest rate, the cost of
recovering possession (including attorneys' fees,
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disbursements of counsel and any costs of suit), all of the costs and expenses
of such decorations, repairs, changes, alterations and additions, the
expense of such reletting and the cost of collection of the rent accruing
therefrom) to satisfy the Rent and Additional Rent provided for in this
Sublease to be paid, then (i) Subtenant shall pay to Sublandlord as
damages if the Premises are not relet, a sum equal to the amount of the Rent
and Additional Rent reserved in this Sublease for such period or periods,
plus the cost of recovering possession of the Premises (including attorneys'
fees and any costs of suit), the unpaid Rent and Additional Rent earned at
the time of repossession plus interest thereon at the then prevailing
interest rate, and the costs incurred in any attempt by Sublandlord to
relet the Premises, or (ii) if the Premises have been relet, the Subtenant
shall satisfy and pay any such deficiency. Any such payments due Sublandlord
shall be made upon demand therefor from time to time and Subtenant agrees that
Sublandlord may file suit to recover any sums falling due under the terms of
this Section 13 from time to time. No delivery to or recovery by
Sublandlord of any portion due Sublandlord hereunder shall be any defense
in any action to recover any amount not theretofore reduced to judgment in
favor of Sublandlord, nor shall such reletting be construed as an election on
the part of Sublandlord to terminate this Sublease unless a written notice of
such intention be given to Subtenant by Sublandlord. Notwithstanding any
such reletting without termination, Sublandlord may at any time
thereafter elect to terminate this Sublease for such previous breach.
c. In the event of a breach by Subtenant of any of the
agreements, conditions, covenants or terms hereof, Sublandlord shall
have the right of injunction to restrain the same and the right to invoke
any remedy allowed by law or in equity whether or not other
remedies, indemnities or reimbursements are herein provided. The
rights and remedies given to Sublandlord in this Sublease are distinct,
separate and cumulative remedies, and no one of them, whether or not exercised
by Sublandlord, shall be deemed to be in exclusion of any of the others.
d. In the interest of minimizing the time and expense of any
litigation between the parties hereto, Sublandlord and Subtenant each
hereby do waive the right to trial by jury in any action, proceeding or
counterclaim brought by either of the parties hereto against the other
on any matters whatsoever arising out of or in any way connected with this
Sublease, the relationship of Sublandlord and Subtenant, Subtenant's use
or occupancy of the Premises, and/or any claim of injury or damage, or for the
enforcement of any remedy.
e. In addition to all other remedies of Sublandlord, Sublandlord
shall be entitled to reimbursement upon demand of all attorneys' fees and
disbursements of counsel incurred by Sublandlord in connection with any
Event of Default, whether suit is initiated or not.
f. Sublandlord shall in no event be considered to be in default
of Sublandlord's obligations hereunder until the expiration of a
reasonable time after notice of default from Subtenant.
14. Sublandlord's Right to Cure Defaults; Late Payments.
If Subtenant defaults in the making of any payment, or in the doing of
any act herein required to be made or done by Subtenant, or does or
suffers any act prohibited herein, then Sublandlord may,
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<PAGE> 10
but shall not be required to, make such payment or do such act, or correct
any damage caused by such prohibited act and enter the Premises as appropriate
in connection therewith. Subtenant shall reimburse Sublandlord on demand
for all costs and expenses incurred by Sublandlord in curing any such
default plus a charge of ten percent (10%) of the amount of such costs and
expenses, together with interest thereon at the then prevailing interest
rate from the date such sums are incurred by Sublandlord.
Notwithstanding the foregoing, the making of any such payment or the doing of
any such act by Sublandlord shall not operate to cure such default or to
estop Sublandlord from the pursuit of any remedy to which Sublandlord would
otherwise be entitled. If any installment of Rent or Additional Rent is not
paid by Subtenant when due and payable: (i) a one-time late charge in the
amount of five percent (5%) of the delinquent installment shall become
immediately due and payable as compensation to Sublandlord for
administrative costs; and (ii) the unpaid balance due Sublandlord shall bear
interest at the then prevailing interest rate from the date such installment
became due and payable to the date of payment thereof by Subtenant, and
such interest shall constitute Additional Rent hereunder which shall be
immediately due and payable.
15. Covenant of Quiet Enjoyment. Subject to other terms of this
Sublease, if Subtenant shall pay the Rent and Additional Rent and comply
with the terms and conditions of this Sublease to be performed by Subtenant,
Subtenant shall, during the term hereby created, freely, peaceably and
quietly occupy and enjoy the full possession of the Premises, provided
Sublandlord shall not be liable for any breach of such covenants resulting from
the actions or inaction of the Sublandlord.
16. Indemnification, Waiver and Release.
a. Indemnification. Subtenant shall indemnify and hold
Sublandlord, its officers, directors, shareholders, agents and employees
harmless from and against any and all demands, claims, fines, damages,
losses, liabilities, liens, judgments and expenses (including, without
limitation, attorneys' fees and court costs) incurred in connection with or
arising from: (i) the use or occupancy of the Premises by Subtenant or
any person claiming under Subtenant; (ii) any activity, work or thing done or
permitted or suffered by Subtenant to be done in or about the Premises; (iii)
any acts, omissions or negligence of Subtenant or any person claiming under
Subtenant or the contractors, agents, employees, invitees or visitors of
Subtenant or any such person; (iv) any breach, violation or nonperformance
by Subtenant, any person claiming under Subtenant or the employees,
agents, contractors, invitees, or visitors of Subtenant, (v) any injury or
damage to the person, property or business of Subtenant, its employees,
agents, contractors, invitees, visitors, or any other person entering upon
the Premises under the express or implied invitation of Subtenant; or
(vi) any actions taken by Sublandlord to enforce the foregoing right
of indemnification against Subtenant, except if any of the above-listed
events are the result of the gross negligence or willful misconduct of
Sublandlord, its directors, officers, shareholders, agents or employees.
If any action or proceeding is brought against Sublandlord, its officers,
shareholders, agents or employees by reason of any such claim,
Subtenant, upon notice from Sublandlord, shall defend the claim at
Subtenant s expense with counsel reasonably satisfactory to Sublandlord.
-10-
<PAGE> 11
b. Waiver and Release. Subtenant waives and releases all claims
against Sublandlord, its officers, shareholders, agents and employees with
respect to all matters arising out of Subtenant's use and occupancy of the
Premises, except if the result of the gross negligence or wilful
misconduct of Sublandlord, its directors, officers, shareholders, agents
or employees.
17. Mutual Estoppel. Either party may request from the other party,
an estoppel certificate to be executed in recordable form and to any person
designated in a written request which (a) ratifies this Sublease; (b)
states the commencement and termination dates; and (c) certifies (i) that
this Sublease is in full force and effect and has not been assigned,
modified, supplemented or amended (except by such writings as shall be
stated), (ii) that all conditions under this Sublease to be performed
have been satisfied (stating exceptions, if any), (iii) that no defenses or
offsets against the enforcement of this Sublease exist (or stating those
claimed): (iv) as to advance rent, if any, paid by Subtenant, (v) the date
to which Rent and Additional Rent have been paid, (vi) the amount of
security deposited with Sublandlord, and such other information as may
reasonably be requested. Persons receiving such estoppel certificates
shall be entitled to rely upon them.
18. Hazardous Waste. Subtenant shall not, without the prior written
consent of Sublandlord, cause or permit, knowingly or unknowingly, any
Hazardous Material (hereinafter defined) to be brought or remain upon, kept,
used, discharged, leaked, or emitted in or about, or treated at the Premises.
As used in this Sublease, "Hazardous Material(s)" shall mean any hazardous,
toxic or radioactive substance, material, matter or waste which is or becomes
regulated by any federal, state or local law, ordinance, order, rule,
regulation, code or any other governmental restriction or requirement,
and shall include asbestos, petroleum products and the terms "Hazardous
Substance" and "Hazardous Waste" as defined in the Comprehensive
Environmental Response, Compensation and Liability Act, as amended 42 U.S.C.
# 9601 et seq. ("CERCLA"), and the Resource Conservation and Recovery Act, as
amended, 42 U.S.C. # 6901 et seq. ("RCRA"). To obtain Sublandlord's
consent, Subtenant shall prepare and Environmental Audit for Sublandlord's
review. Such Environmental Audit shall list: (1) the name(s) of each
Hazardous Material and a Material Safety Data Sheet (MSDS) as required by the
Occupational Safety and Health Act; (2) the volume proposed to be used, stored
and/or treated at the Premises; (3) the purpose of such Hazardous
Material; (4) the proposed on-premises storage location(s); (5) the name(s)
of the proposed off-premises disposal entity; and (6) an emergency
preparedness plan in the event of a release. Additionally, the
Environmental Audit shall include copies of all required federal, state, and
local permits concerning or related to the proposed use, storage, or
treatment of any Hazardous Material(s) at the Premises. Subtenant shall
submit a new Environmental Audit whenever it proposes to use, store, or treat
a new Hazardous Material at the Premises or when the volume of existing
Hazardous Materials to be used, stored, or treated at the Premises expands
by ten percent (10%) during any thirty (30) day period. If Sublandlord, in
its reasonable judgment, finds the Environmental Audit acceptable, then
Sublandlord shall deliver to Subtenant Sublandlord's written
consent. Notwithstanding such consent, Sublandlord may revoke its consent
upon: (1) Subtenant's failure to remain in full compliance with applicable
environmental permits and/or any other requirements under any federal, state,
or local law, ordinance, order, rule, regulation, code or any other
governmental restriction or requirement (including but not limited to
CERCLA and RCRA) related to
-11-
<PAGE> 12
environmental safety, human health, or employee safety; (2) the Subtenant's
business operations pose or potentially pose a human health risk to other
tenants; or (3) the Subtenant expands its use, storage, or treatment of
any Hazardous Material(s) in a manner inconsistent with the safe operation of
a shopping center. Should Sublandlord consent in writing to Subtenant
bringing, using, storing or treating any Hazardous Material(s) in or upon the
Premises, Subtenant shall strictly obey and adhere to any and all federal,
state or local laws, ordinances, orders, rules, regulations, codes or any
other governmental restrictions or requirements (including but not limited to
CERCLA and RCRA) which in any way regulate, govern or impact Subtenant's
possession, use, storage, treatment or disposal of said Hazardous
Material(s). In addition, Subtenant represents and warrants to Sublandlord
that (1) Subtenant shall apply for and remain in compliance with any and
all federal, state or local permits in regard to Hazardous Materials; (2)
Subtenant shall report to any and all applicable governmental authorities
any release of reportable quantities of any Hazardous Material(s) as required
by any and all federal, state or local laws, ordinances, orders, rules,
regulations, codes or any other governmental restrictions or requirements; (3)
Subtenant, within five (5) days of receipt, shall send to Sublandlord a copy
of any notice, order, inspection report, or other document issued by any
governmental authority relevant to the Subtenant's compliance status with
environmental or health and safety laws; and, (4) Subtenant shall remove from
the Premises all Hazardous Materials at the termination of this Sublease.
19. Governing Law. The provisions of this Sublease shall be governed
by the laws of the State of Minnesota. This Sublease may not be amended
except in writing signed by all of the parties. No waiver of any
provision hereunder shall be effective unless in writing signed by the party
waiving its rights.
20. Complete Agreement. This Sublease constitutes the entire
agreement between Sublandlord and Subtenant, and there are no other oral or
written agreements or inducements between them with respect to the Premises.
21. Counterparts. This Sublease may be executed in two or more
counterparts, each of which shall be an original but one of which shall
constitute one and the same instrument.
-12-
<PAGE> 13
IN WITNESS WHEREOF, the parties hereto have executed this Sublease
Agreement as of the date first written above.
