BIG BUCK BREWERY & STEAKHOUSE INC, 10KSB, 1999-03-29

BIG BUCK BREWERY & STEAKHOUSE INC
10KSB, 1999-03-29
EATING & DRINKING PLACES

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

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FORM 10-KSB

/X/ ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 FOR THE FISCAL YEAR ENDED JANUARY 3, 1999

/ / TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

COMMISSION FILE NUMBER 0-20845

BIG BUCK BREWERY & STEAKHOUSE, INC.
(Name of Small Business Issuer in Its Charter)

MICHIGAN 38-3196031
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)

550 SOUTH WISCONSIN STREET, GAYLORD, MICHIGAN 49735
(Address of Principal Executive Offices, including Zip Code)

(517) 731-0401
(Issuer's Telephone Number, including Area Code)

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE EXCHANGE ACT: NONE

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE EXCHANGE ACT:

COMMON STOCK ($.01 PAR VALUE)
(Title of Class)

Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes /X/ No / /

Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. / /

The issuer's revenues for its most recent fiscal year were $15,561,753.

The aggregate market value of the voting stock held by non-affiliates
of the issuer as of March 1, 1999 was approximately $8,242,820.

The number of shares of the common stock of the issuer outstanding as
of March 1, 1999 was 5,285,000.

DOCUMENTS INCORPORATED BY REFERENCE

None.

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TABLE OF CONTENTS
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PART I .......................................................................................................... 1

ITEM 1 DESCRIPTION OF BUSINESS ............................................................ 1
ITEM 2 DESCRIPTION OF PROPERTY ............................................................ 8
ITEM 3 LEGAL PROCEEDINGS .................................................................. 10
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ................................ 10

PART II ......................................................................................................... 11

ITEM 5 MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS............................ 11
ITEM 6 MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION........................... 12
ITEM 7 FINANCIAL STATEMENTS ............................................................... 18
ITEM 8 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE ................................................ 29

PART III ........................................................................................................ 30

ITEM 9 DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.................................. 30
ITEM 10 EXECUTIVE COMPENSATION ............................................................ 32
ITEM 11 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT ......................................................................... 34
ITEM 12 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS ..................................... 36
ITEM 13 EXHIBITS, LIST AND REPORTS ON FORM 8-K ............................................. 36

SIGNATURES ...................................................................................................... 39

INDEX TO EXHIBITS ............................................................................................... 40

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PART I

ITEM 1 DESCRIPTION OF BUSINESS

THE FOLLOWING DESCRIPTION OF BIG BUCK'S BUSINESS CONTAINS CERTAIN
FORWARD-LOOKING TERMINOLOGY SUCH AS "BELIEVES," "ANTICIPATES," "EXPECTS," AND
"INTENDS," OR COMPARABLE TERMINOLOGY. SUCH STATEMENTS ARE SUBJECT TO CERTAIN
RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY
FROM THOSE PROJECTED. POTENTIAL PURCHASERS OF BIG BUCK'S SECURITIES ARE
CAUTIONED NOT TO PLACE UNDUE RELIANCE ON SUCH FORWARD-LOOKING STATEMENTS WHICH
ARE QUALIFIED IN THEIR ENTIRETY BY THE CAUTIONS AND RISKS DESCRIBED HEREIN.

OVERVIEW

The business of Big Buck Brewery & Steakhouse, Inc. is to develop,
own and operate microbrewery/restaurants under the name "Big Buck Brewery &
Steakhouse=SM=." In May 1995, Big Buck opened its first unit in Gaylord,
Michigan, adjoining I-75 approximately 200 miles north of Detroit. In March
1997, Big Buck opened its second unit in Grand Rapids, Michigan, and in
October 1997, Big Buck opened its third unit in Auburn Hills, Michigan, a
suburb of Detroit. Big Buck plans to open a fourth unit in Grapevine, Texas,
a suburb of Dallas. Scheduled to open in the summer of 1999, this unit will
be operated by Buck & Bass, L.P. pursuant to a joint venture agreement
between Big Buck and Bass Pro Outdoor World, L.P., the nation's premier
retailer of outdoor sports equipment.

Big Buck Brewery & Steakhouses offer a casual dining atmosphere
featuring moderately priced steaks, ribs, hamburgers, chicken, fish, pasta
and other food and a distinctive selection of beers which are microbrewed
on-site. Each unit features a two-story stainless and copper microbrewery,
contained behind glass walls, which serves as an integral part of the
restaurant "theme." Big Buck features over ten beers ranging from a light
golden ale to a dark full-bodied stout, designed to satisfy the tastes of a
broad spectrum of customers.

Big Buck also sells its microbrewed beer in its retail stores and
off-site through wholesale distributors in order to promote customer interest in
Big Buck Brewery & Steakhouses. A key element of Big Buck's strategy is to
capitalize on the growing interest of consumers in high quality, more flavorful
microbrewed beer. Big Buck believes it will generate customer loyalty to its
beers and its restaurant operations through customer identification with each
local unit.

In December 1998, the State of Michigan approved Big Buck's small
winemaker license applications for the Auburn Hills and Gaylord units. Big
Buck intends to produce wines using its own equipment on each such site
under the label Auburn Hill Winery.

Big Buck was incorporated under the Michigan Business Corporation Act
in November 1993. Big Buck's executive office is located at 550 South Wisconsin
Street, Gaylord, Michigan 49735. Its telephone number is (517) 731-0401. Its
World Wide Web site address is www.bigbuck.com. Its Common Stock is quoted on
the Nasdaq SmallCap Market and trades under the ticker symbol "BBUC."

THE CRAFTBREWED AND SPECIALTY BEER MARKET

Big Buck's brewing operations are in the small but growing craftbrewing
segment of the United States brewing industry, which includes microbreweries
such as Big Buck, contract brewers, regional specialty brewers and brewpubs (a
field into which Big Buck intends to expand). Craftbrewed beers are
distinguishable from other domestically produced beers by their flavor and
brewing styles. Consumer interest in higher quality, more flavorful beer has
resulted in significant growth in the craftbrewed beer market during the last
several years. According to industry sources, the United States craftbrewed beer
segment increased at an annual growth rate of approximately 5.2% while the
national brewers experienced no meaningful growth during 1998.

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BUSINESS STRATEGY--EXPANSION PLANS

Big Buck intends to develop and open units throughout the upper
Midwest, the Southeast and eventually across the United States, using its Auburn
Hills unit as a model. Development is currently underway for the fourth Big Buck
Brewery & Steakhouse in Grapevine, Texas, a suburb of Dallas. Scheduled to open
in the summer of 1999, this unit will be operated by Buck & Bass, L.P. pursuant
to a joint venture agreement between Big Buck and Bass Pro. During 1998, Big
Buck contributed approximately $891,000 to the limited partnership for
construction and equipment costs at the Grapevine unit. Based on its effective
89.9% interest in the joint venture (Big Buck holds an 89.1% interest in the
limited partnership and an 80% interest in the general partner which currently
owns 1% of the limited partnership), Big Buck may be required to contribute up
to an additional $4.5 million, upon ten business days' notice, to complete
construction of the Grapevine unit. Without additional financing, Big Buck will
be unable to complete construction of this unit.

If such funds are not available when required by the joint venture, Big
Buck may be in material default under the joint venture agreement. In the event
of material default, Bass Pro would be entitled to purchase Big Buck's interest
in the joint venture at 40% of book value, thereby eliminating Big Buck's
interest in the Grapevine unit. Further, Bass Pro has the right to purchase up
to 15% of Big Buck's interest in the joint venture, at 100% of Big Buck's
original cost, within 24 months of the opening of the Grapevine unit; provided,
however, that Big Buck's interest in the joint venture may not be reduced below
51%.

Big Buck is exploring the possibility of expanding its joint venture
agreement with Bass Pro to develop and open Big Buck Brewery & Steakhouses
adjacent to Bass Pro Outdoor World superstores in several other cities in the
Southeast, including, but not limited to, each of the following markets: Ft.
Lauderdale, Nashville and Charlotte. There can be no assurance that Big Buck
will enter into agreements to develop and operate additional units with Bass Pro
or any other joint venture partner. Big Buck must raise substantial proceeds to
complete construction of the Grapevine unit and to finance any expansion beyond
the Grapevine unit. See "Management's Discussion and Analysis or Plan of
Operation--Liquidity and Capital Resources."

Big Buck believes that one of the primary causes for the popularity to
date of its Big Buck Brewery & Steakhouse concept is the development of customer
loyalty to its craftbrewed beers. Big Buck believes its patrons, who may order a
Big Buck beer with a meal or sample a Big Buck beer at the bar, have developed a
loyalty to one of the distinctive Big Buck beers for a variety of reasons
including (a) the opportunity to identify their favorite Big Buck beer with
their local unit, (b) the opportunity to sample any of the handcrafted beers
available at the units and to select a favorite beer, and (c) the quality of Big
Buck beer. Increased customer loyalty to Big Buck beers results in repeat
business at each unit, thereby increasing revenues from restaurant operations
and off-site retail sales.

Sites for future units will be selected by management after
consideration of various strategic, regulatory, physical and demographic
attributes. Management believes that locations like that of the Gaylord unit,
adjacent to a major expressway; the Grand Rapids unit, located on a street with
an average daily vehicle count of approximately 52,000; and the Auburn Hills
unit, accessible to Detroit metro area residents, significantly increase
restaurant patronage. Management also reviews other demographic attributes of
potential communities into which it may expand. These attributes include traffic
counts, population, sales tax revenues, alcohol consumption and hotel capacity
and occupancy rates. In addition, management will consider the laws of each
state applicable to Big Buck before expanding into any new state. It is expected
that units located in metropolitan areas will be larger than those located
outside metropolitan areas and are expected to achieve higher revenues.

RESTAURANT OPERATIONS

GENERAL. A Big Buck Brewery & Steakhouse offers craftbrewed beer
brewed on-site along with a menu featuring steaks, ribs, hamburgers, chicken,
fish, pasta and other food in a unique, architecturally spacious setting.

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The units offer over ten different types of beers ranging from a light golden
ale to a full-bodied stout. Big Buck attempts to create an exciting yet
casual restaurant where patrons can have fun and feel comfortable.

DESIGN AND LAYOUT. Big Buck Brewery & Steakhouses are built around the
microbrewery theme and feature large, open and visually stimulating dining
areas, highlighted by gleaming stainless steel and copper brewing
equipment. The Gaylord unit features a 4,000 square foot dining area and a 1,600
square foot bar area, with combined seating capacity of approximately 420. It is
decorated with a rustic wood-finished interior, mounted deer racks, 36-foot high
vaulted ceilings and warm lighting. The specially commissioned Amish hand-carved
wooden furniture and overhead genuine Tennessee whisky barrel lighting fixtures
add character to the building's decor. The layout is flexible, permitting tables
to be rearranged to accommodate customer demand. A wall of television sets,
including a ten-foot screen television set, adjacent to the bar area provides
customers the opportunity to watch sporting and other special events. The
friendly and attentive staff, on-site brewing, summertime outdoor seating and
live music are designed to create an appealing atmosphere for lunch, dinner and
bar customers. The Grand Rapids unit's seating capacity is approximately 250 in
the restaurant and bar combined. The brewing and fermenting tanks of this unit
front directly on 28th Street, a street with an average daily vehicle count of
approximately 52,000. The Auburn Hills unit, which houses a 15-barrel brewing
system, encompasses approximately 26,700 square feet including brewery, bar and
restaurant, with a total seating capacity of approximately 650. This unit is
accessible to Detroit metro area residents. Each unit's interior follows the
same motif with a warm, cozy atmosphere utilizing soft lighting and Amish
furniture. The menu and beer styles are the same at each unit. Big Buck intends
to use the Auburn Hills unit as a model for future units.

