FAMOUS DAVE S OF AMERICA INC, DEF 14A, 1998-04-27

FAMOUS DAVE S OF AMERICA INC
DEF 14A, 1998-04-27
EATING PLACES

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<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the Registrant /X/
Filed by a Party other than the Registrant / /

Check the appropriate box:

<TABLE>
<S><C>
/ / Preliminary Proxy Statement / / Confidential, For Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>

FAMOUS DAVE'S OF AMERICA, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of filing fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------

(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------

(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
- --------------------------------------------------------------------------------

(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------

(5) Total fee paid:
- --------------------------------------------------------------------------------

/ / Fee paid previously with preliminary materials:

/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing by
registration statement number, or the form or schedule and the date of its
filing.

(1) Amount previously paid:
- --------------------------------------------------------------------------------

(2) Form, Schedule or Registration Statement no.:
- --------------------------------------------------------------------------------

(3) Filing Party:
- --------------------------------------------------------------------------------

(4) Date Filed:
- --------------------------------------------------------------------------------

<PAGE> 2
FAMOUS DAVE'S OF AMERICA, INC.
7279 Flying Cloud Drive
Eden Prairie, Minnesota 55344

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 11, 1998

TO THE SHAREHOLDERS OF FAMOUS DAVE'S OF AMERICA, INC.:

Please take notice that the Annual Meeting of Shareholders of Famous
Dave's of America, Inc. will be held, pursuant to due call by the Board of
Directors of the Company, at the Calhoun Blues Club, 3001 Hennepin Avenue,
Calhoun Square, Minneapolis, Minnesota, on Thursday, June 11, 1998, at 10:00
a.m., or at any adjournment or adjournments thereof, for the purpose of
considering and taking appropriate action with respect to the following:

1. To elect five directors.

2. To approve an amendment to the Company's 1995 Stock Option and
Compensation Plan to increase the number of shares of Common
Stock reserved for issuance thereunder from 900,000 to 950,000
shares.

3. To approve the adoption of the 1998 Director Stock Option
Plan.

4. To transact any other business as may properly come before the
meeting or any adjournments thereof.

Pursuant to due action of the Board of Directors, shareholders of
record on May 1, 1998 will be entitled to vote at the meeting or any
adjournments thereof.

A PROXY FOR THE MEETING IS ENCLOSED HEREWITH. YOU ARE REQUESTED TO FILL
IN AND SIGN THE PROXY, WHICH IS SOLICITED BY THE BOARD OF DIRECTORS, AND MAIL IT
PROMPTLY IN THE ENCLOSED ENVELOPE.

By Order of the Board of Directors

Douglas S. Lanham
Secretary

May 7, 1998

<PAGE> 3

FAMOUS DAVE'S OF AMERICA, INC.
7279 FLYING CLOUD DRIVE
EDEN PRAIRIE, MINNESOTA 55344

--------------------------------------------

PROXY STATEMENT

--------------------------------------------

ANNUAL MEETING OF SHAREHOLDERS TO BE HELD
JUNE 11, 1998

VOTING AND REVOCATION OF PROXY

This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Famous Dave's of America, Inc. (the
"Company") to be used at the Annual Meeting of Shareholders of the Company to be
held on Thursday, June 11, 1998, at 10:00 a.m. at the Calhoun Blues Club, 3001
Hennepin Avenue, Calhoun Square, Minneapolis, Minnesota. The approximate date on
which this Proxy Statement and the accompanying proxy were first sent or given
to shareholders was May 7, 1998. Each shareholder who signs and returns a proxy
in the form enclosed with this Proxy Statement may revoke the same at any time
prior to its use by giving notice of such revocation to the Company in writing,
in open meeting or by executing and delivering a new proxy to the Secretary of
the Company. Unless so revoked, the shares represented by each proxy will be
voted at the meeting and at any adjournments thereof. Presence at the meeting of
a shareholder who has signed a proxy does not alone revoke that proxy. Only
shareholders of record at the close of business on May 1, 1998 (the "Record
Date") will be entitled to vote at the meeting or any adjournments thereof.

VOTING SECURITIES AND
PRINCIPAL HOLDERS THEREOF

The Company has outstanding one class of voting securities, Common
Stock, $0.01 par value, of which 8,827,590 shares were outstanding as of the
close of business on the Record Date. Each share of Common Stock is entitled to
one vote on all matters put to a vote of shareholders.

<PAGE> 4

The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of the Record Date, 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, (iii) each executive officer named
in the Summary Compensation Table, and (iv) all executive officers and directors
as a group. Unless otherwise indicated, the address of each of the following
persons is 7279 Flying Cloud Drive, Eden Prairie, MN 55344 and each such person
has sole voting and investment power with respect to the shares of Common Stock
set forth opposite each of their respective names.

NAME OF BENEFICIAL OWNER (1) NUMBER PERCENT OF CLASS
- --------------------------------------------- -------- ----------------
<S> <C> <C> <C>
David W. Anderson................................ 1,781,000 (2) 20.2%

Douglas S. Lanham................................ 75,700 (3) *

Mark A. Payne (4)................................ 0 --
8860 Flesher Circle
Eden Prairie, MN 55347

Stanley R. Herman................................ 30,000 (5) *
5525 Village Drive
Edina, MN 55439

Thomas J. Brosig................................. 43,333 (6) *
130 Cheshire Lane
Minnetonka, MN 55305

Richard L. Monfort............................... 8,333 (6) *
3519 Holman Court
Greeley, CO 80631

Martin J. O'Dowd................................. 23,833 (6) *
7701 France Avenue South, Suite 200
Edina, MN 55435

Arnold and S. Bleichroder, Inc................... 714,500 (7) 8.1%
1345 Avenue of the Americas
New York, NY 10105

BankBoston Corporation........................... 645,080 (8) 7.3%
100 Federal Street
Boston, MA 02110

Mellon Bank Corporation.......................... 526,000 (9) 6.0%
One Mellon Bank Center
500 Grant Street
Pittsburgh, PA 15258-0001

Okabena Partnership K............................ 578,750 (10) 6.6%
5140 Norwest Center
90 South Seventh Street
Minneapolis, MN 55402-4139

All executive officers and directors
as a group (five persons)...................... 1,920,199 (11) 21.6%
</TABLE>

<PAGE> 5

- ---------------

* Less than 1%.

(1) Unless otherwise indicated, the address of each person is 7279 Flying
Cloud Drive, Eden Prairie, Minnesota 55344.

(2) Includes 100,000 shares owned by Grand Pines Resorts, Inc., a
corporation wholly-owned by Mr. Anderson. Mr. Anderson disclaims
beneficial ownership of such shares.

(3) Includes 50,000 shares issuable upon exercise of options exercisable
currently or within 60 days of the Record Date and 12,000 shares owned
by David Anderson subject to an option held by Mr. Lanham which is
currently exercisable.

(4) Mr. Payne's employment with the Company as President, Treasurer and
Secretary was terminated on February 3, 1998.

(5) Mr. Herman's employment with the Company as Executive Vice President of
Strategic Planning and Marketing was terminated on February 6, 1998.
Number of shares includes 30,000 shares issuable upon exercise of
options exercisable currently or within 60 days of the Record Date.