S&D LAND HOLDINGS, INC.,
a Minnesota corporation
By___________________
Its__________________
FAMOUS DAVE'S OF MINNEAPOLIS, INC.,
a Minnesota corporation
By___________________
Its _________________
-13-
<PAGE> 1
EXHIBIT 10.6
ASSIGNMENT AND ASSUMPTION OF LEASE AGREEMENT
This Assignment and Assumption of Lease Agreement dated as of May 13,
1996, by and among Carlson Real Estate Company, a Minnesota limited partnership
("Carlson"), Innovative Gaming, Inc. formerly a Minnesota corporation, now a
Nevada corporation ("Innovative"), and Famous Dave's of America, Inc., a
Minnesota corporation ("Famous Dave's").
RECITALS:
A. Carlson is the owner of the real estate legally described on Lots
2, 4, 5, 6, 7 and 8, Block 1, Minneapolis Industrial Park Third Addition and
Lot 1, Block 1, Minneapolis Industrial Park Fourth Addition ("Property") and
has leased a portion of the Property in Building "5" containing approximately
7,850 square feet of office/warehouse space ("Premises" as that term is defined
in the Lease) to Innovative pursuant to that certain Plymouth Oaks Park Lease
dated as of June 29, 1993 (the "Lease").
B. Famous Dave's desires to assume the Lease from Innovative and
Innovative desires to assign the Lease to Famous Dave's.
C. Provided Innovative is not in default under the terms of the Lease,
Carlson will consent to the assignment of the Lease to Famous Dave's so long as
Innovative continues to remain liable under the Lease.
NOW, THEREFORE, Carlson, Innovative and Famous Dave's, in
consideration of Ten Dollars and other good and valuable consideration and the
covenants and conditions set forth herein, hereby agree as follows:
1. Innovative hereby assigns all of its rights and obligations under
the Lease to Famous Dave's commencing August 31, 1996 ("Commencement Date") and
further agrees to
<PAGE> 2
remain liable thereunder for the performance of all of the terms, conditions
and obligations to be performed by Innovative including, but not limited to,
the payment of Rent and other sums.
2. Famous Dave's hereby assumes all of Innovative's rights and obligations
under the Lease commencing August 31, 1996. It is understood and agreed that
Famous Dave's does not assume any responsibilities or obligations under the
Lease arising prior to the Commencement Date. In connection therewith, Famous
Dave's will commence paying Rent directly to Carlson at its Lockbox Address,
P.O. Box C/M 9471, St. Paul, MN 55170-9471 (or such other address designated by
Carlson in writing to Famous Dave's) for the Premises at an annual rate of
Forty-Seven Thousand Four Hundred Fourteen and 04/100 Dollars ($47,414.04),
payable in monthly installments of $3,951.17 and continuing on the first day of
each month thereafter during the term of the Lease. Famous Dave's also agrees
to pay as additional Rent for the Premises and during the term of the Lease
commencing August 31, 1996 as follows:
(i) Pro rata share of all real estate taxes and installments of
special assessments assessed against the Premises in accordance
with Paragraph 8B of this Lease;
(ii) All utility charges incurred for the Premises in accordance with
Paragraph 12 of the Lease;
(iii) Pro rata share of Operating Expenses relating to the Premises in
accordance with Paragraph 8A of the Lease;
(iv) Any premiums required to be paid in order to carry and maintain
all insurance required under Paragraph 16 of the Lease.
3. Famous Dave's shall use the Premises for offices, storage, test-
kitchen/commissary purposes and such other use to which Carlson may consent.
Any use by Famous Dave's shall be subject to compliance with all local codes
and ordinances.
2
<PAGE> 3
4. Any notice or demand required to be given under the Lease shall
be given to Famous Dave's of America, Inc., 12700 Industrial Park Boulevard,
Minneapolis, MN 55441 and to Innovative at , Reno, Nevada,
Attn: CEO all in accordance with Paragraph 24 of the Lease.
5. Carlson hereby agrees that Famous Dave's, at its expense, may
fill in the loading dock to create a truck ramp, enlarge the existing overhead
door to standard loading door height and replace the overhead door, provided
that, at the time Famous Dave's vacates the Premises, it will return the
loading dock to existing condition upon request of Carlson.
6. The Premises have been improved by Carlson pursuant to
Paragraph 3 of the Lease. If Famous Dave's requires or desires alterations or
additions to the Premises, such alterations or additions shall be subject to
the written approval of Carlson in accordance with the Lease, and Famous Dave's
shall be responsible to furnish and install, at its expense, all such
alterations and additions. Famous Dave's shall submit plans to Carlson and
obtain all required permits prior to the commencement of any work.
7. Innovative hereby warrants and represents, for the benefit for
Carlson and Famous Dave's, that the following statements are true and correct:
A. The Lease represents the entire agreement between Innovative and
Carlson as to the subject matter thereof.
B. No default by Carlson exists in the performance or observance of
any covenant or condition in the Lease and there are no defenses
or offsets against the enforcement of the Lease by Carlson.
8. Carlson hereby warrants and represent, for the benefit of
Famous Dave's, that the following statements are true and correct:
A. The Lease represents the entire agreement between Innovative and
Carlson as to the subject matter thereof.
3
<PAGE> 4
B. As of the date hereof, no default by Innovative exists in the
performance or observance of any covenant or condition in the
Lease.
C. The total monthly Rent currently due under the Lease is
$5,433.00 (including pro rata Operating Expense and Real Estate
Taxes).
9. It is understood and agreed that Famous Dave's shall be
responsible for any additional rent due Landlord as a result of the 1996 year
end reconciliations of Operating Expenses and Real Estate Taxes due pursuant to
the Lease. Conversely, Famous Dave's shall be entitled to any rent credits that
may be due it as a result of 1996 year end reconciliations of Operating
Expenses and Real Estate Taxes due pursuant to the Lease.
IN WITNESS WHEREOF the parties have caused this Assignment and
Assumption of Lease Agreement to be executed in their respective names, all as
of the date first above written.
FAMOUS DAVE'S OF AMERICA, INC., INNOVATIVE GAMING, INC.,
<TABLE>
<S> <C>
a Minnesota corporation a Nevada corporation
BY: BY:
-------------------------- ----------------------------
Its: President Its: VP Director of Compliance
------------------------ --------------------------
</TABLE>
4
<PAGE> 5
<TABLE>
<S> <C>
CARLSON REAL ESTATE COMPANY,
a Minnesota limited partnership
By
----------------------------
Its
---------------------------
</TABLE>
5
<PAGE> 6
EXHIBIT 10.6
SIDE AGREEMENT
This Agreement made this 16th day of May, 1996 by and between Innovative
Gaming, Inc., formerly a Minnesota corporation, now a Nevada corporation
("Innovative") and Famous Dave's of America, Inc., a Minnesota corporation
("Famous Dave's").
R E C I T A L S
A. Innovative has assigned that certain Plymouth Oaks Park Lease dated as
of June 29, 1993 (the "Lease") to Famous Dave's pursuant to an Assignment and
Assumption of Lease Agreement ("Assignment Agreement").
B. Innovative has agreed to allow Famous Dave's early occupancy of a
portion of the premises covered by the Lease, agreed to give Famous Dave's one
month's free rent, and to sell to Famous Dave's certain office furniture.
C. Innovative and Famous Dave's desire to document their Agreement with
respect to the matters identified in A and B above.
D. Capitalized terms used herein shall have the same meaning ascribed to
them in the Lease and Assignment and Assumption Agreement.
NOW THEREFORE, in consideration of $10.00 (Ten and no/100 Dollars) and
other good and valuable consideration and the covenants and conditions set forth
herein, the parties agree as follows:
1. The Assignment Agreement provides that Famous Dave's will assume all of
Innovative's rights and obligations (including payment of Rent) under the
Lease on August 31, 1996 ("Commencement Date"). Innovative may vacate the
Premises earlier than the Commencement Date ("Vacation Date") and in such
event the parties hereby agree that Famous Dave's will commence paying Rent
as provided for in the Assignment Agreement 30 days after the Vacation
Date.
It is expressly understood and agreed that Famous Dave's will assume
all of Innovative's rights and obligations under the Lease on the Vacation
Date.
2. Famous Dave's will pay to Innovative $23,000 for the office furniture
itemized on the attached Exhibit A prior to the Vacation Date.
3. Famous Dave's shall occupy two offices and share the use of the
conference room commencing May 16, 1996. Innovative agrees to also make
available to Famous Dave's on May 16, 1996, use of a secured storage room
(lock to be provided by IGCA) mutually agreed upon by the parties and at no
charge to Famous Dave's.
<PAGE> 7
4. Innovative will allow Famous Dave's to add two phone lines, the payment
of which shall be made by Famous Dave's, to Innovative's system for use by
Famous Dave's until such time as Innovative totally vacates the Premises.
5. During the period May 16, 1996 through the Vacation Date, the parties
understand and agree that no alternative and/or improvements will be made
to the Premises.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
in the respective names as of the date first above written.
INNOVATIVE GAMING, INC.
a Nevada corporation
Date: 5/16/96 By /s/ Craig Bullis
------- ------------------------------
Its VP Dir. of Compliance
---------------------
FAMOUS DAVE'S OF AMERICA,
a Minnesota corporation
Date: 5/16/96 By /s/ William Timm
------- ------------------------------
Its President
---------------------
<PAGE> 8
IGCA
Innovative Gaming Corporation of America
12700 Industrial Park Blvd.
Suite 00
Plymouth, MN 35441
Exhibit A
Bus. 612-557-6744
Fax. 612-557-3021
FOLLOWING IS A LIST OF FURNITURE IN THE EXECUTIVE OFFICES
ALONG WITH THE BOARD ROOM, ALL FURNITURE IS BLACK OAK
(1) OFFICE OF THE C.E.O.
- -LARGE "U" SHAPED EXECUTIVE DESK WITH LEATHER CHAIR
- -ROUND MEETING TABLE WITH FOUR MATCHING CHAIRS
- -TWO (2) GUEST CHAIRS
- -TWO (2) LEATHER LOVE SEATS AND SMALL COFFEE TABLE
(2) OFFICES OF THE OPERATIONS MGR. AND DIRECTOR OF
COMPLIANCE.
- -LARGE "U" SHAPPED EXECUTVE DESK WITH LIGHTED CREDENZA
- -LARGE TWO (2) DRAWER LATERAL FILE
- -ONE GRAY CLOTH EXECUTIVE CHAIR
- -ONE GUEST CHAIR
(3) OFFICE OF THE C.O.O.
- -ONE EXTRA LARGE "U" SHAPED EXECUTIVE DESK WITH LEATHER
CHAIR
- -ONE ROUND TABLE WITH FOUR (4) MATCHING CHAIRS
- -TWO (2) GUEST CHAIRS
(4) OFFICE OF THE DIRECTOR OF SALES
- -ONE EXTRA LARGE "U" SHAPED EXECUTIVE DESK WITH LEATHER
CHAIR
- -TWO (2) GUEST CHAIRS
(5) BOARD ROOM
- -ONE 3 BY 12 BOARD ROOM TABLE
- -EIGHT (8) BLACK LEATHER EXECUTIVE CHAIRS
- -ONE 2 BY 8 LATERAL FILE CABINET
- -ONE T.V. AND V.C.R. CABINET TO HOLD A 20" T.V.
- -ONE WALL MOUNTED MATCHING CHALK BOARD
* (* 1 Rack from "Gina Sublease space")
* Long-Section in Gina's space Per Ralph.
<PAGE> 1
EXHIBIT 10.7
FAMOUS DAVE'S OF MINNEAPOLIS, INC.
1995 STOCK OPTION AND
COMPENSATION PLAN
1. Purpose. The purpose of this Famous Dave's of Minneapolis,
Inc. (the "Company") 1995 Stock Option and Compensation Plan (the "Plan") is to
increase stockholder value and to advance the interests of the Company by
furnishing a variety of economic incentives ("Incentives") designed to attract,
retain and motivate employees and certain key consultants. Incentives may
consist of opportunities to purchase or receive shares of Common Stock, $0.01
par value, of the Company ("Common Stock"), monetary payments, or both, on
terms determined under this Plan.