MENU AND PRICING. The menu at each unit consists of appetizers, soups,
meal-sized salads, and entrees, including steaks, ribs, hamburgers, chicken,
fish, pastas as well as a variety of desserts. Management analyzes menu items
for popularity, profitability and ease of preparation. The menu items are
selected to complement Big Buck's craftbrewed beers. The menu is designed to
offer a broad range of prices that convey value to the customer. Entrees range
in price from $4.95 to $28.00 with an average entree price of $12.00. During
1998, on-site sales of beer, including gift shop sales, accounted for 20.5%,
18.4% and 22.7% of the Gaylord, Grand Rapids and Auburn Hills unit sales,
respectively.

CUSTOMERS. Big Buck believes its restaurants appeal to a wide range of
customers and will draw clientele from throughout the region in which they are
located.

BREWING OPERATIONS

GENERAL. The brewery at the Gaylord unit presently has the capacity to
brew 10,000 barrels of beer per year, and is designed to produce 20,000 barrels
per year with the installation of additional fermentation tanks. The Grand
Rapids unit features a 7.5-barrel brewing system which can produce 7,000 barrels
per year with the installation of additional fermentation tanks. The Auburn
Hills unit features a 15-barrel brewing system which can produce 15,000 barrels
per year with the installation of additional fermentation tanks. Future units
will be built with initial brewing capacities of 2,000 to 5,000 barrels of beer
per year and are expected to have production capacities of 7,000 to 15,000
barrels per year with the installation of additional fermentation tanks. Big
Buck intends to purchase and install additional fermentation tanks as demand for
its beers requires increased production. Each brewery will be custom-designed to
be integrated into the restaurant layout in the most efficient and aesthetically
pleasing manner possible.

OFF-SITE DISTRIBUTION. Big Buck sells its microbrewed beer off-site
through wholesale distributors in order to promote customer interest in the Big
Buck Brewery & Steakhouse concept. Big Buck transports its beer from the Gaylord
unit to each distributor for redistribution to retailers which include bars,
pubs, restaurants and supermarkets. The beer is available by the keg to be
served on draft at restaurants, bars and pubs and is available in bottles for
retail sales. Presently, off-site sales of Big Buck's beer are generally limited
to within 200 miles of

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the Gaylord unit. Off-site sales of beer accounted for approximately 0.9% of
revenues during 1998. The Gaylord unit presently has the capacity to meet
additional demand for off-site sales of beer.

PROMOTION OF PRODUCTS WITHIN LOCAL MARKETS. Big Buck markets its beer
locally with the use of point of sale materials as well as several forms of
other promotional materials including coasters, tap handles and color brochures.
These items are, for the most part, used by retailers to promote Big Buck beers
within their establishment. In addition, Big Buck offers guided tours of its
units to further increase consumer awareness of Big Buck beers. Big Buck
believes that its educational and promotional methods are more effective in
communicating with consumers than broad-based, less flexible national beer
advertising campaigns.

BREWING EQUIPMENT. Big Buck's brewing equipment was designed and built
by J.V. Northwest, Inc. of Wilsonville, Oregon, and is automated wherever
possible. The Gaylord unit's system begins with a 47-foot tall, stainless steel
grain silo fabricated to replicate a giant beer bottle. The silo is painted
"beer bottle brown" and the label was hand painted by a commissioned artist. The
Gaylord unit houses a 20-barrel mash tun; lauter tun; a brew kettle; 50-barrel
hot liquor tank; 50-barrel cold liquor tank; six 40-barrel fermenters; three
80-barrel fermenters; two 40-barrel conditioning tanks and seven 10-barrel
bright beer serving tanks. Filtering is done through a diatomaceous earth
filtering system which removes yeast and other naturally occurring material
resulting in a clear final product. The brewery permits the production of a wide
range of beer styles which can be adapted to market demand for various beer
styles today and into the future. The Grand Rapids unit features a 7.5-barrel
brewing system with four 15-barrel fermenters and five 15-barrel conditioning
tanks which also serve as bright beer serving tanks. The Auburn Hills unit
features a 15-barrel brewing system with seven 30-barrel fermenters and twelve
15- barrel conditioning tanks which also serve as bright beer serving tanks. It
is contemplated that Big Buck will use similar equipment at all breweries built
in future units.

BOTTLING, KEGGING AND PACKAGING. Big Buck uses a technologically
advanced bottling line to bottle its beer for off-site retail sales at its
Gaylord unit. The bottle filler utilizes a carbon dioxide environment during the
bottling process to extend shelf life. Kegs are filled by a keg rack system and
then stored pending shipment to wholesale distributors in a specially designed
cooler. Big Buck's kegs have the Big Buck Brewery & Steakhouse name and logo
stamped onto the top rail for easy identification and a handsome appearance. Big
Buck also sells its beer in a container called a "party pig," a plastic
pressurized unit holding 2.25 gallons (one case) of beer. The pressurization
allows the beer to be served from the customer's refrigerator, boat or golf
cart. Party pigs are sold through each unit's gift shop.

QUALITY CONTROL. Quality control of each brewery is under the
supervision of Big Buck's brewmaster. As with the current units, each future
brewery will contain a laboratory to monitor and maintain quality assurance in
the brewing and packaging processes.

INGREDIENTS AND RAW MATERIALS. Big Buck currently purchases its malted
barley from market sources on a competitive bid basis. Raw materials such as
hops are available from multiple sources at competitive prices. Big Buck also
uses competitive sources for its supply of packaging materials such as bottles,
labels, six pack carriers and shipping cases.

BREWING PROCESS

Beer is made primarily from four natural ingredients: malted barley,
hops, yeast and water. Big Buck uses only the finest barley, primarily two row,
in its production. The universal spice of beer is hops. Hops, like the grapes
used in wine, are varietal. Brewers select hops based on specific varieties
grown in select areas around the world. Some hop varieties are selected for
their bittering qualities, while others are chosen for their ability to impart
distinctive aromas to the beer. Yeast is a uni-cellular organism whose
metabolism converts sugar into alcohol and carbon dioxide. Big Buck uses only
specially selected yeast. The entire brewing process from

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mashing through filtration typically is completed in 14 to 21 days, depending on
the formulation and style of the beer being brewed.

BEER VARIETIES

Big Buck believes that its diverse and high quality beer varieties
encourage the trial of new beer and, over time, help to create more
knowledgeable and sophisticated beer drinkers. Big Buck's beers cover a full
range of flavors from very light, to medium, to very dark and heavy.

BIG BUCK BEER-Registered Trademark-: Big Buck's flagship brand and
its top seller is a standard American-style beer with a small amount of corn
added to the grist to give the brew a smooth, easy-drinking character that
most American consumers have come to expect in a beer. Big Buck Beer has a
rich golden color and a light malt character balanced with a mild dose of
hops.

BUCK NAKED: This American-style, low-calorie or "light" beer is
formulated to appeal to those who prefer a low-calorie brew. Buck Naked is an
all malt brew with a touch of imported Czechoslovakian Saaz hops.

WOLVERINE WHEAT: This American wheat beer is made from a blend of
malted barley and malted wheat. The wheat imparts a unique, refreshing flavor to
the beer. Wolverine Wheat is straw in color, lightly hopped, crisp and
refreshing.

RASPBERRY WHEAT: A version of Wolverine Wheat, this beer is flavored
with pure fruit to impart a subtle raspberry nose, a delicate fruit flavor and a
slight pink hue.

ANTLER ALE: This amber ale, formulated as a transitional flavor between
lighter and darker beers, has a light amber color while maintaining a mild,
clean flavor and a low hopping rate.

REDBIRD ALE: Similar to a traditional pale ale, Redbird Ale has a
reddish copper appearance, medium body and is well hopped. This is a heartier
beer with a medium body and a pleasant hop bitterness.

DOC'S ESB: This full-bodied bock beer gets its distinctive character
from a blend of four different grains and three hop varieties. Doc's ESB has a
deep reddish brown color and is generously hopped to balance the full body and
complex character.

BLACK RIVER STOUT: This cream stout is slightly sweet with a moderate
hop bitterness. The rich flavor and black color of this brew comes from six
different grains. Deep flavors of coffee and caramel are present in this brew.

BLACK'N BERRY: A Black'n Tan is generally a stout mixed with pale or
amber ale. Black'n Berry is a new twist, Black River Stout and Raspberry Wheat.
The delicate fruit qualities are accented by the heavy stout flavor.

CHERRY SHANDY: Cherry Shandy is a uniquely blended mixture of our
homemade black cherry soda and Buck Naked. This is a light, refreshing,
low-alcohol libation.

Big Buck also brews various seasonal beers, including Winter Warmer,
Alpenfest, Oktoberfest and 10 pt. Porter. Such beers are offered for limited
periods of time throughout the year.

SALES AND MARKETING

Big Buck's primary sources of advertising include television, outdoor
billboards, radio and newspapers, which generally cover the local markets of
each unit, with the exception of billboards which cover more distant

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geographical areas of Michigan. In addition to these sources, Big Buck uses
local travel publications, including golf and vacation planners which are
distributed free of charge, as well as inquiries via local travel information
centers and tourism bureaus. Big Buck also distributes four-color brochures
promoting its units to major corporations and various travel welcome centers
throughout Michigan as well as local hotels and resorts. During 1998, Big Buck
incurred approximately $556,000 in advertising expenses.

Big Buck strives to provide its customers with a dining experience that
will encourage repeat business and promote "word-of-mouth" advertising. To
supplement its service-oriented marketing efforts, Big Buck sells merchandise
including hats, t-shirts, sweatshirts and other items bearing the Big Buck
Brewery & Steakhouse name and logo.

COMPETITION

The restaurant industry is highly competitive with respect to price,
service, food quality (including taste, freshness and nutritional value) and
location. New restaurants have a high failure rate. The restaurant industry is
also generally affected by changes in consumer preferences, national, regional
and local economic conditions, and demographic trends. The performance of
individual restaurants may also be affected by factors such as traffic patterns,
demographic considerations, an the type, number and location of competing
restaurants. In addition, factors such as inflation, increased food, labor and
employee benefit costs, and the lack of availability of experienced management
and hourly employees may also adversely affect the restaurant industry in
general and Big Buck's units in particular. Restaurant operating costs are
further affected by increases in the minimum hourly wage, unemployment tax rates
and similar matters over which Big Buck has no control. There are numerous
well-established competitors, including national, regional and local restaurant
chains, possessing substantially greater financial, marketing, personnel and
other resources than Big Buck. Big Buck also competes with a large variety of
locally owned restaurants, diners, and other establishments that offer
moderately priced food to the public and with other microbrewery/restaurants in
a highly competitive and developing microbrewery and brewpub restaurant market.

