<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the quarterly period ended June 29, 1997
[ ] Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from ____________________ to _________________
Commission file number 0-21625
--------------
FAMOUS DAVE'S OF AMERICA, INC.
(Exact Name of Small Business Issuer as Specified in Its Charter)
Minnesota 41-1782300
(State or other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
12700 Industrial Park Boulevard, Suite #60, Plymouth, MN 55441
(Address of Principal Executive Offices)
(612) 557-5798
(Issuer's Telephone Number, Including Area Code)
(Former Name, Former Address and Former Fiscal Year, If Changed Since
Last Report)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No
----- -----
At August 1, 1997 there were 8,665,990 shares of common stock, $.01 par value,
outstanding.
1
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FAMOUS DAVE'S OF AMERICA, INC.
Form 10-QSB Index
June 29,1997
<TABLE>
<CAPTION>
Page Number
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<S> <C>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements 3
Condensed Consolidated Balance Sheets - 3
June 29, 1997 and December 29, 1996
Condensed Consolidated Statements of Operations - 4
for the thirteen weeks ended June 29, 1997 and June 30, 1996 and
for the twenty-six weeks ended June 29, 1997 and June 30, 1996
Condensed Consolidated Statements of Cash Flows - 5
for the twenty-six weeks ended June 29, 1997 and June 30, 1996
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of 8
Financial Condition and Results of Operations
PART II OTHER INFORMATION
Items 1 and 6. 12
Signatures 13
</TABLE>
2
<PAGE> 3
Part I. Financial Information
Item 1. Financial Statements
FAMOUS DAVE'S OF AMERICA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 29, December 29,
1997 1996
-------- ------------
ASSETS (Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 747,514 $ 4,906,640
Available-for-sale securities 6,887,893 9,417,188
Inventories 271,401 166,594
Prepaid expenses and other current assets 830,212 577,590
----------- -----------
Total current assets 8,737,020 15,068,012
----------- -----------
PROPERTY, EQUIPMENT AND LEASEHOLD
IMPROVEMENTS, NET 10,715,691 5,837,844
----------- -----------
OTHER ASSETS:
Construction in progress 932,377 192,131
Other 113,625 222,472
----------- -----------
Total other assets 1,046,002 414,603
----------- -----------
$20,498,713 $21,320,459
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 1,338,269 $ 445,910
Notes payable 0 473,044
Current portion of capital lease obligations 170,622 162,261
Other current liabilities 542,669 194,430
----------- -----------
Total current liabilities 2,051,560 1,275,645
CAPITAL LEASE OBLIGATIONS, NET OF CURRENT
PORTION 649,963 741,797
----------- -----------
Total liabilities 2,701,523 2,017,442
----------- -----------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Common stock, $.01 par value, 100,000,000 shares authorized,
6,024,250 and 6,001,250 shares issued and outstanding 60,243 60,013
Additional paid-in capital 19,609,286 19,586,515
Unrealized loss on securities available-for-sale 0 (11,850)
Accumulated deficit (1,872,339) (331,661)
----------- -----------
Total shareholders' equity 17,797,190 19,303,017
----------- -----------
$20,498,713 $21,320,459
=========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
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FAMOUS DAVE'S OF AMERICA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Thirteen Weeks Ended Twenty-six Weeks Ended
-------------------------- -------------------------
June 29, June 30, June 29, June 30,
1997 1996 1997 1996
-------------- ---------- ----------- -----------
(Unaudited) (Unaudited)(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
SALES, NET $ 3,797,462 $ 716,479 $ 6,038,145 $1,006,867
------------- ---------- ----------- ----------
COSTS AND EXPENSES:
Food and beverage costs 1,402,780 245,058 2,182,806 339,801
Labor and benefits 847,041 139,312 1,419,361 214,712
Restaurant operating expenses 694,291 115,054 1,150,129 188,956
Depreciation and amortization 114,642 19,338 238,374 27,286
Pre-opening expenses 282,557 0 282,557 0
General and administrative 1,497,795 315,877 2,564,805 601,824
------------- ---------- ----------- ----------
Total costs and expenses 4,839,106 834,639 7,838,032 1,372,579
------------- ---------- ----------- ----------
LOSS FROM OPERATIONS (1,041,644) (118,160) (1,799,887) (365,712)
Interest and other income (expense), net 120,253 (19,595) 259,209 (22,491)