2. Administration. The Plan shall be administered by the stock
option committee (the "Committee") of the board of directors of the Company.
If the Company stock is privately held, the Committee shall consist of one or
more directors of the Company as shall be appointed from time to time by the
Chairman of the board of directors of the Company. If the Company stock
becomes the subject of a public offering, the Committee shall then consist of
not less than two directors of the Company who shall be appointed from time to
time by the board of directors of the Company, each of which such appointees
shall be a "disinterested person" within the meaning of Rule 16b-3 of the
Securities Exchange Act of 1934, and the regulations promulgated thereunder
(the "1934 Act"), and the board of directors of the Company may from time to
time appoint members of the Committee in substitution for, or in addition to,
members previously appointed, and may fill vacancies, however caused, in the
Committee. If more than one person is on the Committee, the following shall
apply: (a) the Committee shall select one of its members as its chairman and
shall hold its meetings at such times and places as it shall deem advisable;
(b) a majority of the Committee's members shall constitute a quorum; (c) all
action of the Committee shall be taken by the majority of its members; and (d)
any action may be taken by a written instrument signed by majority of the
members and actions so taken shall be fully effective as if they had been made
by a majority vote at a meeting duly called and held. The Committee may
appoint a secretary, shall keep minutes of its meetings and shall make such
rules and regulations for the conduct of its business as it shall deem
advisable. The Committee shall have complete authority to award Incentives
under the Plan, to interpret the Plan, and to make any other determination
which it believes necessary and advisable for the proper administration of the
Plan. The Committee's decisions and matters relating to the Plan shall be
final and conclusive on the Company and its participants.
3. Eligible Participants. Employees of or consultants to the
Company or its subsidiaries or affiliates (including officers and directors,
but excluding directors who are not also employees of or consultants to the
Company or its subsidiaries or affiliates), shall become eligible to receive
Incentives under the Plan when designated by the Committee. Participants may
be designated individually or by groups or categories (for example, by pay
grade) as the Committee deems appropriate. Participation by officers of the
Company or its subsidiaries or affiliates and any performance objectives
relating to such officers must be approved by the Committee. Participation by
others and any performance objectives relating to others may be approved by
groups or categories
<PAGE> 2
(for example, by pay grade) and authority to designate participants who are not
officers and to set or modify such targets may be delegated.
4. Types of Incentives. Incentives under the Plan may be
granted in any one or a combination of the following forms: (a) incentive stock
options and non-statutory stock options (section 6); (b) stock appreciation
rights ("SARs") (section 7); (c) stock awards (section 8); (d) restricted stock
(section 8); (e) performance shares (section 9); and (f) cash awards (section
10).
5. Shares Subject to the Plan.
5.1 Number of Shares. Subject to adjustment as provided
in Section 11.6, the number of shares of Common Stock which may be
issued under the Plan shall not exceed 250 shares of Common Stock.
5.2 Cancellation. To the extent that cash in lieu of
shares of Common Stock is delivered upon the exercise of a SAR
pursuant to Section 7.4, the Company shall be deemed, for purposes of
applying the limitation on the number of shares, to have issued the
greater of the number of shares of Common Stock which it was entitled
to issue upon such exercise or on the exercise of any related option.
In the event that a stock option or SAR granted hereunder expires or
is terminated or cancelled unexercised as to any shares of Common
Stock, such shares may again be issued under the Plan either pursuant
to stock options, SARs or otherwise. In the event that shares of
Common Stock are issued as restricted stock or pursuant to a stock
award and thereafter are forfeited or reacquired by the Company
pursuant to rights reserved upon issuance thereof, such forfeited and
reacquired shares may again be issued under the Plan, either as
restricted stock, pursuant to stock awards or otherwise. The
Committee may also determine to cancel, and agree to the cancellation
of, stock options in order to make a participant eligible for the
grant of a stock option at a lower price than the option to be
cancelled.
5.3 Type of Common Stock. Common Stock issued under the
Plan in connection with stock options, SARs, performance shares,
restricted stock or stock awards, may be authorized and unissued
shares.
6. Stock Options. A stock option is a right to purchase shares
of Common Stock from the Company. Each stock option granted by the Committee
under this Plan shall be subject to the following terms and conditions:
6.1 Price. The option price per share shall be
determined by the Committee, subject to adjustment under Section 11.6.
6.2 Number. The number of shares of Common Stock
subject to the option shall be determined by the Committee, subject to
adjustment as provided in Section 11.6. The number of shares of
Common Stock subject to a stock option shall be reduced in the same
-2-
<PAGE> 3
proportion that the holder thereof exercises a SAR if any SAR is
granted in conjunction with or related to the stock option.
6.3 Duration and Time for Exercise. Subject to earlier
termination as provided in Section 11.4, the term of each stock option
shall be determined by the Committee but shall not exceed ten years
and one day from the date of grant. Each stock option shall become
exercisable at such time or times during its term as shall be
determined by the Committee at the time of grant. The Committee may
accelerate the exercisability of any stock option. Subject to the
foregoing and with the approval of the Committee, all or any part of
the shares of Common Stock with respect to which the right to purchase
has accrued may be purchased by the Company at the time of such
accrual or at any time or times thereafter during the term of the
option.
6.4 Manner of Exercise. A stock option may be
exercised, in whole or in part, by giving written notice to the
Company, specifying the number of shares of Common Stock to be
purchased and accompanied by the full purchase price for such shares.
The option price shall be payable in United States dollars upon
exercise of the option and may be paid by cash; uncertified or
certified check; bank draft; by delivery of shares of Common Stock in
payment of all or any part of the option price, which shares shall be
valued for this purpose at the Fair Market Value on the date such
option is exercised; by instructing the Company to withhold from the
shares of Common Stock issuable upon exercise of the stock option
shares of Common Stock in payment of all or any part of the option
price, which shares shall be valued for this purpose at the Fair
Market Value or in such other manner as may be authorized from time to
time by the Committee. Prior to the issuance of shares of Common
Stock upon the exercise of a stock option, a participant shall have no
rights as a stockholder.
6.5 Incentive Stock Options. Notwithstanding anything
in the Plan to the contrary, the following additional provisions shall
apply to the grant of stock options which are intended to qualify as
Incentive Stock Options (as such term is defined in Section 422A of
the Internal Revenue Code of 1986, as amended):
(a) The aggregate Fair Market Value (determined
as of the time the option is granted) of the shares of Common
Stock with respect to which Incentive Stock Options are
exercisable for the first time by any participant during any
calendar year (under all of the Company's plans) shall not
exceed $100,000.
(b) Any Incentive Stock Option certificate
authorized under the Plan shall contain such other provisions
as the Committee shall deem advisable, but shall in all events
be consistent with and contain all provisions required in
order to qualify the options as Incentive Stock Options.
-3-
<PAGE> 4
(c) All Incentive Stock Options must be granted
within ten years from the earlier of the date on which this
Plan was adopted by board of directors or the date this Plan
was approved by the stockholders.
(d) Unless sooner exercised, all Incentive Stock
Options shall expire no later than 10 years after the date of
grant.
(e) The option price for Incentive Stock Options
shall be not less than the Fair Market Value of the Common
Stock subject to the option on the date of grant.
(f) No Incentive Stock Options shall be granted
to any participant who, at the time such option is granted,
would own (within the meaning of Section 422A of the Code)
stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the employer
corporation or of its parent or subsidiary corporation.
7. Stock Appreciation Rights. A SAR is a right to receive,
without payment to the Company, a number of shares of Common Stock, cash or any
combination thereof, the amount of which is determined pursuant to the formula
set forth in Section 7.4. A SAR may be granted (a) with respect to any stock
option granted under this Plan, either concurrently with the grant of such
stock option or at such later time as determined by the Committee (as to all or
any portion of the shares of Common Stock subject to the stock option), or (b)
alone, without reference to any related stock option. Each SAR granted by the
Committee under this Plan shall be subject to the following terms and
conditions:
7.1 Number. Each SAR granted to any participant shall
relate to such number of shares of Common Stock as shall be determined
by the Committee, subject to adjustment as provided in Section 11.6.
In the case of a SAR granted with respect to a stock option, the
number of shares of Common Stock to which the SAR pertains shall be
reduced in the same proportion that the holder of the option exercises
the related stock option.
7.2 Duration. Subject to earlier termination as
provided in Section 11.4, the term of each SAR shall be determined by
the Committee but shall not exceed ten years and one day from the date
of grant. Unless otherwise provided by the Committee, each SAR shall
become exercisable at such time or times, to such extent and upon such
conditions as the stock option, if any, to which it relates is
exercisable. The Committee may in its discretion accelerate the
exercisability of any SAR.
7.3 Exercise. A SAR may be exercised, in whole or in
part, by giving written notice to the Company, specifying the number
of SARs which the holder wishes to exercise. Upon receipt of such
written notice, the Company shall, within ninety (90) days thereafter,
deliver to the exercising holder certificates for the shares of Common
Stock or cash or both, as determined by the Committee, to which the
holder is entitled pursuant to Section 7.4.
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7.4 Payment. Subject to the right of the Committee to
deliver cash in lieu of shares of Common Stock (which, as it pertains
to officers and directors of the Company, shall comply with all
requirements of the 1934 Act), the number of shares of Common Stock
which shall be issuable upon the exercise of a SAR shall be determined
by dividing:
(a) the number of shares of Common Stock as to
which the SAR is exercised multiplied by the amount of the
appreciation in such shares (for this purpose, the
"appreciation" shall be the amount by which the Fair Market
Value of the shares of Common Stock subject to the SAR on the
exercise date exceeds (1) in the case of a SAR related to a
stock option, the purchase price of the shares of Common Stock
under the stock option or (2) in the case of a SAR granted
alone, without reference to a related stock option, an amount
which shall be determined by the Committee at the time of
grant, subject to adjustment under Section 11.6); by
(b) the Fair Market Value of a share of Common
Stock on the exercise date.
In lieu of issuing shares of Common Stock upon the exercise of
a SAR, the Committee may elect to pay the holder of the SAR cash equal
to the Fair Market Value on the exercise date of any or all of the
shares which would otherwise be issuable. No fractional shares of
Common Stock shall be issued upon the exercise of a SAR; instead, the
holder of the SAR shall be entitled to receive a cash adjustment equal
to the same fraction of the Fair Market Value of a share of Common
Stock on the exercise date or to purchase the portion necessary to
make a whole share at its Fair Market Value on the date of exercise.
8. Stock Awards and Restricted Stock. A stock award consists of
the transfer by the Company to a participant of shares of Common Stock, without
other payment therefor, as additional compensation for services to the Company.
A share of restricted stock consists of shares of Common Stock which are sold
or transferred by the Company to a participant at a price determined by the
Committee (which price shall be at least equal to the minimum price required by
applicable law for the issuance of a share of Common Stock) and subject to
restrictions on their sale or other transfer by the participant. The transfer
of Common Stock pursuant to stock awards and the transfer and sale of
restricted stock shall be subject to the following terms and conditions:
8.1 Number of Shares. The number of shares to be
transferred or sold by the Company to a participant pursuant to a
stock award or as restricted stock shall be determined by the
Committee.
8.2 Sale Price. The Committee shall determine the
price, if any, at which shares of restricted stock shall be sold to a
participant, which may vary from time to time and among participants
and which may be below the Fair Market Value of such shares of Common
Stock at the date of sale.
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8.3 Restrictions. All shares of restricted stock
transferred or sold hereunder shall be subject to such restrictions as
the Committee may determine, including, without limitation any or all
of the following:
(a) a prohibition against the sale, transfer,
pledge or other encumbrance of the shares of restricted stock,
such prohibition to lapse at such time or times as the
Committee shall determine (whether in annual or more frequent
installments, at the time of the death, disability or
retirement of the holder of such shares, or otherwise);
(b) a requirement that the holder of shares of
restricted stock forfeit, or (in the case of shares sold to a
participant) resell back to the Company at his or her cost,
all or a part of such shares in the event of termination of
his or her employment or consulting engagement during any
period in which such shares are subject to restrictions;
(c) such other conditions or restrictions as the
Committee may deem advisable.
