<PAGE>


                             INCOME CONTINUANCE AGREEMENT

    This Income Continuance Agreement ("Agreement") is made and entered into 
this 10 day of March 1997, by and between Peter S. Bedzyk ("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 

<PAGE>

         Company may from time designate as "confidential," "proprietary," or 
         "trade 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 such assumption by the date the Change in

                                       2

<PAGE>

    Control becomes effective will constitute Good Reason for termination of 
    the Officer's 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/  PETER S. BEDZYK
            --------------                  --------------------
                                            Peter S. Bedzyk
STATE OF MINNESOTA
              ss.
COUNTY OF HENNEPIN

    The foregoing instrument was acknowledged before me this 10 day of March
1997, by Peter S. Bedzyk.                  
         ---------------

                                            /s/  James A. Kelzer
                                            --------------------
                                            Notary Public

                                      4

<PAGE>
                                                 TIMBER LODGE STEAKHOUSE, INC.


                                                 By:  /s/  L. H. LeJeune
                                                      ------------------
                                                      Its:  Chairman
STATE OF MINNESOTA )
                   ) ss.
COUNTY OF HENNEPIN )

    The foregoing instrument was acknowledged before me this  10  day of
May, 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 PETER S. BEDZYK'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, PETER S., BEDZYK, 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/ Peter S. Bedzyk 
                                       --------------------
                                       Peter S. Bedzyk

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


/s/  James A. Kelzer
--------------------------------------
              Notary

                                       7

<PAGE>

                                   PETER S. BEDZYK

                                COMPENSATION SCHEDULE

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

    1997            $ 87,500           $17,500        $105,000

    1998              96,250            19,250         115,500

    1999             105,825            21,175         127,050

    2000             116,463            23,293         139,756

    2001             128,109            25,622         153,731


THE COMPANY:                           THE OFFICER:
Timber Lodge Steakhouse, Inc.          /s/   Peter S. Bedzyk


By:  /s/   L. F. LeJeune               Chief Operating Officer
     -------------------               -----------------------
     Its:  Chairman                    Title