------------- ---------- ----------- ----------
NET LOSS $ (921,391) $ (137,755) $(1,540,678) $ (388,203)
============= ========== =========== ==========
NET LOSS PER COMMON SHARE $ (0.15) $ (0.06) $ (0.25) $ (0.18)
============= ========== =========== ==========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING 6,219,044 2,214,423 6,218,233 2,214,423
============= ========== =========== ==========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE> 5
FAMOUS DAVE'S OF AMERICA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Twenty-six Weeks Ended
-----------------------
June 29, June 30,
1997 1996
---------- ----------
(Unaudited) (Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net loss $ (1,540,678) $ (388,203)
Adjustments to reconcile net loss to
cash flows from operating activities:
Depreciation and amortization 320,876 36,289
Changes in working capital items -
Inventories (104,807) (42,127)
Prepaids and other current assets (235,651) (340,233)
Accounts payable 892,359 367,660
Other current liabilities 348,239 202,715
---------- ---------
Cash flows from operating activities (319,662) (163,899)
---------- ---------
CASH FLOWS FROM
INVESTING ACTIVITIES:
Purchase of property, equipment
and leasehold improvements (5,136,006) (991,415)
Increase in construction progress (740,246) (87,957)
Net decrease in securities available-for-sale 2,541,145 0
Purchase of intangibles (16,950) 0
Net change in pre-opening expenses 63,080 (39,068)
---------- ---------
Cash flows from investing activities (3,288,977) (1,118,440)
---------- ---------
CASH FLOWS FROM
FINANCING ACTIVITIES:
Advances (payments) on notes payable (473,044) 1,516,503
Payments on capital lease obligations (83,472) 0
Prepaid equity issuance costs paid (16,971) (82,324)
Proceeds from exercise of stock options 23,000 0
---------- ---------
Cash flows from financing activities (550,487) 1,434,179
---------- ---------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (4,159,126) 151,840
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 4,906,640 100,297
---------- ---------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 747,514 $ 252,137
========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
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FAMOUS DAVE'S OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 29, 1997
(UNAUDITED)
(1) GENERAL
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." As of June 29, 1997, the Company owned and operated
five restaurants: its original unit located in the Linden Hills neighborhood
of Minneapolis (the "Linden Hills Unit"), a unit in Roseville, Minnesota which
opened in June 1996 (the "Roseville Unit"), a unit in Calhoun Square in
Minneapolis, Minnesota which opened in September 1996 (the "Calhoun Blues
Club"), a unit in Maple Grove, Minnesota which opened in April 1997 (the "Maple
Grove Unit"), and a unit in the Highland Park neighborhood of St. Paul,
Minnesota which opened in June 1997 (the "Highland Park Unit"). As of June 30,
1996, the Company owned and operated two restaurants: the Linden Hills Unit
and the Roseville Unit. As of June 29, 1997, the Company had seven additional
units in development. During July 1997, the Company opened two of these units
in Apple Valley and Stillwater, Minnesota.
(2) BASIS OF FINANCIAL STATEMENT PRESENTATION
The accompanying unaudited condensed financial statements have been
prepared by the Company pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations. Although management believes that the disclosures are adequate to
make the information presented not misleading, it is suggested that these
interim condensed financial statements be read in conjunction with the
Company's most recent audited financial statements and notes thereto included
in the Company's Annual Report on Form 10-KSB for the fiscal year ended
December 29, 1996. In the opinion of management, all adjustments (which include
only normal recurring adjustments) necessary for a fair presentation of the
financial position, results of operations and cash flows for the interim
periods presented have been made. Operating results for the thirteen and
twenty-six weeks ended June 29, 1997 are not necessarily indicative of the
results that may be expected for the fiscal year ending December 28, 1997.
Certain amounts in the fiscal 1996 financial statements have been
reclassified to conform to the fiscal 1997 presentation with no impact on
previously reported net loss or shareholders' equity.