The domestic beer market is highly competitive due to the enormous
advertising and marketing expenditures by national and major regional brewers;
the continuing proliferation of microbreweries, regional craft breweries,
brewpubs, and other small craftbrewers; the introduction of fuller-flavored
products by certain major national brewers; and a general surplus of domestic
brewing capacity, which facilitates existing contract brewer expansion and the
entry of new contract brewers. Although domestic demand for craftbrewed beers
has increased dramatically over the past decade, there can be no assurance that
this demand will continue. Big Buck anticipates intensifying competition in the
craftbrewed and fuller-flavored beer markets.

GOVERNMENT REGULATION

BEER AND LIQUOR REGULATION. A significant percentage of Big Buck's
revenue is derived from beer sales. On-site sales of beer, including gift shop
sales, accounted for 20.5% of revenues and off-site sales of beer accounted for
an additional 0.9% of revenues during 1998. Big Buck must comply with federal
licensing requirements imposed by the Bureau of Alcohol, Tobacco and Firearms of
the United States Department of Treasury, as well as the licensing requirements
of states and municipalities where its units are or will be located. Failure to
comply with federal, state or local regulations could cause Big Buck's licenses
to be revoked and force it to cease brewing and/or selling its beer. Typically,
licenses must be renewed annually and may be revoked or suspended for cause at
any time. Management believes Big Buck is operating in substantial compliance
with applicable laws and regulations governing its operations.

RESTAURANT REGULATION. The restaurant industry is subject to numerous
federal, state and local government regulations, including those relating to the
preparation and sale of food and to building and zoning requirements. Big Buck
is subject to regulation by air and water pollution control divisions of the
Environmental

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Protection Agency of the United States and by certain states and municipalities
in which its units are or will be located. Big Buck is also subject to laws
governing it relationship with employees, including minimum wage requirements,
overtime, working and safety conditions and citizenship requirements. Restaurant
operating costs are affected by increases in the minimum hourly wage,
unemployment tax rates, sales taxes and similar matters, such as any government
mandated health insurance, over which Big Buck has no control. Management
believes Big Buck is operating in substantial compliance with applicable laws
and regulations governing its operations.

Big Buck is subject to "dram-shop" laws in Michigan and will be subject
to such statutes in other states into which it expands. These laws generally
provide someone injured by an intoxicated person the right to recover damages
from the establishment which wrongfully served alcoholic beverages to such
person. Big Buck carries liquor liability coverage as part of its existing
comprehensive general liability insurance.

Michigan imposes an excise tax of $6.30 per barrel on each barrel of
beer sold in Michigan. However, each brewer which is a "microbrewery" under
Michigan law (presently with production of not more than 30,000 barrels per
year) is granted a microbrewer's excise tax credit in the amount of $2.00 per
barrel. To the extent Big Buck's production increases to amounts over 30,000
barrels per year, there will be an increase in the average Michigan excise tax
rate of Big Buck.

Big Buck is licensed under Michigan law as a "microbrewery." A
microbrewery in Michigan is limited to the production of not more than 30,000
barrels of beer per year by all breweries owned or controlled by the same
entity, whether within or outside Michigan. Without a change in current law, Big
Buck will limit its sales of beer off-site so as to reserve its brewing capacity
for sales of beer on-site which provides Big Buck higher margins but do not
reach the same customer base. Based on production at its units during 1998, Big
Buck believes it could operate up to approximately ten units at historical
production levels without exceeding the 30,000 barrel production ceiling.

EMPLOYEES

At January 3, 1999, Big Buck employed 443 persons at its units,
including 136 full-time employees. Of Big Buck's total number of employees, 12
served in executive and corporate administrative capacities, 24 served as
restaurant management personnel, and the remainder were hourly personnel. No
employee is covered by a collective bargaining agreement and Big Buck has never
experienced an organized work stoppage, strike or labor dispute. Big Buck
considers relations with its employees to be satisfactory.

TRADEMARKS AND SERVICE MARKS

Big Buck claims trademark and service mark rights to, and ownership in,
a number of marks including, but not limited to, BIG BUCK BREWERY & STEAKHOUSE
and BIG BUCK BEER. Big Buck's service mark for BIG BUCK BREWERY & STEAKHOUSE
expires in September 2007 and its trademark for BIG BUCK BEER expires in March
2007. There can be no assurance that Big Buck's marks will be enforceable
against prior users in the areas where Big Buck conducts, or will conduct, its
operations. Big Buck regards its marks as having substantial value and as being
an important factor in the marketing of its microbrewery/restaurants and beer.
Big Buck's policy is to pursue registration of its marks whenever possible and
to oppose vigorously any infringement of its marks.

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ITEM 2 DESCRIPTION OF PROPERTY

Big Buck owns the Gaylord unit, including the real property on which it
is located. See "Description of Business--Restaurant Operations" for a
description of the Gaylord unit. Big Buck currently owes NBD Bank approximately
$1.9 million and Crestmark Bank approximately $1.4 million. A first priority
lien in favor of NBD and a second priority lien in favor of Crestmark on
substantially all of Big Buck's assets, including the Gaylord unit, secure this
indebtedness.

Big Buck purchased the Grand Rapids site in December 1996. The site
included an existing structure of approximately 8,200 square feet and is located
on 28th Street in Grand Rapids. Seating capacity is approximately 250 for
restaurant and bar combined. The Grand Rapids unit opened in March 1997.

In April 1997, Big Buck sold the Grand Rapids site, including all
improvements thereto, to an unrelated third party, Eyde Brothers Development
Co., pursuant to a real estate purchase and leaseback agreement for $1.4
million. Pursuant to a separate lease agreement, Big Buck leases the Grand
Rapids site at a minimum annual base rent of $140,000 and a maximum annual base
rent of $192,500 over a ten-year term. The lease may be extended at the option
of Big Buck for two additional five-year terms. In addition to the annual base
rent, Big Buck is obligated to pay an annual percentage rent in the amount of 5%
on gross sales at the site in excess of $2.9 million per year. In the event that
such annual gross sales do not exceed $2.9 million for any two consecutive years
during the lease term, Big Buck will be obligated to repurchase the Grand Rapids
site for $1.4 million, plus $70,000 for each lease year on a pro rata basis.
Annual gross sales for the period from April 11, 1997 through April 10, 1998 did
not exceed $2.9 million. In the event that annual gross sales for the period
from April 11, 1998 through April 10, 1999 do not exceed $2.9 million, Big Buck
will be obligated to repurchase the Grand Rapids site for $1,540,000. Big Buck
has the option to purchase the Grand Rapids site from the lessor after the
seventh full lease year for $1.4 million, plus $70,000 for each lease year on a
pro rata basis. Should a repurchase be required, Big Buck believes that it would
be able to obtain mortgage financing sufficient to pay the required purchase
price. There can be no assurance that such mortgage financing, in the event
repurchase were required, would be available on terms acceptable to Big Buck or
at all. Big Buck pays average effective annual base rent of $16.67 per square
foot at the Grand Rapids unit.

Big Buck purchased the Auburn Hills site in August 1996. The site is
just off of Interstate 75 at exit 79. The unit constructed on this site
encompasses approximately 26,700 square feet including brewery, bar and
restaurant. Seating capacity is approximately 650 for the restaurant and bar
combined. The Auburn Hills unit opened in October 1997.

In August 1997, Big Buck entered into a real estate purchase and
leaseback agreement providing for the sale of the Auburn Hills site to an
unrelated third party, Michael G. Eyde, for $4.0 million. In connection with
this transaction, Big Buck granted a five-year stock option, exercisable at
$5.00 per share, for 50,000 shares of its Common Stock to Mr. Eyde. Big Buck
leases the Auburn Hills site pursuant to a separate lease agreement which
provides for a minimum annual base rent of $400,000, and a maximum annual base
rent of $550,000. The lease has a 25-year term and Big Buck is able to extend
such term for two additional ten-year terms. In addition to the annual base
rent, Big Buck is obligated to pay an annual percentage rent of 5.25% of gross
sales at the site in excess of $8.0 million per year. In the event that such
annual gross sales do not exceed $8.0 million for any two consecutive years
during the lease term, Big Buck will be obligated to repurchase the Auburn Hills
site for $4.0 million, plus $200,000 for each lease year on a pro rata basis.
Big Buck was required to pay Mr. Eyde an annual percentage rent of $46,000 based
upon annual gross sales for the period from October 1, 1997 through September
30, 1998. The lessor has the ability to require that Big Buck issue Common Stock
(valued at $5.00 per share) in payment of such repurchase price. Big Buck has
the option to purchase the Auburn Hills site from the lessor after the seventh
full lease year for $4.0 million, plus $200,00 for each lease year on a pro rata
basis. Independent of annual gross sales, the lessor has the option to require
Big Buck to purchase the Auburn Hills site before the third

8
<PAGE>

full lease year at the same price. Big Buck pays average effective annual base
rent of $15.00 per square foot at the Auburn Hills unit.

The Grand Rapids and Auburn Hills lessors may terminate in the event
of a default which is not cured within the applicable grace period. A default
is defined as (a) Big Buck's failure to make a rental payment within 30 days
after receipt of written notice that a payment is past due or (b) Big Buck's
failure to perform its obligations under the lease (other than rent payments)
within 30 days after written notice of a curable violation; provided,
however, that if such default cannot be cured within the 30-day period, a
default will be deemed to have occurred only if Big Buck has failed to
commence a cure within such 30-day period.

Annual percentage rent is required whether the Grand Rapids and Auburn
Hills units are profitable or not. In the event that Big Buck is required to pay
annual percentage rent, the funds available to Big Buck for working capital and
development plans will be reduced. In the event that annual percentage rent is
not required over two consecutive years, Big Buck may be forced to repurchase
such sites at a premium over their respective sale prices. There can be no
assurance that Big Buck will have sufficient funds to repurchase the Grand
Rapids site or the Auburn Hills site. In the event of a default and termination
of either lease, Big Buck would be unable to continue to operate the related
unit, which would have a material adverse impact on Big Buck's business,
operating results and financial condition.

Big Buck plans to operate the Grapevine unit pursuant to a joint
venture agreement with Bass Pro. The Grapevine unit is currently under
construction just off Highway 121, the major artery between downtown Dallas and
the Dallas/Fort Worth airport. Plans call for the Grapevine site to house a
15-barrel brewing system and to encompass approximately 22,500 square feet
including brewery, bar and restaurant, with a total seating capacity of
approximately 500. During 1998, Big Buck contributed approximately $891,000 to
the limited partnership for construction and equipment costs at the Grapevine
unit. Big Buck may be required to contribute up to an additional $4.5 million,
upon ten business days' notice, to complete construction of the Grapevine unit.
Without additional financing, Big Buck will be unable to complete construction
of this unit. If such funds are not available when required by the joint
venture, Big Buck may be in material default under the joint venture agreement.
In the even of material default, Bass Pro would be entitled to purchase Big
Buck's interest in the joint venture at 40% of book value, thereby eliminating
Big Buck's interest in the Grapevine unit. Further, Bass Pro has the right to
purchase up to 15% of Big Buck's interest in the joint venture, at 100% of Big
Buck's original cost, within 24 months of the opening of the Grapevine unit;
provided, however, that Big Buck's interest in the joint venture may not be
reduced below 51%.

