<PAGE>

                             INCOME CONTINUANCE AGREEMENT

    This Income Continuance Agreement ("Agreement") is made and entered into
this 10 day of March, 1997, by and between Robert G. Cornell ("Officer") and
Timber Lodge Steakhouse, Inc., a Minnesota Corporation ("Company").

    WHEREAS, the Company is in the business of owning and managing restaurants
including the restaurant chain doing business as Timber Lodge Steakhouse; and

    WHEREAS, the Company may in the future receive offers to purchase its
restaurant chain which does business as Timber Lodge Steakhouse.

    WHEREAS, the Company desires to provide Officer with temporary financial
support if his employment is terminated as a result of Company's sale, exchange
or other transfer of all or substantially all of the assets of the Company's
restaurant chain doing business as Timber Lodge Steakhouse.

    NOW, THEREFORE, in consideration of the promises and the mutual agreements,
covenants, and provisions contained in this Agreement, the Company and the
Officer agree as follows:

1.  DEFINITIONS.

    a. CAUSE.  "Cause" shall mean any one or more of the following: (i)  the
       Officer's dishonesty or theft of the Company's property; (ii) the gross
       negligence or inefficiency in execution of the Officer's duties; 
       (iii) the Officer's  material violation of the Company's rules, 
       regulations, instructions or policies; (iv) the Company is adjudicated
       bankrupt; or (v) the Officer's commission of an act which is a crime or
       which materially damages the reputation of the Company, including but 
       not limited to fraud.

    b. CHANGE IN CONTROL.  "Change in Control" is the sale, lease, exchange
       or other transfer, directly or indirectly, of all or substantially all
       of the assets of the Company's restaurant chain doing business as Timber
       Lodge Steakhouse, to any person or entity.

    c. CONFIDENTIAL INFORMATION.  "Confidential Information" means any
       information or compilation of information possessed by the Company that
       derives independent economic value, actual or potential, from not being
       generally known to, and not being readily ascertainable by proper means
       by other persons who can obtain economic value from its disclosure or 
       use, including but not limited to:  (a) any information not generally 
       known in the restaurant industry regarding the Company's products, 
       formulas, recipes, pricing of products, research, development, marketing,
       servicing, operational methods and instructions; (b) financial 
       information concerning the Company and its customers, including, but
       not limited to, information concerning sales figures, projections, and 
       estimates; (c) customer lists or identifying information; and (d) any
       information that the Company may from time designate as "confidential,"
       "proprietary," or "trade 

<PAGE>

       secrets" which is not generally known in the restaurant industry.

    d. GOOD REASON.  (A) Subject to Subsection (B), "Good Reason" with
       respect to an Officer is any of the following:

       (1)  An adverse change in the Officer's status or position as a result
            of a Change in Control, including, without limitation, any adverse
            change in the Officer's status or position as a result of a 
            material diminution in his duties or responsibilities; however,
            Good Reason does not include, without more, the sale of the 
            Company's restaurant chain doing business as Timber Lodge 
            Steakhouse, nor does Good Reason including an adverse change in
            Officer's status or position caused by an insubstantial or 
            inadvertent action that is remedied by the Company promptly 
            after receipt of notice of such change is given by the Officer;

       (2)  A reduction by the Successor in the Officer's Base Pay, or an
            adverse change in the form or timing of the payment thereof, as in
            effect immediately prior to the Change in Control; 

    e. SUCCESSOR.  A "Successor" is any person or entity that succeeds to, or
       has the practical ability to control the Company's restaurant chain 
       doing business as Timber Lodge Steakhouse by purchases, merger, 
       consolidation or other form of business combination.

2.  ELIGIBILITY FOR BENEFITS.  Officer will become eligible for the benefits
    provided in paragraph 3 herein, if (a) there is a Change In Control; if 
    (b) (i) his employment is terminated for any reason other than his death 
    or cause or (ii) Officer terminates his employment with the Successor for 
    Good Reason; (c) such termination occurs within the period beginning on the
    date of a Change in Control (subject to such Change in Control occurring 
    prior to December 31, 2001) and ending on the last day of the twelve month 
    that begins after the month in which the Change in Control occurs; and 
    (c) Officer signs the General Release attached hereto as Exhibit A.

3.  BENEFITS.  The Company will make a cash lump sum payment to Officer in an
    amount equal to 24 months of his base pay plus a 20% bonus based upon two
    years of his base pay, less applicable, federal state and FICA tax 
    deductions.  The calculation of this amount will be based upon the 
    compensation schedule attached hereto as Exhibit B.  Such benefits will 
    be paid to Officer provided he has become eligible for benefits as set 
    forth in paragraph 2 herein, and provided he has not rescinded his General
    Release, fifteen days after Officer has signed the General Release in the 
    form attached hereto as Exhibit A.

