Item 5.02
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Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
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(b) Termination of Chief Executive Officer
As of October 11, 2016, Adam Wright ceased being the Chief Executive Officer of Famous Daves of America, Inc. (the
Company) and, effective October 12, 2016, resigned from the Companys Board of Directors (the Board).
(c)
Appointment of Chief Executive Officer and Chief Operating Officer
On October 11, 2016, the Company appointed Michael Lister to
serve as Chief Executive Officer and Chief Operating Officer. Since 2001, Mr. Lister, age 56, has been an owner and the president of Famous Five Dining, Inc., which operates five Famous Daves franchised restaurants in Tennessee. He is
currently serving his fourth term as Chairman of the Franchise Advisory Board. Prior to becoming a franchise owner, he served as the Companys senior vice president of operations from 1997 to 2001, opening 46 stores in 4 years, and was
responsible for all aspects of operations: day-to-day restaurant operations, menu development, kitchen design, management recruiting, training and retention, site selection, new restaurant openings, strategic planning, budgeting and marketing
initiatives.
Prior to October 11, 2016, Mr. Lister was the President of Famous Five Dining, Inc., a corporation that controls
five franchised Famous Daves restaurants. Famous Five Dining, Inc. paid an aggregate of approximately $522,613 in franchise royalties and contributions to the Companys system-wide marketing for fiscal 2015 and $377,142 for year-to-date
fiscal 2016.
There are no arrangements or understandings between Mr. Lister and any other person pursuant to which he was selected
as Chief Executive Officer of the Company and no family relationships between Mr. Lister and the executive officers or directors of the Company. In connection with his appointment as Chief Executive Officer and Chief Operating Officer,
Mr. Lister has entered into an employment agreement as described below and incorporated into this Item 5.02(c).
The Company has
issued a press release, dated October 12, 2016, announcing the appointment of Mr. Lister and which is attached as Exhibit 99.1 and incorporated herein in its entirety by this reference.
(e) Employment Agreement
Mr. Listers employment with the Company is governed by an employment agreement entered into on October 11, 2016, which has a
four year term. Under the employment agreement, Mr. Lister is entitled to receive an annual base salary of $300,000 and is eligible for annual bonus compensation in the discretion of the Board in amounts expected to be 50% of his base salary,
to be
pro-rated
in the case of any partial years worked. Provided that he is employed through December 31, 2016, Mr. Lister will receive a guaranteed minimum bonus of $18,750 for 2016.
Pursuant to the employment agreement, on October 11, 2016, the Company also granted to Mr. Lister a five-year, 70,000 share
non-qualified stock option under the Companys 2015 Equity Incentive Plan that will vest in equal monthly installments over the employment term (the Stock Option). The Stock Option will have an exercise price equal to the fair
market value of the Companys common stock as of October 11, 2016. The employment agreement also provides that Mr. Lister is eligible, in the determination of the Board, for additional equity grants in subsequent years.
Mr. Lister may participate in the Companys benefit plans that are currently and hereafter maintained by the Company and for which
he is eligible, including, without, limitation, group medical, 401(k), life insurance and other benefit plans. Mr. Lister is entitled to be reimbursed for reasonable travel and other expenses and will be provided with (or reimbursed for) a cell
phone, a laptop computer and a calling and data plan. He will also receive a temporary residence living allowance of $3,500 per month and will be reimbursed for reasonable travel expenses incurred in commuting to the Companys headquarters
prior to his move to the Minneapolis/St. Paul metropolitan area, provided that such allowance and reimbursement will terminate upon the earlier of his relocation or eighteen months after October 11, 2016. The Company will reimburse
Mr. Lister for relocation expenses of up to $10,000. The Company has also agreed to provide Mr. Lister with an automobile, or to reimburse him for up to $8,400 per year to lease an automobile.
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Pursuant to the employment agreement, Mr. Lister agreed to customary non-competition and
non-solicitation provisions; provided, however, that Mr. Lister will not be restricted from owning or operating Company franchise locations or any single location restaurants.
If Mr. Listers employment is terminated for any reason other than for Cause (as defined in the employment agreement),
death or disability, or if Mr. Lister resigns for Good Reason (as defined in the employment agreement), the employment agreement provides that so long as he has signed and has not revoked a release agreement, he will receive
severance comprised of continuing payments of his base salary for a period the lesser of (i) six months after such termination and (ii) the remainder of what would have been his employment term.
The foregoing description of the employment agreement with Mr. Lister summarized above is a summary only, and is qualified in its
entirety by the document filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.