Pursuant to a separate commercial sublease agreement, the limited
partnership created by the joint venture leases the Grapevine site from Bass Pro
over a 15-year term. The lease may be extended at the option of Bass Pro for
seven additional five-year terms. The sublessee is obligated to pay an annual
percentage rent in the amount of 5.5% on gross sales less than $11.0 million per
year and 6.5% on gross sales in excess of $11.0 million per year (with a minimum
annual base rent of $385,000). Bas Pro may terminate in the event of a default
which is not cured within the applicable grace period. A default is defined to
include, but is not limited to, (a) the sublessee's failure to open the unit for
business on the same date as the sublessor's Outdoor World superstore is open
for business, (b) the sublessee's failure to remain open during all business
days, (c) the sublessee's failure to maintain on duty a fully trained service
staff, (d) the sublessee's failure to provide high quality food of the type
provided at the Gaylord unit, (e) the sublessee's failure to achieve gross sales
in the first full calendar year immediately following the opening and for each
calendar year thereafter of $7.0 million, (f) the sublessee encumbering in any
manner any interest in the subleased premises, or (g) the sublessee's failure to
conduct full and complete customer surveys no less frequently than each calendar
quarter.

9
<PAGE>

venture agreement, Big Buck's interest in the Grapevine unit would be
eliminated. This would have a material adverse impact on Big Buck's business,
operating results an financial condition.

In the opinion of management, Big Buck's properties are adequately
covered by insurance.

ITEM 3 LEGAL PROCEEDINGS

Big Buck is involved in routine legal actions in the ordinary course of
its business. Although the outcomes of any such legal actions cannot be
predicted, in the opinion of management there is no legal proceeding pending
against or involving Big Buck for which the outcome is likely to have a material
adverse effect upon the financial position or results of operations of Big Buck.

ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matter was submitted to a vote of security holders through the
solicitation of proxies or otherwise during the fourth quarter of Big Buck's
most recently completed fiscal year.

EXECUTIVE OFFICERS OF THE REGISTRANT

The following table provides information with respect to Big Buck's
executive officers as of March 1, 1999. Each executive officer has been
appointed to serve until his successor is duly appointed by the Board of
Directors or his earlier removal or resignation from office. See "Directors,
Executive Officers, Promoters and Control Persons; Compliance with Section 16(a)
of the Exchange Act."

Name Age Position With Big Buck
- ---- --- ----------------------
<S> <C> <C>
William F. Rolinski 51 Chief Executive Officer, President and Chairman of the Board
Gary J. Hewett 36 Chief Operating Officer, Executive Vice President and Director
Anthony P. Dombrowski 38 Chief Financial Officer and Treasurer
</TABLE>

10
<PAGE>

PART IIPART II

ITEM 5 MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

The Common Stock of Big Buck has been included in the Nasdaq SmallCap
Market under the symbol "BBUC" since the completion of the its initial public
offering in June 1996. The following table sets forth the approximate high and
low closing prices for Big Buck's Common Stock for the periods indicated as
reported by the Nasdaq SmallCap Market. Such quotations reflect inter-dealer
prices, without retail mark-up, mark-down or commission and may not represent
actual transactions.

<TABLE>
<CAPTION>
PERIOD High Low
- ------ ---- ---
<S> <C> <C>
1997
First Quarter..................................... $ 3-1/8 $ 1-3/4
Second Quarter.................................... $ 4-1/2 $ 1-7/8
Third Quarter..................................... $ 4-3/4 $ 3-1/8
Fourth Quarter.................................... $ 7-1/4 $ 4-3/4
1998
First Quarter..................................... $ 5-7/8 $ 2-1/8
Second Quarter.................................... $ 5 $ 3-1/4
Third Quarter..................................... $ 4-1/4 $ 3-1/2
Fourth Quarter.................................... $ 4-13/16 $ 3-7/8
</TABLE>

As of March 1, 1999, Big Buck had 270 shareholders of record and
approximately 3,000 beneficial owners.

Big Buck has never declared or paid cash dividends on its Common Stock
and does not intend to declare or pay cash dividends on its Common Stock in the
foreseeable future. Big Buck presently expects to retain its earnings to finance
the development and expansion of its business. The declaration or payment by Big
Buck of dividends, if any, on its Common Stock in the future is subject to the
discretion of the Board of Directors and will depend on Big Buck's earnings,
financial condition, capital requirements and other relevant factors. The
declaration or payment by Big Buck of dividends is also subject to the terms of
Big Buck's credit facility with NBD Bank and the terms of the loan agreement
governing Big Buck's promissory note with Crestmark Bank.

SALES OF UNREGISTERED SECURITIES

On November 5, 1998, Big Buck issued a warrant, exercisable at $2.625
per share, for 50,000 shares of its Common Stock to Bass Pro. This issuance was
made in connection with the joint venture agreement between Big Buck and Bass
Pro pursuant to which the Grapevine unit will be operated. This warrant expires
on the third anniversary of the opening of the Grapevine unit. Such unit is
scheduled to open in the summer of 1999. On November 20, 1998, Big Buck issued a
five-year warrant, exercisable a $2.7625 per share, for 14,582 shares of its
Common Stock to Seger Financial, Inc. This issuance was made in connection with
the $1.4 million debt financing which Seger obtained for Big Buck from Crestmark
Bank.

These issuances were made in reliance upon the exemption provided in
Section 4(2) of the Securities Act. The foregoing securities are restricted as
to sale or transfer, unless registered under the Securities Act, and
certificates representing such securities contain restrictive legends preventing
sale, transfer or other disposition unless registered under the Securities Act.
In addition, the recipients of such securities received, or had access to,
material information concerning Big Buck, including, but not limited to, Big
Buck's reports on Form 10-KSB, Form 10-QSB and Form 8-K, as filed with the SEC.
No underwriting commissions or discounts were paid with respect to the issuances
of such securities.

11
<PAGE>

ITEM 6 MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

THIS DISCUSSION AND ANALYSIS CONTAINS CERTAIN FORWARD-LOOKING
TERMINOLOGY SUCH AS "BELIEVES," "ANTICIPATES," "EXPECTS," AND "INTENDS," OR
COMPARABLE TERMINOLOGY. SUCH STATEMENTS ARE SUBJECT TO CERTAIN RISKS AND
UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE
PROJECTED. POTENTIAL PURCHASERS OF BIG BUCK'S SECURITIES ARE CAUTIONED NOT TO
PLACE UNDUE RELIANCE ON SUCH FORWARD-LOOKING STATEMENTS WHICH ARE QUALIFIED IN
THEIR ENTIRETY BY THE CAUTIONS AND RISKS DESCRIBED HEREIN.

OVERVIEW

Big Buck develops, owns and operates microbrewery/restaurants under the
name "Big Buck Brewery & Steakhouse." Until May 1995 when Big Buck opened its
first unit in Gaylord, Michigan, it had no operations or revenues and its
activities were devoted solely to development. In March 1997, Big Buck opened
its second unit in Grand Rapids, Michigan, and in October 1997, Big Buck opened
its third unit in Auburn Hills, Michigan, a suburb of Detroit. Big Buck plans to
open its fourth unit in Grapevine, Texas, a suburb of Dallas. Scheduled to open
in the summer of 1999, this unit will be operated by Buck & Bass, L.P. pursuant
to a joint venture agreement between Big Buck and Bass Pro.

Future revenues and profits will depend upon various factors, including
market acceptance of the Big Buck Brewery & Steakhouse concept and general
economic conditions. Big Buck's present sources of revenue are the Gaylord,
Grand Rapids and Auburn Hills units. There can be no assurances that Big Buck
will successfully implement its expansion plans, in which case Big Buck will
continue to depend on revenues from the existing units. Big Buck also faces all
of the risks, expenses and difficulties frequently encountered in connection
with the expansion and development of a new business. Furthermore, to the extent
that Big Buck's expansion strategy is successful, it must manage the transition
to multiple site, higher volume operations, control increased overhead expenses
and hire additional personnel.

Big Buck uses a 52-/53-week fiscal year ending on the Sunday nearest
December 31. All references herein to "1998" and "1997" represent the 53-week
and 52-week fiscal years ended January 3, 1999 and December 28, 1997,
respectively.

12
<PAGE>

RESULTS OF OPERATIONS

The operating results of Big Buck expressed as a percentage of total revenue
were as follows:

<TABLE>
<CAPTION>
JANUARY 3, DECEMBER 28,
1999 1997
----------- -------------
<S> <C> <C>
REVENUE
Restaurant sales ................................................................ 95.4% 93.5%
Wholesale and retail sales ...................................................... 4.6 6.5
----------- -----------
Total revenue .............................................................. 100.0 100.0
----------- -----------
COSTS AND EXPENSES:
Cost of sales ............................................................... 33.9 33.7
Restaurant salaries and benefits ............................................ 29.9 28.8
Operating expenses .......................................................... 21.0 20.2
Depreciation and amortization ............................................... 5.0 7.2
----------- -----------
Total costs and expenses .................................................. 89.8 89.9
----------- -----------
RESTAURANT OPERATING INCOME .......................................................... 10.2 10.1

GENERAL AND ADMINISTRATIVE EXPENSES .................................................. 11.5 18.0
----------- -----------
LOSS FROM OPERATIONS ................................................................. (1.3) (7.9)
----------- -----------
OTHER INCOME (EXPENSE):
Interest expense ................................................................ (5.2) (4.5)
Interest income ................................................................. .1 1.1
Other ........................................................................... (.1) (0.2)
----------- -----------
Other income (expense), net ................................................... (5.2) (3.6)
----------- -----------
LOSS BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPAL ...................... (6.5) (11.5)

CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPAL FOR PREOPENING COSTS ............. (2.2) --
----------- -----------
NET LOSS ............................................................................. (8.7)% (11.5)%
----------- -----------
----------- -----------
</TABLE>

RESULTS OF OPERATIONS FOR THE FISCAL YEARS ENDED JANUARY 3, 1999 AND
DECEMBER 28, 1997

REVENUES

Total revenues for Big Buck increased 71% to $15,561,753 in 1998 from
$9,096,580 in 1997. The increase is primarily attributable to the Grand Rapids
and Auburn Hills units being open for the entire year.

COSTS OF SALES

Costs of sales which consist of food, merchandise and brewery supplies
increased 72% to $5,270,518 in 1998 compared to $3,065,523 in 1997. The increase
is primarily due to the increased sales. Costs of sales as a

13
<PAGE>

percentage of revenues increased to 33.9% in 1998 from 33.7% in 1997. The
percentage increase is the result of higher produce cost and a higher percentage
of sales from food in 1998 than in 1997.

RESTAURANT SALARIES AND BENEFITS

Restaurant salaries and benefits, which consist of restaurant
management and hourly employee wages and benefits, payroll taxes and workers'
compensation insurance, increased 78% to $4,659,949 in 1998 compared to
$2,619,194 in 1997. As a percentage of revenues, restaurant salaries and
benefits increased to 29.9% in 1998 compared to 28.8% in 1997 due primarily to
the implementation of the unit-level manager incentive bonus policy.

OPERATING EXPENSES

Operating expenses, which include supplies, utilities, repairs and
maintenance, advertising and occupancy costs increased 78% to $3,267,568 in
1998 compared to $1,833,330 in 1997. Operating expenses as a percentage of
revenues increased to 21.0% in 1998 as compared to 20.2% in 1997. This
increase is due to increased maintenance and promotional expenses in 1998
compared to 1997.

GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses increased 9% to $1,787,633 in 1998
compared to $1,640,047 in 1997. As a percentage of revenue, these expenses
decreased to 11.5% in 1998 as compared to 18.0% in 1997. The decreased expenses
as a percentage of revenues reflect increased total sales. As additional units
are opened by Big Buck, management believes that these expenses will continue to
grow at a slower rate than total revenues, resulting in a continued decrease in
these expenses as a percentage of revenues.

DEPRECIATION AND AMORTIZATION

Depreciation and amortization expenses increased 19% to $780,054 in
1998 compared to $655,474 in 1997. As a percentage of revenues, these expenses
decreased to 5.0% in 1998 as compared to 7.2% in 1997. The percentage decrease
was the result of the Grand Rapids and Auburn Hills units being open for the
entire year.

INTEREST EXPENSES/INTEREST INCOME

Interest expense increased 99% to $815,984 during 1998 compared to
$410,964 in 1997. This increase is due to the sale and leaseback of the Grand
Rapids and Auburn Hills sites, which are accounted for as long-term capital
lease obligations.

Interest income decreased 85% to $15,266 during 1998 compared to
$102,343 in 1997. The decrease in interest income is due to the sale of
short-term investments during 1997 for use in the completion of the Auburn Hills
units and due to working capital needs.

LIQUIDITY AND CAPITAL RESOURCES

Big Buck used $336,910 in cash for operating activities during 1998 and
generated $101,309 in cash from operating activities during 1997. Big Buck had a
working capital deficit of $1,978,841 at January 3, 1999 and working capital of
$255,000 at December 28, 1997. In order to fund operations in the short-term,
Big Buck intends to use cash provided by the operations of its three existing
units. Big Buck is also exploring the possible issuance of debt and equity
securities to increase its workin capital.

Since inception, Big Buck's principal capital requirements have been
the funding of (a) its operations and promotion of the Big Buck Brewery &
Steakhouse format and (b) the construction of units and the acquisition of

14
<PAGE>

furniture, fixtures and equipment for such units. Total capital expenditures for
the Gaylord, Grand Rapids and Auburn Hills units were approximately $5.8
million, $3.2 million and $9.7 million, respectively.

During 1998, Big Buck contributed $891,000 to the limited partnership
which will own and operate the Grapevine unit. Big Buck may be required to
contribute up to an additional $4.5 million, upon ten business days' notice, to
complete construction of the Grapevine unit. Without additional financing, Big
Buck will be unable to complete construction of this unit. If such funds are not
available when required by the joint venture, Big Buck may be in material
default under the joint venture agreement. In the event of material default,
Bass Pro would be entitled to purchase Big Buck's interest in the joint venture
at 40% of book value, thereby eliminating Big Buck's interest in the Grapevine
unit. Further, Bass Pro has the right to purchase up to 15% of Big Buck's
interest in the joint venture, at 100% of Big Buck's original cost, within 24
months of the opening of the Grapevine unit; provided, however, that Big Buck's
interest in the joint venture may not be reduced below 51%. Big Buck expects
that it will continue to require significant capital resources to fund new unit
development and construction.

Big Buck generated $1,759,432 in cash from financing activities during
1998. Such financing activities included short-term borrowing from Crestmark
Bank of $1,400,000 and collection of proceeds from a sale and leaseback
financing receivable of $749,650.

The completion of the Grapevine unit and the development of any
additional units will require Big Buck to obtain additional financing. The
amount of financing required for new units depends on the definitive locations,
site conditions, construction costs and size and type of units to be built.
There can be no assurance that financing will be available on terms acceptable
or favorable to Big Buck, or at all. Without such financing, Big Buck's
development plans will be slower than planned or even unachievable.

SEASONALITY

Big Buck's sales and earnings are expected to fluctuate based on
seasonal patterns. Big Buck anticipates that its highest earnings will occur in
the second and third calendar quarters due to the milder climate during those
quarters in Michigan. Big Buck believes, however, that future expansion into
markets outside Michigan, if any, will mitigate the effect of seasonality on
its business.

YEAR 2000 READINESS DISCLOSURE

The term "Year 2000" is used to describe general problems that may
result from improper processing of dates and date-sensitive calculations by
computers or other machinery as the year 2000 is approached and reached. This
problem stems from the fact that many of the world's computer hardware and
software applications have historically used only the last two digits to refer
to a year. As a result, many of these computer programs do not or will not
properly recognize a year that begins with "20" instead of the familiar "19." If
not corrected, many computer applications could fail or create erroneous
results. The following information was prepared to comply with the guidelines
for Year 2000 disclosure that the SEC issued in an Interpretative Release,
effective August 4, 1998.

STATE OF READINESS

To operate its business, Big Buck relies on many third party
information technology ("IT") systems, including its point of sale, table
seating and reservation management, inventory management, credit card
processing, payroll, accounts payable, fixed assets, banking and general ledger
systems. Big Buck does not maintain any proprietary IT systems and has not made
any modifications to any of the IT systems provided to it by its IT vendors. Big
Buck is in the process of requesting each of its hardware and software vendors
to complete a Year 2000 compliance questionnaire. Based on the results of such
questionnaires Big Buck will determine those IT systems that need to be upgraded
or replaced to function properly in the year 2000.

15
<PAGE>

Big Buck is also in the process of assessing its non-IT systems (i.e.
embedded technology such as microprocessors in kitchen equipment, brewery
equipment, elevators, etc.). Big Buck plans to complete its assessment by July
1, 1999 and will then determine the best approach for remedying any
non-compliant system.

Big Buck also relies upon suppliers of raw materials and packaging for
beer, suppliers of food and retail products and other third party product and
service providers, over which it can assert little control. Big Buck is in the
process of contacting all critical suppliers and service providers to assess the
readiness of such parties and to determine the extent to which Big Buck may be
vulnerable to such parties' failure to resolve their own Year 2000 issues. This
effort is expected to be completed by July 1, 1999.

COSTS TO ADDRESS YEAR 2000 ISSUES

Big Buck expenses costs associated with its Year 2000 compliance
efforts as the costs are incurred, but has not yet incurred any costs in
connection with its Year 2000 compliance efforts. Big Buck estimates that its
future cost of assessing and remedying Year 2000 issues will approximate
$40,000. Such estimate does not consider any additional costs incurred due to
the failure of any third party vendor, supplier or service provider to achieve
Year 2000 compliance.

RISKS OF YEAR 2000 ISSUES

Big Buck recognizes that Year 2000 issues constitute a material
known uncertainty. Big Buck also recognizes the importance of ensuring that
Year 2000 issues will not adversely affect its operations. Big Buck believes
that the processes described above will be effective to manage the risks
associated with the problem. However, there can be no assurance that the
processes can be completed on the timetable described above or that
remediation will be fully effective. The failure to identify and remediate
Year 2000 issues, or the failure of key vendors, suppliers and service
providers or other critical third parties who do business with Big Buck to
timely remediate their Year 2000 issues could cause system failures or
errors, business interruptions and, in a worst case scenario, the inability
to engage in normal business practices for an unknown length of time. Big
Buck's business, operating results, financial condition and cash flows could
be materially adversely affected. At this time, however, Big Buck does not
possess information necessary to estimate the overall potential financial
impact of Year 2000 compliance issues. Specific risks Big Buck faces with
regard to Year 2000 issues include the following:

1. Disruption of Internal Computer Systems. If our internal computer
systems should fail, it could disrupt our accounting, restaurant management and
other systems. We believe that the failure of our internal computer systems is
unlikely. However, we expect that minor Year 2000 compliance issues will
continue to be identified through our discussions with our hardware and software
vendors. We intend to address these compliance issues no later than the second
calendar quarter of 1999.

2. Disruption of Supply Materials. The inability of our suppliers and
service providers to be Year 2000 ready could result in delays in product
delivery, disruption in the distribution channels and disruption in services
required to operate. We are in the process of surveying our suppliers and
service providers with regard to their Year 2000 readiness. We are hopeful of
receiving adequate responses from critical suppliers and service providers and
many non-critical suppliers and service providers by the second quarter of 1999.
Where ultimate survey results show that the need arises, we will arrange for
back-up suppliers and service providers before the change-over date.

CONTINGENCY PLANS

16
<PAGE>

Buck's vendors, suppliers, and service providers are unable to provide
sufficient evidence of Year 2000 readiness by July 1, 1999, Big Buck will
seek to arrange for their replacement.

17
<PAGE>

ITEM 7 FINANCIAL STATEMENTS

INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
BIG BUCK BREWERY & STEAKHOUSE, INC.
Report of Independent Public Accountants..................................... 19
Financial Statements
Balance Sheets...................................................... 20
Statements of Operations............................................ 21
Statements of Shareholders' Equity.................................. 22
Statements of Cash Flows............................................ 23
Notes to Financial Statements....................................... 24
</TABLE>

18
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Big Buck Brewery & Steakhouse, Inc.:

We have audited the accompanying balance sheets of Big Buck Brewery &
Steakhouse, Inc. (a Michigan corporation) as of January 3, 1999 and December 28,
1997, and the related statements of operations, shareholders' equity and cash
flows for the years then ended. These financial statements are the
responsibility of Big Buck's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Big Buck Brewery &
Steakhouse, Inc. as of January 3, 1999 and December 28, 1997, and the results of
its operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.

As explained in Note 1 to the financial statements, effective December
29, 1997 the Company changed its method of accounting for preopening costs.

/s/ ARTHUR ANDERSEN LLP

Minneapolis, Minnesota,
February 19, 1999

19
<PAGE>

BIG BUCK BREWERY & STEAKHOUSE, INC.

Balance Sheets

January 3, December 28,
1999 1997
---------------- -----------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 500,236 $ 354,015
Lease receivable (Note 2) -- 749,650
Accounts receivable 216,147 170,460
Inventories 308,286 289,805
Preopening expenses, net -- 348,581
Prepaids and other 274,819 171,766
------------ ------------
Total current assets 1,299,488 2,084,277

PROPERTY AND EQUIPMENT, net 18,847,968 18,340,043

OTHER ASSETS, net 672,530 383,301
------------ ------------
$ 20,819,986 $ 20,807,621
------------ ------------
------------ ------------

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 925,031 $ 843,430
Accrued expenses 709,070 735,727
Current maturities of long-term obligations 1,644,228 249,824
------------ ------------
Total current liabilities 3,278,329 1,828,981
LONG-TERM OBLIGATIONS, less current maturities 7,030,329 7,274,558
------------ ------------
Total liabilities 10,308,658 9,103,539
COMMITMENTS AND CONTINGENCIES (Notes 2 and 6)

SHAREHOLDERS' EQUITY:
Common stock, $.01 par value, 20,000,000 shares authorized;
5,285,000 shares issued and outstanding 52,850 52,850
Warrants 153,650 153,650
Additional paid-in capital 13,407,694 13,240,694
Accumulated deficit (3,102,866) (1,743,112)
------------ ------------
Total shareholders' equity 10,511,328 11,704,082
------------ ------------
$ 20,819,986 $ 20,807,621
------------ ------------
------------ ------------
</TABLE>

The accompanying notes are an integral part of these balance sheets.

