Edgar Filing: FAMOUS DAVES OF AMERICA INC

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INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

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

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(Name of Person(s) Filing Proxy Statement if other than the Registrant)

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(Famous Daves Logo)

FAMOUS DAVE'S OF AMERICA, INC.
8091 Wallace Road
Eden Prairie, Minnesota 55344

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 13, 2004

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 Famous Dave's Calhoun Blues Club, 3001 Hennepin Avenue,
Calhoun Square, Minneapolis, Minnesota, on Thursday, May 13, 2004, at 9:00 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 six directors;

2. To ratify the appointment of Grant Thornton, LLP as independent auditors
of the Company for fiscal 2004; and

3. 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
March 22, 2004 (the "Record Date") will be entitled to vote at the meeting or
any adjournments thereof. Adoption of each proposal requires the affirmative
vote of the holders of a majority of the shares of the Company's common stock
present in person or represented by proxy at the Annual Meeting.

A PROXY FOR THE ANNUAL 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

/s/ Diana Garvis Purcel
Diana Garvis Purcel
Secretary

April 12, 2004

(Famous Daves Logo)

FAMOUS DAVE'S OF AMERICA, INC.
8091 WALLACE ROAD
EDEN PRAIRIE, MINNESOTA 55344

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

PROXY STATEMENT
-------------------------

ANNUAL MEETING OF SHAREHOLDERS TO BE HELD
MAY 13, 2004

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.
(periodically referred to herein as "Famous Dave's" and the "Company") to be
used at the Annual Meeting of Shareholders of the Company to be held on
Thursday, May 13, 2004, at 9:00 a.m. at the Famous Dave's Calhoun Blues Club,
3001 Hennepin Avenue, Calhoun Square, Minneapolis, Minnesota, for the purpose of
considering and taking appropriate action with respect to the following:

1. To elect six directors;

2. To ratify the appointment of Grant Thornton, LLP as independent auditors
of the Company for fiscal 2004; and

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

The approximate date on which this Proxy Statement and the accompanying
proxy were first sent or given to shareholders was April 12, 2004. 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 March 22, 2004 (the "Record Date") will be entitled to vote at
the meeting or any adjournments thereof.

PROXIES AND VOTING

Only holders of record of the Company's Common Stock at the close of
business on March 22, 2004, 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
12,303,182 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. Adoption of each proposal requires the
affirmative vote of the holders of a majority of the shares of the Company's
common stock present in person or represented by proxy at the Annual Meeting.

All shares represented by proxies will be voted for the election of the
nominees for the Board of Directors named in this Proxy Statement and for
ratification of Grant Thornton, LLP's appointment as the Company's independent
auditor 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 any proposal is considered to be present and
entitled to vote on such proposal 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 any proposal, shall not be considered
present and entitled to vote on such proposal.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THE
ELECTION OF ALL NOMINEES FOR THE BOARD OF DIRECTORS NAMED IN THIS PROXY
STATEMENT AND "FOR" THE RATIFICATION OF GRANT THORNTON, LLP AS THE INDEPENDENT
AUDITORS OF THE COMPANY FOR FISCAL 2004.

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.

ELECTION OF DIRECTORS
(PROPOSAL ONE)

The Board of Directors currently consists of six (6) directors, each of
which has been nominated for re-election by the Board of Directors. If
re-elected, each nominee has consented to serve as a director of the Company, to
hold office until the next Annual Meeting of the Shareholders, or until his, or
her, successor is elected and shall have qualified.

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.

NAME AND AGE OF PRINCIPAL OCCUPATION, BUSINESS EXPERIENCE DIRECTOR
DIRECTOR AND NOMINEE FOR THE PAST FIVE YEARS AND DIRECTORSHIPS OF PUBLIC COMPANIES SINCE
-------------------- ------------------------------------------------------------- --------

F. Lane Cardwell, Jr. F. Lane Cardwell, Jr. has spent over 20 years in the 2003
Age 51 restaurant industry, most recently as the President of
Eatzi's Market and Bakery from June 1996 to June 1999. Prior
to joining Eatzi's in 1996, Mr. Cardwell was Executive Vice
President, Chief Administrative Officer and a member of the
Board of Directors of Brinker International, Inc. Mr.
Cardwell is also a director of P. F. Chang's China Bistro,
Inc., a publicly traded company, and serves on its Audit and
Compensation committees.
K. Jeffrey Dahlberg K. Jeffrey Dahlberg has served as Chairman of the Company's 2001
Age 50 Board of Directors since December 2003. Mr. Dahlberg also
serves as President of Sugarloaf Ventures, Inc. a business
development and investment firm. Mr. Dahlberg, who co-founded
Grow Biz International, Inc. in 1990, served as its Chairman
from inception until March 2000 and as its Chief Executive
Officer from 1999 until March 2000.
David Goronkin David Goronkin has served as President, Chief Executive 2003
Age 41 Officer and a member of the Company's Board of Directors
since August 2003. Prior to joining the Company, Mr. Goronkin
was an executive officer of Buffets, Inc., serving as its
Chief Operating Officer since August 2000 and Executive Vice
President of Operations since October 1996. Mr. Goronkin had
also served as a director of Buffets since October 2000. From
1994 though 1996, Mr. Goronkin held several operations and
franchise related positions with HomeTown Buffet, Inc.,
including serving as its Vice President of Operations
immediately prior to that company's merger with Buffets, Inc.
in 1996. From 1984 through 1994, Mr. Goronkin held a variety
of operations and franchise support positions with Chi-Chi's
Mexican Restaurants.
Mary L. Jeffries Mary L. Jeffries served as a General Partner and Chief 2003
Age 46 Operating Officer of St. Paul Venture Capital, an early-stage
venture capital fund, from February 2001 until December 2003.
From 1997 until she joined St. Paul Venture Capital, Ms.
Jeffries served as Chief Operating Officer at the marketing
and communications agency of Shandwick International. From
1988-1997, Ms. Jeffries held positions as Managing Director,
Chief Operating Officer and Controller at the public
relations agency of Mona Meyer McGrath & Gavin. Ms. Jeffries
also served as Assistant Controller of Fairview Hospital and
HealthCare Services from 1983-1988, and was a Senior Auditor
and Computer Audit Specialist at KPMG from 1979-1983.

Richard L. Monfort From 1991 to 1995, Richard L. Monfort served as Group Vice 1996
Age 49 President and Chief Executive Officer of ConAgra Red Meats
division, which had approximately $8.0 billion in annual pork
and beef sales. 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 Champions Hotel in Palm
Springs, California, and being an owner of the Hilltop
Steakhouse in Boston, Massachusetts and a partner in the
Montera Cattle Company. Since 1997, Mr. Monfort has served as
Vice Chairman of the Colorado Rockies, a professional
baseball team.
Dean A. Riesen Appointed as a director in March 2003, Dean A. Riesen founded 2003
Age 47 an investment firm, Riesen & Company, of which he has served
as Managing Partner since 2001. Prior to that, Mr. Riesen
served as Chief Financial Officer of Carlson Holdings, Inc.
(parent of Carlson Companies, Inc. and T.G.I. Friday's, Inc.)
from 1999-2001. Mr. Riesen was also President & CEO of
Tonkawa, Inc. from 1999-2001 and President, CEO, and General
Partner of Carlson Real Estate Company from 1985-2001. Mr.
Riesen served on Carlson Companies' Investment Committee from
1989-1999. Mr. Riesen was a member of Thomas Cook Holdings
LTD (U.K.) Board of Directors and a member of its Audit
Committee.