(6) Includes 8,333 shares issuable upon exercise of options exercisable
currently or within 60 days of the Record Date.

(7) Figures based on a Schedule 13G filed with the Securities and Exchange
Commission ("SEC") on February 13, 1998.

(8) Figures based on a Schedule 13G filed with the SEC on February 17, 1998,
on behalf of BankBoston Corporation and its subsidiary, BankBoston,
National Association.

(9) Figures based on a Schedule 13G filed with the SEC on January 27, 1998.
Also filed on behalf of Mellon Bank N.A. and The Dreyfuss Corporation.

(10) Figures based on a Schedule 13D filed with the SEC on November 21, 1997.
Also filed on behalf of Kohler Capital Management, Inc., Foshay Tower,
Suite 500, Minneapolis, MN 55402, which provides portfolio management
services and investment advice to Okabena Partnership K.

(11) Includes 74,999 shares issuable upon exercise of options exercisable
currently or within 60 days of the Record Date.

<PAGE> 6

ELECTION OF DIRECTORS
(PROPOSAL 1)

Five directors are to be elected at the meeting, each director to hold
office until the next Annual Meeting of Shareholders, or until his successor is
elected and qualified. All of the persons listed below are now serving as
directors of the Company.

The names and ages of the nominees, and their principal occupations and
tenure as directors, are set forth below based upon information furnished to the
Company by such nominees. All of the persons listed below have consented to
serve as a director, if elected.

NAME POSITIONS WITH THE COMPANY AGE DIRECTOR SINCE
- ------------------------------------------------------------------ --- --------------
<S> <C> <C> <C>
David W. Anderson................... Chairman of the Board 44 1994
Douglas S. Lanham................... President, Chief Executive Officer, 49 1997
Chief Operating Officer, Secretary
and Director
Thomas J. Brosig.................... Director 48 1996
Richard L. Monfort.................. Director 43 1996
Martin J. O'Dowd.................... Director 49 1996
</TABLE>

DAVID W. ANDERSON was the founder of the Company and has been the
Chairman of the Board since its formation. Mr. Anderson is also a founder
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 of that company.

DOUGLAS S. LANHAM joined the Company as President, Chief Operating
Officer and a Director in January 1997. In April 1997 Mr. Lanham assumed the
additional title of Chief Executive Officer and relinquished the title of
President. In April 1998 Mr. Lanham assumed the additional titles of President
and Secretary of the Company. From April 1994 to November 1996, Mr. Lanham was a
partner and the Chief Operating Officer of Sunstate Restaurant Corp., a
franchisee of Chili's Grill & Bar. He was the Senior Vice President of
Operations for Brinker International from 1988 to April 1994, overseeing 70
Chili's Bar & Grill restaurants from 1988 to 1991 and then serving as Concept
Head for 40 Grady's American Grill restaurants from 1991 to 1994.

THOMAS J. BROSIG has been a Director of the Company since August 1996.
Mr. Brosig has served as President of Grand Casinos, Inc. since September 1996
and also became the Chief Executive Officer in March 1998. From August 1994 to
that time, he served as its Executive Vice President - Investor Relations and
Special Projects. From its inception until May 1995, Mr. Brosig served as
Secretary of Grand Casinos, Inc., and served as its President from May 1993
until August 1994. 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., a manufacturer and distributor of leather apparel.

RICHARD L. MONFORT became a Director of the Company in December 1996.
From 1990 to 1995, Mr. Monfort served as the President of the red meats division
of Conagra, which division had $8 billion in sales of beef and pork annually.
From September 1995 to the present, Mr. Monfort has been engaged in the
management of various private business and investment interests, including
acting as managing partner of the Hyatt Grand Champion Hotel (Palm Springs,
California), owner of the Hilltop Steakhouse (Boston, Massachusetts), and
partner in the Montera Cattle Company. Mr. Monfort is also a director of
Electronic

<PAGE> 7

Fabrication Technology Corporation (Greeley, Colorado), a producer of circuit
boards and other components for computer manufacturers.

MARTIN J. O'DOWD has been a Director of the Company since November 1996
and is the President, Chief Executive Officer and a Director of Elephant &
Castle Group, Inc. He was Chief Operating Officer for United States operations
of that company from April 1997 to March 1998. From May 1995 to April 1997, Mr.
O'Dowd served as President and Chief Operating Officer and a Director of
Rainforest Cafe, Inc. From July 1987 to May 1995, Mr. O'Dowd was Corporate
Director, Food and Beverage Services for Holiday Inn Worldwide. Mr. O'Dowd is
also a Director of Hotel Discovery, Inc.

EXECUTIVE COMPENSATION

The following table sets forth the cash and noncash compensation for
each of the last three fiscal years awarded to or earned by each executive
officer of the Company whose salary and bonus during the year ended December 28,
1997 exceeded $100,000, or would have exceeded $100,000 had such officer been
employed by the Company at the end of the prior fiscal year.

SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>

Long-Term
Compensation
Annual Compensation Awards
------------------------------------ Other Annual Common Stock
Salary Bonus Compensation Underlying Options
Name and Principal Position Year ($) ($) ($) (#)
- --------------------------- ------ ----- ----- ----- ----
<S> <C> <C> <C> <C> <C>
David W. Anderson 1997 100,000 0 20,558 (1) 0
Chairman of the Board 1996 78,680 0 16,320 (1) 0
1995 0 0 0 0

Douglas S. Lanham 1997 199,039 0 0 300,000
President, CEO, COO 1996 0 0 0 0
and Secretary

Mark A. Payne (2) 1997 125,000 0 0 50,000
President, Treasurer and 1996 43,270 0 0 125,000
Secretary

Stanley R. Herman (3) 1997 118,749 25,000 0 20,000
Executive Vice President of 1996 0 0 0 80,000
Strategic Planning and Mktg.
</TABLE>

(1) Automobile allowance.
(2) Mr. Payne's employment with the Company was terminated on February 3, 1998.
(3) Mr. Herman's employment with the Company was terminated on February 6, 1998.

<PAGE> 8

OPTION GRANTS IN LAST FISCAL YEAR

The following table sets forth the number of individual grants of stock
options made during fiscal year 1997 to each of the executive officers named in
the Summary Compensation Table:
<TABLE>
<CAPTION>

Number of Percent of
Shares Total Options Market Price
Underlying Granted to Exercise or on Date
Options Employees in Base Price of Grant Expiration
Name Granted (#) Fiscal Year ($/Share) ($/Share) Date
- ---- ----------- ------------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
David W. Anderson......... 0 -- -- -- --

Douglas S. Lanham......... 250,000 (1) 41.1 8.625 8.625 1/23/2007
50,000 (2) 8.2 15.00 15.00 7/28/2007