20
<PAGE>

BIG BUCK BREWERY & STEAKHOUSE, INC.
Statements of Operations

<TABLE>
<CAPTION>
For the Years Ended
-------------------------------
January 3, December 28,
1999 1997
------------- --------------
<S> <C> <C>
REVENUE:
Restaurant sales $ 14,843,860 $ 8,500,828
Wholesale and retail sales 717,893 595,752
------------ ------------
Total revenue 15,561,753 9,096,580
------------ ------------
COSTS AND EXPENSES:
Cost of sales 5,270,518 3,065,523
Restaurant salaries and benefits 4,659,949 2,526,586
Operating expenses 3,267,568 1,925,938
Depreciation and amortization 780,054 655,474
------------ ------------
Total costs and expenses 13,978,089 8,173,521
------------ ------------
RESTAURANT OPERATING INCOME 1,583,664 923,059

GENERAL AND ADMINISTRATIVE EXPENSES 1,787,633 1,640,047
------------ ------------
LOSS FROM OPERATIONS (203,969) (716,988)
------------ ------------
OTHER INCOME (EXPENSE):
Interest expense (815,984) (410,964)
Interest income 15,266 102,343
Other (8,520) (13,911)
------------ ------------
Other income (expense), net (809,238) (322,532)
------------ ------------
LOSS BEFORE CUMULATIVE EFFECT
OF CHANGE IN ACCOUNTING PRINCIPLE (1,013,207) (1,039,520)

CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
PRINCIPLE FOR PREOPENING COSTS (346,547) --
------------ ------------
NET LOSS $ (1,359,754) $ (1,039,520)
------------ ------------
------------ ------------
BASIC AND DILUTED LOSS PER COMMON SHARE $ (0.26) $ (0.20)
------------ ------------
------------ ------------
BASIC AND DILUTED WEIGHTED AVERAGE
SHARES OUTSTANDING 5,285,000 5,277,033
------------ ------------
------------ ------------
</TABLE>

The accompanying notes are an integral part of these financial statements.

21
<PAGE>

BIG BUCK BREWERY & STEAKHOUSE, INC.

Statements of Shareholders' Equity
For the Years Ended

COMMON STOCK ADDITIONAL
------------------------- PAID-IN ACCUMULATED
SHARES AMOUNT WARRANTS CAPITAL DEFICIT TOTAL
------------- --------- -------------- ------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, December 29, 1996 5,275,000 $ 52,750 $ 153,650 $ 13,034,544 $ (703,592) $ 12,537,352
Issuance of common stock for services
rendered........................... 10,000 100 -- 56,150 -- 56,250
Issuance of stock options for services
rendered........................... -- -- -- 150,000 -- 150,000
Net loss............................... -- -- -- -- (1,039,520) (1,039,520)

------------- --------- -------------- ------------- ------------ --------------
BALANCE, December 28, 1997................. 5,285,000 52,850 153,650 13,240,694 (1,743,112) 11,704,082
Issuance of warrants for services
rendered........................... -- -- -- 167,000 -- 167,000
Net loss............................... -- -- -- -- (1,359,754) (1,359,754)
------------- --------- -------------- ------------- ------------ --------------
BALANCE, January 3, 1999................... 5,285,000 $ 52,850 $ 153,650 $ 13,407,694 $ (3,102,866) $ 10,511,328
------------- --------- -------------- ------------- ------------ --------------
------------- --------- -------------- ------------- ------------ --------------
</TABLE>

The accompanying notes are an integral part of these financial statements.

22
<PAGE>

BIG BUCK BREWERY & STEAKHOUSE, INC.

Statements of Cash Flows

<TABLE>
<CAPTION>
For the Years Ended
-------------------------------------
January 3, December 28,
1999 1997
----------------- ------------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss $ (1,359,754) $ (1,039,520)
Adjustments to reconcile net loss to cash flows used in
operating activitiesA
Cumulative effect of change of accounting for preopening costs 346,547 --
Depreciation and amortization 780,054 655,474
Loss on sale of property 8,520 --
Change in operating assets and liabilities:
Accounts receivable (45,687) (130,460)
Inventories (18,481) (134,020)
Prepaids and other (103,053) (410,206)
Accounts payable 81,601 556,613
Accrued expenses (26,657) 603,428
------------- -------------
Net cash (used in) provided by operating activities (336,910) 101,309
------------- -------------
INVESTING ACTIVITIES:
Purchases of property and equipment, net (1,276,301) (9,084,325)
Sale of short-term investments, net -- 4,910,000
------------- -------------
Net cash used in investing activities (1,276,301) (4,174,325)
-------------- -------------
FINANCING ACTIVITIES:
Borrowings under long-term debt and capital lease obligations 2,149,650 4,649,351
Payments on long-term debt and capital lease obligations (249,825) (250,788)
Payment of deferred financing costs (140,393) -
------------- -------------
Net cash provided by financing activities 1,759,432 4,398,563
------------- -------------
INCREASE IN CASH 146,221 325,547
CASH, beginning of year 354,015 28,468
------------- -------------
CASH, end of year $ 500,236 $ 354,015
------------- -------------
------------- -------------
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid $ 813,074 $ 415,306
Income taxes paid -- --
NONCASH TRANSACTION:
Issuance of common stock, stock options and warrants for property
and services 167,000 206,150
</TABLE>

The accompanying notes are an integral part of these financial statements.

23
<PAGE>

BIG BUCK BREWERY & STEAKHOUSE, INC.

Notes to Financial Statements

January 3, 1999 and December 28, 1997

1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES:

NATURE OF BUSINESS

Big Buck Brewery & Steakhouse, Inc. (f/k/a Michigan Brewery, Inc.) develops,
owns and operates microbrewery/restaurants under the name "Big Buck Brewery &
Steakhouse." As of January 3, 1999, the Company owned and operated three units
in the state of Michigan. The first unit opened in Gaylord, Michigan, on May 26,
1995. The Gaylord unit is utilized for bottling and wholesale distribution of
its private label beer. Subsequent units opened on March 17, 1997 in Grand
Rapids, Michigan, and on October 1, 1997 in Auburn Hills, Michigan, a suburb of
Detroit. The Company plans to open a fourth unit in Grapevine, Texas, a suburb
of Dallas. Scheduled to open in the summer of 1999, this unit will be operated
by Buck & Bass, L.P. pursuant to a joint venture agreement between the Company
and Bass Pro Outdoor World, L.P.

The Company incurred a net loss of $1,359,754 in 1998 and $1,039,520 in 1997.
The losses for these periods are primarily attributable to costs and expenses
incurred in the completion of the development and start-up of operations at the
Grand Rapids and Auburn Hills units and the costs associated with the hiring of
management to position the Company for its future expansion plans. The Company
has a limited operating history, and future revenues and results from operations
will depend upon various factors including market acceptance of the Big Buck
Brewery & Steakhouse concept and general economic conditions. The Company's
ability to meet its expansion plan and achieve profitability depends on its
ability to obtain substantial financing for the development of additional units.
There are no assurances that such financing will be available on terms
acceptable or favorable to the Company.

FISCAL YEAR

The Company has adopted a 52-/53-week fiscal year ending on the Sunday nearest
December 31 of each year. All references herein to "1998" and "1997" represent
the 53-week and 52-week fiscal years ended January 3, 1999 and December 28,
1997, respectively.

INVENTORIES

Inventories consist primarily of restaurant food and beverage items, raw
materials used in the brewing process, finished goods, including beer in kegs
and beer held in fermentation prior to the filtration and packaging process, and
retail goods for resale. Inventories are stated at the lower of cost or market
as determined by the first-in, first out inventory method and consisted of the
following at:
<TABLE>
<CAPTION>

January 3, December 28,
1999 1997
------------------- ---------------
<S> <C> <C>
Food..................................................................... $ 116,966 $ 88,820
Brewery.................................................................. 95,180 83,032
Retail goods............................................................. 96,140 117,953
---------- ----------
$ 308,286 $ 289,805
---------- ----------
---------- ----------
</TABLE>

PREOPENING EXPENSES

During April 1998, the Accounting Standards Executive Committee of the American
Institute of Certified Public Accountants issued Statement of Position (SOP)
98-5, "Reporting on the Costs of Start-Up Activities." SOP 98-5

24
<PAGE>

requires companies to expense as incurred all start-up and preopening costs that
are not otherwise capitalizable as long-lived assets. The Company has elected
early implementation of the new accounting standard retroactive to the beginning
of 1998. The effect of this accounting change was to charge operations the
unamortized balance of preopening costs as of December 28, 1997 of $346,547.

PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost. Improvements are capitalized, while
repair and maintenance costs are charged to operations when incurred. Property
and equipment are depreciated using the straight-line method for financial
reporting purposes and accelerated methods for income tax reporting purposes
over their estimated useful lives of 5 to 40 years. In the event that facts and
circumstances indicate that the carrying amount of property may not be
recoverable, an evaluation would be performed using such factors as recent
operating results, projected cash flows and management's plans for future
operations.

Property and equipment consisted of the following at:

<TABLE>
<CAPTION>
January 3, December 28, Estimated
1999 1997 Useful Lives
------------------ ------------------- ------------------
<S> <C> <C> <C>
Land and improvements...................................... $ 5,057,914 $ 4,713,545 20 years for
improvements
Building and improvements.................................. 9,261,213 9,245,345 40 years
Brewery equipment.......................................... 2,011,015 2,000,276 12-30 years
Restaurant equipment....................................... 1,827,540 1,807,032 10 years
Furniture, fixtures and equipment.......................... 1,575,592 1,479,898 5-7 years
Construction in progress................................... 772,235 --
------------- -------------
20,505,509 19,246,096
Accumulated depreciation................................... (1,657,541) (906,053)
------------- -------------
$ 18,847,968 $ 18,340,043
------------- -------------
------------- -------------
</TABLE>

INCOME TAXES

Deferred tax assets and liabilities are computed based on the difference between
the financial reporting and tax bases of the Company's assets and liabilities
using currently enacted tax rates.

LOSS PER SHARE

The Company adopted in 1997, Statement of Financial Accounting Standards (SFAS)
No. 128 "Earnings per Share" which requires disclosure of basic earnings per
share (EPS) and diluted EPS, which replaces the existing primary EPS and fully
diluted EPS, as defined by APB No. 15. Basic EPS is computed by dividing net
income by the weighted average number of shares of common stock outstanding
during the year. Diluted EPS is computed similarly to EPS as previously reported
provided that, when applying the treasury stock method to common equivalent
shares, the Company must use its average share price for the period rather than
the more dilutive greater of the average share price or end-of-period share
price required by APB No. 15. Substantially all of the warrants and options
outstanding at January 3, 1999 had exercise prices in excess of the market price
of the Company's common stock.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and

25
<PAGE>

disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Ultimate results could differ from those estimates.