EXECUTIVE COMPENSATION

The following table sets forth the cash and non-cash compensation for each
of the last three fiscal years awarded to or earned by (i) each individual
serving as Chief Executive Officer of the Company during the fiscal year ended
December 28, 2003; and (ii) each individual that served as an executive officer
or Chairman of the Board of the Company at the end of the fiscal year ended
December 28, 2003 who received in excess of $100,000 in salary and bonus during
such fiscal year (the "Named Executives").

SUMMARY COMPENSATION TABLE

LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION ------------
----------------------------------------------- SECURITIES
FISCAL OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) OPTIONS(#) COMPENSATION
--------------------------- ------ --------- -------- --------------- ------------ ------------

David Goronkin(1).............. 2003 164,232 93,750(9) 1,110(7) 200,000(12) -0-
President and Chief Executive
Officer
Christopher O'Donnell(2)....... 2003 154,237 28,000(10) -0- -0- -0-
Sr. Vice President 2002 151,385 -0- -0- 30,000(6) -0-
Operations 2001 139,500 28,800(5) -0- 20,000(11) -0-

David W. Anderson(3)........... 2003 118,462 -0- -0- -0- -0-
Former Chairman, President, 2002 -0- -0- -0- -0- -0-
Chief Executive Officer 2001 -0- -0- -0- -0- -0-
and Chief Operating Officer
Martin J. O'Dowd(4)............ 2003 195,730 -0- -0- -0- 200,000(8)
Former Chief Executive 2002 458,308 -0- -0- 100,000(6) -0-
Officer and Secretary 2001 412,500 125,000(5) -0- 100,000(11) -0-

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

(1) Mr. Goronkin was appointed President and Chief Executive Officer on August
11, 2003.

(2) Mr. O'Donnell became Sr. Vice President Operations on June 19, 2002. Prior
to such time, he served as Vice President of Human Resources.

(3) Mr. Anderson resigned as a director and officer of the Company effective
December 10, 2003. Prior to such time, Mr. Anderson served as Chairman of
the Board. Mr. Anderson also served as interim Chief Executive Officer from
May 19, 2003 to August 11, 2003.

(4) Mr. O'Dowd resigned as Chief Executive Officer on May 19, 2003.

(5) Includes bonuses paid in February 2002 for Fiscal 2001 performance.

(6) Includes options granted in February 2002 for Fiscal 2001 performance.

(7) Represents premium payments for a term life insurance policy, made by the
Company on behalf of Mr. Goronkin.

(8) Represents severance payment made to Mr. O'Dowd pursuant to an agreement
governing the termination of Mr. O'Dowd's employment with the Company.

(9) Represents a bonus paid in March 2004 for Mr. Goronkin's performance during
fiscal 2003; the bonus is subject to forfeiture based on certain fiscal
2004 performance criteria. Mr. Goronkin elected to receive this bonus in
the form of deferred stock units pursuant to the Company's 2004 Deferred
Stock Unit Plan.

(10) Includes bonuses paid in February 2004 for Fiscal 2003 performance.

(11) Includes options granted in February 2001 for Fiscal 2000 performance.

(12) Includes options granted as part of Mr. Goronkin's employment arrangement.

OPTION GRANTS IN LAST FISCAL YEAR

The following table sets forth the number of individual grants of stock
options made during fiscal year 2003 to the Named Executives.

INDIVIDUAL GRANTS
------------------------------------------------------
NUMBER OF PERCENTAGE OF POTENTIAL REALIZABLE VALUE
SECURITIES TOTAL OPTIONS AT ASSUMED ANNUAL RATE OF
UNDERLYING GRANTED TO EXERCISE OR STOCK PRICE APPRECIATION
OPTION EMPLOYEES IN BASE PRICE EXPIRATION ---------------------------
NAME GRANTED FISCAL YEAR ($/SHARE) DATE 5%($) 10%($)
---- ---------- -------------- ----------- ---------- ----------- -------------

David Goronkin............ 200,000(1) 44% $4.10 8/11/13 $515,783 $1,307,146
Christopher O'Donnell..... -0- -0- -0- -0- -0- -0-
David W. Anderson......... -0- -0- -0- -0- -0- -0-
Martin J. O'Dowd.......... -0- -0- -0- -0- -0- -0-

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

(1) Options vest and become exercisable in 3 equal annual installments
commencing on August 11, 2004.

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 Named Executives, and the value of the options held by such persons as of
December 28, 2003 (the end of fiscal 2003).

NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT FY-END(#) OPTIONS AT FY-END(1)($)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------

David Goronkin.............. -0- -0- -0- 200,000 -0- $168,000
Christopher O'Donnell....... -0- -0- 60,000 34,000 $109,010 $ 19,150
David W. Anderson........... -0- -0- -0- -0- -0- -0-
Martin J. O'Dowd............ 701,667 2,863,196 -0- -0- -0- -0-

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

(1) Based upon the difference between the option exercise price and the closing
sale price of the Common Stock on December 26, 2003 (the last trading day
prior to the end of the Company's 2003 fiscal year), which was $4.94.

EMPLOYMENT AGREEMENTS

On July 25, 2003, the Company entered into a two-year written employment
agreement with David Goronkin, the Company's current President and Chief
Executive Officer that became effective on August 11, 2003. Pursuant to the
agreement, Mr. Goronkin receives an annualized base salary of $450,000 (subject
to increase at the discretion of the Board) and is eligible for a bonus of up to
50% of his base salary based on his satisfaction of certain performance-based
criteria. In addition to providing health, dental, vision and disability
insurance coverage, retirement and other customary benefits, the Company has
agreed to purchase a term life insurance policy with beneficiaries of Mr.
Goronkin's choice. The employment agreement provides that Mr. Goronkin will
continue to receive his base salary and insurance benefits for a period of up to
18 months if he is terminated by the Company for a reason other than death,
disability or "cause," if Mr. Goronkin resigns for "good reason," or if Mr.
Goronkin is terminated for any reason within six months following a "change in
control," each as defined in the employment agreement. The employment agreement
provides that Mr. Goronkin will not compete with the Company for two years after
the termination of his employment with the Company. The Company granted Mr.
Goronkin a bonus of $93,750 in 2004 for his performance during fiscal 2003,
which bonus is subject to forfeiture based on certain fiscal 2004 performance
criteria. Mr. Goronkin elected to receive this bonus in the form of deferred
stock units pursuant to the Company's 2004 Deferred Stock Unit Plan.