Mark A. Payne............. 50,000 (3) 8.2 8.25 8.25 3/26/2007

Stanley R. Herman......... 20,000 (4) 3.2 8.0625 8.0625 12/18/2007
</TABLE>

(1) Options vest and become exercisable in five equal increments on the date of
grant and on the first, second, third and fourth anniversaries of the date
of grant.
(2) Options vest and become exercisable on January 23, 2005.
(3) Options vested and became exercisable in five equal increments on the
first, second, third, fourth and fifth anniversaries of the date of grant.
These options terminated as a result of the termination of Mr. Payne's
employment with the Company on February 3, 1998.
(4) Options vested and became exercisable in four equal increments on the
first, second, third and fourth anniversaries of the date of grant. These
options were terminated as a result of the termination of Mr. Herman's
employment with the Company on February 6, 1998.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES

The following table summarizes information with respect to options held
by the executive officers named in the Summary Compensation Table, and the value
of the options held by such persons at the end of fiscal 1997. No options were
exercised by the executive officers named in the Summary Compensation Table
during fiscal 1997.
<TABLE>
<CAPTION>

Number of Unexercised Value of Unexercised in-the-
Options at FY-End (#) Money Options at FY-End ($)(1)
-------------------------------- --------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
David W. Anderson.................... 0 0 -- --
Douglas S. Lanham.................... 0 300,000 -- 78,250
Mark A. Payne........................ 50,000 125,000 230,400 380,000
Stanley R. Herman.................... 20,000 80,000 38,760 133,790
</TABLE>

(1) Based upon the difference between the option exercise price and the last
sale price of the Common Stock on December 26, 1997, which was $8.938.

<PAGE> 9

EMPLOYMENT AGREEMENTS

David W. Anderson, Chairman of the Board, had a two-year employment
agreement which expired on March 4, 1998. It was subject to early termination
for variety of reasons, including voluntary termination by Mr. Anderson. Mr.
Anderson's base salary was $100,000 for the 1997 fiscal year. Such base salary
could be adjusted annually as determined by the Company's Board of Directors.
Mr. Anderson has agreed to take no salary for fiscal 1998. Such agreement also
provided that Mr. Anderson would receive six months' severance if terminated by
the Company for a reason other than "cause," as defined therein. The employment
agreement provided that Mr. Anderson would not compete with the Company for two
years if he resigned or was terminated for cause. Mr. Anderson receives medical,
dental and other customary benefits.

Douglas S. Lanham, Chief Executive Officer and Chief Operating Officer,
has a four-year employment agreement with the Company which expires on January
31, 2001, subject to early termination for a variety of reasons. Mr. Lanham
received a base salary of $225,000 during the 1997 fiscal year. The base salary
will be adjusted annually to reflect, at a minimum, increases in the consumer
price index. Pursuant to the agreement, Mr. Lanham was guaranteed to receive an
annual bonus in the amount of up to 20% of his base salary during the first year
of his employment and in the amount of up to 40% of his base salary thereafter.
Mr. Lanham waived receiving a bonus during fiscal year 1997. The agreement also
provides that Mr. Lanham will receive one year's severance if terminated by the
Company for a reason other than "cause" or if Mr. Lanham resigns for "good
reason," as defined therein, except that if Mr. Lanham resigns for any reason
between the sixth and 12th month of the agreement, he shall continue to receive
his base salary for the remainder of the calendar year or for three months, if
greater. Mr. Lanham also receives medical, dental and other customary benefits.
The employment agreement provides that Mr. Lanham will not compete with the
Company for two years if he resigns or is terminated for cause.

Mark A. Payne, President, Treasurer and Secretary, had a three-year
employment agreement which expired on August 12, 1999, subject to early
termination for a variety of reasons. Mr. Payne's employment with the Company
was terminated on February 3, 1998. Mr. Payne received a base salary of $125,000
for the 1997 fiscal year. Such agreement also provided that Mr. Payne would
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. The employment agreement provided that Mr.
Payne would not compete with the Company for two years if he resigned or was
terminated for cause.

In conjunction with his termination, Mr. Payne received a severance
payment of $175,000. In addition, the expiration date of Mr. Payne's option
agreement dated August 12, 1996 to purchase 25,000 shares of Common Stock was
extended until December 31, 1998. Under Mr. Payne's option agreement dated
August 12, 1996 to purchase a total of 100,000 shares, the vesting of a
previously unvested portion of the option to purchase 65,000 shares was
accelerated to February 3, 1998. A portion of the option, to purchase 25,000
shares, had already vested on August 12, 1997. The expiration date to exercise
the vested portion of the option was extended to December 31, 1998. The
remaining unvested portion of the option, to purchase 10,000 shares, was
terminated. Lastly, Mr. Payne's option agreement dated March 26, 1997 to
purchase 50,000 shares was terminated.

Stanley R. Herman, Executive Vice President of Strategic Planning and
Marketing, had a three-year employment agreement which expired on January 2,
2000, subject to early termination for a variety of reasons. Mr. Herman's
employment with the Company was terminated on February 6, 1998. Mr. Herman
received a base salary of $125,000 for the 1997 fiscal year. Such agreement
provided that Mr. Herman would receive six months' severance if terminated by
the Company for a reason other than "cause." Mr.

<PAGE> 10

Herman also received medical, dental and other customary benefits. The
employment agreement provided that Mr. Herman would not compete with the Company
for two years if he resigned or was terminated for cause.

In conjunction with his termination, Mr. Herman received a severance
payment of $62,500. Under Mr. Herman's option agreement dated December 18, 1996
to purchase a total of 80,000 shares, the vesting of a previously unvested
portion of the option to purchase 50,000 shares was accelerated to February 6,
1998. A portion of the option, to purchase 20,000 shares, had already vested on
December 18, 1997. The remaining unvested portion of the option, to purchase
10,000 shares, was terminated. Mr. Herman's option agreement dated December 18,
1997 to purchase 20,000 shares was also terminated.

DIRECTOR COMPENSATION

Directors receive no fees for serving as directors. The Company's three
non-management directors, Messrs. Brosig, Monfort and O'Dowd, each received
ten-year options to purchase 25,000 shares of Common Stock when they became
members of the Board in 1996. One-third of the options vest on each of the
first, second and third anniversaries of the date of grant. The options granted
to Messrs. Brosig and O'Dowd have an exercise price of $4.33 a share and the
options granted to Mr. Monfort have an exercise price of $6.75 a share. Members
of the Board who are also employees of the Company receive no options for their
services as directors.

CERTAIN TRANSACTIONS

The Company entered into a revolving promissory note with Mr. Anderson
allowing for advances of up to $2,000,000. This Agreement was terminated in June
1997. The outstanding balance on the note was $83,000 at December 29, 1996,
which was paid in full during 1997.

The Company leases four of its restaurant sites from S&D Land Holdings,
Inc. ("S&D"), a Minnesota corporation wholly-owned by David W. Anderson,
Chairman and Chief Executive Officer of the Company. The Company paid S&D rent
of $169,000 for the year ended December 28, 1997 and owed S&D $172,000 at
December 28, 1997.

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 service marks and recipes to
Grand Pines in exchange for a 4% annual royalty fee on gross food sales. During
the year ended December 28, 1997, the Company recognized royalty income of
$56,000 in connection with this arrangement. Until July 1997, the Company also
provided certain management services to Grand Pines for 3% of its food sales.
Management fee income was $15,000 for the year ended December 28, 1997. At
December 28, 1997, Grand Pines owed the Company $190,000 for royalties,
management services and other expenses. This amount was paid in full in February
1998.