2. LONG-TERM OBLIGATIONS:

Long-term obligations consisted of the following as of:
<TABLE>
<CAPTION>
January 3, December 28,
1999 1997
---------- ----------

<S> <C> <C>
Capital lease obligations (see below) $5,400,000 $5,400,000

Mortgage note payable to bank, monthly principal payments of $5,760 plus
interest at 10.2%, remaining balance due on October 1, 2000, collateralized
by all assets of the Company and guaranteed by certain shareholders 1,566,117 1,635,239

Note payable to bank, monthly payments of interest only at 10.0%,
balance due on May 15, 1999, collateralized by all assets of the Company 1,400,000 --

Note payable to bank, monthly principal payments of $13,333 plus interest at
10.2%, remaining balance due on October 1, 2000, collateralized by all
assets of the Company and guaranteed by certain shareholders 293,333 453,333

Other 15,107 35,810
---------- ----------
Total 8,674,557 7,524,382

Less-Current maturities 1,644,228 249,824
---------- ----------
Long-term obligations $7,030,329 $7,274,558
---------- ----------
---------- ----------
</TABLE>

In April 1997, the Company entered into a real estate purchase and leaseback
agreement with an unaffiliated third party for the land and property of its
Grand Rapids unit. The Company received proceeds of $1,400,000 and in return,
entered into a ten-year lease with a minimum annual base rent of $140,000 and a
maximum annual base rent of $192,500 and percentage rent provisions. In the
event gross sales, as defined, do not exceed $2,900,000 for any two consecutive
lease years, the Company is obligated to repurchase the land and property for
$1.4 million, plus $70,000 for each lease year on a pro rata basis. Annual gross
sales for the period from April 11, 1997 through April 10, 1998 did not exceed
$2.9 million. In the event that annual gross sales for the period from April 11,
1998 through April 10, 1999 do not exceed $2.9 million, Big Buck will be
obligated to repurchase the land and property for $1,540,000. Subsequent to the
seventh year, the Company has the option to purchase the land and property a a
predefined price.

In August 1997, the Company entered into a second real estate purchase and
leaseback agreement with an unaffiliated third party for the land of its Auburn
Hills unit. The Company received proceeds of $4,000,000 ($749,650 of which was
received during February 1998) and in return, entered into a 25-year lease with
a minimum annual base rent of $400,000 and percentage rent provisions. In the
event gross sales, as defined, do not exceed $8,000,000 for any two consecutive
lease years, the Company is obligate to repurchase the land for $4.0 million,
plus $200,000 for each lease year on a pro rata basis. Big Buck was required to
pay an annual percentage rent of $46,000 based upon annual gross sales for the
period from October 1, 1997 through September 30, 1998. Subsequent to the
seventh year, the Company has the option to purchase the land at a predefined
price. In lieu of cash payment, the Company may be required to issue shares of
common stock for all or part of the purchase price valued at $5.00 per share.

26
<PAGE>

No gain or loss was recognized on the sale and leaseback transactions.
Management expects that if the Company was required to purchase the land at
these units that these leases could be renewed or replaced by mortgage or other
financing arrangements; however, there can be no assurance that such financing
would be available on acceptable terms or at all.

The note payable to bank agreement requires, among other things, that the
Company maintain certain financial ratios. As of January 3, 1999, the Company
was in compliance with or has received waivers related to all such covenants.

Maturities of long-term obligations as of January 3, 1999 were as follows:

<TABLE>
<CAPTION>
<S> <C>
1999 $1,644,228
2000 1,630,329
2001 --
2002 --
2003 --
Thereafter 5,400,000
----------
$8,674,557
----------
----------
</TABLE>

3. INCOME TAXES:

Effective January 1, 1996, the Company converted from S Corporation status to a
C Corporation. As of January 3, 1999 and December 28, 1997, the Company's
deferred taxes consisted primarily of net operating loss carryforwards,
preopening costs not currently deductible and accelerated methods of
depreciation. The Company has recorded a full valuation allowance against the
net deferred tax asset due to the uncertainty of realizing the related benefits.
As of January 3, 1999, the Company had net operating loss carryforwards of
approximately $4.9 million which expire through the year 2013.

4. SHAREHOLDERS' EQUITY:

INITIAL PUBLIC OFFERING

During June 1996, the Securities and Exchange Commission declared effective a
Registration Statement relating to the IPO of 2,550,000 units at an offering
price of $5.00 per unit, including 100,000 units from the exercise of the
underwriters' overallotment option. Each unit consisted of one share of common
stock and one Redeemable Class A Warrant. The Company received net proceeds of
$10,984,853, after the payment of $1,765,147 in related offering costs. The net
proceeds were used to repay the Nonconvertible Note (Note 2), and the private
placement debt and the remaining proceeds were used to fund operating losses and
to finance a portion of the construction on the Grand Rapids and Auburn Hills
units.

WARRANTS

In connection with its IPO, the Company issued a warrant to the underwriter to
purchase 245,000 shares of common stock at $6.00 per share. The warrant became
exercisable in June 1997 and is exercisable until June 2000.

In connection with the joint venture agreement (Notes 1 and 6), the Company
issued a warrant, exercisable at $2.625 per share, for 50,000 shares of its
common stock to Bass Pro. The Company also issued a five-year warrant to its
private placement agent, exercisable at $2.7625 per share, for 14,582 shares of
its common stock.

27
<PAGE>

5. STOCK OPTION PLANS:

During January 1996, the Company adopted the 1996 Stock Option Plan (the Plan),
pursuant to which options to acquire an aggregate of 600,000 shares, as amended
in June 1997, of the Company's common stock may be granted. Under the Plan, the
board of directors may grant options to purchase shares of the Company's stock
to eligible employees, nonemployees and contractors at a price not less than
100% of the fair market value at the time of the grant for both incentive and
nonstatutory stock options. Option granted under the Plan vest annually over
four years from date of grant and are exercisable for ten years, except that the
term may not exceed five years for incentive stock options granted to persons
who own more than 10% of the Company's outstanding voting stock.

Also, during January 1996, the Company adopted the 1996 Director Stock Option
Plan (the Director's Plan) pursuant to which options to acquire an aggregate of
100,000 shares of the Company's common stock may be granted to outside
directors. Under the Director's Plan, 5,000 options were automatically granted
to each outside director upon the completion of the Company's IPO, and
thereafter 5,000 options are granted annually for each year of continued service
by the outside director. Each option is granted at fair market value on the date
of grant, vests one year after the date of grant and is exercisable for ten
years.

A summary of the status of the Company's two stock option plans at January 3,
1999 and December 28, 1997 and changes during the fiscal years then ended is
presented in the table and narrative below:

Year Ended Year Ended
January 3, 1999 December 28, 1997
------------------------------------------ ------------------------------------------
Weighted Average Weighted Average
Shares Exercise Price Shares Exercise Price
---------- ------------------ -------- -----------------
<S> <C> <C> <C> <C>
Outstanding, beginning of
Period.................. 546,000 $ 4.55 200,000 $ 4.41
Granted...................... 125,000 3.38 356,000 4.63
Exercised.................... -- -- -- --
Forfeited.................... -- -- 10,000 2.00
Expired...................... -- -- -- --
------- --------- --------- -------
Outstanding, end of
Period.................. 671,000 $ 4.11 546,000 $ 4.55
------- --------- --------- -------
------- --------- --------- -------
Exercisable, end of
Period.................. 280,500 137,750
------- -------
------- -------
Weighted average fair value
Of options granted...... $ 3.10 $ 2.97
------- -------
------- -------
</TABLE>

The Company accounts for these plans under APB Opinion No. 25, under which no
compensation cost has been recognized. Had compensation cost for these plans
been determined consistent with SFAS No. 123, "Accounting for Stock-Based
Compensation," the Company's net loss and loss per share would have been
increased to the following pro forma amounts:

1998 1997
---------------- ---------------
<S> <C> <C> <C>
Net Loss As Reported $(1,359,754) $(1,039,520)
Pro Forma (1,710,122) (1,370,375)
Diluted EPS As Reported (0.26) (0.20)
Pro Forma (0.32) (0.26)
</TABLE>

28
<PAGE>

The fair value of each option grant is estimated on the date of grant using the
Black-Scholes option pricing model with the following weighted-average
assumptions used for grants in 1998 and 1997, respectively: risk-free interest
rates of 5.20% and 6.01%; no expected dividend yields; expected lives of 7 and 5
years; and expected volatility of 123.47% and 85.06%.

6. COMMITMENTS AND CONTINGENCIES:

LEGAL PROCEEDINGS

The Company is involved in various legal actions rising in the ordinary course
of business. Although the outcomes of any such legal actions cannot be
predicted, in the opinion of management there is no legal proceeding pending
against or involving the Company for which the outcome is likely to have a
material adverse effect upon the financial position or results of operations of
the Company.

JOINT VENTURE

During 1998, the Company contributed $891,000 to the limited partnership which
will own and operate the Grapevine unit. The Company may be required to
contribute up to an additional $4.5 million, upon ten business day's notice, to
complete construction of the Grapevine unit. Without additional financing, the
Company will be unable to complete construction of this unit. If such funds are
not available when required by the joint venture, the Company may be in material
default under the joint venture agreement. In the event of material default,
Bass Pro would be entitled to purchase the Company's interest in the joint
venture at 40% of book value, thereby eliminating the Company's interest in the
Grapevine unit. Further, Bass Pro has the right to purchase up to 15% of the
Company's interest in the joint venture, at 100% of the Company's original cost,
within 24 months of the opening of the Grapevine unit; provided, however, that
the Company's interest in the joint venture may not be reduced below 51%. The
Company expects that it will continue to require significant capital resources
to fund new unit development and construction.

ITEM 8 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.

29
<PAGE>

PART III

ITEM 9 DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT

The following table provides information with respect to Big Buck's
directors and executive officers as of March 1, 1999. Each director serves for a
one-year term expiring in 1999 and until his successor has been duly elected and
qualified. Each executive officer has been appointed to serve until his
successor is duly appointed by the Board of Directors or his earlier removal or
resignation from office. There are no family relationships between any director
or executive officer.

NAME AGE PRINCIPAL OCCUPATION POSITION WITH BIG BUCK DIRECTOR SINCE
- ----------------------------- --- -------------------- ---------------------- --------------

<S> <C> <C> <C> <C>
William F. Rolinski......... 51 Chief Executive Officer, Chief Executive Officer, 1993
President and Chairman of President and Chairman of
the Board of Big Buck the Board

Gary J. Hewett.............. 36 Chief Operating Officer, Chief Operating Officer, 1998
Executive Vice President Executive Vice President
and Director of Big Buck and Director

Anthony P. Dombrowski....... 38 Chief Financial Officer and Chief Financial Officer N/A
Treasurer of Big Buck and Treasurer

Blair A. Murphy, D.O........ 45 Self-Employed Physician Director 1993

Patrick M. Sidders.......... 58 Investment Banker Director 1998

Henry T. Siwecki............ 54 Sole Owner and President of Director 1995
Siwecki Construction, Inc.

Casimer I. Zaremba.......... 78 Private Investor Director 1993

</TABLE>

William F. Rolinski is a founder of Big Buck and has been the Chief
Executive Officer, President and Chairman of the Board since its formation in
1993. From 1987 to 1994, Mr. Rolinski was the founder, secretary and corporate
counsel of Ward Lake Energy, Inc., an independent producer of natural gas in
Michigan. While Mr. Rolinski was at Ward Lake, the company drilled and produced
over 500 natural gas wells with combined reserves of over $200 million.