(3) INITIAL PUBLIC STOCK OFFERING/CLASS A WARRANT CALL
During October and November 1996, the Company sold, in an initial public
offering, 2,645,000 units consisting of one share of common stock and one
Redeemable Class A Warrant for $6.50 per unit. Net proceeds to the Company
totaled approximately $15,200,000. Each Redeemable Class A Warrant entitled
the holder to purchase one share of common stock for $8.50 per share.
In June 1997, the Company called for the redemption of the Class A
Warrants, giving warrant holders 30 days notice to exercise their warrants
prior to redemption by the Company. During July 1997, the warrant call was
completed with more than 2,635,000 of the outstanding 2,645,000 warrants being
exercised. Net proceeds to the Company from such exercises totalled over $22
million. Unexercised warrants were redeemed for $.01 per warrant.
(4) INCOME (LOSS) PER COMMON SHARE
Income (loss) per common share is usually based on the weighted average
number of common shares outstanding during each period. 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
approach was used in determining the dilutive effect of such issuances.
6
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FAMOUS DAVE'S OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 29, 1997
(UNAUDITED)
The Company will adopt in the fiscal year ending December 28, 1997,
Statement of Financial Accounting Standards No. 128 "Earnings per Share" (SFAS
No. 128), which was issued in February 1997. SFAS No. 128 requires disclosures
of basic earnings per share (EPS) and diluted EPS, which replaces the existing
primary EPS and fully diluted EPS, as defined by APB No. 15. Basic EPS is
computed by dividing net income by the weighted average number of shares of
Common Stock outstanding during the year. Dilutive EPS is computed similar to
EPS as previously reported provided that, when applying the treasury stock
method to common equivalent shares, the Company must use its average share
price for the period rather than the more dilutive greater of the average share
price or end-of-period share price required by APB No. 15.
(5) PRE-OPENING COSTS
It is the Company's policy to capitalize direct and incremental costs
associated with opening a new Unit which consist primarily of hiring and
training the initial workforce and other direct costs. Beginning March 31,
1997, these costs are charged to operations in the month the Unit opens. Prior
to March 31, 1997, the Company amortized these costs over a twelve-month period
beginning when the Unit was opened. During the thirteen weeks ended June 29,
1997, the Company charged to operations approximately $80,000 in previously
unamortized pre-opening costs related to its Roseville Unit and Calhoun Blues
Club as a result of this change.
(6) RELATED PARTY TRANSACTIONS
S&D LAND HOLDINGS, INC. - The Company leases the real estate for four of
its current or proposed units from S&D Land Holdings, Inc. (S&D), a company
wholly owned by the Company's founding Shareholder.
GRAND PINES RESORTS, INC. - Grand Pines Resorts, Inc. (Grand Pines) is a
company wholly owned by the founding shareholder of the Company. The Company
charges Grand Pines a royalty of 4% of its food sales and provides certain
management services to Grand Pines for 3% of its food sales. Royalty and
management services income totaled $24,984 and $18,579 for the thirteen weeks
ended June 29, 1997 and June 30, 1996, respectively. Royalty and management
services income totaled $43,618 and $29,776 for the twenty-six weeks ended June
29, 1997 and June 30, 1996, respectively.
NOTE PAYABLE - SHAREHOLDER - The Company has a $2,000,000 revolving note
with its founding shareholder. The note bears interest at 8%, is unsecured and
is due on demand. There were no outstanding balances on the note at June 29,
1997.
(7) INCOME TAXES
The Company was an S Corporation through March 3, 1996. Accordingly,
losses incurred through March 3, 1996 have been recognized by the Company's
founding shareholder. From March 4, 1996 though December 29, 1996, the Company
generated a net operating loss of approximately $330,000 which, if not used,
will expire in 2011. During the twenty-six weeks ended June 29, 1997, an
additional net operating loss of approximately $1,540,000 was generated which,
if not used, will expire in 2012. Future changes in the ownership of the
Company may place limitations on the use of these net operating loss
carryforwards. The Company has recorded a full valuation allowance against its
deferred tax asset due to the uncertainty of realizing the related benefit.