Management believes all of the above-described transactions were
conducted on terms no less favorable to the Company than could be obtained from
unrelated third parties.

<PAGE> 11

PROPOSAL TO INCREASE THE NUMBER OF SHARES
OF COMMON STOCK RESERVED FOR ISSUANCE
UNDER THE COMPANY'S 1995 STOCK OPTION AND COMPENSATION PLAN
(PROPOSAL 2)

On December 29, 1995, the Board of Directors of the Company unanimously
approved the 1995 Stock Option and Compensation Plan (the "Plan"). At the
Company's Annual Meeting of Shareholders on July 11, 1997, an amendment to the
Plan was approved to increase the number of shares reserved for issuance under
the Plan by 400,000 shares, for a total of 900,000 shares. On January 27, 1998,
the Board of Directors approved an amendment to the Plan to increase the number
of shares reserved for issuance under the Plan by 50,000, subject to approval by
the Company's shareholders. A complete text of the Plan is set forth as Exhibit
A to this Proxy Statement. The brief summary of the Plan which follows is
qualified in its entirety by reference to the complete text.

GENERAL

The purpose of the Plan is to increase shareholder value and to advance
the interests of the Company by furnishing a variety of economic incentives
("Incentives") designed to attract, retain and motivate employees of and
consultants to the Company.

The Plan provides that a committee (the "Committee") composed of at
least two disinterested members of the board of directors of the Company may
grant Incentives in the following forms: (a) stock options; (b) stock
appreciation rights; (c) stock awards; (d) restricted stock; (e) performance
shares; and (f) cash awards. Incentives may be granted to participants who are
employees of or consultants to the Company (including officers and directors of
the Company who are also employees of or consultants to the Company) selected
from time to time by the Committee.

The number of shares of Common Stock which may be issued under the Plan
if this amendment is approved may not exceed 950,000 shares, subject to
adjustment in the event of a merger, recapitalization or other corporate
restructuring. This represents approximately 10.8% of the outstanding shares of
Common Stock on April 23, 1998. On April 23, 1998, the closing sale price of the
Common Stock as reported by Nasdaq was $6.125 per share.

STOCK OPTIONS

Under the Plan, the Committee may grant non-qualified and incentive
stock options to eligible employees to purchase shares of Common Stock from the
Company. The Plan confers on the Committee discretion, with respect to any such
stock option, to determine the number and purchase price of the shares subject
to the option, the term of each option and the time or times during its term
when the option becomes exercisable. The purchase price for incentive stock
options may not be less than the fair market value of the shares subject to the
option on the date of grant. The number of shares subject to an option will be
reduced proportionately to the extent that the optionee exercises a related SAR.
The term of a non-qualified option may not exceed 10 years and one day from the
date of grant and the term of an incentive stock option may not exceed 10 years
from the date of grant. Any option shall become immediately exercisable in the
event of specified changes in corporate ownership or control. The Committee may
accelerate the exercisability of any option or may determine to cancel stock
options in order to make a participant eligible for the grant of an option at a
lower price. The Committee may approve the purchase by the Company of an
unexercised stock option for the difference between the exercise price and the
fair market value of the shares covered by such option.

<PAGE> 12

The option price may be paid in cash, check, bank draft or by delivery
of shares of Common Stock valued at their fair market value at the time of
purchase or by withholding from the shares issuable upon exercise of the option
shares of Common Stock valued at their fair market value or as otherwise
authorized by the Committee.

In the event that an optionee ceases to be an employee of or consultant
to the Company for any reason, including death, any stock option or unexercised
portion thereof which was otherwise exercisable on the date of termination of
employment shall expire at the time or times established by the Committee.

STOCK APPRECIATION RIGHTS

A stock appreciation right or a "SAR" is a right to receive, without
payment to the Company, a number of shares, cash or any combination thereof, the
amount of which is determined pursuant to the formula described below. A SAR may
be granted with respect to any stock option granted under the Plan, or alone,
without reference to any stock option. A SAR granted with respect to any stock
option may be granted concurrently with the grant of such option or at such
later time as determined by the Committee and as to all or any portion of the
shares subject to the option.

The Plan confers on the Committee discretion to determine the number of
shares as to which a SAR will relate as well as the duration and exercisability
of an SAR. 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 will be reduced in
the same proportion that the holder exercises the related option. The term of a
SAR may not exceed ten years and one day from the date of grant. Unless
otherwise provided by the Committee, a SAR will be exercisable for the same time
period as the stock option to which it relates is exercisable. Any SAR shall
become immediately exercisable in the event of specified changes in corporate
ownership or control. The Committee may accelerate the exercisability of any
SAR.

Upon exercise of a SAR, the holder is entitled to receive an amount
which is equal to the aggregate amount of the appreciation in the shares of
Common Stock as to which the SAR is exercised. For this purpose, the
"appreciation" in the shares consists of the amount by which the fair market
value of the shares of Common Stock on the exercise date exceeds (a) in the case
of a SAR related to a stock option, the purchase price of the shares under the
option or (b) in the case of a SAR granted alone, without reference to a related
stock option, an amount determined by the Committee at the time of grant. The
Committee may pay the amount of this appreciation to the holder of the SAR by
the delivery of Common Stock, cash, or any combination of Common Stock and cash.

RESTRICTED STOCK

Restricted stock consists of the sale or transfer by the Company to an
eligible participant of one or more shares of Common Stock which are subject to
restrictions on their sale or other transfer by the employee. The price at which
restricted stock will be sold will be determined by the Committee, and it may
vary from time to time and among employees and may be less than the fair market
value of the shares at the date of sale. All shares of restricted stock will be
subject to such restrictions as the Committee may

<PAGE> 13

determine. Subject to these restrictions and the other requirements of the Plan,
a participant receiving restricted stock shall have all of the rights of a
shareholder as to those shares.

STOCK AWARDS

Stock awards consist of the transfer by the Company to an eligible
participant of shares of Common Stock, without payment, as additional
compensation for services to the Company. The number of shares transferred
pursuant to any stock award will be determined by the Committee.

PERFORMANCE SHARES

Performance shares consist of the grant by the Company to an eligible
participant of a contingent right to receive cash or payment of shares of Common
Stock. The performance shares shall be paid in shares of Common Stock to the
extent performance objectives set forth in the grant are achieved. The number of
shares granted and the performance criteria will be determined by the Committee.

CASH AWARDS

A cash award consists of a monetary payment made by the Company to an
eligible participant as additional compensation for his services to the Company.
Payment may depend on the achievement of specified performance objectives. The
amount of any monetary payment constituting a cash award shall be determined by
the Committee.

NON-TRANSFERABILITY OF MOST INCENTIVES

No stock option, SAR, performance share or restricted stock granted
under the Plan will be transferable by its holder, except in the event of the
holder's death, by will or the laws of descent and distribution. During an
employee's lifetime, an Incentive may be exercised only by him or her or by his
or her guardian or legal representative.