Christopher O'Donnell, the Company's Sr. Vice President of Operations, has
an employment arrangement with the Company pursuant to which he receives an
annualized salary of $160,000, along with medical, dental and other customary
benefits. Mr. O'Donnell was granted a bonus of $28,000 for his performance
during fiscal 2003. Effective December, 18, 2003, the Company increased Mr.
O'Donnell's annualized base salary to $166,400.

Effective August 1, 1999, the Company entered into a three-year written
employment agreement with Martin J. O'Dowd, the Company's former President,
Chief Executive Officer and Secretary. Effective September 1, 2001, parties
amended the agreement to extend its term for an additional two years. Under the
agreement, Mr. O'Dowd received an annualized base salary of $468,000 from the
beginning of fiscal 2003 until his resignation from the Company on May 19, 2003.
Mr. O'Dowd also received medical, dental and other customary benefits. Pursuant
to an agreement governing Mr. O'Dowd's termination of employment, the Company
paid Mr. O'Dowd the $200,000 severance payment contemplated by his employment
agreement in exchange for a customary release of claims.

Between May 19, 2003 and August 11, 2003, David W. Anderson was acting
interim President and Chief Executive Officer for which he was paid a salary of
$118,462.

DIRECTOR COMPENSATION

The Company grants each of its non-employee director's options to purchase
25,000 shares of the Company's Common Stock upon his or her initial election to
the Board of Directors, which options vest in equal installments over four
years. The Company also grants its non-employee directors options to purchase
5,000 shares of the Company's Common Stock on the day after each annual
shareholder's meeting, which options vest in their entirety on the first
anniversary of the date of grant. The exercise price of all such options is
equal to the fair market value of the Company's Common Stock on the date of
grant. In addition to stock options, each non-employee director of the Company
receives $5,000 for each meeting of the Board of Directors attended in person,
or $2,500 for each such meeting attended by telephone.

Non-employee directors may also be granted, at the discretion of the Board,
additional options to purchase shares of the Company's common stock. These
additional options, if granted, contain such terms and provisions as the Board
determines at the time of grant.

During fiscal 2003 options were granted to the following members of the
board:

DATE
OPTIONS # OF SHARES STRIKE VESTING
NAME GRANTED GRANTED PRICE SCHEDULE
---- -------- ----------- ------ --------

K. Jeffery Dahlberg................................. 6/13/03 5,000(2) $4.16 6/13/03
Dean A. Riesen...................................... 8/29/03 25,000(1) $6.00 8/26/07
Dean A. Riesen...................................... 6/13/03 5,000(2) $4.16 6/13/04
Mary L. Jeffries.................................... 9/29/03 25,000(1) $6.00 9/29/07
Richard L. Monfort.................................. 6/13/03 5,000(2) $4.16 6/13/04
F. Lane Cardwell, Jr................................ 12/15/03 25,000(1) $4.82 12/15/07

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

(1) Vests in equal installments over four years.

(2) Vests in their entirety on the anniversary of the grant date.

Members of the Board who are also employees of the Company receive no
options for their services as directors.

EXECUTIVE OFFICERS OF THE COMPANY

PRINCIPAL OCCUPATION, BUSINESS EXPERIENCE
NAME AND TITLE AGE FOR THE PAST FIVE YEARS AND DIRECTORSHIPS OF PUBLIC COMPANIES
-------------- --- -------------------------------------------------------------

K. Jeffrey Dahlberg.................. 50 See "Election of Directors (Proposal One)" -- above.
Chairman of the Board
David Goronkin....................... 41 See "Election of Directors (Proposal One)" -- above.
President and Chief Executive
Officer
Diana Garvis Purcel.................. 37 Ms. Purcel has served as Vice President, Chief Financial
Vice President, Chief Financial Officer and Secretary of the Company since November 19, 2003.
Officer and Secretary Prior to joining the Company, Ms. Purcel served as Chief
Financial Officer of Paper Warehouse, Inc., a publicly held
chain of retail stores specializing in party supplies and
paper goods, from 2002 until September 2003. While she was
with Paper Warehouse, she also served as its Controller and
Chief Accounting Officer since 1999 and as a Vice President
since 2000. Over the course of her career, Ms. Purcel has
held financial and accounting positions with Powell, Inc
(formerly Damark International, Inc.) and Target Corporation
(formerly Dayton Hudson Corporation). Ms. Purcel is a
certified public accountant who spent five years with the
firm of Arthur Andersen in the late 1980s and early 1990s.
Christopher O'Donnell................ 44 Mr. O'Donnell has served as Senior Vice President of
Senior VP of Operations Operations of the Company since June 19, 2002. From February
1998 to June 2002, he served as the Company's Vice President
of Human Resources. Prior to joining the Company, Mr.
O'Donnell was Vice President of Development for Pencom
International, a producer of training products for restaurant
and hotel operators aimed at increasing sales, improving
service, building traffic, addressing staffing challenges and
reducing turnover. From 1982 to 1987, Mr. O'Donnell was the
operating partner in Premier Ventures, a high volume
restaurant located in Denver, Colorado.

STOCK PERFORMANCE GRAPH

The Securities and Exchange Commission requires that the Company include in
this Proxy Statement a line-graph presentation comparing cumulative, five-year
return to the Company's shareholders (based on appreciation of the market price
of the Company's common stock) on an indexed basis with (i) a broad equity
market index and (ii) an appropriate published industry or line-of-business
index, or peer group index constructed by the Company. The following
presentation compares the Company's common stock price for the period from
January 3, 1999 through December 28, 2003, to the S&P 500 Stock Index and to the
S&P Small Cap Restaurant Index.

The Company has elected to use the S&P Small Cap Restaurant Index in
compiling its stock performance graph because it believes the S&P Small Cap
Restaurant Index represents a comparison to competitors with similar market
capitalization to the Company.

The presentation assumes that the value of an investment in each of the
Company's common stock, the S&P 500 Stock Index and the S&P Small Cap Restaurant
Index was $100 on January 3, 1999, and that any dividends paid were reinvested
in the same security.

COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG FAMOUS DAVE'S OF AMERICA, INC., THE S&P 500 STOCK INDEX,
AND THE S&P SMALL CAP RESTAURANT INDEX

[PERFORMANCE GRAPH]

----------------------------------------------------------------------------------------------------------------------
TOTAL RETURN ANALYSIS 1/3/99 1/2/00 12/31/00 12/30/01 12/29/02 12/28/03
----------------------------------------------------------------------------------------------------------------------

Famous Dave's of America $100.00 $ 72.25 $106.68 $259.95 $111.86 $165.38
----------------------------------------------------------------------------------------------------------------------
S&P Small Cap Restaurants $100.00 $ 98.36 $120.16 $141.41 $144.62 $206.71
----------------------------------------------------------------------------------------------------------------------
S&P 500 $100.00 $121.04 $110.02 $ 96.28 $ 75.03 $ 96.09
----------------------------------------------------------------------------------------------------------------------

Source: CTA Public Relations www.ctapr.com (303) 665-4200. Data from BRIDGE
Information Systems, Inc.