7
<PAGE> 8
FAMOUS DAVE'S OF AMERICA, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
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." As of June 29, 1997, the Company owned and operated
five restaurants: its original unit located in the Linden Hills neighborhood
of Minneapolis (the "Linden Hills Unit"), a unit in Roseville, Minnesota which
opened in June 1996 (the "Roseville Unit"), a unit in Calhoun Square in
Minneapolis, Minnesota which opened in September 1996 (the "Calhoun Blues
Club"), a unit in Maple Grove, Minnesota which opened in April 1997 (the "Maple
Grove Unit"), and a unit in the Highland Park neighborhood of St. Paul,
Minnesota which opened in June 1997 (the "Highland Park Unit"). The Calhoun
Blues Club features live blues music nightly and an authentic Chicago blues
decor. As of June 30, 1996, the Company owned and operated two restaurants:
the Linden Hills Unit and the Roseville Unit. As of June 29, 1997, the Company
had seven additional units in development. During July 1997, the Company
opened two of these units in Apple Valley and Stillwater, Minnesota.
Future additional revenues and profits, if any, will depend upon various
factors, including additional market acceptance of the Famous Dave's concept,
the quality of the restaurant operations, the ability to expand to multi-unit
operations and general economic conditions. The Company's present sources of
revenue are limited to existing operating 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 existing operating units.
The Company also faces all of the risks, expenses and difficulties frequently
encountered in connection with the expansion and development of an 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.
The following discussion and analysis of financial condition and results
of operations should be read in conjunction with the accompanying unaudited
condensed consolidated financial statements and notes thereto and the audited
consolidated financial statements and notes thereto included in the Company's
Form 10-KSB for the fiscal year ended December 29, 1996.
RESULTS OF OPERATIONS
The overall results of operations the thirteen and twenty-six weeks ended June
29, 1997 reflect the opening of new units and the continued development of the
Company's infrastructure to support the Company's expansion. The operating
results of the Company expressed as a percentage of net sales were as follows:
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED
------------------------ ------------------------
JUNE 29, JUNE 30, JUNE 29, JUNE 30,
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
SALES, NET 100.0% 100.0% 100.0% 100.0%
----- ----- ----- -----
UNIT-LEVEL COSTS AND EXPENSES:
Food and beverage costs 36.9% 34.2% 36.2% 33.7%
Labor and benefits 22.3% 19.4% 23.5% 21.3%
Restaurant operating expenses 18.3% 16.1% 19.0% 18.8%
Depreciation and amortization 3.0% 2.7% 3.9% 2.7%
Pre-opening expenses 7.4% 0.0% 4.7% 0.0%
----- ----- ----- -----
Total costs and expenses 88.0% 72.4% 87.3% 76.5%
----- ----- ----- -----
INCOME FROM UNIT-LEVEL OPERATIONS 12.0% 27.6% 12.7% 23.5%
General and administrative 39.4% 44.1% 42.5% 59.8%
----- ----- ----- -----
LOSS FROM OPERATIONS (27.4%) (16.5%) (29.8%) (36.3%)
Interest and other income (expense), net 3.2% (2.7%) 4.3% (2.2%)
----- ----- ----- -----
NET LOSS (24.3%) (19.2%) (25.5%) (38.6%)
======= ======= ======= =======
</TABLE>
8
<PAGE> 9
FAMOUS DAVE'S OF AMERICA, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
SALES, NET
Net sales for the thirteen weeks ended June 29, 1997 were $3,797,462
compared to $716,419 for the same period in 1996, a 430% increase. For the
twenty-six weeks ended June 29, 1997, net sales were $6,038,145 compared to
$1,006,867 for the same period in 1996, a 500% increase. The increase in net
sales is primarily due to the opening of new units: the Roseville Unit in June
1996, the Calhoun Blues Club in September 1996, the Maple Grove Unit in April
1997 and the Highland Park Unit in June 1997. Net sales for the Linden Hills
Unit for the thirteen weeks and twenty-six weeks ended June 29, 1997 were down
4% and up 1%, respectively, over the comparable 1996 periods. The 4% decrease
in second quarter 1997 is primarily attributable to the opening of new units
and the resulting redistribution demand from the original Linden Hills Unit.