AMENDMENT OF THE PLAN

The Board of Directors may amend or discontinue the Plan at any time.
However, no such amendment or discontinuance may, subject to adjustment in the
event of a merger, recapitalization, or other corporate restructuring, (a)
change or impair, without the consent of the recipient thereof, an Incentive
previously granted, (b) materially increase the maximum number of shares of
Common Stock which may be issued to all employees under the Plan, (c) materially
change or expand the types of Incentives 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. Certain
Plan amendments require shareholder approval, including amendments which would
materially increase benefits accruing to participants, increase the number of
securities issuable under the Plan, or change the requirements for eligibility
under the Plan.

FEDERAL INCOME TAX CONSEQUENCES

The following discussion sets forth certain United States income tax
considerations in connection with the ownership of Common Stock. These tax
considerations are stated in general terms and are based on the Internal Revenue
Code of 1986, as amended, regulations thereunder and judicial and administrative
interpretations thereof. This discussion does not address state or local tax
considerations with respect to the

<PAGE> 14

ownership of Common Stock. Moreover, the tax considerations relevant to
ownership of the Common Stock may vary depending on a holder's particular
status.

Under existing Federal income tax provisions, a participant who
receives a stock option or performance shares or a SAR under the Plan or who
purchases or receives shares of restricted stock under the Plan which are
subject to restrictions which create a "substantial risk of forfeiture" (within
the meaning of section 83 of the Internal Revenue Code) will not normally
realize any income, nor will the Company normally receive any deduction for
federal income tax purposes in the year such Incentive is granted. A participant
who receives a stock award under the Plan consisting of shares of Common Stock
will realize ordinary income in the year of the award in an amount equal to the
fair market value of the shares of Common Stock covered by the award on the date
it is made, and the Company will be entitled to a deduction equal to the amount
the participant is required to treat as ordinary income. A participant who
receives a cash award will realize ordinary income in the year the award is paid
equal to the amount thereof, and the amount of the cash will be deductible by
the Company.

When a non-qualified stock option granted pursuant to the Plan is
exercised, the participant will realize ordinary income measured by the
difference between the aggregate purchase price of the shares of Common Stock as
to which the option is exercised and the aggregate fair market value of shares
of the Common Stock on the exercise date, and the Company will be entitled to a
deduction in the year the option is exercised equal to the amount the
participant is required to treat as ordinary income.

Options which qualify as incentive stock options are entitled to
special tax treatment. Under existing federal income tax law, if shares
purchased pursuant to the exercise of such an option are not disposed of by the
optionee within two years from the date of granting of the option or within one
year after the transfer of the shares to the optionee, whichever is longer, then
(i) no income will be recognized to the optionee upon the exercise of the
option; (ii) any gain or loss will be recognized to the optionee only upon
ultimate disposition of the shares and, assuming the shares constitute capital
assets in the optionee's hands, will be treated as long-term capital gain or
loss; (iii) the optionee's basis in the shares purchased will be equal to the
amount of cash paid for such shares; and (iv) the Company will not be entitled
to a federal income tax deduction in connection with the exercise of the option.
The Company understands that the difference between the option price and the
fair market value of the shares acquired upon exercise of an incentive stock
option will be treated as an "item of tax preference" for purposes of the
alternative minimum tax. In addition, incentive stock options exercised more
than three months after retirement are treated as non-qualified options.

The Company further understands that if the optionee disposes of the
shares acquired by exercise of an incentive stock option before the expiration
of the holding period described above, the optionee must treat as ordinary
income in the year of that disposition an amount equal to the difference between
the optionee's basis in the shares and the lesser of the fair market value of
the shares on the date of exercise or the selling price. In addition, the
Company will be entitled to a deduction equal to the amount the participant is
required to treat as ordinary income.

If the exercise price of an option is paid by surrender of previously
owned shares, the basis of the shares received in replacement of the previously
owned shares is carried over. If the option is a nonstatutory option, the gain
recognized on exercise is added to the basis. If the option is an incentive
stock option, the optionee will recognize gain if the shares surrendered were
acquired through the exercise of an incentive stock option and have not been
held for the applicable holding period. This gain will be added to the basis of
the shares received in replacement of the previously owned shares.

<PAGE> 15

When a stock appreciation right granted pursuant to the Plan is
exercised, the participant will realize ordinary income in the year the right is
exercised equal to the value of the appreciation which he is entitled to receive
pursuant to the formula described above, and the Company will be entitled to a
deduction in the same year and in the same amount.

A participant who receives restricted stock or performance shares
subject to restrictions which create a "substantial risk of forfeiture" (within
the meaning of section 83 of the Internal Revenue Code) will normally realize
taxable income on the date the shares become transferable or no longer subject
to substantial risk of forfeiture or on the date of their earlier disposition.
The amount of such taxable income will be equal to the amount by which the fair
market value of the shares of Common Stock on the date such restrictions lapse
(or any earlier date on which the shares are disposed of) exceeds their purchase
price, if any. A participant may elect, however, to include in income in the
year of purchase or grant the excess of the fair market value of the shares of
Common Stock (without regard to any restrictions) on the date of purchase or
grant over its purchase price. The Company will be entitled to a deduction for
compensation paid in the same year and in the same amount as income is realized
by the employee.

PROPOSAL TO ADOPT THE 1998 DIRECTOR STOCK OPTION PLAN
(PROPOSAL 3)

On April 23, 1998, the Board of Directors of the Company approved the
1998 Director Stock Option Plan (the "Plan"), subject to approval by the
Company's shareholders. A complete text of the Plan is set forth as Exhibit B to
this Proxy Statement. The brief summary of the Plan which follows is qualified
in its entirety by reference to the complete text.

GENERAL

The purpose of the Plan is to advance the interests of the Company and
its shareholders by encouraging share ownership by members of the Board of
Directors who are not employees of the Company or any of its subsidiaries, in
order to promote long-term shareholder value through continuing ownership of the
Company's Common Stock. The Plan provides that the Board of Directors may award
nonqualified stock options to purchase shares of Common Stock from the Company
to members of the Board who are not employees of the Company or any of its
subsidiaries.

The number of shares of Common Stock which may be issued under the Plan
if the Plan is approved may not exceed 250,000 shares, subject to adjustment in
the event of a merger, recapitalization or other corporate restructuring. This
represents approximately 2.8% of the outstanding shares of Common Stock on April
23, 1998.

GRANT OF STOCK OPTIONS

The Plan confers on the Board discretion, with respect to any such
stock option, to determine the number and purchase price of the shares subject
to the option, the term of each option and the time or times during its term
when the option becomes exercisable. The purchase price for incentive stock
options may not be less than the fair market value of the shares subject to the
option on the date of grant. The term of an option may not exceed 10 years from
the date of grant. Any option shall become immediately exercisable upon the
removal of the optionee from the Board without cause or in the event of
specified changes in corporate control.

<PAGE> 16

The option price may be paid in cash, check, by delivery of shares of
Common Stock valued at their fair market value at the time of purchase, or by a
combination of the above.

In the event that an optionee ceases to be a non-employee director for
a reason other than death, any stock option or unexercised portion thereof which
was otherwise exercisable on the date the optionee ceases to be a non-employee
director shall expire three years after such date, but in no event after the
option would otherwise have expired under the Plan. If an optionee dies, any
stock option or unexercised portion thereof which was otherwise exercisable on
the date of death may be executed by his or her executors, administrators, heirs
or distributees within one year after the date of death, but in no event after
the option would otherwise have expired under the Plan.