RATIFICATION OF THE APPOINTMENT
OF INDEPENDENT AUDITORS
(PROPOSAL TWO)

The Board of Directors and management of the Company are committed to the
quality, integrity and transparency of the Company's financial reports.
Independent auditors play an important part in the Company's system of financial
control. In accordance with the duties set forth in its written charter, the
audit committee of the Company's Board of Directors has appointed Grant
Thornton, LLP as the Company's independent auditors for the 2004 fiscal year. A
representative of Grant Thornton, LLP is expected to attend this year's Annual
Meeting and be available to respond to appropriate questions from shareholders,
and will have the opportunity to make a statement if he or she desires to do so.

If the shareholders do not ratify the appointment of Grant Thornton, LLP,
the audit committee may reconsider its selection, but is not required to do so.
Notwithstanding the proposed ratification of the appointment of Grant Thornton,
LLP by the shareholders, the audit committee, in its discretion, may direct the
appointment of new independent auditors at any time during the year without
notice to, or the consent of, the shareholders, if the audit committee
determines that such a change would be in the best interests of the Company and
its shareholders.

CHANGE IN INDEPENDENT AUDITORS

On September 26, 2002, the Company dismissed Virchow, Krause & Company,
LLP, which had previously served as the Company's independent auditors.

The reports of the Company's principal auditors on the consolidated
financial statements of the Company for the past two fiscal years contained no
adverse opinion or disclaimer of opinion and were not qualified or modified as
to uncertainty, audit scope or accounting principles.

The Company's audit committee and Board of Directors participated in and
approved the decision to change independent auditors on September 26, 2002.

In connection with its audit of the consolidated financial statements for
the 2001 and 2000 fiscal years ending December 30, 2001 and December 31, 2000,
respectively, and through September 26, 2002, there were no disagreements with
Virchow, Krause & Company, LLP on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of Virchow, Krause & Company,
LLP would have caused Virchow, Krause & Company, LLP to make reference to such
disagreements in their report on the financial statements for such years.

During the 2001 and 2000 fiscal years and through September 26, 2002, there
were no "reportable events" as that term is defined in Item 304(a)(1)(v) of
Regulation S-K.

The Company requested that Virchow, Krause & Company, LLP furnish it with a
letter addressed to the Securities and Exchange Commission stating whether or
not it agreed with the above statements. A copy of such letter, dated September
27, 2002, was filed as Exhibit 16.1 to our Current Report on Form 8-K filed with
the Securities Exchange Commission on September 27, 2002.

On September 26, 2002, the Company engaged Grant Thornton, LLP as its new
independent auditors. The Company's audit committee and Board of Directors
approved the engagement on September 26, 2002. In the two most recent fiscal
years and any subsequent interim period prior to the date of the engagement, the
Company had not consulted with Grant Thornton regarding either (i) the
application of accounting principles to a specified transaction, either
completed or proposed; or the type of audit opinion that might be rendered on
the Company's financial statements, and neither a written report was provided to
the Company nor oral advice was provided that Grant Thornton concluded was an
important factor considered by the Company in reaching a decision as to the
accounting, auditing or financial reporting issue; or (ii) any matter that was
either the subject of a "disagreement," as that term is defined in Item
304(a)(1)(iv)of Regulation S-K and the related instructions to Item 304 of
Regulation S-K, or a "reportable event," as that term is defined in Item
304(a)(1)(v) of Regulation S-K.

FEES BILLED TO COMPANY BY ITS INDEPENDENT AUDITORS

The following table presents fees for tax preparation, 401K audit and
consulting fees paid to Virchow, Krause & Company, LLP and for professional
audit services rendered by Grant Thornton, LLP during fiscal 2003 and 2002, as
well as fees for other services rendered by Grant Thornton, LLP to the Company
during fiscal 2003 and 2002.

2003 2002
---- ----

Audit Fees.................................................. $ 58,250 $ 51,550
Audit-Related Fees(1)....................................... $ 28,000 $ 19,057
Tax Fees(2)................................................. $ 48,800 $ 33,365
All Other Fees(3)........................................... $ 15,256 $ 19,162
-------- --------
Total Fees............................................. $150,306 $123,132
======== ========

-------------------------
(1) Audit-Related Fees consisted principally of assurance and related services
that are reasonably related to the performance of the audit or review of the
Company's financial statements but not reported under the caption Audit Fees
above.

(2) Tax Fees consisted of fees for tax compliance, tax advice, and tax planning.

(3) All Other Fees consisted of fees for permitted non-audit products and
services provided including 401K Audit, Property Tax Reduction and Return
Preparation, Press release review and 10Q review.

The audit committee of the Board of Directors has reviewed the services
provided by Grant Thornton, LLP during fiscal year 2003 and the fees billed
therefore and, after consideration, has determined that the receipt of these
fees by Grant Thornton, LLP is compatible with the provision of independent
audit services. The audit committee discussed these services and fees with Grant
Thornton, LLP and Company management to determine that they are permitted under
the rules and regulations concerning auditor independence promulgated by the
U.S. Securities and Exchange Commission to implement the Sarbanes-Oxley Act of
2002, as well as the American Institute of Certified Public Accountants.

PRE-APPROVAL POLICY

Following adoption of the amended audit committee charter (a copy of which
is attached as Appendix A to this proxy statement) all services performed by
Grant Thornton, LLP have been pre-approved in accordance with the charter. The
charter provides that all audit and non-audit accounting services that are
permitted to be performed by the Company's independent accountant under
applicable rules and regulations must be pre-approved by the audit committee or
by designated members of the audit committee, other than with respect to de
minimus exceptions permitted under the Sarbanes-Oxley Act of 2002.

Prior to or as soon as practicable following the beginning of each fiscal
year, a description of the audit, audit-related, tax, and other services
expected to be performed by the independent auditor in the following fiscal year
is presented to the audit committee for approval. Following such approval, any
requests for audit, audit-related, tax, and other services not presented and
pre-approved must be submitted to the audit committee for specific pre-approval
and cannot commence until such approval has been granted. Normally, pre-approval
is provided at regularly scheduled meetings. However, the authority to grant
specific pre-approval between meetings, as necessary, has been delegated to the
Chairperson of the audit committee. The Chairperson must update the audit
committee at the next regularly scheduled meeting of any services that were
granted specific pre-approval. In addition, the audit committee has granted
pre-approval for the Chief Executive Officer and the Chief Financial Officer to
spend up to $5,000 on a cumulative basis in additional permitted audit-related
fees with Grant Thornton, LLP which authority and amount will be reviewed and
approved annually.

OTHER MATTERS

BOARD OF DIRECTORS AND COMMITTEES

Board of Directors

The Company's Board of Directors is currently comprised of the six members,
each of which is identified under Proposal one ("Election of Directors") above.
The following directors, which constitute a majority of the Board, are
"independent directors" as such term is defined in Section 4200(a)(15) of
National Association of Securities Dealers' listing standards: F. Lane Cardwell,
Jr., Mary L. Jeffries, Richard L. Monfort and Dean A. Riesen. The Board of
Directors held four meetings during fiscal 2003 and took written action in lieu
of a meeting eight times. The Company has a standing audit committee,
compensation committee, corporate governance and nominating committee and
strategic planning committee.