4.  SUCCESSOR RESPONSIBILITY.  The Company will require any Successor to
    expressly assume and agree to perform the obligations of this Agreement in
    the same manner and to the same extent that the Company would be required
    to perform if no such succession had taken place.  Failure of the Company 
    to obtain suchassumption by the date the Change in Control becomes 
    effective will constitute Good Reason for termination of the Officer's 

                                      2.

<PAGE>

    employment.  However, in order to receive benefits under the circumstances
    set forth in this paragraph, employee must terminate his employment within 
    thirty days after the Change in Control becomes effective.

5.  NON-COMPETITION AGREEMENT IN EXCHANGE FOR BENEFITS.  Officer agrees that
    for a period of two (2) years after the termination of his employment, for
    any reason which entitles him to receive the benefits set forth at 
    paragraph 3, he will not directly or indirectly own, manage, operate, 
    control, consult with, become employed by, or render services to or for 
    any person, firm, corporation, or other entity which operates a steak 
    restaurant which has a concept (e.g. price, theme, menu) similar to Timber
    Lodge Steakhouse within a radius of 20 miles from any Timber Lodge 
    Steakhouse.  The Company or its Successor may agree to waive these 
    restrictions in its sole discretion.

    Officer further agrees that he will not directly or indirectly disclose any
    Confidential Information to any other person, firm or company, or in any
    way use for his benefit, or to the detriment of the Company or its
    Successor, any information or knowledge obtained during the course of his
    employment with the Company or its Successor except as required in the
    conduct of the Company's or Successor's business.

6.  NO EMPLOYMENT OR SERVICE CONTRACT.  Nothing in this Plan is intended to
    provide Officer with any right to continue in the employ of the Company
    for any period of specific duration or interfere with or otherwise restrict
    in any way Officer's rights or the rights of the Company, which rights are
    hereby expressly reserved, to terminate Officer's employment at any time 
    for any reason or no reason whatsoever, with or without cause.

7.  INVALIDITY.  In case any one or more of the provisions of this Agreement
    shall be invalid, illegal, or unenforceable in any respect, the validity,
    legality, and enforceability of the remaining provisions contained in this 
    Agreement will not in any way be affected or impaired thereby.

8.  VOLUNTARY AND KNOWING ACTION.  Officer acknowledges that he has had twenty-
    one days in which to consider this Agreement, that he has been advised of 
    his right to seek counsel, that he has had an opportunity to review this 
    Agreement with his own attorney, that he has read and understands the terms
    of this Agreement, and that he is voluntarily entering into the Agreement.

9.  NOTICES.  For the purposes of this Agreement, notices and all other
    communications provided for in, or required under, this Agreement must be
    in writing and will be deemed to have been duly given when personally 
    delivered or when mailed by United States registered or certified mail,
    return receipt requested, postage prepaid and addressed to Officer or the 
    Company's (as the case may be) respective address (provided that all 
    notices to the Company must be directed to the attention of the chair of 
    the Board).  For purposes of any such notice requirement, the Company 
    will use the Officer's most current address on file in the Company's 
    personnel records.  Any notice of a Officer's change of address will 
    be effective only upon receipt by the Company.

                                      3.

<PAGE>

10. ENTIRE AGREEMENT.  This Agreement sets forth the entire understanding
    between the parties, there being no terms, conditions, warranties, or
    representations other than those contained herein, and no amendment 
    hereto shall be valid unless made in writing and signed by the parties.
    This Agreement replaces, supersedes, and nullifies all prior agreements
    or arrangements between the parties relating to Officer's employment or 
    termination from employment with Company or any of its affiliated or 
    Successor entities.

11. SEVERABILITY.  In the event any portion of this Agreement is held to be
    invalid, the same shall not affect in any respect whatsoever the validity
    of the remainder of this Agreement.

12. GOVERNING LAWS.  This Agreement shall be construed and enforced in
    accordance with the laws of the State of Minnesota.

    IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.

    Dated:  March 10, 1997                  /s/ Robert G. Cornell
            --------------                  ---------------------
                                            Robert G. Cornell


STATE OF MINNESOTA
               ss.
COUNTY OF HENNEPIN

    The foregoing instrument was acknowledged before me this 10 day of March
1997, by Robert G. Cornell.

                                      /s/ Sally M. Adair
                                      ------------------
                                      Notary Public

                                      4.

<PAGE>

                                                  TIMBER LODGE STEAKHOUSE, INC.