FOOD AND BEVERAGE COSTS
Food and beverage costs for the thirteen weeks ended June 29, 1997 were
$1,402,780 or 36.9% of net sales, compared to $245,058 or 34.2% of net sales
for the same period in 1996. For the twenty-six weeks ended June 29, 1997,
food and beverage costs were $2,182,806 or 36.2% of net sales, compared to
$339,801 or 33.7% of net sales for the same period in 1996. The increase in
food and beverage costs as a percent of sales in 1997 compared to 1996 was
primarily due to increased pork prices.
LABOR AND BENEFITS
Labor and benefits for the thirteen weeks ended June 29, 1997 were
$847,041 or 22.3% of net sales, compared to $139,312 or 19.4% of net sales for
the same period in 1996. For the twenty-six weeks ended June 29, 1997, labor
and benefits were $1,419,361 or 23.5% of net sales, compared to $214,712 or
21.3% of net sales for the same period in 1996. The increase in labor and
benefits as a percent of sales for 1997 compared to 1996 was primarily due to
(1) higher labor and benefit costs associated with the Calhoun Blues Club which
opened in September 1996 and (2) June 1996 labor levels and resulting labor
costs being unusually low at the Roseville unit when it opened in June 1996 to
much stronger than anticipated customer demand and sales volumes.
RESTAURANT OPERATING EXPENSES
Restaurant operating expenses for the thirteen weeks ended June 29, 1997
were $694,291 or 18.3% of net sales, compared to $115,054 or 16.1% of net sales
for the same period in 1996. For the twenty-six weeks ended June 29, 1997,
restaurant operating expenses were $1,150,129 or 19.0% of net sales, compared
to $188,956 or 18.8% of net sales for the same period in 1996. The increase in
restaurant operating expenses as a percent of sales for 1997 compared to 1996
was primarily due to higher operating costs associated with the Calhoun Blues
Club which opened in September 1996 offset by improved operating efficiencies
achieved in the Company's other units.
DEPRECIATION AND AMORTIZATION
Unit-level depreciation and amortization for the thirteen weeks ended June
29, 1997 were $114,642 or 3.0% of net sales compared to $19,338 or 2.7% of net
sales during the same period in 1996. Unit-level depreciation and amortization
for the twenty-six weeks ended June 29, 1997 were $238,374 or 3.9% of net sales
compared to $27,286 or 2.7% of net sales during the same period in 1996. The
increase in unit-level depreciation and amortization in 1997 compared to 1996
is due mainly to the opening of new units. Unit-level depreciation and
amortization for the twenty-six weeks ended June 29, 1997 also includes
approximately $50,000 representing first quarter 1997 amortization of
pre-opening expenses related to the Roseville and Calhoun Units.
PRE-OPENING EXPENSES
Pre-opening expenses for the thirteen weeks ended June 29, 1997 were $282,557
or 7.4% of net sales and reflect the change, beginning March 31, 1997, whereby
pre-opening costs are charged to operations in the month a new Unit opens.
Prior to March 31, 1997, the Company amortized pre-opening costs over a
twelve-month period following the opening of the Unit. During the thirteen
weeks ended June 29, 1997, the Company charged to operations approximately
$80,000 in previously unamortized pre-opening costs related to its Roseville
Unit and Calhoun Blues Club as a result of this change.
9
<PAGE> 10
FAMOUS DAVE'S OF AMERICA, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
INCOME FROM UNIT-LEVEL OPERATIONS
Income from unit-level operations totaled $456,151, or 12.0 percent of net
sales, for the thirteen weeks ended June 29, 1997, compared to $197,717, or
27.6 percent of net sales, in the corresponding period of 1996. Income from
unit-level operations totaled $764,918, or 12.7 percent of net sales, for the
twenty-six weeks ended June 29, 1997, compared to $236,112, or 23.5 percent of
net sales, in the corresponding period of 1996. Income from unit-level
operations represents income before general and administrative expenses.