Audit Committee of the Board of Directors

The Company has established a three-member audit committee within the Board
of Directors that currently consists of Chairperson Mary L. Jeffries and Messrs.
Richard L. Monfort and Dean A. Riesen. The audit committee operates under a
written charter adopted by the Board of Directors. A copy of the written
charter, as amended to date, is attached as Appendix A to this proxy statement.
As set forth in the charter, the primary responsibilities of the audit committee
include: (i) serving as an independent and objective party to monitor the
Company's financial reporting process and internal control system; (ii)
reviewing and appraising the audit performed by the Company's independent
auditors; and (iii) providing an open avenue of communication among the
independent auditors, financial and senior management and the Board of
Directors. The charter also requires that the audit committee review and
pre-approve the performance of all audit and non-audit services to be performed
by the Company's independent auditors, as well as tax work performed by the
Company's tax firm, other than certain de minimus exceptions permitted by
Section 202 of the Sarbanes-Oxley Act of 2002. The audit committee held ten
meetings during fiscal 2003.

The Board of Directors has determined that at least one member of the audit
committee, Mary L. Jeffries, is an "audit committee financial expert" as that
term is defined in Item 401(h)(2) of Regulation S-K promulgated under the
Securities Exchange Act of 1934, as amended. In addition, each member of the
audit committee (including Ms. Jeffries) is an "independent director," as such
term is defined in Section 4200(a)(15) of National Association of Securities
Dealers' listing standards, and meets the criteria for independence set forth in
Rule 10A-3(b)(1) under the Securities Exchange Act of 1934, as amended. The
Board of Directors has also determined that each of the audit committee members
is able to read and understand fundamental financial statements and that at
least one member of the audit committee has past employment experience in
finance or accounting.

COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS

The Company has established a two-member compensation committee within the
Board of Directors that currently consists of Chairman Dean A. Riesen and K.
Jeffrey Dahlberg. 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 held two
meetings during 2003 and did not take any written actions in lieu of any
meetings.

CORPORATE GOVERNANCE AND NOMINATING COMMITTEE OF THE BOARD OF DIRECTORS

On February 18, 2004, the Company established a corporate governance and
nominating committee within the Board of Directors that consists of Chairman
Dean A. Riesen, Mary L. Jeffries and F. Lane Cardwell, Jr. each of who satisfies
the independence requirements of The NASDAQ Stock Market rules. The primary role
of the corporate governance and nominating committee is to consider and make
recommendations to the full Board of Directors concerning the appropriate size,
function and needs of the Board, including establishing criteria for Board
membership and considering, recruiting and recommending candidates

(including those recommended by shareholders) to fill new Board positions. The
corporate governance and nominating committee also considers and advises the
full Board on matters of corporate governance and monitors and recommends the
functions of and membership on the various committees of the Board.

The corporate governance and nominating committee (or a subcommittee
thereof) recruits and considers director candidates and presents qualified
candidates to the full Board for consideration. Qualified candidates will be
considered without regard to race, color, religion, sex, ancestry, national
origin or disability.

The corporate governance and nominating committee will consider each
candidate's general business and industry experience, his or her ability to act
on behalf of shareholders, overall Board diversity, potential concerns regarding
independence or conflicts of interest and other factors relevant in evaluating
Board nominees. If the corporate governance and nominating committee approves a
candidate for further review following an initial screening, the corporate
governance and nominating committee will establish an interview process for the
candidate. Generally, the candidate will meet with at least a majority of the
members of the corporate governance and nominating committee, along with the
Company's Chief Executive Officer. Contemporaneously with the interview process,
the corporate governance and nominating committee will conduct a comprehensive
conflicts-of-interest assessment of the candidate. The corporate governance and
nominating committee will consider reports of the interviews and the
conflicts-of-interest assessment to determine whether to recommend the candidate
to the full Board of Directors. The corporate governance and nominating
committee will also take into consideration the candidate's personal attributes,
including, without limitation, personal integrity, loyalty to the Company and
concern for its success and welfare, willingness to apply sound and independent
business judgment, awareness of a director's vital part in the Company's good
corporate citizenship and image, time available for meetings and consultation on
Company matters and willingness to assume broad, fiduciary responsibility.

Recommendations for candidates to be considered for election to the Board
at the Company's annual shareholder meeting may be submitted to the corporate
governance and nominating committee by the Company's shareholders. In order to
make such a recommendation, a shareholder must submit the recommendation in
writing to the Chairman of the corporate governance and nominating committee, in
care of the Company's Secretary at the Company's headquarters address, at least
120 days prior to the mailing date of the previous year's annual meeting proxy
statement. To enable the Committee to evaluate the candidate's qualifications,
shareholder recommendations must include the following information:

- The name and address of the nominating shareholder and of the director
candidate;

- A representation that the nominating shareholder is a holder of record of
the Company entitled to vote at the current year's annual meeting;

- A description of any arrangements or understandings between the
nominating shareholder and the director candidate or candidates being
recommended pursuant to which the nomination or nominations are to be
made by the shareholder;

- A resume detailing the educational, professional and other information
necessary to determine if the nominee is qualified to hold a Board
position;

- Such other information regarding each nominee proposed by such
shareholder as would have been required to be included in a proxy
statement filed pursuant to the proxy rules of the Securities and
Exchange Commission had each nominee been nominated by the Board of
Directors; and

- The consent of each nominee to serve as a director of the Company if so
elected.

STRATEGIC PLANNING COMMITTEE OF THE BOARD OF DIRECTORS

On February 18, 2004, the Company established a five member strategic
planning committee within the Board of Directors that is currently comprised of
Ms. Mary L. Jeffries and Messrs. F. Lane Cardwell, Jr. (Chairman), K. Jeffrey
Dahlberg, David Goronkin and Dean A. Riesen. The primary role of the strategic
planning committee is to consider the long-term strategic direction of the
Company and make recommendations regarding the long-term strategic direction of
the Company to the full Board of Directors.
13

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

During fiscal 2003, directors serving on the compensation committee
included K. Jeffrey Dahlberg and Dean A. Riesen (the current members of the
compensation committee), as well as Thomas J. Brosig and James W. Cox, each a
former member of the Company's Board of Directors who resigned during 2003. Mr.
Dahlberg served as the Company's Vice Chairman from May 19, 2003 until December
10, 2003, at which time he was appointed to his current position as Chairman of
the Board.

ABILITY OF SHAREHOLDERS TO COMMUNICATE WITH THE COMPANY'S BOARD OF DIRECTORS

The Company's Board of Directors has established several means for
shareholders and others to communicate with the Company's Board of Directors. If
the shareholder has a concern regarding the Company's financial statements,
accounting practices or internal controls, the concern should be submitted in
writing to the Chairperson of the Company's audit committee in care of the
Company's Secretary at the Company's headquarter address. If the concern relates
to the Company's governance practices, business ethics or corporate conduct, the
concern should be submitted in writing to the Chairman of the Board in care of
the Corporation's Secretary at the Company's headquarter address. If a
shareholder is unsure as to which category the concern relates, the shareholder
may communicate it to any one of the independent directors in care of the
Company's Secretary at the Company's headquarter address. All shareholder
communications will be sent to the applicable director(s).