NON-TRANSFERABILITY

No stock option granted under the Plan will be transferable by its
holder except, in the event of the holder's death, by will or the laws of
descent and distribution.

AMENDMENT OF THE PLAN

The Board of Directors may amend or discontinue the Plan at any time.
However, no such amendment or discontinuance shall, subject to adjustment in the
event of a merger, recapitalization, or other corporate restructuring, become
effective without shareholder approval if such approval is required by law, rule
or regulation, and in no event shall the Plan be amended more than once every
six months, other than to comport with changes in the Internal Revenue Code of
1986, as amended, or the Employee Retirement Income Security Act. In addition,
no amendment to the Plan may materially and adversely affect any right of any
optionee with respect to an outstanding option without such optionee's written
consent.

FEDERAL INCOME TAX CONSEQUENCES

Under existing Federal income tax provisions, a participant who
receives a stock option under the Plan which are subject to restrictions which
create a "substantial risk of forfeiture" (within the meaning of section 83 of
the Internal Revenue Code) will not normally realize any income, nor will the
Company normally receive any deduction for federal income tax purposes in the
year such Incentive is granted.

If the exercise price of an option is paid by surrender of previously
owned shares, the basis of the shares received in replacement of the previously
owned shares is carried over. Since the option is a nonstatutory option, the
gain recognized on exercise is added to the basis. This gain will be added to
the basis of the shares received in replacement of the previously owned shares.

<PAGE> 17

PROXIES AND VOTING

Only holders of record of the Company's Common Stock at the close of
business on May 1, 1998, the record date for the Annual Meeting, are entitled to
notice of and to vote at the Annual Meeting. On the record date, there were
8,827,590 shares of Common Stock outstanding. Each share of Common Stock
entitles the holder thereof to one vote upon each matter to be presented at the
Annual Meeting. A quorum, consisting of a majority of the outstanding shares of
the Common Stock entitled to vote at the Annual Meeting, must be present in
person or represented by proxy before action may be taken at the Annual Meeting.

Each proxy returned to the Company will be voted in accordance with the
instructions indicated thereon. The proxy will be voted FOR the election of the
nominees for the Board of Directors named in this Proxy Statement unless a
contrary choice is specified. If any nominee should withdraw or otherwise become
unavailable for reasons not presently known, the proxies which would have
otherwise been voted for such nominee will be voted for such substitute nominee
as may be selected by the Board of Directors. A shareholder who abstains with
respect to the election of directors is considered to be present and entitled to
vote on the election of directors at the meeting, and is in effect casting a
negative vote, but a shareholder (including a broker) who does not give
authority to a proxy to vote, or withholds authority to vote, on the election of
directors, shall not be considered present and entitled to vote on the election
of directors.

All shares represented by proxies will be voted for approval of the
proposed amendment to the 1995 Stock Option and Compensation Plan and for the
adoption of the 1998 Director Stock Option Plan unless a contrary choice is
specified. A shareholder who abstains with respect to these proposals is
considered to be present and entitled to vote at the meeting, and is in effect
casting a negative vote, but a shareholder (including a broker) who does not
give authority to a proxy to vote on the proposals shall not be considered
present and entitled to vote on the proposals.

While the Board of Directors knows of no other matters to be presented
at the Annual Meeting or any adjournment thereof, all proxies returned to the
Company will be voted on any such matter in accordance with the judgment of the
proxy holders.

OTHER MATTERS

BOARD OF DIRECTORS AND COMMITTEES

The Board of Directors held five meetings during 1997 and took action
by written action in lieu of a meeting five times. The Company has an audit
committee and a compensation committee.

The Company's audit committee was constituted on May 22, 1997 and
consists of Messrs. Thomas J. Brosig and Richard L. Monfort. The audit committee
recommends to the full Board the engagement of the Company's independent
accountants, reviews the audit plan and results of the audit engagement, reviews
the independence of the auditors and reviews the adequacy of the Company's
system of internal accounting controls. The audit committee met once during the
last fiscal year.

The Company's compensation committee was constituted on April 22, 1997
and consists of Messrs. Thomas J. Brosig and Martin J. O'Dowd. The compensation
committee reviews the Company's remuneration policies and practices, makes
recommendations to the full board in connection with all compensation matters
affecting the Company and administers the Company's incentive compensation
plans. The compensation committee met once during the last fiscal year.

<PAGE> 18

INDEPENDENT ACCOUNTANTS

Lund Koehler Cox & Company, PLLP has acted as the Company's independent
public accountants since the Company's inception and will serve as such for the
current fiscal year. A representative of Lund Koehler Cox & Company, PLLP is
expected to attend this year's Annual Meeting of Shareholders and will be
available to respond to appropriate questions from shareholders.

BENEFICIAL OWNERSHIP REPORTING COMPLIANCE WITH SECTION 16(A)
OF THE SECURITIES EXCHANGE ACT OF 1934

Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership of such securities with the Securities and
Exchange Commission and NASDAQ. Officers, directors and greater than ten per
cent shareholders are required by SEC regulations to furnish the Company with
copies of all Section 16(a) forms they file.

Based solely on review of the copies of such forms furnished to the
Company, or written representations that no Forms 5 were required, the Company
believes that during the year ended December 28, 1997 all Section 16(a) filing
requirements applicable to its officers, directors and greater than ten per cent
beneficial owners were complied with, except that Stanley R. Herman did not
timely file a Form 3 to report his joining the Company on January 2, 1997 and
his receipt of certain options. Mr. Herman filed a Form 3 on January 31, 1997.

PROPOSALS OF SHAREHOLDERS

All proposals of shareholders intended to be presented at the 1999
Annual Meeting of Shareholders of the Company must be received by the Company at
its executive offices on or before January 7, 1999.

SOLICITATION

The Company will bear the cost of preparing, assembling and mailing the
proxy, Proxy Statement, Annual Report and other material which may be sent to
the shareholders in connection with this solicitation. Brokerage houses and
other custodians, nominees and fiduciaries may be requested to forward
soliciting material to the beneficial owners of stock, in which case they will
be reimbursed by the Company for their expenses in doing so. Proxies are being
solicited primarily by mail but, in addition, officers and regular employees of
the Company may solicit proxies personally, by telephone, by telegram or by
special letter.

The Board of Directors does not intend to present to the meeting any
other matter not referred to above and does not presently know of any matters
that may be presented to the meeting by others. However, if other matters come
before the meeting, it is the intent of the persons named in the enclosed proxy
to vote the proxy in accordance with their best judgment.

By Order of the Board of Directors

Douglas S. Lanham
Secretary

<PAGE> 19

EXHIBIT A

FAMOUS DAVE'S OF AMERICA, INC.

1995 STOCK OPTION AND
COMPENSATION PLAN
(as amended through July 11, 1997)

a. 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.

b. 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.

c. 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 (for example, by pay grade) and authority to designate participants
who are not officers and to set or modify such targets may be delegated.

d. 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).

e. Shares Subject to the Plan.

i. 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 900,000 shares of Common Stock.