Although income from unit-level operations should not be considered an
alternative to loss from operations as a measure of the Company's operating
performance, such unit-level measurement is commonly used as an additional
measure of operating performance in the restaurant and certain related
industries. The change in income from unit-level operations, both in amount
and as a percent of sales, from 1996 to 1997 is attributable to the increase in
net sales from additional units opened, the impact of pre-opening expenses, and
the other changes in costs and expenses as discussed above.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses for the thirteen weeks ended June 29,
1997 were $1,497,795 or 39.4% of sales, compared to $315,877 or 44.1% of sales
for the same period in 1996. For the twenty-six weeks ended June 29, 1997,
general and administrative expenses were $2,564,805 or 42.5% of sales, compared
to $601,824 or 59.8% of sales for the same period in 1996. The increase in
general and administrative expenses in 1997 compared to 1996 is primarily
attributable to costs associated with the development of the Company's
corporate and administrative infrastructure, primarily in the form of
personnel, to support the development of additional units. The decrease in
general and administrative expenses as a percent of sales for 1997 compared to
1996 was primarily due to increased sales volume and the resulting improved
leveraging of the cost of corporate and administrative infrastructure.
LOSS FROM OPERATIONS
Loss from operations totaled $1,041,644, or 27.4 percent of net sales, for
the thirteen weeks ended June 29, 1997 compared to $118,160, or 16.5 percent of
net sales, in the corresponding period of 1996. Loss from operations totaled
$1,799,887, or 29.8 percent of net sales, for the twenty-six weeks ended June
29, 1997, compared to $365,712, or 36.3 percent of net sales, in the
corresponding period of 1996. The increase in loss from operations in 1997
compared to 1996 is primarily due to increased general and administrative
expenses which reflect the building of the infrastructure necessary to support
the Company's expansion, partially offset by increased income from unit-level
operations from new units opened.
INTEREST AND OTHER INCOME (EXPENSE), NET
Interest and other income (expense), net primarily represents interest
income received from short-term investments offset by interest expense on
capital lease obligations. Interest and other income (expense), net increased
to $120,253 and $259,209 for the thirteen and twenty-six weeks ending June 29,
1997 from $(19,595) and $(22,491)for the same periods in 1996, respectively.
The increase in income in 1997 compared to 1996 was due primarily to interest
income received from the short-term investment of proceeds from the initial
public offering in October 1996.
NET LOSS/NET LOSS PER COMMON SHARE
Net loss for the thirteen weeks ended June 29, 1997 was $921,391, or $.15
per share on 6,219,044 weighted average shares outstanding, compared to a net
loss of $137,755, or $.06 per share on 2,214,423 weighted average shares
outstanding, during the comparable period in 1996. For the twenty-six weeks
ended June 29, 1997, the net loss was $1,540,678, or $.25 per share on
6,218,233 weighted average shares outstanding, compared to a net loss of
$388,203 or $.18 per share on 2,214,423 weighted average shares outstanding
during the comparable period in 1996. The increase in the net loss and the net
loss per share is primarily the result of increased general and administrative
expenses which reflect the building of the infrastructure necessary to support
the Company's expansion, partially offset by increased income from unit-level
operations from new units opened.
10
<PAGE> 11
FAMOUS DAVE'S OF AMERICA, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
As of June 29, 1997, the Company held cash and short-term investments of
approximately $7.6 million compared to $14.3 million as of December 29, 1996.
As reflected in the accompanying condensed consolidated financial statements,
this decrease in cash and short-term investments during the twenty-six weeks
ended June 29, 1997 primarily represents cash flow used for (i) investing
activities (site acquisition, development, construction and purchase of
equipment) and (ii) the expansion of the Company's corporate infrastructure.
During the twenty-six weeks ended June 29, 1997, the Company used cash flows of
approximately $320,000 for operating activities, used cash flows of
approximately $5.9 million for the purchase of property, equipment and
leasehold improvements as well as site acquisition, development and
construction costs, and used cash flows of approximately $550,000 for financing
activities.
In June 1997, the Company called for the redemption of the 2,645,000
outstanding Redeemable Class A Warrants which were issued as part of the units
sold in the Company's initial public offering, giving warrant holders 30 days
notice to exercise their warrants prior to redemption by the Company. During
July 1997, the warrant call was completed with more than 2,635,000 of the
outstanding 2,645,000 warrants being exercised. Net proceeds to the Company
from such exercises totalled over $22 million. Unexercised warrants were
redeemed for $.01 per warrant.