8.4 Escrow. In order to enforce the restrictions
imposed by the Committee pursuant to Section 8.3, the participant
receiving restricted stock shall enter into an agreement with the
Company setting forth the conditions of the grant. Shares of
restricted stock shall be registered in the name of the participant
and deposited, together with a stock power endorsed in blank, with the
Company. Each such certificate shall bear a legend in substantially
the following form:
The transferability of this certificate and the shares of
Common Stock represented by it are subject to the terms and
conditions (including conditions of forfeiture) contained in
the 1995 Stock Option and Compensation Plan of Famous Dave's
of Minneapolis, Inc. (the "Company"), and an agreement entered
into between the registered owner and the Company. A copy of
the Plan and the agreement is on file in the office of the
secretary of the Company.
8.5 End of Restrictions. Subject to Section 11.5, at
the end of any time period during which the shares of restricted stock
are subject to forfeiture and restrictions on transfer, such shares
will be delivered free of all restrictions to the participant or to
the participant's legal representative, beneficiary or heir.
8.6 Stockholder. Subject to the terms and conditions of
the Plan, each participant receiving restricted stock shall have all
the rights of a stockholder with respect to shares of stock during any
period in which such shares are subject to forfeiture and restrictions
on transfer, including without limitation, the right to vote such
shares. Dividends paid in cash
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or property other than Common Stock with respect to shares of
restricted stock shall be paid to the participant currently.
9. Performance Shares. A performance share consists of an award
which shall be paid in shares of Common Stock, as described below. The grant
of performance share shall be subject to such terms and conditions as the
Committee deems appropriate, including the following:
9.1 Performance Objectives. Each performance share will
be subject to performance objectives for the Company or one of its
operating units to be achieved by the end of a specified period. The
number of performance shares granted shall be determined by the
Committee and may be subject to such terms and conditions, as the
Committee shall determine. If the performance objectives are
achieved, each participant will be paid in shares of Common Stock or
cash. If such objectives are not met, each grant of performance
shares may provide for lesser payments in accordance with formulas
established in the award.
9.2 Not Stockholder. The grant of performance shares to
a participant shall not create any rights in such participant as a
stockholder of the Company, until the payment of shares of Common
Stock with respect to an award.
9.3 No Adjustments. No adjustment shall be made in
performance shares granted on account of cash dividends which may be
paid or other rights which may be issued to the holders of Common
Stock prior to the end of any period for which performance objectives
were established.
9.4 Expiration of Performance Share. If any
participant's employment or consulting engagement with the Company is
terminated for any reason other than normal retirement, death or
disability prior to the achievement of the participant's stated
performance objectives, all the participant's rights on the
performance shares shall expire and terminate unless otherwise
determined by the Committee. In the event of termination by reason
of death, disability, or normal retirement, the Committee, in its own
discretion may determine what portions, if any, of the performance
shares should be paid to the participant.
10. Cash Awards. A cash award consists of a monetary payment
made by the Company to a participant as additional compensation for his or her
services to the Company. Payment of a cash award will normally depend on
achievement of performance objectives by the Company or by individuals. The
amount of any monetary payment constituting a cash award shall be determined by
the Committee in its sole discretion. Cash awards may be subject to other
terms and conditions, which may vary from time to time and among participants,
as the Committee determines to be appropriate.
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11. General.
11.1 Effective Date. The Plan will become effective upon
its adoption by unanimous written action by all holders of shares of
Common Stock. Unless approved within one year after the date of the
Plan's adoption by the board of directors, the Plan shall not be
effective for any purpose.
11.2 Duration. The Plan shall remain in effect until all
Incentives granted under the Plan have either been satisfied by the
issuance of shares of Common Stock or the payment of cash or been
terminated under the terms of the Plan and all restrictions imposed on
shares of Common Stock in connection with their issuance under the
Plan have lapsed. No Incentives may be granted under the Plan after
the tenth anniversary of the date the Plan is approved by the
stockholders of the Company.
11.3 Non-transferability of Incentives. No stock option,
SAR, restricted stock or performance award may be transferred, pledged
or assigned by the holder thereof except, in the event of the holder's
death, by will or the laws of descent and distribution or pursuant to
a qualified domestic relations order as defined by the Internal
Revenue Code of 1986, as amended, or Title I of the Employee
Retirement Income Security Act, or the rules thereunder, and the
Company shall not be required to recognize any attempted assignment of
such rights by any participant. During a participant's lifetime, an
Incentive may be exercised only by him or her or by his or her
guardian or legal representative.
11.4 Effect of Termination or Death. In the event that a
participant ceases to be an employee of or consultant to the Company
for any reason, including death, any Incentives may be exercised or
shall expire at such times as may be determined by the Committee.
11.5 Additional Condition. Notwithstanding anything in
this Plan to the contrary: (a) the Company may, if it shall determine
it necessary or desirable for any reason, at the time of award of any
Incentive or the issuance of any shares of Common Stock pursuant to
any Incentive, require the recipient of the Incentive, as a condition
to the receipt thereof or to the receipt of shares of Common Stock
issued pursuant thereto, to deliver to the Company a written
representation of present intention to acquire the Incentive or the
shares of Common Stock issued pursuant thereto for his or her own
account for investment and not for distribution; and (b) if at any
time the Company further determines, in its sole discretion, that the
listing, registration or qualification (or any updating of any such
document) of any Incentive or the shares of Common Stock issuable
pursuant thereto is necessary on any securities exchange or under any
federal or state securities or blue sky law, or that the consent or
approval of any governmental regulatory body is necessary or desirable
as a condition of, or in connection with the award of any Incentive,
the issuance of shares of Common Stock pursuant thereto, or the
removal of any restrictions imposed on such shares, such Incentive
shall not be awarded or such shares of Common Stock shall not be
issued or such restrictions shall not be removed, as the case may be,
in whole or in part, unless such listing, registration,
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<PAGE> 9
qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Company.
11.6 Adjustment. In the event of any merger,
consolidation or reorganization of the Company with any other
corporation or corporations, there shall be substituted for each of
the shares of Common Stock then subject to the Plan, including shares
subject to restrictions, options, or achievement of performance share
objectives, the number and kind of shares of stock or other securities
to which the holders of the shares of Common Stock will be entitled
pursuant to the transaction. In the event of any recapitalization,
stock dividend, stock split, combination of shares or other change in
the Common Stock, the number of shares of Common Stock then subject to
the Plan, including shares subject to restrictions, options or
achievements of performance shares, shall be adjusted in proportion to
the change in outstanding shares of Common Stock. In the event of any
such adjustments, the purchase price of any option, the performance
objectives of any Incentive, and the shares of Common Stock issuable
pursuant to any Incentive shall be adjusted as and to the extent
appropriate, in the discretion of the Committee, to provide
participants with the same relative rights before and after such
adjustment.
11.7 Incentive Plans and Agreements. Except in the case
of stock awards or cash awards, the terms of each Incentive shall be
stated in a plan or agreement approved by the Committee. The
Committee may also determine to enter into agreements with holders of
options to reclassify or convert certain outstanding options, within
the terms of the Plan, as Incentive Stock Options or as non-statutory
stock options and in order to eliminate SARs with respect to all or
part of such options and any other previously issued options.
11.8 Withholding.
(a) The Company shall have the right to withhold
from any payments made under the Plan or to collect as a
condition of payment, any taxes required by law to be
withheld. At any time when a participant is required to pay
to the Company an amount required to be withheld under
applicable income tax laws in connection with a distribution
of Common Stock or upon exercise of an option or SAR, the
participant may satisfy this obligation in whole or in part by
electing (the "Election") to have the Company withhold from
the distribution shares of Common Stock having a value up to
the amount required to be withheld. The value of the shares
to be withheld shall be based on the Fair Market Value of the
Common Stock on the date that the amount of tax to be withheld
shall be determined ("Tax Date").
(b) Each Election must be made prior to the Tax
Date. The Committee may disapprove of any Election, may
suspend or terminate the right to make Elections, or may
provide with respect to any Incentive that the right to make
Elections shall not apply to such Incentive. An Election is
irrevocable.
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(c) If a participant is an officer or director of
the Company within the meaning of Section 16 of the 1934 Act,
then an Election must comply with all of the requirements of
the 1934 Act.
11.9 No Continued Employment. Engagement or Right to
Corporate Assets. No participant under the Plan shall have any
right, because of his or her participation, to continue in the employ
of, or to continue his or her consulting engagement for, the Company
for any period of time or to any right to continue his or her present
or any other rate of compensation. Nothing contained in the Plan
shall be construed as giving an employee, a consultant, such persons'
beneficiaries, or any other person, any equity or interests of any
kind in the assets of the Company or creating a trust of any kind or a
fiduciary relationship of any kind between the Company and any such
person.
11.10 Deferral Permitted. Payment of cash or distribution
of any shares of Common Stock to which a participant is entitled under
any Incentive shall be made as provided in the Incentive. Payment may
be deferred at the option of the participant if provided in the
Incentive.
11.11 Amendment of the Plan. The Board may amend or
discontinue the Plan at any time. However, no such amendment or
discontinuance shall, subject to adjustment under Section 11.6, (a)
change or impair, without the consent of the recipient, an Incentive
previously granted, (b) materially increase the maximum number of
shares of Common Stock which may be issued to all participants under
the Plan, (c) materially increase the benefits that may be granted
under the Plan, (d) materially modify the requirements as to
eligibility for participation in the Plan, or (e) materially increase
the benefits accruing to participants under the Plan.
11.12 Immediate Acceleration of Incentives.
Notwithstanding any provision in this Plan or in any Incentive to the
contrary, (a) the restrictions on all shares of restricted stock award
shall lapse immediately, (b) all outstanding options and SARs will
become exercisable immediately, and (c) all performance shares shall
be deemed to be met and payment made immediately, if subsequent to the
date that the Plan is approved by the Board of Directors of the
Company, any of the following events occur unless otherwise determined
by the board of directors and a majority of the Continuing Directors
(as defined below).
(1) any person or group of persons becomes the
beneficial owner of thirty percent (30%) or more of any equity
security of the Company entitled to vote for the election of
directors;
(2) a majority of the members of the board of
directors of the Company is replaced within the period of less
than two (2) years by directors not nominated and approved by
the board of directors; or
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(3) the stockholders of the Company approve an
agreement to merge or consolidate with or into another
corporation or an agreement to sell or otherwise dispose of
all or substantially all of the Company's assets (including a
plan of liquidation).
For purposes of this Section 11.12, beneficial ownership by a person
or group of persons shall be determined in accordance with Regulation 13D (or
any similar successor regulation) promulgated by the Securities and Exchange
Commission pursuant to the 1934 Act. Beneficial ownership of more than thirty
percent (30%) of an equity security may be established by any reasonable
method, but shall be presumed conclusively as to any person who files a
Schedule 13D report with the Securities and Exchange Commission reporting such
ownership. If the restrictions and forfeitability periods are eliminated by
reason of provision (1), the limitations of this Plan shall not become
applicable again should the person cease to own thirty percent (30%) or more of
any equity security of the Company.
For purposes of this Section 11.12, "Continuing Directors" are
directors (a) who were in office prior to the time any of provisions (1), (2)
or (3) occurred or any person publicly announced an intention to acquire twenty
percent (20%) or more of any equity security of the Company, (b) directors in
office for a period of more than two years, and (c) directors nominated and
approved by the Continuing Directors.
11.13 Definition of Fair Market Value. Whenever "Fair
Market Value" of Common Stock shall be determined for purposes of this
Plan, it shall be determined by reference to the last sale price of a
share of Common Stock on the principal United States Securities
Exchange registered under the 1934 Act on which the Common Stock is
listed (the "Exchange"), or, on the National Association of Securities
Dealers, Inc. Automatic Quotation System (including the National
Market System) ("NASDAQ") on the applicable date. If the Exchange or
NASDAQ is closed for trading on such date, or if the Common Stock does
not trade on such date, then the last sale price used shall be the one
on the date the Common Stock last traded on the Exchange or NASDAQ.