REPORT OF THE AUDIT COMMITTEE

The audit committee has reviewed the Company's audited consolidated
financial statements for the last fiscal year and discussed them with
management.

The audit committee has discussed with the independent auditors the matters
required to be discussed by Statement on Auditing Standards No. 61 (Codification
of Statement on Auditing Standards, AU Section 380), as amended, by the Auditing
Standards Board of the American Institute of Certified Public Accountants.

The audit committee has received and reviewed the written disclosures and
the letter from the independent auditors required by Independence Standard No. 1
(Independence Discussions with Audit Committees), as amended, promulgated by the
Independence Standards Board, and has discussed with the auditors their
independence.

The audit committee, based on the review and discussions described above,
has recommended to the Board of Directors that the audited financial statements
be included in the Company's Annual Report on Form 10-K for the last fiscal year
for filing with the Securities and Exchange Commission.

MARY L. JEFFRIES
RICHARD L. MONFORT
DEAN A. RIESEN

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

A two-member compensation committee within the Board of Directors generally
makes decisions on compensation of the Company's executives. All decisions by
the compensation committee relating to the compensation of the Company's
executive officers are reviewed by the full Board of Directors. The current
members of the compensation committee are Messrs. K. Jeffrey Dahlberg and Dean
A. Riesen. Pursuant to rules designed to enhance disclosure of the Company's
policies toward executive compensation, set forth below is a report prepared by
the compensation committee addressing the compensation policies for the Company
and its subsidiaries for the 2003 fiscal year as they affected the Company's
executive officers.

The compensation committee's executive compensation policies are designed
to provide competitive levels of compensation that integrate pay with the
Company's annual objectives and long-term goals, reward above-average corporate
performance, recognize individual initiative and achievements, and assist the
14

Company in attracting and retaining qualified executives. Executive compensation
is set at levels that the compensation committee believes to be consistent with
others in the Company's industry.

There are four elements in the Company's executive compensation program,
all determined by individual and corporate performance.

- Base salary compensation

- Annual incentive compensation

- Stock options

- Deferred Stock Unit Plan

Total compensation opportunities are competitive with those offered by
employers of comparable size, growth and profitability in the Company's
industry.

Base salary compensation is determined by the potential impact the
individual has on the Company, the skills and experiences required by the job,
and the performance and potential of the incumbent in the job.

Annual incentive compensation for executives of the Company is based
primarily on corporate operating earnings and revenue growth and the Company's
positioning for future results, but also includes an overall assessment by the
compensation committee of executive management's performance, as well as market
conditions.

The 1995 Stock Option and Compensation Plan (the "Management Plan") permits
the compensation committee to grant stock options to officers of the Company and
to directors who are also employees of the Company. Awards of stock options
under the Management Plan are designed to promote the identity of long-term
interests between the Company's executives and its shareholders and assist in
the retention of executives. Options become exercisable based upon criteria
established by the Company. During 2003, the compensation committee issued an
aggregate of 275,000 options pursuant to the Management Plan, which included
200,000 options granted in connection with the hiring of David Goronkin as
President and Chief Executive Officer of the Company. The options granted to Mr.
Goronkin are exercisable at $4.10 per share, the fair market value of the
Company's common stock on the date of the grant.

Based on the terms of his employment agreement with the Company, Mr.
Goronkin received an annualized base salary of $450,000 during fiscal 2003,
which the compensation committee believes is competitive with executives in
other industry-related companies. The Company granted Mr. Goronkin a bonus of
$93,750 in 2004 for his performance during fiscal 2003, which bonus is subject
to forfeiture based on certain fiscal 2004 performance criteria. Mr. Goronkin
elected to receive this bonus in the form of deferred stock units pursuant to
the Company's 2004 Deferred Stock Unit Plan.

The compensation committee surveys employee stock option programs of
companies with similar capitalization to the Company prior to recommending the
grant of options to executives. While the value realizable from exercisable
options is dependent upon the extent to which the Company's performance is
reflected in the market price of the Company's common stock at any particular
point in time, the decision as to whether such value will be realized in any
particular year is determined by each individual executive and not by the
compensation committee. Accordingly, when the compensation committee recommends
that an

option be granted to an executive, that recommendation does not take into
account any gains realized that year by that executive as a result of his or her
individual decision to exercise an option granted in a previous year.

K. JEFFREY DAHLBERG
DEAN A. RIESEN

VOTING SECURITIES AND
PRINCIPAL HOLDERS THEREOF

The Company has outstanding one class of voting securities, Common Stock,
$0.01 par value, of which 12,303,182 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.

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 8091 Wallace Road, Eden Prairie, Minnesota 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.

SHARES
BENEFICIALLY PERCENTAGE
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED OF TOTAL
------------------------------------ ------------ ----------

K. Jeffrey Dahlberg......................................... 327,800(3) 2.66%
David Goronkin.............................................. 19,000 *
Diana G. Purcel............................................. 1,000(4) *
Christopher O'Donnell....................................... 62,000(5) *
F. Lane Cardwell, Jr........................................ -0- *
Mary L. Jeffries............................................ 3,035 *
Richard L. Monfort.......................................... 80,000(6) *
Dean A. Riesen.............................................. 35,500 *
David W. Anderson(1)........................................ 1,630,900(7)(8)(9) 13.26%
Martin J. O'Dowd(2)......................................... -0- *
Wellington Management Company, LLP.......................... 1,183,700(10) 9.62%
75 State Street
Boston, MA 02109
All Directors and Officers as a group (8 people)............ 528,335(11) 4.23%

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

* less than 1%

(1) Mr. Anderson resigned as a director and executive officer of the Company
effective December 10, 2003.

(2) Mr. O'Dowd resigned as a director and executive officer of the Company
effective May 19, 2003.

(3) Includes 38,334 shares that such person has the right to acquire within 60
days.

(4) Includes 1,000 shares held by Ms. Purcel in a self-directed IRA.

(5) Includes 62,000 shares that such person has the right to acquire within 60
days.

(6) Includes 80,000 shares that such person has the right to acquire within 60
days.

(7) Includes 1,559,500 that Mr. Anderson holds jointly with his spouse, of
which 250,000 shares are subject to an option (obligation to sell) granted
to a former affiliate of the Company.

(8) Includes 71,400 shares owned by Grand Pines Resorts, Inc., a corporation
wholly-owned by Mr. Anderson, of which 8,300 shares are subject to options
(obligations to sell) granted to employees of Grand Pines Resorts, Inc. Mr.
Anderson disclaims beneficial ownership of such shares.
16

(9) Based on the most recent Schedule 13G filed on February 4, 2004 with the
Securities and Exchange Commission.

(10) Based on the most recent Schedule 13G filed on February 12, 2004 with the
Securities and Exchange Commission.

(11) Includes 180,334 shares that such group has the right to acquire within 60
days.