As of June 29,1997, the Company had a lease financing facility available
of up to $3,500,000 for furniture, fixtures, equipment and leasehold
improvements, of which approximately $970,000 had been funded as of June 29,
1997.
Additional development and expansion will be funded or financed primarily
through cash and short-term investments currently held, proceeds from the sale
of additional equity and/or debt securities, and proceeds from other forms of
financing such as lease financing or other credit facilities. However, there
are no assurances that additional financing required will be available on terms
acceptable or favorable to the Company.
SEASONALITY
The Company's Units typically generate higher revenues in the second and
third quarters and lower revenues in the first and fourth quarters as a result
of seasonal traffic increases experienced during the summer months.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements. Certain information included in this
Form 10-QSB and other materials filed or to be filed by the Company with the
Securities and Exchange Commission (as well as information included in oral
statements or other written statements made or to be made by the Company)
contains statements that are forward-looking. A number of important factors
could, individually or in the aggregate, cause actual results to differ
materially from those expressed or implied in any forward-looking statements.
Such factors include, but are not limited to, the following: competition in the
casual dining restaurant market; additional market acceptance of the Company's
concept; consumer spending trends and habits; weather conditions in the regions
in which the Company develops and operates restaurants; and laws and
regulations affecting labor and employee benefit costs. For further
information regarding these and other factors, see the Company's Annual Report
on Form 10-KSB for the fiscal year ended December 29, 1996 and the registration
statement dated June 23, 1997 related to the offering of common stock issued
upon exercise of the Company's Class A Warrants.
11
<PAGE> 12
PART II. OTHER INFORMATION
Item 1. 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
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.8 1997 Employee Stock Option Plan
27 Financial Data Schedule
(b) Reports on Form 8-K
None
12
<PAGE> 13
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant has
duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
FAMOUS DAVE'S OF AMERICA, INC.
/s/ Douglas S. Lanham
---------------------------
Douglas S. Lanham
Chief Executive Officer
and Chief Operating Officer
/s/ Mark A. Payne
---------------------------
Mark A. Payne
President
/s/ Steven E. Opdahl
---------------------------
Steven E. Opdahl
Vice President, Finance and
Chief Financial Officer
(Principal Financial and Accounting Officer)
Date: August 8, 1997
13
<PAGE> 1
EXHIBIT 10.8
FAMOUS DAVE'S OF AMERICA, INC.
1997 EMPLOYEE STOCK OPTION PLAN
1. Purpose. The purpose of the 1997 Employee Stock Option Plan (the
"Plan") of Famous Dave's of America, Inc. (the "Company") is to increase
shareholder value and to advance the interests of the Company by attracting,
retaining and motivating employees of the Company by furnishing opportunities
to purchase or receive shares of Common Stock, $.01 par value, of the Company
("Common Stock") pursuant to the Plan.
2. Administration. The Plan shall be administered by the stock option
committee (the "Committee") of the Board of Directors of the Company. The
Committee shall consist of not less than two directors of the Company and shall
be appointed from time to time by the Board of Directors of the Company. 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. 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. A majority of
the Committee's members shall constitute a quorum. All action of the Committee
shall be taken by the majority of its members. 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 it 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 Employees. Employees of the Company (excluding officers and
directors of the Company) shall become eligible to receive Incentives under the
Plan when designated by the Committee. Employees may be designated
individually or by groups or categories (for example, by pay grade) as the
Committee deems appropriate. Participation by others and any performance
objectives relating to others may be approved by groups or categories (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);
and (e) performance shares (section 9).
<PAGE> 2
5. Shares Subject to the Plan.
5.1. Number of Shares. Subject to adjustment as provided in Section
10.6, the number of shares of Common Stock which may be issued under the
Plan shall not exceed 200,000 shares of Common Stock, subject to approval
by the shareholders of the Company at the next meeting of shareholders.
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 canceled
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 canceled.
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 10.6.