If the Common Stock is not listed on an Exchange or on NASDAQ, "Fair
Market Value" shall be determined by the Board of Directors of the
Company, which such valuation determination shall be conclusive.
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EXHIBIT 10.8
EMPLOYMENT AGREEMENT
This Agreement is made as of March 4, 1996 by and between FAMOUS
DAVE'S OF AMERICA, INC., a Minnesota corporation (the "Company"), and DAVID W.
ANDERSON (the "Executive").
W I T N E S S E T H
WHEREAS, the Company desires to employ Executive in accordance with
the terms and conditions stated in this Agreement; and
WHEREAS, Executive desires to accept that employment pursuant to the
terms and conditions of this Agreement;
NOW, THEREFORE, in consideration of the covenants and agreements
contained herein, the parties hereto agree as follows:
I. EMPLOYMENT
1.1 Employment As Chairman of the Board and Chief Executive
Officer. The Company hereby employs Executive as Chairman of the Board and
Chief Executive Officer and Executive accepts such employment pursuant to the
terms of this Agreement. Executive shall report to and take direction from the
Board of Directors. The Executive will perform those duties which are usual
and customary for a president and chief executive officer of a restaurant
company. Executive shall be employed at the Company's corporate offices. He
shall perform his duties in a manner reasonably expected of a chairman and
chief executive officer of a restaurant company.
1.2 Term. Employment shall be for a term commencing March 4, 1996
and continuing until the earlier of (i) March 4, 1998 or (ii) the date
Executive's employment terminates pursuant to Article III hereof.
II. COMPENSATION, BENEFITS AND PERQUISITES
2.1 Base Salary. During the term and effectiveness of this
Agreement, the Company shall pay Executive an annualized base salary ("Base
Salary") at the annual rate of $100,000. The Base Salary shall be payable in
equal installments in the time and manner that other employees of the Company
are compensated. The Board of Directors of the Company will review the Base
Salary at least annually, and may, in its sole discretion increase it to
reflect performance, appropriate industry guideline data or other factors.
2.2 Vacations. Executive shall be entitled to three weeks paid
vacation, or such greater amount of time as determined by the Company's Board
of Directors.
<PAGE> 2
2.3 Employee Benefits. Until the Company adopts a benefit plan,
Executive shall be entitled to the usual and customary benefits and perquisites
which the Company generally provides to its other executives under its
applicable plans and policies (including, without limitation, group health,
group dental and group life coverage). Once the Company adopts a benefit plan,
Executive shall be entitled to the benefits which the Company provides to its
other executives under such plan. Executive shall pay any contributions which
are generally required of executives to receive any such benefits.
III. TERMINATION OF EXECUTIVE'S EMPLOYMENT
3.1 Termination of Employment. Executive's employment under this
Agreement may be terminated by the Company or Executive at any time for any
reason; provided, however, that if Executive's employment is terminated by the
Company during the term of this Agreement for a reason or disability other than
for cause as defined in Section 3.2 below he shall continue to receive his Base
Salary under Section 2.1 for a period of six months from the date of
termination. Executive's employment under this Agreement may be terminated by
Executive at any time for any reason. The termination shall be effective as of
the date specified by the party initiating the termination in a written notice
delivered to the other party, which date shall not be earlier than the date
such notice is delivered to the other party. This Agreement shall terminate in
its entirety immediately upon the death of Executive. Except as expressly
provided to the contrary in this section or applicable law, Executive's rights
to pay and benefits shall cease on the date his employment under this Agreement
terminates.
3.2 Cause. For purposes of this Article III, "cause" shall mean
only the following: (i) commission of a felony; (ii) theft or embezzlement of
Company property or commission of similar acts involving moral turpitude; or
(iii) the failure by Executive to substantially perform his material duties
under this Agreement (excluding nonperformance resulting from Executive's
disability) which willful failure is not cured within thirty (30) days after
written notice from the Chairman of the Board of Directors of the Company
specifying the act of willful nonperformance or within such longer period (but
no longer than ninety (90) days in any event) as is reasonably required to cure
such willful nonperformance. Notwithstanding the foregoing, Executive shall
not be deemed to have been terminated for "cause" unless and until there shall
have been delivered to Executive a copy of a resolution duly adopted by the
affirmative vote of the Board at a meeting of the Board called and held for
this specific purpose.
3.3 Disability. If Executive has become disabled such that he
cannot perform the essential functions of his job with or without reasonable
accommodation, and the disability has continued for a period of more than
ninety (90) days, the Board of Directors of the Company may, in its discretion,
terminate his employment under this Agreement. Upon any such termination for
disability, Executive shall be entitled to such disability, medical, life
insurance, and other benefits as may be provided generally for disabled
employees of the Company during the period he remains disabled.
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<PAGE> 3
3.4 Notice. Executive must provide the Company with at least 30
days written notice if Executive desires to terminate his employment under this
Agreement.
IV. CONFIDENTIALITY
4.1 Prohibitions Against Use. Both parties to this Agreement
acknowledge and agree that during the term of this Agreement they may have
access to various trade secrets and confidential business information
("Confidential Information") of each other. Each party agrees that it shall
use such Confidential Information solely in connection with his obligations
under this Agreement and shall maintain in strictest confidence and shall not
disclose any such Confidential Information, directly or indirectly or use such
information in any other way during the term of this Agreement or for a period
of one (1) year after the termination of this Agreement. The parties further
agree to take all reasonable steps necessary to preserve and protect the
Confidential Information. The provisions of this Section shall be equally
applicable to each parties' officers, directors, agents or employees. The
provisions of this Section shall not apply to information which (i) was in
possession of a party prior to receipt from the other party, or (ii) is or
becomes generally available to the public other than as a result of a
disclosure by a party, its directors, officers, employees, agents or advisors,
or (iii) becomes available to a party from a third party having the right to
make such disclosure.
4.2 Remedies. Executive acknowledges that the Company's remedy at
law for any breach or threatened breach by Executive of Section 4.1 will be
inadequate. Therefore, the Company shall be entitled to injunctive and other
equitable relief restraining Executive from violating those requirements, in
addition to any other remedies that may be available to the Company under this
Agreement or applicable law.
V. NON-COMPETITION
5.1 Agreement Not to Compete. Executive agrees that, on or before
the date which is two (2) years after the date Executive's employment under
this Agreement terminates, he will not, unless he receives the prior approval
of the Board of Directors of the Company, directly or indirectly engage in any
of the following actions:
(a) Own an interest in (except as provided below),
manage, operate, join, control, lend money or render financial or
other assistance to, or participate in or be connected with, as an
officer, employee, partner, stockholder, consultant or otherwise, any
entity whose primary business is the retail sale of barbeque food.
However, nothing in this subsection (a) shall preclude Executive from
holding less than one percent of the outstanding capital stock of any
corporation required to file periodic reports with the Securities and
Exchange Commission under Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the securities of which are listed
on any securities exchange, quote on the National Association of
Securities Dealers Automated Quotation System or traded in the
over-the-counter market.
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(b) Intentionally solicit, endeavor to entice
away from the Company, or otherwise interfere with the
relationship of the Company, any person who is employed by or
otherwise engaged to perform services for the Company
(including, but not limited to, any independent sales
representatives or organizations), whether for Executive's own
account or for the account of any other individual,
partnership, firm, corporation or other business organization.
If the scope of the restrictions in this section are determined by a court of
competent jurisdiction to be too broad to permit enforcement of such
restrictions to their full extent, then such restrictions shall be construed or
rewritten (blue-lined) so as to be enforceable to the maximum extent permitted
by law, and Executive hereby consents, to the extent he may lawfully do so, to
the judicial modification of the scope of such restrictions in any proceeding
brought to enforce them.
VI. MISCELLANEOUS
6.1 Amendment. This Agreement may be amended only in writing,
signed by both parties.
6.2 Entire Agreement. This Agreement contains the entire
understanding of the parties with regard to all matters contained herein.
There are no other agreements, conditions or representations, oral or written,
expressed or implied, with regard thereto. This Agreement supersedes all prior
agreements relating to the employment of Executive by the Company.
6.3 Assignment. This Agreement shall be binding upon, and shall
inure to the benefit of parties and their respective successors, assigns, heirs
and personal representatives and any entity with which the Company may merge or
consolidate or to which the Company may sell substantially all of its assets.
6.4 Notices. Any notice required to be given under this Agreement
shall be in writing and shall be delivered either in person or by certified or
registered mail, return receipt requested. Any notice by mail shall be
addressed as follows:
If to the Company, to:
Famous Dave's of America, Inc.
12700 Industrial Park Boulevard
Suite 60
Plymouth, MN 55441
Attention: President
If to Executive, to:
David W. Anderson
7016 Antrim Road
Edina, MN 55439
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<PAGE> 5
or to such other addresses as either party may designate in writing to the
other party from time to time.
6.6 Waiver of Breach. Any waiver by either party of compliance
with any provision of this Agreement by the other party shall not operate or be
construed as a waiver of any other provision of this Agreement, or of any
subsequent breach by such party of a provision of this Agreement.
6.7 Severability. If any one or more of the provisions (or
portions thereof) of this Agreement shall for any reason be held by a final
determination of a court of competent jurisdiction to be invalid, illegal, or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions (or portions of the provisions) of this
Agreement, and the invalid, illegal or unenforceable provisions shall be deemed
replaced by a provision that is valid, legal and enforceable and that comes
closest to expressing the intention of the parties hereto.
6.8 Governing Law. This Agreement shall be interpreted and
enforced in accordance with the laws of the State of Minnesota, without giving
effect to conflict of law principles.
6.9 Arbitration. Any controversy or claim arising out of or
relating to this Agreement or the breach of this Agreement or the breach of any
exhibits attached to this Agreement shall be settled by arbitration in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association, and a judgment upon the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction. The arbitration award shall be
subject to review only in the manner provided in the Uniform Arbitration Act as
adopted in Chapter 572, Minnesota Statutes, as the Act is amended at the time
of submission of the issue to arbitration. The arbitrator(s) shall have the
authority to award the prevailing party its costs and reasonable attorney's
fees which shall be paid by the non-prevailing party. In the event the parties
hereto agree that it is necessary to litigate any dispute hereunder in a court,
the non-prevailing party shall pay the prevailing party its costs and
reasonable attorney's fees. Notwithstanding anything in this Section 6.9 to
the contrary, Executive shall be entitled to seek specific performance of
Executive's rights to be paid until the date of termination during the pendency
of any dispute or controversy arising under or in connection with this
Agreement or exhibits attached to this Agreement. Further, the Company shall
be entitled to seek an injunction or restraining order in a court of competent
jurisdiction to enforce the provision of Article IV and Article V.
-5-
<PAGE> 6
IN WITNESS WHEREOF, the parties have executed this Agreement
effective as of the date set forth above.
FAMOUS DAVE'S OF AMERICA, INC.
By William Timm
-------------------------------
Its President
David W. Anderson
----------------------------------
David W. Anderson
-6-
<PAGE> 1
EXHIBIT 10.9
EMPLOYMENT AGREEMENT
This Agreement is made as of March 4, 1996 by and between FAMOUS
DAVE'S OF AMERICA, INC., a Minnesota corporation (the "Company"), and WILLIAM
LANCE TIMM (the "Executive").
W I T N E S S E T H
WHEREAS, the Company desires to employ Executive in accordance with
the terms and conditions stated in this Agreement; and
WHEREAS, Executive desires to accept that employment pursuant to the
terms and conditions of this Agreement;
NOW, THEREFORE, in consideration of the covenants and agreements
contained herein, the parties hereto agree as follows:
I. EMPLOYMENT
1.1 Employment As President. The Company hereby employs Executive
as President and Executive accepts such employment pursuant to the terms of
this Agreement. Executive shall report to and take direction from the Board of
Directors. The Executive will perform those duties which are usual and
customary for a president and chief executive officer of a restaurant company.