A-1

<PAGE> 20

ii. 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.

iii. 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.

f. 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:

i. Price. The option price per share shall be
determined by the Committee, subject to adjustment under Section 11.6.

ii. 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 proportion that
the holder thereof exercises a SAR if any SAR is granted in conjunction
with or related to the stock option.

iii. 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.

iv. 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.

v. 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):

(1) 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.

A-2

<PAGE> 21

(2) 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) 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.

(4) Unless sooner exercised, all Incentive Stock
Options shall expire no later than 10 years after the date of
grant.

(5) 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.

(6) 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.

g. 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:

i. 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.

ii. 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.

iii. 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.

iv. 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:

(1) 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

A-3

<PAGE> 22

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

(2) 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.

h. 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:

i. 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.

ii. 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.

iii. 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:

(1) 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);

(2) 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;

(3) such other conditions or restrictions as the
Committee may deem advisable.

iv. 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.

A-4

<PAGE> 23

v. 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.

vi. 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 or property other than Common Stock with
respect to shares of restricted stock shall be paid to the participant
currently.

i. 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:

i. 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.

ii. 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.

iii. 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.

iv. 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.

j. 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.

k. General.

i. 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.

ii. 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.

A-5

<PAGE> 24

iii. 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.

iv. 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.

v. 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, qualification, consent or approval shall have
been effected or obtained free of any conditions not acceptable to the
Company.

vi. 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.

vii. 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.

viii. Withholding.

(1) 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

A-6

<PAGE> 25

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").

(2) 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.

(3) 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.

ix. 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.

x. 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.

xi. 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.

xii. 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

(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

A-7

<PAGE> 26

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.

xiii. 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.

A-8

<PAGE> 27

EXHIBIT B

FAMOUS DAVE'S OF AMERICA, INC.

1998 DIRECTOR STOCK OPTION PLAN

1. PURPOSE. The purpose of the Famous Dave's of America, Inc. 1998
Director Stock Option Plan (the "Plan") is to advance the interests of Famous
Dave's of America, Inc. (the "Company") and its shareholders by encouraging
share ownership by members of the Board of Directors of the Company (the
"Board") who are not employees of the Company or any of its subsidiaries, in
order to promote long-term shareholder value through continuing ownership of the
Company's Common Stock.

2. ADMINISTRATION. The Plan shall be administered by the Board. The
Board shall have all the powers vested in it by the terms of the Plan, such
powers to include authority (within the limitations described herein) to
prescribe the form of the agreement embodying awards of nonqualified stock
options made under the Plan ("Options"). The Board shall, subject to the
provisions of the Plan, grant Options under the Plan and shall have the power to
construe the Plan, to determine all questions arising thereunder and to adopt
and amend such rules and regulations for the administration of the Plan as it
may deem desirable. Any decisions of the Board in the administration of the
Plan, as described herein, shall be final and conclusive. The Board may act only
by a majority of its members in office, except that the members thereof may
authorize any one or more of their number or any other officer of the Company to
execute and deliver documents on behalf of the Board. No member of the Board
shall be liable for anything done or omitted to be done by him or by any other
member of the Board in connection with the Plan, except for his own willful
misconduct or as expressly provided by statute.

3. PARTICIPATION. Each member of the Board who is not an employee of
the Company or any of its subsidiaries (a "Non-Employee Director") shall be
eligible to receive an Option in accordance with Paragraph 5 below.

4. AWARDS UNDER THE PLAN.

(a) Awards under the Plan shall include only Options, which are rights
to purchase Common Stock of the Company, having $.01 par value (the "Common
Stock"). Such Options are subject to the terms, conditions and restrictions
specified in Paragraph 5 below.

(b) There may be issued under the Plan pursuant to the exercise of
Options an aggregate of not more than 250,000 shares of Common Stock, subject to
adjustment as provided in Paragraph 6 below. If any Option is canceled,
terminates or expires unexercised, in whole or in part, any shares of Common
Stock that would otherwise have been issuable pursuant thereto will be available
for issuance under new Options.

(c) A Non-Employee Director to whom an Option is granted (and any
person succeeding to such a Non- Employee Director's rights pursuant to the
Plan) shall have no rights as a shareholder with respect to any Common Stock
issuable pursuant to any such Option until the date of the issuance of a stock
certificate to him for such shares. Except as provided in Paragraph 6 below, no
adjustment shall be made for dividends, distributions or other rights (whether
ordinary or extraordinary, and whether in cash, securities or other property)
for which the record date is prior to the date such stock certificate is issued.

5. NONQUALIFIED STOCK OPTIONS. Each Option granted under the Plan shall
be evidenced by an agreement in such form as the Board shall prescribe from time
to time in accordance with the Plan and shall comply with the following terms
and conditions:

(a) The Option exercise price shall be the "Fair Market Value" (as
herein defined) of the Common Stock subject to such Option on the date the
Option is granted. Fair Market Value shall be the closing sales price of a share
of Common Stock on the date of grant as reported on the Nasdaq Market or, if the
Nasdaq Market is closed on that date, on the last preceding date on which the
Nasdaq Market was open for trading, but in no event will such Option exercise
price be less than the par value of the Common Stock.

B-1

<PAGE> 28

(b) The Board shall determine the number of shares of Common Stock
subject to each Option granted to Non-Employee Directors and, subject to Section
5(d) hereof, the vesting schedule of each such Option. Notwithstanding the
foregoing, once such Options become outstanding, a Non-Employee Director will
still be entitled to the anti-dilution adjustments provided for in Section 6
hereof.

(c) The Option shall not be transferable by the optionee otherwise than
by will or the laws of descent and distribution, and shall be exercisable during
his lifetime only by him.

(d) Options shall not be exercisable:

(i) except pursuant to the vesting schedule established
by the Board of Directors and after the expiration of
ten years from the date it is granted.
Notwithstanding anything to the contrary herein, an
Option shall automatically become immediately
exercisable in full: (i) upon the removal of the
Non-Employee Director from the Board without cause;
or (ii) in the event of a "change in control" of the
Company, as defined in any existing agreements
between the Company and its senior officers.

(ii) unless payment in full is made for the shares of
Common Stock being acquired thereunder at the time of
exercise, such payment shall be made in United States
dollars by cash or check, or in lieu thereof, by
tendering to the Company Common Stock owned by the
person exercising the Option and having a Fair Market
Value equal to the cash exercise price applicable to
such Option, or by a combination of United States
dollars and Common Stock as aforesaid; and

(iii) unless the person exercising the Option has been at
all times during the period beginning with the date
of grant of the Option and ending on the date of such
exercise, a Non- Employee Director of the Company,
except that

(A) if such person shall cease to be such a
Non-Employee Director for reasons other than death,
while holding an Option that has not expired and has
not been fully exercised, such person may, at any
time within three years of the date he ceased to be a
Non-Employee Director (but in no event after the
Option has expired under the provisions of
subparagraph 5(d)(i) above), exercise the Option with
respect to any Common Stock as to which he could have
exercised on the date he ceased to be such a
Non-Employee Director; or

(B) if any person to whom an Option has been granted
shall die holding an Option that has not expired and
has not been fully exercised, his executors,
administrators, heirs or distributees, as the case
may be, may, at any time within one year after the
date of such death (but in no event after the Option
has expired under the provisions of subparagraph
5(d)(i) above), exercise the Option with respect to
any shares subject to the Option.