                                                      By    /s/  L. F. LeJeune
                                                            ------------------
                                                      Its:  Chairman

STATE OF MINNESOTA )
                   ) ss.
COUNTY OF HENNEPIN )

    The foregoing instrument was acknowledged before me this 10 day of March
1997 by  L. F. LeJeune   the Chairman of Timber Lodge Steakhouse, Inc., a 
Minnesota corporation, on behalf of the corporation.  

                                       /s/ Susan A. Peterson
                                       ---------------------
                                       Notary Public

                                       5.

<PAGE>

            EXHIBIT A TO ROBERT G. CORNELL'S INCOME CONTINUANCE AGREEMENT 

                                       RELEASE

DEFINITIONS.  I intend all words used in this Release to have their plain
meanings in ordinary English.  Technical legal words are not needed to describe
what I mean.  Specific terms I use in this Release have the following meanings:

    A. I, me, and my include both me and anyone who has or obtains any legal
       rights or claims through me.

    B. Company, as used herein, shall at all times mean Timber Lodge
       Steakhouse, Inc. its parent, subsidiaries, successors and assigns, its
       affiliated and predecessor companies, their successors and assigns, 
       their affiliated and predecessor companies and the present or former
       officers, employees and agents of any of them, whether in their 
       individual or official capacities, and the current and former trustees
       or administrators of any pension or other benefit plan applicable to 
       the employees or former employees of the Company, in their official 
       and individual capacities.

    C. MY CLAIMS means all of the rights I have now to any relief of any kind
       from the Company, whether or not I now know about those rights, arising
       out of my employment with the Company, and my employment termination,
       including, but not limited to, claims for breach of contract; fraud or
       misrepresentation; violation of the Minnesota Human Rights Act, or other
       federal, state, or local civil rights laws based on age, disability or
       other protected class status; defamation; intentional or negligent
       infliction of emotional distress; breach of the covenant of good faith
       and fair dealing; promissory estoppel; negligence; wrongful termination
       of employment; and any other claims for unlawful employment practices. 
       However, this release shall not affect any claims which could be made 
       under any welfare benefit plan or any pension or retirement plan through 
       the Company.

AGREEMENT TO RELEASE MY CLAIMS.  I am receiving a substantial amount of money 
paid by the Company.  I agree to give up all My Claims against the Company in 
exchange for this payment.  I will not bring any lawsuits, file any charges, 
complaints, or notices, or make any other demands against the Company based 
on My Claims.  The money I am receiving is a full and fair payment for the 
release of all My Claims.  The Company does not owe me anything in addition 
to what I will be receiving.

ADDITIONAL AGREEMENTS AND UNDERSTANDINGS.  Even though the Company is paying 
me to release My Claim, the Company does not admit that it may be responsible 
or legally obligated to me.  In fact, the Company denies that it is 
responsible or legally obligated for My Claims or that it has engaged in any 
wrongdoing.

    I understand that I may rescind (that is, cancel) this Release within 
seven (7) calendar days of signing it to reinstate federal claims and within 
fifteen (15) calendar days of signing it to reinstate state claims.  To be 
effective, my rescission must be in writing and delivered to the 

<PAGE>

Company in care of, Robert G., Cornell, Timber Lodge Steakhouse, Inc. 
4021 Vernon Ave. So. (address), either by hand or by mail within the 15-day
period. If sent by mail, the rescission must be:

    1.   Postmarked within the 15-day period;

    2.   Properly addressed to the Company; and

    3.   Sent by certified mail, return receipt requested.

    I have read this Release carefully and understand all its terms.  I have 
had an opportunity to discuss this Release with my own attorney.  In agreeing 
to sign this Release, I have not relied on any statements or explanations 
made by the Company or its attorney.

I understand and agree that this Release, the Separation Agreement to which 
it is attached, and the Company employee benefit plans in which I am a 
participant contain all the agreements between the Company and me.  We have 
no other written or oral agreements.

Dated: /s/  March 10,1997. 
      --------------------
                                      /s/ Robert G. Cornell
                                      ---------------------
                                      Robert G. Cornell


Subscribed and sworn to before me this
10 day of March 1997.


/s/ Sally M. Adair
------------------
Notary

                                      7.

<PAGE>

                                    ROBERT CORNELL

                                COMPENSATION SCHEDULE

                  BASE SALARY           BONUS               TOTAL
                  -----------           -----               -----

    1997           $ 72,500            $14,500             $ 87,000

    1998             79,750             15,950               95,700

    1999             87,725             17,545              105,270

    2000             96,498             19,300              115,798

    2001            106,147             21,229              127,376


THE COMPANY:                           THE OFFICER:
Timber Lodge Steakhouse, Inc.          /s/  Robert G. Cornell

By:  /s/ L. F. LeJeune                 /s/  Chief Financial Officer
     ------------------------          ----------------------------

     Its:  Chairman                     Title