Executive shall be employed at the Company's corporate offices. He shall
perform his duties in a manner reasonably expected of a chairman and chief
executive officer of a restaurant company.
1.2 Term. Employment shall be for a term commencing March 4, 1996
and continuing until the earlier of (i) March 4, 1998 or (ii) the date
Executive's employment terminates pursuant to Article III hereof.
II. COMPENSATION, BENEFITS AND PERQUISITES
2.1 Base Salary. During the term and effectiveness of this
Agreement, the Company shall pay Executive an annualized base salary ("Base
Salary") at the annual rate of $100,000. The Base Salary shall be payable in
equal installments in the time and manner that other employees of the Company
are compensated. The Board of Directors of the Company will review the Base
Salary at least annually, and may, in its sole discretion increase it to
reflect performance, appropriate industry guideline data or other factors.
2.2 Vacations. Executive shall be entitled to three weeks paid
vacation, or such greater amount of time as determined by the Company's Board
of Directors.
<PAGE> 2
2.3 Employee Benefits. Until the Company adopts a benefit plan,
Executive shall be entitled to the usual and customary benefits and perquisites
which the Company generally provides to its other executives under its
applicable plans and policies (including, without limitation, group health,
group dental and group life coverage). Once the Company adopts a benefit plan,
Executive shall be entitled to the benefits which the Company provides to its
other executives under such plan. Executive shall pay any contributions which
are generally required of executives to receive any such benefits.
III. TERMINATION OF EXECUTIVE'S EMPLOYMENT
3.1 Termination of Employment. Executive's employment under this
Agreement may be terminated by the Company or Executive at any time for any
reason; provided, however, that if Executive's employment is terminated by the
Company during the term of this Agreement for a reason or disability other than
for cause as defined in Section 3.2 below he shall continue to receive his Base
Salary under Section 2.1 for a period of six months from the date of
termination. Executive's employment under this Agreement may be terminated by
Executive at any time for any reason. The termination shall be effective as of
the date specified by the party initiating the termination in a written notice
delivered to the other party, which date shall not be earlier than the date
such notice is delivered to the other party. This Agreement shall terminate in
its entirety immediately upon the death of Executive. Except as expressly
provided to the contrary in this section or applicable law, Executive's rights
to pay and benefits shall cease on the date his employment under this Agreement
terminates.
3.2 Cause. For purposes of this Article III, "cause" shall mean
only the following: (i) commission of a felony; (ii) theft or embezzlement of
Company property or commission of similar acts involving moral turpitude; or
(iii) the failure by Executive to substantially perform his material duties
under this Agreement (excluding nonperformance resulting from Executive's
disability) which willful failure is not cured within thirty (30) days after
written notice from the Chairman of the Board of Directors of the Company
specifying the act of willful nonperformance or within such longer period (but
no longer than ninety (90) days in any event) as is reasonably required to cure
such willful nonperformance. Notwithstanding the foregoing, Executive shall
not be deemed to have been terminated for "cause" unless and until there shall
have been delivered to Executive a copy of a resolution duly adopted by the
affirmative vote of the Board at a meeting of the Board called and held for
this specific purpose.
3.3 Disability. If Executive has become disabled such that he
cannot perform the essential functions of his job with or without reasonable
accommodation, and the disability has continued for a period of more than
ninety (90) days, the Board of Directors of the Company may, in its discretion,
terminate his employment under this Agreement. Upon any such termination for
disability, Executive shall be entitled to such disability, medical, life
insurance, and other benefits as may be provided generally for disabled
employees of the Company during the period he remains disabled.
-2-
<PAGE> 3
3.4 Notice. Executive must provide the Company with at least 30
days written notice if Executive desires to terminate his employment under this
Agreement.
IV. CONFIDENTIALITY
4.1 Prohibitions Against Use. Both parties to this Agreement
acknowledge and agree that during the term of this Agreement they may have
access to various trade secrets and confidential business information
("Confidential Information") of each other. Each party agrees that it shall
use such Confidential Information solely in connection with his obligations
under this Agreement and shall maintain in strictest confidence and shall not
disclose any such Confidential Information, directly or indirectly or use such
information in any other way during the term of this Agreement or for a period
of one (1) year after the termination of this Agreement. The parties further
agree to take all reasonable steps necessary to preserve and protect the
Confidential Information. The provisions of this Section shall be equally
applicable to each parties' officers, directors, agents or employees. The
provisions of this Section shall not apply to information which (i) was in
possession of a party prior to receipt from the other party, or (ii) is or
becomes generally available to the public other than as a result of a
disclosure by a party, its directors, officers, employees, agents or advisors,
or (iii) becomes available to a party from a third party having the right to
make such disclosure.
4.2 Remedies. Executive acknowledges that the Company's remedy at
law for any breach or threatened breach by Executive of Section 4.1 will be
inadequate. Therefore, the Company shall be entitled to injunctive and other
equitable relief restraining Executive from violating those requirements, in
addition to any other remedies that may be available to the Company under this
Agreement or applicable law.
V. NON-COMPETITION
5.1 Agreement Not to Compete. Executive agrees that, on or before
the date which is two (2) years after the date Executive's employment under
this Agreement terminates, he will not, unless he receives the prior approval
of the Board of Directors of the Company, directly or indirectly engage in any
of the following actions:
(a) Own an interest in (except as provided below),
manage, operate, join, control, lend money or render financial or
other assistance to, or participate in or be connected with, as an
officer, employee, partner, stockholder, consultant or otherwise, any
entity whose primary business is the retail sale of barbeque food.
However, nothing in this subsection (a) shall preclude Executive from
holding less than one percent of the outstanding capital stock of any
corporation required to file periodic reports with the Securities and
Exchange Commission under Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the securities of which are listed
on any securities exchange, quote on the National Association of
Securities Dealers Automated Quotation System or traded in the
over-the-counter market.
-3-
<PAGE> 4
(b) Intentionally solicit, endeavor to entice away from
the Company, or otherwise interfere with the relationship of the
Company, any person who is employed by or otherwise engaged to perform
services for the Company (including, but not limited to, any
independent sales representatives or organizations), whether for
Executive's own account or for the account of any other individual,
partnership, firm, corporation or other business organization.
If the scope of the restrictions in this section are determined by a court of
competent jurisdiction to be too broad to permit enforcement of such
restrictions to their full extent, then such restrictions shall be construed or
rewritten (blue-lined) so as to be enforceable to the maximum extent permitted
by law, and Executive hereby consents, to the extent he may lawfully do so, to
the judicial modification of the scope of such restrictions in any proceeding
brought to enforce them.
VI. MISCELLANEOUS
6.1 Amendment. This Agreement may be amended only in writing,
signed by both parties.
6.2 Entire Agreement. This Agreement contains the entire
understanding of the parties with regard to all matters contained herein.
There are no other agreements, conditions or representations, oral or written,
expressed or implied, with regard thereto. This Agreement supersedes all prior
agreements relating to the employment of Executive by the Company.
6.3 Assignment. This Agreement shall be binding upon, and shall
inure to the benefit of parties and their respective successors, assigns, heirs
and personal representatives and any entity with which the Company may merge or
consolidate or to which the Company may sell substantially all of its assets.
6.4 Notices. Any notice required to be given under this Agreement
shall be in writing and shall be delivered either in person or by certified or
registered mail, return receipt requested. Any notice by mail shall be
addressed as follows:
If to the Company, to:
Famous Dave's of America, Inc.
12700 Industrial Park Boulevard
Suite 60
Plymouth, MN 55441
Attention: President
If to Executive, to:
William Lance Timm
7016 Antrim Road
Edina, MN 55439
-4-
<PAGE> 5
or to such other addresses as either party may designate in writing to the
other party from time to time.
6.6 Waiver of Breach. Any waiver by either party of compliance
with any provision of this Agreement by the other party shall not operate or be
construed as a waiver of any other provision of this Agreement, or of any
subsequent breach by such party of a provision of this Agreement.
6.7 Severability. If any one or more of the provisions (or
portions thereof) of this Agreement shall for any reason be held by a final
determination of a court of competent jurisdiction to be invalid, illegal, or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions (or portions of the provisions) of this
Agreement, and the invalid, illegal or unenforceable provisions shall be deemed
replaced by a provision that is valid, legal and enforceable and that comes
closest to expressing the intention of the parties hereto.
6.8 Governing Law. This Agreement shall be interpreted and
enforced in accordance with the laws of the State of Minnesota, without giving
effect to conflict of law principles.
6.9 Arbitration. Any controversy or claim arising out of or
relating to this Agreement or the breach of this Agreement or the breach of any
exhibits attached to this Agreement shall be settled by arbitration in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association, and a judgment upon the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction. The arbitration award shall be
subject to review only in the manner provided in the Uniform Arbitration Act as
adopted in Chapter 572, Minnesota Statutes, as the Act is amended at the time
of submission of the issue to arbitration. The arbitrator(s) shall have the
authority to award the prevailing party its costs and reasonable attorney's
fees which shall be paid by the non-prevailing party. In the event the parties
hereto agree that it is necessary to litigate any dispute hereunder in a court,
the non-prevailing party shall pay the prevailing party its costs and
reasonable attorney's fees. Notwithstanding anything in this Section 6.9 to
the contrary, Executive shall be entitled to seek specific performance of
Executive's rights to be paid until the date of termination during the pendency
of any dispute or controversy arising under or in connection with this
Agreement or exhibits attached to this Agreement. Further, the Company shall
be entitled to seek an injunction or restraining order in a court of competent
jurisdiction to enforce the provision of Article IV and Article V.
-5-
<PAGE> 6
IN WITNESS WHEREOF, the parties have executed this Agreement
effective as of the date set forth above.
FAMOUS DAVE'S OF AMERICA, INC.
By David Anderson
----------------------------------
Its Chairman
William Lance Timm
------------------------------------
William Lance Timm
-6-
<PAGE> 1
EXHIBIT 10.10
EMPLOYMENT AGREEMENT
This Agreement is made as of August 12, 1996 by and between FAMOUS
DAVE'S OF AMERICA, INC., a Minnesota corporation (the "Company"), and MARK A.
PAYNE (the "Executive").
W I T N E S S E T H
WHEREAS, the Company desires to employ Executive in accordance with
the terms and conditions stated in this Agreement; and
WHEREAS, Executive desires to accept that employment pursuant to the
terms and conditions of this Agreement;
NOW, THEREFORE, in consideration of the covenants and agreements
contained herein, the parties hereto agree as follows:
I. EMPLOYMENT
1.1 Employment As Vice President of Finance and Chief Financial
Officer. The Company hereby employs Executive as Vice President of Finance and
Chief Financial Officer and Executive accepts such employment pursuant to the
terms of this Agreement. Executive shall report to and take direction from the
Chairman of the Board and the Board of Directors. The Executive will perform
those duties which are usual and customary for a vice president of finance and
chief financial officer of a restaurant enterprise. Executive shall be
employed at the Company's corporate offices. He shall perform his duties in a
manner reasonably expected of a vice president of finance and chief financial
officer of a restaurant company.
1.2 Term. Employment shall be for a term commencing August 12,
1996 and continuing until the earlier of (i) August 12, 1999 or (ii) the date
Executive's employment terminates pursuant to Article III hereof.
II. COMPENSATION, BENEFITS AND PERQUISITES
2.1 Base Salary. During the term and effectiveness of this
Agreement, the Company shall pay Executive an annualized base salary ("Base
Salary") at the annual rate of $125,000. The Base Salary shall be payable in
equal installments in the time and manner that other employees of the Company
are compensated. The Board of Directors of the Company will review the Base
Salary at least annually, and may, in its sole discretion increase it to
reflect performance, appropriate industry guideline data or other factors.