CERTAIN TRANSACTIONS

During 2003, the Company subleased three real estate units from S&D Land
Holdings, Inc. ("S&D"), a corporation wholly owned by David W. Anderson, the
Company's founding shareholder who served as Chairman of the Board and interim
Chief Executive Officer until December 10, 2003. Total rent payments to S&D,
during fiscal 2003, totaled $112,880.

On May 30, 2003, S&D assigned its lease interest in one of these properties
(Roseville, Minnesota) to the Company in exchange for $243,707. On October 28,
2003, S&D assigned its lease interest in another one of these properties (Linden
Hills, Minnesota) to a franchisee that had previously been subleasing the Linden
Hills property from the Company. As a result of this transaction, the Company's
sublease was terminated at that location. With respect to the third and final
lease agreement (Highland Park, Minnesota), an unrelated third party purchased
S&D's leasehold interest in the property on November 5, 2003. Following this
purchase, the Company has not been a party to any transactions involving S&D.

On October 5, 2001, the Company granted Martin J. O'Dowd, the Company's
former Chief Executive Officer, a two-year exclusive option to develop franchise
units in North Carolina beginning in October 2004. This option generally
precluded the Company's development of owned or franchised restaurants in North
Carolina before the expiration of the option. Upon exercise, the option
permitted Mr. O'Dowd to develop the franchise units in exchange for a 4% royalty
fee, which fee was less than the aggregate amount the Company generally charged
to an unaffiliated third party. In addition, the option waived certain franchise
area development and franchise fees the Company customarily charges to an
unaffiliated third party. Pursuant to an agreement governing Mr. O'Dowd's May
19, 2003 termination of employment, the Company agreed to allow Mr. O'Dowd to
exercise the option at any time following May 19, 2003 in exchange for Mr.
O'Dowd's agreeing to a minimum development schedule. In November 2003 and
following Mr. O'Dowd's separation from the Company, Mr. O'Dowd relinquished his
interests in the North Carolina market pursuant to a transaction in which he
acquired the Company's three Atlanta area restaurants. In connection with
acquiring these units, Mr. O'Dowd entered into franchise agreements with the
Company related to the purchase and subsequent operation of these units and
entered into an area development agreement governing the development of
additional franchised restaurants in defined areas of Georgia.

Except as otherwise set forth above, 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.

COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

Section 16(a) of the Securities Exchange Act of 1934, as amended, 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 percent
shareholders are required by SEC regulations to furnish the Company with copies
of all Section 16(a) forms they file.

Information regarding David W. Anderson required to be filed on a Form 5 in
December 2003, was instead filed on March 1, 2004; K. Jeffrey Dahlberg amended a
Form 4 initially filed on July 8, 2003 to report a June 13, 2003 stock option
grant; Mary L. Jeffries filed a Form 4 on September 5, 2003 reporting an August
29, 2003 stock option grant; Richard L. Monfort filed a Form 4 on September 25,
2003 reporting a June 13, 2003 stock option grant; Mr. Monfort also filed a Form
5 in May 2003 that reported stock options granted in May 2002; Dean A. Riesen
filed a Form 4 on September 5, 2003 reporting a June 13, 2003 stock

option grant. Except as set forth above, 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 its officers, directors and greater
than ten percent beneficial owners complied with all applicable Section 16(a)
filing requirements during the fiscal year ended December 28, 2003.

PROPOSALS OF SHAREHOLDERS

Any shareholder who desires to submit a proposal for action by the
shareholders at the next annual meeting must submit such proposal in writing to
Diana Garvis Purcel, Secretary, Famous Dave's of America, Inc., 8091 Wallace
Road, Eden Prairie, Minnesota 55344 by December 13, 2004. Due to the complexity
of the respective rights of the shareholders and the Company in this area, any
shareholder desiring to propose such an action is advised to consult with his or
her legal counsel with respect to such rights. The Company suggests that any
such proposal be submitted by certified mail return receipt requested.

DISCRETIONARY PROXY VOTING AUTHORITY/
UNTIMELY STOCKHOLDER PROPOSALS

Rule 14a-4(c) promulgated under the Securities and Exchange Act of 1934
governs the Company's use of its discretionary proxy voting authority with
respect to a shareholder proposal that the stockholder has not sought to include
in the Company's proxy statement. The Rule provides that if a proponent of a
proposal fails to notify the Company of the proposal at least 45 days before the
date of mailing of the prior year's proxy statement, then the management proxies
will be allowed to use their discretionary voting authority when the proposal is
raised at the meeting, without any discussion of the matter in the proxy
statement.

With respect to the Company's 2005 Annual Meeting of Shareholders, if the
Company is not provided notice of a stockholder proposal, which the stockholder
has not previously sought to include in the Company's proxy statement, by
February 26, 2005, the management proxies will be allowed to use their
discretionary authority as outlined above.

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 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

/s/ Diana Garvis Purcel
Diana Garvis Purcel
Secretary

APPENDIX A

FAMOUS DAVE'S OF AMERICA, INC.
AUDIT COMMITTEE CHARTER
(as adopted on December 10, 2003)

I. Purpose.

The primary function of the Audit Committee (the "Committee") is to assist
the Board of Directors (the "Board") in fulfilling its oversight
responsibilities by reviewing: the financial reports and other financial
information provided by the Corporation to any governmental body or the public;
the Corporation's systems of internal controls regarding finance, accounting,
legal compliance and ethics that management and the Board have established; and
the Corporation's auditing, accounting and financial reporting processes
generally. Consistent with this function, the Committee should encourage
continuous improvement of, and should foster adherence to, the corporation's
policies, procedures and practices at all levels. The Committee's primary duties
and responsibilities are to:

- Serve as an independent and objective party to monitor the Corporation's
financial reporting process and internal control system.

- Review and appraise the audit performed by the Corporation's independent
accountants, who report directly to the Committee.

- Provide an open avenue of communication among the independent accountants,
financial and senior management and the Board.

The Committee will primarily fulfill these responsibilities by carrying out
the activities enumerated in Section IV of this Charter.

II. Composition.

The Committee shall be comprised of three or more directors as determined
by the Board, each of whom shall be independent directors (as defined by all
applicable rules and regulations of the Securities and Exchange Commission (the
"Commission"), Nasdaq and any other appropriate body), and free from any
relationship that, in the opinion of the Board, would interfere with the
exercise of his or her independent judgment as a member of the Committee. All
members of the Committee shall have a working familiarity with basic finance and
accounting practices, including being able to read and understand financial
statements, and at least one member of the Committee shall have accounting or
related financial management expertise. The Committee shall endeavor to have, as
one of its members, an individual who qualifies as an "audit committee financial
expert" in compliance with the criteria established by the Commission and other
relevant regulations at the time the regulations require disclosure of the
existence of an audit committee financial expert. The existence of such audit
committee financial expert, including his or her name and whether or not he or
she is independent, or the lack of an audit committee financial expert, shall be
disclosed in the Corporation's periodic filings as required by the Commission.

Committee members may enhance their familiarity with finance and accounting
by participating in educational programs conducted by the Corporation or an
outside consultant.