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 10.6. The number of shares of Common Stock subject
to a stock option shall be reduced in the same 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 10.4, 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. No stock option may be exercised during
the first six months of its term. Except as provided by the preceding
sentence, the Committee may
2
<PAGE> 3
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
shareholder.
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 422 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.
(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
shareholders.
(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.
3
<PAGE> 4
(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 422 of the Code) stock possessing
more than 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 10.6. In the
case of an 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 10.4, 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. No SAR may be exercised during the first twelve months of
its term. Except as provided in the preceding sentence, 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 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.
7.4. Payment. Subject to the right of the Committee to deliver cash
in lieu of shares of Common Stock, 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
4
<PAGE> 5
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 10.6); 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.
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,
5
<PAGE> 6
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 cost, all or a part of such
shares in the event of termination of his employment 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 1997 Employee Stock
Option Plan of Famous Dave's of America, 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 10.5, 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. Shareholder. Subject to the terms and conditions of the Plan,
each participant receiving restricted stock shall have all the rights of
a shareholder 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 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
6
<PAGE> 7
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 Shareholder. The grant of performance shares to a
participant shall not create any rights in such participant as a
shareholder 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 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 participants rights
on the performance shares shall expire and terminate unless otherwise
determined by the Committee. In the event of termination of employment
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. General.
10.1. Effective Date. The Plan will become effective on June 24,
1997.
10.2. 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 shareholders of the
Company.
10.3. 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 to the limited
extent provided in the Plan or in the Incentive) 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 by his guardian or legal representative.
7
<PAGE> 8
10.4. Effect of Termination of Employment or Death. In the event
that a participant ceases to be an employee of 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.
10.5. 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 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, qualification, consent or
approval shall have been effected or obtained free of any conditions not
acceptable to the Company.
10.6. 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.
10.7. 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.
8
<PAGE> 9
10.8. 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.
(1) No Election shall be effective for a Tax Date which
occurs within six months of the grant of the award, except
that this limitation shall not apply in the event death or
disability of the participant occurs prior to the expiration
of the six-month period.
(2) The Election must be made either six months prior to
the Tax Date or must be made during a period beginning on the
third business day following the date of release for
publication of the Company's quarterly or annual summary
statements of sales and earnings and ending on the twelfth
business day following such date.
10.9. No Continued Employment 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 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, the employee's 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.
9
<PAGE> 10
10.10. 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.
10.11. 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 10.6, (a) change or impair,
without the consent of the recipient, an Incentive previously granted,
(b) increase the maximum number of shares of Common Stock which may be
issued to all participants under the Plan, (c) change or expand the types
of Incentives that may be granted under the Plan, (d) change the class of
persons eligible to receive Incentives under the Plan, or (e) materially
increase the benefits accruing to participants under the Plan.
10.12 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 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 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
years by directors not nominated and approved by the Board of
Directors; or
(3) the shareholders 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 10.12, 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 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 peroid are eliminated by reason of provision
(1), the limitations of this Plan shall not become applicable again should the
person cease to own 30% or more of any equity security of the Company.
For purposes of this Section 10.12 "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 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.
10.13. Definition of Fair Market Value. For purposes of this Plan,
the "Fair Market Value" of a share of Common Stock at a specified date
shall, unless otherwise expressly provided in this Plan, be the amount
which the Committee determines in good faith to be 100% of the fair
market value of such a share as of the date in question; provided,
however, that notwithstanding the foregoing, if such shares are listed on
a U.S. securities exchange or are quoted on the NASDAQ National Market
System or NASDAQ Small-Cap Stock Market ("NASDAQ"), then Fair Market
Value shall be determined by reference to the last sale price of a share
of Common Stock on such U.S. securities exchange or NASDAQ on the
applicable date. If such U.S. securities 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 such U.S. securities exchange or NASDAQ.
10
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Famous
Dave's of America Form 10-QSB for the twenty-six weeks ended June 29, 1997, and
is qualified in its entirety by reference to such 10-QSB.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-28-1997
<PERIOD-START> DEC-30-1996
<PERIOD-END> JUN-29-1997
<CASH> 747,514
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19,669,529
0
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</TABLE>