2.2 Bonus. Executive will receive a bonus in the amount of
$25,000 upon the closing of the Company's Initial Public Offering, if any. The
Company also agrees to consider an annual bonus
<PAGE> 2
based on Executive's performance to be determined at the end of each year of
service, at the discretion of the Company's Board of Directors.
2.3 Vacations. Executive shall be entitled to three weeks paid
vacation, or such greater amount of time as determined by the Company's Board
of Directors.
2.4 Employee Benefits. Until the Company adopts a benefit plan,
Executive shall be entitled to the usual and customary benefits and perquisites
which the Company generally provides to its other executives under its
applicable plans and policies (including, without limitation, group health,
group dental and group life coverage). The Company also agrees to pay 75% of
the COBRA continuation premiums for Executive's health and dental insurance
currently maintained by Executive and his family for the period provided under
COBRA. Once the Company adopts a benefit plan, Executive shall be entitled to
the benefits which the Company provides to its other executives under such
plan. Executive shall pay any contributions which are generally required of
executives to receive any such benefits.
III. TERMINATION OF EXECUTIVE'S EMPLOYMENT
3.1 Termination of Employment. Executive's employment under this
Agreement may be terminated by the Company or Executive at any time for any
reason; provided, however, that if Executive's employment is terminated by the
Company during the term of this Agreement for a reason or disability other than
for cause as defined in Section 3.2 below he shall continue to receive his Base
Salary under Section 2.1 for a period of six months from the date of
termination, if such termination occurs in the first year of service. If such
termination occurs after the first year of service, during the term of this
Agreement for a reason or disability other than for cause as defined in Section
3.2 below he shall continue to receive his Base Salary under Section 2.1 for a
period of twelve months from the date of termination. The Executive's
employment under this Agreement may be terminated by Executive at any time for
any reason. The termination shall be effective as of the date specified by the
party initiating the termination in a written notice delivered to the other
party, which date shall not be earlier than the date such notice is delivered
to the other party. This Agreement shall terminate in its entirety immediately
upon the death of Executive. Except as expressly provided to the contrary in
this section or applicable law, Executive's rights to pay and benefits shall
cease on the date his employment under this Agreement terminates.
3.2 Cause. For purposes of this Article III, "cause" shall mean
only the following: (i) commission of a felony; (ii) theft or embezzlement of
Company property or commission of similar acts involving moral turpitude; or
(iii) the failure by Executive to substantially perform his material duties
under this Agreement (excluding nonperformance resulting from Executive's
disability) which willful failure is not cured within thirty (30) days after
written notice from the Chairman of the Board of Directors of the Company
specifying the act of willful nonperformance or within such longer period (but
no longer than ninety (90) days in any event) as is reasonably required to cure
such willful nonperformance. Notwithstanding the foregoing, Executive shall
not be deemed to have been terminated for "cause" unless and until there shall
have been delivered to Executive a copy of a
-2-
<PAGE> 3
resolution duly adopted by the affirmative vote of the Board at a meeting of
the Board called and held for this specific purpose.
3.3 Disability. If Executive has become disabled such that he
cannot perform the essential functions of his job with or without reasonable
accommodation, and the disability has continued for a period of more than
ninety (90) days, the Board of Directors of the Company may, in its discretion,
terminate his employment under this Agreement. Upon any such termination for
disability, Executive shall be entitled to such disability, medical, life
insurance, and other benefits as may be provided generally for disabled
employees of the Company during the period he remains disabled.
3.4 Notice. Executive must provide the Company with at least 30
days written notice if Executive desires to terminate his employment under this
Agreement.
IV. CONFIDENTIALITY
4.1 Prohibitions Against Use. Both parties to this Agreement
acknowledge and agree that during the term of this Agreement they may have
access to various trade secrets and confidential business information
("Confidential Information") of each other. Each party agrees that it shall
use such Confidential Information solely in connection with his obligations
under this Agreement and shall maintain in strictest confidence and shall not
disclose any such Confidential Information, directly or indirectly or use such
information in any other way during the term of this Agreement or for a period
of one (1) year after the termination of this Agreement. The parties further
agree to take all reasonable steps necessary to preserve and protect the
Confidential Information. The provisions of this Section shall be equally
applicable to each parties' officers, directors, agents or employees. The
provisions of this Section shall not apply to information which (i) was in
possession of a party prior to receipt from the other party, or (ii) is or
becomes generally available to the public other than as a result of a
disclosure by a party, its directors, officers, employees, agents or advisors,
or (iii) becomes available to a party from a third party having the right to
make such disclosure.
4.2 Remedies. Executive acknowledges that the Company's remedy at
law for any breach or threatened breach by Executive of Section 4.1 will be
inadequate. Therefore, the Company shall be entitled to injunctive and other
equitable relief restraining Executive from violating those requirements, in
addition to any other remedies that may be available to the Company under this
Agreement or applicable law.
V. NON-COMPETITION
5.1 Agreement Not to Compete. Executive agrees that, on or before
the date which is two (2) years after the date Executive's employment under
this Agreement terminates, he will not, unless he receives the prior approval
of the Board of Directors of the Company, directly or indirectly engage in any
of the following actions:
-3-
<PAGE> 4
(a) Own an interest in (except as provided below),
manage, operate, join, control, lend money or render financial or
other assistance to, or participate in or be connected with, as an
officer, employee, partner, stockholder, consultant or otherwise, any
entity whose primary business is the retail sale of barbeque food.
However, nothing in this subsection (a) shall preclude Executive from
holding less than one percent of the outstanding capital stock of any
corporation required to file periodic reports with the Securities and
Exchange Commission under Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the securities of which are listed
on any securities exchange, quote on the National Association of
Securities Dealers Automated Quotation System or traded in the
over-the-counter market.
(b) Intentionally solicit, endeavor to entice away from
the Company, or otherwise interfere with the relationship of the
Company, any person who is employed by or otherwise engaged to perform
services for the Company (including, but not limited to, any
independent sales representatives or organizations), whether for
Executive's own account or for the account of any other individual,
partnership, firm, corporation or other business organization.
If the scope of the restrictions in this section are determined by a court of
competent jurisdiction to be too broad to permit enforcement of such
restrictions to their full extent, then such restrictions shall be construed or
rewritten (blue-lined) so as to be enforceable to the maximum extent permitted
by law, and Executive hereby consents, to the extent he may lawfully do so, to
the judicial modification of the scope of such restrictions in any proceeding
brought to enforce them.
VI. MISCELLANEOUS
6.1 Amendment. This Agreement may be amended only in writing,
signed by both parties.
6.2 Entire Agreement. This Agreement contains the entire
understanding of the parties with regard to all matters contained herein.
There are no other agreements, conditions or representations, oral or written,
expressed or implied, with regard thereto. This Agreement supersedes all prior
agreements relating to the employment of Executive by the Company.
6.3 Assignment. This Agreement shall be binding upon, and shall
inure to the benefit of parties and their respective successors, assigns, heirs
and personal representatives and any entity with which the Company may merge or
consolidate or to which the Company may sell substantially all of its assets.
-4-
<PAGE> 5
6.4 Notices. Any notice required to be given under this Agreement
shall be in writing and shall be delivered either in person or by certified or
registered mail, return receipt requested. Any notice by mail shall be
addressed as follows:
If to the Company, to:
Famous Dave's of America, Inc.
12700 Industrial Park Boulevard
Suite 60
Plymouth, MN 55441
Attention: President
If to Executive, to:
Mark A. Payne
8860 Flesher Circle
Eden Prairie, MN 55347
or to such other addresses as either party may designate in writing to the
other party from time to time.
6.6 Waiver of Breach. Any waiver by either party of compliance
with any provision of this Agreement by the other party shall not operate or be
construed as a waiver of any other provision of this Agreement, or of any
subsequent breach by such party of a provision of this Agreement.
6.7 Severability. If any one or more of the provisions (or
portions thereof) of this Agreement shall for any reason be held by a final
determination of a court of competent jurisdiction to be invalid, illegal, or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions (or portions of the provisions) of this
Agreement, and the invalid, illegal or unenforceable provisions shall be deemed
replaced by a provision that is valid, legal and enforceable and that comes
closest to expressing the intention of the parties hereto.
6.8 Governing Law. This Agreement shall be interpreted and
enforced in accordance with the laws of the State of Minnesota, without giving
effect to conflict of law principles.
6.9 Arbitration. Any controversy or claim arising out of or
relating to this Agreement or the breach of this Agreement or the breach of any
exhibits attached to this Agreement shall be settled by arbitration in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association, and a judgment upon the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction. The arbitration award shall be
subject to review only in the manner provided in the Uniform Arbitration Act as
adopted in Chapter 572, Minnesota Statutes, as the Act is amended at the time
of submission of the issue to arbitration. The arbitrator(s) shall have the
authority to award the prevailing party its costs and reasonable attorney's
fees which shall be paid by the non-
-5-
<PAGE> 6
prevailing party. In the event the parties hereto agree that it is necessary
to litigate any dispute hereunder in a court, the non-prevailing party shall
pay the prevailing party its costs and reasonable attorney's fees.
Notwithstanding anything in this Section 6.9 to the contrary, Executive shall
be entitled to seek specific performance of Executive's rights to be paid until
the date of termination during the pendency of any dispute or controversy
arising under or in connection with this Agreement or exhibits attached to this
Agreement. Further, the Company shall be entitled to seek an injunction or
restraining order in a court of competent jurisdiction to enforce the provision
of Article IV and Article V.
IN WITNESS WHEREOF, the parties have executed this Agreement effective
as of the date set forth above.
FAMOUS DAVE'S OF AMERICA, INC.
By
------------------------------------
Its Chairman of the Board
------------------------------------
Mark A. Payne
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<PAGE> 1
EXHIBIT 10.11
FAMOUS DAVE'S
TRADEMARK LICENSE AGREEMENT
WITH GRAND PINES RESORT, INC.
This Trademark License Agreement (the "Agreement") is made as of this
4th day of March, 1996, by and between Famous Dave's of America, Inc., a
Minnesota corporation (the "Licensor") and Grand Pines Resort, Inc., a
Minnesota corporation (the "Licensee").
INTRODUCTION
Licensor is the owner of various trademarks including those which
encompass the phrase "Famous Dave's" (the "Trademarks") all as set forth on
Exhibit A attached hereto and hereby made a part hereof. In accordance with
the terms hereof, Licensor hereby grants Licensee a license to use the
Trademarks solely at Licensee's owned and/or managed restaurant in Hayward,
Wisconsin (the "Facility").
Now, therefore, in consideration of the promises set forth herein, the
parties hereto do hereby agree as follows:
1. License. Licensor grants to Licensee the nonexclusive,
personal, nontransferable right and license to use the Trademarks solely at the
Facility, under the conditions and for the term set forth herein. Licensee
may, but is not obligated, to use any of the Trademarks; provided, however,
that any use of any Trademarks shall be carried out in accordance herewith.
Licensee may not assign its rights hereunder.
2. License Fee. As and for the license of the Trademarks,
Licensee agrees to pay Licensor a fee equal to four percent (4%) of gross food
sales of the Facility, on a quarterly basis, in arrears.
3. Quality. Licensor may and shall supervise Licensee's use of
the Trademarks. Licensor may terminate this License, as provided at paragraph
8(c) hereof, if at any time Licensee's use of any of the Trademarks negatively
impacts upon Licensor's name and/or reputation for quality in a material
respect.
4. Inspection. Licensee shall, upon request of the Licensor,
submit to the Licensor or to its duly authorized representatives, samples of
all of Licensee's materials using the Trademarks for the purpose of
ascertaining or determining compliance with Paragraphs 1 and 2 hereof.
5 Use of Trademarks and Designation of Ownership. At Licensor's
request, Licensee shall provide Licensor with samples of all literature,
packages, labels, labeling, menus, and advertising using one or more of the
Trademarks, prepared by or for Licensee. When using the Trademarks under this
Agreement, Licensee agrees at all times, in advertising or in any other manner,
clearly to identify individually registered Trademarks as being so registered
and all Trademarks, registered or not, as the property of Licensor.