The members of the Committee shall be elected by the Board at the annual
organizational meeting of the Board and shall serve until the next annual
organizational meeting of the Board or until their successors have been duly
elected and qualified. Unless a Chair is elected by the full Board, the members
of the Committee may designate a Chair by majority vote of the full Committee
membership.

III. Meetings.

The Committee shall meet at least four times annually, or more frequently
as circumstances dictate. As part of its job to foster open communication, the
Committee should meet at least annually with management
A-1

and the independent accountants in separate executive sessions to discuss any
matters that the Committee or each of these groups believe should be discussed
privately.

IV. Responsibilities and Duties.

To fulfill its responsibilities and duties, the Committee is expected to:

1. Provide an open avenue of communication between the Corporation, the
independent accountants and the Board.

2. Review the Committee's charter at least annually and recommend to the Board
any necessary or desirable amendments as conditions may dictate.

3. Maintain sole authority and responsibility for hiring and firing the
independent accountants, and maintain direct responsibility for the
appointment, compensation, and oversight of the independent accountants'
work (including resolution of disagreements between management and the
auditor regarding financial reporting) for the purpose of preparing or
issuing an audit report or related work. The independent accountants shall
report directly to the Committee.

4. Confirm and assure the independence of the internal audit function (if any)
and the independent accountant, including considering whether the
independent accountant's performance of permissible non-audit services and
the compensations received for such services is compatible with the
independent accountant's independence.

5. Review and pre-approve the performance of all audit and non-audit
accounting services to be performed by the independent accountant (other
than with respect to de minimus exceptions permitted by the Sarbanes-Oxley
Act of 2002), to the extent such services are permitted under applicable
rules and regulation. By action of the Committee, the authority to grant
pre-approval may be delegated to one or more designated members of the
Committee who are independent members of the Board, with any such
pre-approval to be reported to the Committee at its next regularly
scheduled meeting. Approval of non-audit services shall be disclosed to
investor in the Corporation's periodic reports required by Section 13(a) of
the Securities Exchange Act of 1934, as amended.

6. Consider, in consultation with the independent accountant, the audit scope
and plan of the independent accountant.

7. Review the following items with management and the independent accountant
at the completion of the annual examination and recommend to the Board
whether the financial statements should be included in the Annual Report on
Form 10-K:

(a)The Corporation's annual financial statements and related footnotes.

(b)The independent accountant's audit of the financial statements and his
or her report thereof.

(c)Any significant changes required in the independent accountant's audit
plan.

(d)Any serious difficulties or disputes with management encountered during
the course of the audit.

(e)Other matters related to the conduct of the audit which are to be
communicated to the Committee under SAS numbers 61 and 90.

8. Review with management, and if appropriate, with the independent
accountants, the interim financial results that are filed with the
Commission or other regulators.

9. Assess the effectiveness of the Corporation's internal control environment,
and evaluate the need for an internal audit function; Discuss with
management any significant deficiencies in internal controls that have been
identified by the Chief Executive Officer or Chief Financial Officer which
could adversely affect the Corporation's ability to record, process,
summarize or report financial data.

A-2

10. Consider and review with the independent accountant:

(a)The adequacy of the Corporation's internal controls, including
computerized information system controls and security.

(b)Any related significant findings and recommendations of the independent
accountant together with management's responses thereto.

11. Review the internal controls report prepared by management for insertion
into the annual report and the independent accountant's attestation on the
assertions of management that are contained in the internal controls
report.

12. Maintain sole authority and responsibility for hiring and firing tax
consultants, and maintain direct responsibility for the oversight of such
tax consultants' work, which oversight shall include a review of the
summary of results of such work on an annual basis. Tax consultants engaged
by the Corporation shall report directly to the Committee.

13. Review with management legal and regulatory matters that may have a
material impact on the financial statements, related company compliance
policies, and programs and reports received from regulators.

14. Review the Corporation's critical accounting policies and practices, all
alternative treatments of financial information within GAAP discussed
between the independent accountants and management, and all other material
written communications between the independent accounts and management.

15. Ensure there is a process for the confidential, anonymous submission by the
Corporation's employees of concerns regarding questionable accounting and
auditing matters.

16. Ensure procedures are established for the receipt, retention and treatment
of complaints received by the Corporation regarding accounting, auditing,
and internal accounting controls.

17. Review and approve (with the concurrence of a majority of the disinterested
members of the Board) any related party and affiliated party transactions.

18. Report Committee actions to the Board with such recommendations as the
Committee may deem appropriate.

19. The Committee shall have the power to conduct or authorize investigations
into any matters within the Committee's scope of responsibilities.

20. The Committee has the authority to engage and determine funding for outside
legal, accounting or other advisors and to obtain advice and assistance
from such outside advisors as deemed appropriate to perform its duties and
responsibilities.

21. The Committee will perform other activities consistent with this Charter,
the Company's articles of incorporation or bylaws or applicable law, as the
Committee or the Board deems necessary or appropriate.

A-3

FAMOUS DAVE'S OF AMERICA, INC.

PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
THURSDAY, MAY 13, 2004
9:00 A.M.
CALHOUN BLUES CLUB
3001 HENNEPIN AVENUE
CALHOUN SQUARE
MINNEAPOLIS, MN

FAMOUS DAVE'S OF AMERICA, INC.
8091 WALLACE ROAD
EDEN PRAIRIE, MN 55344 PROXY
--------------------------------------------------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.

The undersigned, a shareholder of Famous Dave's of America, Inc., hereby
appoints David Goronkin and Diana G. Purcel, 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,
May 13, 2004, at 9:00 a.m., and at any and all adjournments thereof.

See reverse for voting instructions.

Please detach here
--------------------------------------------------------------------------------

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES.

1. ELECTION OF DIRECTORS: 01 F. Lane Cardwell, Jr. 04 Mary L. Jeffries
02 K. Jeffrey Dahlberg 05 Richard L. Monfort
03 David Goronkin 06 Dean A. Riesen

[ ] Vote FOR [ ] Vote WITHHELD
all nominees from all nominees
(except as marked)

(INSTRUCTIONS: TO WITHHOLD ----------------------------------------
AUTHORITY TO VOTE FOR ANY INDICATED
NOMINEE, WRITE THE NUMBER(S) OF THE
NOMINEE(S) IN THE BOX PROVIDED TO
THE RIGHT.) ----------------------------------------

2. PROPOSAL TO RATIFY THE APPOINTMENT OF GRANT THORNTON, LLP, CERTIFIED PUBLIC
ACCOUNTANTS, AS INDEPENDENT AUDITORS OF THE COMPANY FOR FISCAL 2004.

[ ] FOR [ ] AGAINST [ ]ABSTAIN

3. UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY
ADJOURNMENTS THEREOF.

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.

Address Change? Mark Box
Indicate changes below: [ ] Date
--------------------------

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

Signature(s) in Box

Please sign exactly as name appears at
left. When shares are held by joint
tenants, both should sign. When signing
as attorney, executor, administrator,
trustee or guardian, or in some other
fiduciary capacity, please give full
title as such. If a corporation, please
sign in full corporate name by president
or other authorized officer(s). If a
partnership, please sign in partnership
name by authorized person(s).