6. DILUTION AND OTHER ADJUSTMENTS. In the event of any change in the
outstanding Common Stock of the Company by reason of any stock split, stock
dividend, split-up, split-off, spin-off, recapitalization, merger,
consolidation, rights offering, reorganization, combination or exchange of
shares, a sale by the Company of substantially all of its assets, any
distribution to shareholders other than a normal cash dividend, or other
extraordinary or unusual event, the number or kind of shares that may be issued
under the Plan pursuant to subparagraph 4(b) above, and the number or kind of
shares subject to, and the Option price per share under, all outstanding Options
shall be automatically adjusted so that the proportionate interest of the
participant shall be maintained as before the occurrence of such event; such
adjustment in outstanding Options shall be made without change in the total
Option exercise price applicable to the unexercised portion of such Options and
with a corresponding adjustment in the Option exercise price per share, and such
adjustment shall be conclusive and binding for all purposes of the Plan.

B-2

<PAGE> 29

7. MISCELLANEOUS PROVISIONS.

(a) Except as expressly provided for in the Plan, no Non-Employee
Director or other person shall have any claim or right to be granted an Option
under the Plan. Neither the Plan nor any action taken hereunder shall be
construed as giving any Non-Employee Director any right to be retained in the
service of the Company.

(b) A participant's rights and interest under the Plan may not be
assigned or transferred, hypothecated or encumbered in whole or in part either
directly or by operation of law or otherwise (except in the event of a
participant's death, by will or the laws of descent and distribution),
including, but not by way of limitation, execution, levy, garnishment,
attachment, pledge, bankruptcy or in any other manner, and no such right or
interest of any participant in the Plan shall be subject to any obligation or
liability of such participant.

(c) Common Stock shall not be issued hereunder unless counsel for the
Company shall be satisfied that such issuance will be in compliance with
applicable federal, state, local and foreign securities, securities exchange and
other applicable laws and requirements.

(d) It shall be a condition to the obligation of the Company to issue
Common Stock upon exercise of an Option, that the participant (or any
beneficiary or person entitled to act under subparagraph 5(d)(iii)(B) above) pay
to the Company, upon its demand, such amount as may be requested by the Company
for the purpose of satisfying any liability to withhold federal, state, local or
foreign income or other taxes. If the amount requested is not paid, the Company
may refuse to issue such Common Stock.

(e) The expenses of the Plan shall be borne by the Company.

(f) By accepting any Option or other benefit under the Plan, each
participant and each person claiming under or through him shall be conclusively
deemed to have indicated his acceptance and ratification of, and consent to, any
action taken under the Plan by the Company or the Board.

(g) The appropriate officers of the Company shall cause to be filed any
reports, returns or other information regarding Options hereunder or any Common
Stock issued pursuant hereto as may be required by Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended, or any other applicable statute,
rule or regulation.

8. AMENDMENT OR DISCONTINUANCE. The Plan may be amended at any time and
from time to time by the Board as the Board shall deem advisable; provided,
however, that no amendment shall become effective without shareholder approval
if such shareholder approval is required by law, rule or regulation, and in no
event shall the Plan be amended more than once every six months, other than to
comport with changes in the Internal Revenue Code of 1986, as amended, the
Employee Retirement Income Security Act or the rules thereunder. No amendment of
the Plan shall materially and adversely affect any right of any participant with
respect to any Option theretofore granted without such participant's written
consent.

9. TERMINATION. This Plan shall terminate upon the earlier of the
following dates or events to occur upon the adoption of a resolution of the
Board terminating the Plan or ten years from the date the Plan is initially
approved and adopted by the shareholders of the Company. No termination of the
Plan shall materially and adversely affect any of the rights or obligations of
any person, without his consent, under any Option theretofore granted under the
Plan.

10. EFFECTIVE DATE OF PLAN. The Plan will become effective on the date
that it is approved by the affirmative vote of the holders of the greater of (a)
a majority of the outstanding shares of Common Stock of the Company present and
entitled to vote or (b) a majority of the voting power of the minimum number of
shares entitled to vote that would constitute a quorum for transaction of
business at the Company's Annual Meeting of Shareholders.

B-3

<PAGE> 30
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
FAMOUS DAVE'S OF AMERICA, INC.

PROXY FOR ANNUAL MEETING OF SHAREHOLDERS -- JUNE 11, 1998

The undersigned, a shareholder of Famous Dave's of America, Inc.,
hereby appoints David W. Anderson and Douglas S. Lanham, and each of
them, as proxies, with full power of substitution, to vote on behalf
of the undersigned the number of shares which the undersigned is then
entitled to vote, at the Annual Meeting of Shareholders of Famous
Dave's of America, Inc. to be held at the Calhoun Blues Club, 3001
Hennepin Avenue, Calhoun Square, Minneapolis, Minnesota, on Thursday,
June 11, 1998, at 10:00 a.m., and at any and all adjournments thereof,
with all the powers which the undersigned would possess if personally
present, upon:

<TABLE>
<CAPTION>
<S><C>
1. Election of Directors
[ ] FOR all nominees [ ] WITHHOLD AUTHORITY to vote for
(except as marked to the contrary below) all nominees listed below
David W. Anderson, Thomas J. Brosig, Douglas S. Lanham, Richard L. Monfort, Martin J. O'Dowd

</TABLE>

INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name on the space provided below:

----------------------------------------------------------------------

(2) To approve an amendment to the Company's 1995 Stock Option and
Compensation Plan to increase the number of shares of Common Stock
reserved for issuance thereunder from 900,000 shares to 950,000 shares.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

(3) To approve the adoption of the 1998 Director Stock Option Plan.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

(4) Upon such other business as may properly come before the meeting or any
adjournments thereof.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES,

FOR THE AMENDMENT TO THE 1995 STOCK OPTION AND COMPENSATION PLAN

AND FOR THE ADOPTION OF THE 1998 DIRECTOR STOCK OPTION PLAN.

(Continued, and TO BE COMPLETED AND SIGNED, on the reverse side)

- --------------------------------------------------------------------------------

(Continued from other side)

The undersigned hereby revokes all previous proxies relating to the
shares covered hereby and acknowledges receipt of the Notice and Proxy
Statement relating to the Annual Meeting of Shareholders.

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. When
properly executed, this proxy will be voted on the proposals set forth
herein as directed by the shareholder, but if no direction is made in
the space provided, this proxy will be voted FOR the election of all
nominees for director, FOR the proposal to increase the number of
shares reserved for issuance under the Company's 1995 Stock Option and
Compensation Plan and FOR the proposal to adopt the 1998 Director
Stock Option Plan.

Dated
----------------------------------
, 1998

x
----------------------------------

(Shareholder must sign exactly as the
name appears at left. When signed as a
corporate officer, executor,
administrator, trustee, guardian, etc.,
please give full title as such. Both
joint tenants must sign.)