<PAGE> 2
6. Maintenance of Trademarks. Licensor may but is not obligated
to register and maintain the Trademarks on the United States Federal Trademark
Register.
7. Disclaimer of Liability and Indemnity. Licensor assumes no
liability to Licensee or to any third party with respect to any product
prepared and/or sold by Licensee in conjunction with any Trademark.
8. Termination.
(a) Except as otherwise provided herein, this Agreement
shall remain in full force and effect perpetually from the date of
this Agreement.
(b) If Licensee makes any assignment of assets or business
for the benefit of creditors, or if a trustee or receiver is appointed
to administer or conduct Licensee's business or affairs, or if
Licensee is adjudged in any legal proceeding to be either a voluntary
or involuntary bankrupt, then all the rights granted herein shall
forthwith cease and terminate without prior notice or legal action by
Licensor.
(c) If Licensee fails to comply with any provision of this
Agreement including paragraph 2 hereof, and/or if Licensee's use of any
Trademark negatively impacts upon Licensor's business reputation
and/or upon Licensor's reputation for quality in a material respect,
Licensor may terminate this Agreement upon 30 days' written notice to
Licensee, provided that Licensee has not corrected such default during
such thirty (30) day period.
Upon termination of this Agreement, Licensee shall as soon as is
reasonably possible thereafter, and in any event within thirty (30) days, cease
and desist in Licensee's use of any written or other materials making use of
any of the Trademarks.
9. Trademark Ownership. Licensee acknowledges Licensor's
exclusive rights, title, and interest in and to the Trademarks and will not at
any time do or cause to be done any act or thing contesting or in any way
impairing or tending to impair any part of such rights, title, and/or interest.
In connection with the use of the Trademarks, Licensee shall not in any manner
represent that it has any ownership in any Trademark or registration thereof,
and Licensee acknowledges that use of any of the Trademarks shall not create in
the Licensee's favor any right, title, or interest in or to the Trademarks, but
all uses of the Trademarks by the Licensee shall inure to the benefit of the
Licensor. Upon termination of this Agreement in any manner provided herein,
Licensee will as provided at paragraph 8 hereof, cease and desist from all use
of all of the Trademarks in any way (and will deliver up to Licensor, or its
duly authorized representatives, all materials and papers upon which any of the
Trademarks appear), and Licensee shall at no time adopt or use, without
Licensor's prior written consent, any word or mark which is likely to be
similar to or confusing with any of the Trademarks.
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10. Notices. Any notices required or permitted to be given under
this Agreement shall be deemed sufficiently given if mailed by registered mail,
postage prepaid, addressed to the party to be notified at its address shown
below; or at such other address as may be furnished in writing to the notifying
party:
Licensor: Famous Dave's of America, Inc.
7016 Antrim Road
Edina, MN 55439
Licensee: Grand Pines Resort, Inc.
7016 Antrim Road
Edina, MN 55439
11. Entire Agreement. This Agreement contains the entire
understanding of the parties with respect to the transactions contemplated by
this Agreement and supersedes all prior agreements and undertakings between the
parties with respect to such subject matter.
12. Modification or Amendment. No modification or amendment of
any term, condition or provision of this Agreement, including without
limitation the modification to any Exhibit to this Agreement, shall be valid or
of any effect unless made in writing and signed by the party to be bound or its
duly authorized representative and specifying with particularity the nature and
extent of such modification or amendment.
IN WITNESS WHEREOF, this Agreement has been executed as of the day and
year first above written.
LICENSOR: FAMOUS DAVE'S OF AMERICA, INC.
---------------------------------------------
David W. Anderson
Its President
LICENSEE: GRAND PINES RESORT, INC.
By
-----------------------------------------
Its
--------------------------------------
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EXHIBIT 10.12
MANAGEMENT AGREEMENT
This AGREEMENT made and entered into as of the 1st day of January
1996, between FAMOUS DAVE'S OF MINNEAPOLIS, INC., a Minnesota corporation
("Manager"), and FAMOUS DAVE'S ENTERPRISES, INC., a Minnesota corporation (the
"Owner"), which owns and operates a barbecue restaurant in Hayward, Wisconsin
(the "Restaurant").
I. GENERAL
1. The Owner hereby retains the Manager for the purpose of
rendering management and administrative services needed for the operation of
the Restaurant on the basis hereinafter set forth.
2. The Manager shall perform all services described herein for
the account of and as agent of the Owner. All such services shall be rendered
subject to the control of the Owner, which shall have final authority in all
matters relating to the Restaurant's operations. The Manager shall use
reasonable judgment in discharging its duties hereunder.
II. MANAGEMENT SERVICES
1. At Owner's request, Manager agrees to provide the following
consulting services and management advice to Owner in connection with the
operation of the Restaurant, in the same manner as is customary and usual in
the operation of comparable facilities, and to consult with the Owner and keep
the Owner advised as to all major policy matters affecting the Restaurant.
2. Services specified in subparagraph 1 include, but are not
limited to, advice and consultation relating to the following:
A. Licensure of the Restaurant with the proper agencies,
including the filing of any required local, state and federal reports;
B. The purchase by the Owner of hazard, liability and
other necessary insurance coverage for the Restaurant;
C. Review of the Owner's personnel requirements,
consulting with the Owner as to personnel needs and hiring personnel;
D. Establishment of staffing schedules, wage structures
and personnel policies for all personnel;
E. Purchase or lease by the Owner of all food, beverages,
supplies and equipment used in the operation of the Restaurant;
F. Day-to-day operations of the Restaurant to ensure the
operations are conducted in a businesslike manner;
G. Developing an ongoing advertising and promotion
program;
<PAGE> 2
H. Preparation of budgets and operation plans for the
Restaurant;
I. Accounting and record keeping, internal control,
inventory control, and all other financial controls relating to
Restaurant operation.
3. The Manager is not authorized to make purchases and enter into
contracts relating to the affairs of the Restaurant.
III. ACCOUNTING AND BOOKKEEPING SERVICES
Manager shall perform the following accounting and bookkeeping
services in connection with the operation of the Restaurant:
A. Receipt for and deposit in a special bank account
selected by the Owner, separate from all other monies of the Manager,
all funds received from the operation of the Restaurant and supervise
the disbursement of such funds for the operating expenses of the
Restaurant;
B. Maintain the books of account, including all journals and
ledgers, check register and payroll records;
C. Process vendors' invoices and other accounts payable;
D. Prepare payroll checks from time sheet summaries prepared
under the Manager's supervision;
E. Prepare payroll and supervise preparation of Owner's tax
returns;
F. Prepare monthly bank reconciliations; and
G. Prepare monthly operating statements in accordance with
generally accepted accounting principles and provide them to the
Owner.
IV. FEE FOR SERVICE
1. Except as provided herein, the Manager shall be reimbursed on
a monthly basis for its reasonable direct out-of-pocket expenses incurred in
connection with the service prorated hereunder, including legal, accounting,
travel, lodging and meal expenses. The Manager shall prepare an itemization of
such costs on a monthly basis which shall be submitted to the Owner by the 15th
of the subsequent month. The books and records of the Manager pertaining to
the services provided hereunder shall be reasonably available to the Owner and
its authorized agents for verification of reimbursed costs.
2. The Owner shall pay the Manager for the services rendered
hereunder a fee equal to 3% of the gross food sales of the Restaurant per month
(the "Service Fee"), payable on the 15th day of the following month.
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V. TAX PARTNERSHIP
The Manager and the Owner affirmatively state that they do not have
the intention to form a joint venture or partnership, nor have they done so.
The Manager is an independent contractor for the Owner, and no employee or
agency relationship shall exist.
VII. TERM
The initial term of this Agreement shall be one year. Either party
shall have the option to extend the term of this Agreement for additional
one-year renewal terms on the same terms and conditions contained herein if a
party gives the other party written notice of its election so to extend at
least 30 days prior to the termination of the original or any renewal term and
shall continue indefinitely thereafter until terminated by either party as set
forth herein.
VIII. TERMINATION
Notwithstanding any provision hereof to the contrary, the Owner or the
Manager shall have the right to terminate this Agreement:
A. by the Owner, on 60 days' advance written notice, in the
event the Manager ceases to be an affiliate of the Owner;
B. by the Company, on 60 days' advance written notice, if
the Owner sells or otherwise transfers ownership of the Restaurant to a
non-affiliated party;
C. by either party without cause after the initial and
renewal terms, on 30 days' prior written notice; or
D. by either party at any time for cause, if such cause has
a material adverse effect on the Restaurant, upon 30 days' prior
written notice to the other party, unless such cause is cured as
provided herein. Such notice shall describe in detail the basis upon
which the terminating party believes such termination is justified.
Upon receipt of such notice, the other party shall immediately commence
to attempt to cure and shall have 30 days during which to attempt to
cure any alleged default under this Agreement, and upon such cure being
effected, the terminating party's rights to terminate shall cease, and
this Agreement will continue in full force and effect. Furthermore, if
the Manager has diligently attempted to effect such a cure within such
30-day period but cannot complete such cure because of the failure of a
third party (such as a governmental agency) to act within such period,
then the Manager shall have a reasonable time beyond such 30-day
period, not to exceed an additional 90 days, to complete its cure of
the alleged basis for the Owner's election to terminate. In addition,
either party may terminate this Agreement by notice to the other party
upon such other party's filing of a voluntary petition in bankruptcy,
making of an assignment for the benefit of creditors, adjudication as a
bankrupt or insolvent, filing of a petition or answer seeking for
itself a reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any statute, law or
rule, seeking or consenting to or acquiescence in the appointment of a
trustee, receiver or liquidator for all or any part of the party's
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<PAGE> 4
assets or ceasing to be a going concern. For purposes of this Agreement,
"cause" shall be gross negligence, malfeasance or breach of this Agreement.
VI. NOTICES
All notices permitted or required by this Agreement shall be deemed
given when in writing and delivered personally or deposited in the United
States mail, postage prepaid, return receipt requested, addressed to the other
party at the address set forth below or such address as the party may designate
in writing:
To Manager: Famous Dave's of Minneapolis, Inc.
7016 Antrim Road
Edina, MN 55439
To Owner: Famous Dave's Enterprises, Inc.
Route 5, Box 5167
Hayward, WI 54843
VIII. MISCELLANEOUS
1. Section headings are for convenience of reference only and
shall not be used to construe the meaning of any provision of this Agreement.
2. This Agreement may be executed in any number of counterparts,
each of which shall be an original, and all of which shall together constitute
one agreement.
3. Should any part of this Agreement be invalid or unenforceable,
such invalidity or unenforceability shall not affect the validity and
enforceability of the remaining portions.
4. Each individual signing this Agreement warrants that such
execution has been duly authorized by the party for which he is signing. The
execution and performance of this Agreement by each party has been duly
authorized by all applicable laws and regulations and all necessary corporate
action, and this Agreement constitutes the valid and enforceable obligation of
each party in accordance with its terms.
5. The Manager shall not assign this Agreement other than to an
affiliate corporation or other entity controlled by the Manager. Affiliate
shall mean any person directly or indirectly controlling, controlled by or
under common control with the applicable party.
6. This Agreement shall be construed in accordance with the laws
of the State of Minnesota.
7. This Agreement may not be modified except in writing executed
by the party to be charged.
8. This Agreement constitutes the entire agreement of the parties
hereto and supersedes all prior agreements and representations with respect to
the subject matter hereof.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
MANAGER:
FAMOUS DAVE'S OF MINNEAPOLIS, INC.
By:__________________________
Name:
Title:
OWNER:
FAMOUS DAVE'S ENTERPRISES, INC.
By:__________________________
Name:
Title:
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<PAGE> 1
EXHIBIT 24.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
report and to all references to our firm included in or made a part of this
registration statement.
/s/ Lund Koehler Cox & Company, PLLP
LUND KOEHLER COS & COMPANY, PLLP
Minneapolis, Minnesota
August 22, 1996