Gary J. Hewett became the Chief Operating Officer and Executive Vice
President of Big Buck in April 1996 and a director of Big Buck in December
1998. From June 1989 to March 1996, he served in various capacities at
Hooters of America, Inc., a national restaurant chain, including Vice
President of Franchise Operations where he was responsible for the
operational support of 84 franchised restaurants and Vice President of
Company Operations where he was responsible for the operation of 2
company-owned restaurants. Mr. Hewett's responsibilities at Hooters included
supervision of site selection, restaurant design and layout, training and new
restaurant openings. From 1986 to 1989, Mr. Hewett was employed by the
Marriott Corporation as a restaurant general manager.

Anthony P. Dombrowski became the Chief Financial Officer and Treasurer
of Big Buck in May 1996. He acted as a consultant to Big Buck, in the capacity
of Chief Financial Officer, from January 1996 to May 1996. From February 1995 to
May 1996, Mr. Dombrowski operated his own financial and consulting business.
From

30
<PAGE>

May 1989 to January 1995, Mr. Dombrowski was the Chief Financial Officer of Ward
Lake. Mr. Dombrowski began his career with Price Waterhouse LLP in 1982.

Blair A. Murphy, D.O. is a founder of Big Buck and has been a director
since its formation in 1993. Dr. Murphy has been a urological surgeon since 1990
and is presently a self-employed physician.

Patrick M. Sidders became a director of Big Buck in December 1998. From
September 1995 to June 1998, Mr. Sidders served as Senior Vice President and
Director of Corporate Finance for R.J. Steichen & Company, the investment
banking firm which acted as the underwriter of Big Buck's initial public
offering. From March 1994 to September 1995, he worked as Executive Vice
President Administration and Chief Financial Officer of Casino Magic, Inc., a
casino management company. From June 1990 to March 1994, Mr. Sidders served as
Senior Vice President and Director of Corporate Finance for John G. Kinnard and
Company, Incorporation, an investment banking firm.

Henry T. Siwecki has been a director since August 1995. For more than
the last five years, Mr. Siwecki has been the sole owner and president of
Siwecki Construction, Inc., a commercial and residential contractor.

Casimer I. Zaremba is a founder of Big Buck and has been a director
since its formation in 1993. Mr. Zaremba has been a private investor for more
than the past five years.

COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

Section 16(a) of the Exchange Act requires Big Buck's officers,
directors and persons who own more than 10% of a registered class of Big Buck's
equity securities to file reports of ownership and changes in ownership with the
SEC. Such officers, directors and shareholders are required by the SEC to
furnish Big Buck with copies of all such reports. To Big Buck's knowledge, based
solely on a review of copies of reports filed with the SEC during 1998, all
applicable Section 16(a) filing requirement were met, except that three reports
on Form 5 setting forth the January 1, 1997 automatic grant of stock options for
5,000 shares pursuant to the 1996 Director Stock Option Plan to each of Blair A.
Murphy, D.O., Henry T. Siwecki and Casimer I. Zaremba, Big Buck's non-employee
directors, were not filed on a timely basis.

31
<PAGE>

ITEM 10 EXECUTIVE COMPENSATION

The following table sets forth information with respect to
compensation paid by Big Buck to the Chief Executive Officer and the other
highest paid executive officers (the "Named Executive Officers") during 1998,
1997 and 1996.

SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>

ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------- ----------------------
AWARDS
----------------------
SECURITIES
NAME AND PRINCIPAL POSITION YEAR SALARY UNDERLYING OPTIONS
--------------------------- ---- ------ ------------------
<S> <C> <C> <C>
William F. Rolinski . . . . . . . . . . . . . . 1998 $151,586 30,000
Chief Executive Officer, President and 1997 $167,308 75,000
Chairman of the Board 1996 $134,038 --

Gary J. Hewett . . . . . . . . . . . . . . . . . 1998 $130,845 25,000
Chief Operating Officer, Executive 1997 $152,061 125,000
Vice President and Director 1996(1) $101,445 55,000

Anthony P. Dombrowski . . . . . . . . . . . . . 1998 $ 92,885 20,000
Chief Financial Officer and 1997 $102,615 60,000
Treasurer 1996(2) $112,516 33,000
- ----------------------
</TABLE>

(1) Mr. Hewett became an employee of Big Buck on April 1, 1996. The amount
reported for 1996 reflects less than a full year's compensation.

(2) Mr. Dombrowski became an employee of Big Buck on May 1, 1996. From
January 1996 through April 1996, Mr. Dombrowski served as a consultant
to Big Buck. The amount reported for 1996 reflects a full year's
compensation.

The following table sets forth each grant of stock options during 1998
to the Named Executive Officers. No stock appreciation rights were granted
during 1998.

OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
NUMBER OF
SECURITIES PERCENT OF TOTAL
UNDERLYING OPTIONS GRANTED EXERCISE OR
OPTIONS TO EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED(1) FISCAL YEAR ($/SHARE)(2) DATE
- -------------------------------- ---------------- -------------------- ------------------ ---------------
<S> <C> <C> <C> <C>
William F. Rolinski................. 30,000 27.3% $3.00 12/28/08

Gary J. Hewett...................... 25,000 22.7% $3.00 12/28/08

Anthony P. Dombrowski............... 20,000 18.2% $3.00 12/28/08
- ----------------------
</TABLE>
(1) These options became exercisable immediately upon grant.

(2) Fair market value per share on the date of grant.

32
<PAGE>

The following table sets forth information concerning the unexercised
options held by the Named Executive Officers as of the end of 1998. No options
were exercised by the Named Executive Officers in 1998. No stock appreciation
rights were exercised by the Named Executive Officers in 1998 or were
outstanding at the end of that year.

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

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FY-END AT FY-END(1)
---------------------- --------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------------------- ------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C>
William F. Rolinski. . . . . . . . . . . . . 48,750 56,250 $7,500 $0

Gary J. Hewett . . . . . . . . . . . . . . . 86,250 118,750 $7,500 $0

Anthony P. Dombrowski. . . . . . . . . . . . 53,000 60,000 $5,750 $0
</TABLE>
- -----------------------

(1) Market value of underlying securities at fiscal year end minus the
exercise price.

COMPENSATION OF DIRECTORS

Big Buck's non-employee directors receive options pursuant to the 1996
Director Stock Option Plan. Management members of the Board receive no
compensation as Board members. Board members are paid their expenses, if any,
which are incurred solely to participate in meetings of the Board or Board
committees.

EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT, AND CHANGE-IN-CONTROL
ARRANGEMENTS

Gary J. Hewett, Chief Operating Officer, Executive Vice President and a
director of Big Buck, is entitled to six months' salary upon termination of
employment, unless such termination is for cause. Based on Mr. Hewett's 1998
compensation, he would be entitled to approximately $65,423 upon termination of
employment without cause. To date, Big Buck has not entered into any agreements
providing for the continued employment of its personnel.

33
<PAGE>

ITEM 11 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information known to Big Buck
regarding beneficial ownership of its Common Stock as of February 1, 1999, by
(a) each person who is known to Big Buck to own beneficially more than five
percent of the Common Stock, (b) each director, (c) each Named Executive
Officer, and (d) all executive officers and directors as a group. Unless
otherwise noted, each person identified below possesses sole voting and
investment power with respect to such shares. Except as otherwise noted below,
Big Buck knows of no agreements among its shareholders which relate to voting or
investment power with respect to its Common Stock.

SHARES PERCENT
BENEFICIALLY OF
NAME AND ADDRESS OF BENEFICIAL OWNER (1) OWNED(1) CLASS
- ---------------------------------------- ------------ ---------
<S> <C> <C>
William F. Rolinski(2)(3)....................................................... 889,358 16.7%

Perkins Capital Management, Inc.(4)............................................. 872,500 15.1%
730 East Lake Street
Wayzata, Minnesota 55391

Casimer I. Zaremba(2)(5)(6)..................................................... 690,007 13.0%

Blair A. Murphy, D.O.(2)(5)..................................................... 650,007 12.3%

The Perkins Opportunity Fund(7)................................................. 600,000 10.7%
730 East Lake Street
Wayzata, Minnesota 55391

FMR Corp.(8).................................................................... 522,500 9.9%
82 Devonshire Street
Boston, Massachusetts 02109

Henry T. Siwecki(2)(5)(9)....................................................... 151,989 2.9%

Gary J. Hewett(10).............................................................. 86,250 1.6%

Anthony P. Dombrowski(11)....................................................... 59,000 1.1%

Patrick M. Sidders(12) ......................................................... 19,000 *

All Executive Officers and Directors as a Group (7 persons)(13)................. 2,545,611 46.0%
</TABLE>

- ---------------
*Represents less than one percent.

(1) Beneficial ownership is determined in accordance with the rules of the
SEC and includes voting or investment power with respect to securities.
Securities "beneficially owned" by a person may include securities
owned by or for, among others, the spouse, children or certain other
relatives of such person as well as other securities as to which the
person has or shares voting or investment power or has the option or
right to acquire Common Stock within 60 days. The number of shares
beneficially owned includes shares issuable pursuant to warrants and
stock options that are exercisable within 60 days of February 1, 1999.
Unless otherwise indicated, the address for each listed shareholder is
c/o Big Buck Brewery & Steakhouse, Inc., 550 South Wisconsin Street,
Gaylord, Michigan 49735.

34
<PAGE>

(2) Substantially all of the shares beneficially owned by Messrs. Rolinski,
Zaremba, Murphy and Siwecki are subject to a three-year escrow
agreement with Norwest Bank Minnesota, National Association, Big Buck
and the Commissioner of Commerce for the State of Minnesota dated June
7, 1996.

(3) Includes 48,750 shares of Common Stock subject to currently exercisable
options.

(4) As set forth in Schedule 13G filed with the SEC by Perkins Capital
Management, Inc. and The Perkins Opportunity Fund on February 4, 1999.
Includes (a) 177,500 shares of Common Stock owned by the clients of
PCM, (b) 195,000 shares of Common Stock subject to currently
exercisable warrants owned by the clients of PCM, (c) 200,000 shares of
Common Stock owned by POF, and (d) 300,000 shares of Common Stock
subject to currently exercisable warrants owned by POF. PCM has (a)
sole power to vote 262,000 shares of Common Stock, including 200,000
shares of Common Stock owned by POF, and (b) sole power to dispose of
872,500 shares of Common Stock, including 200,000 shares of Common
Stock owned by POF and 300,000 shares of Common Stock subject to
currently exercisable warrants owned by POF. PCM disclaims beneficial
ownership of the securities owned by POF.

(5) Includes 15,000 shares of Common Stock subject to currently exercisable
options.

(6) Beneficial ownership of 450,005 of these shares is shared with Walter
Zaremba, Casimer Zaremba's brother.

(7) As set forth in Schedule 13G filed with the SEC by PCM and POF on
February 4, 1999. Includes 300,000 shares of Common Stock subject to
currently exercisable warrants. Ownership of ten percent or more of the
outstanding stock of Big Buck requires the prior approval of the
Michigan Liquor Control Commission. As a result, the warrants held by
POF cannot be exercised in their entirety without such approval.

(8) As set forth in Schedule 13G filed with the SEC by FMR Corp. on
February 11, 1999. Fidelity Management & Research Company, a
wholly-owned subsidiary of FMR Corp. and an investment adviser
registered under the Investment Advisers Act of 1940, is the beneficial
owner of 522,500 shares as a result of acting as investment adviser to
various investment companies registered under the Investment Company
Act of 1940. The ownership of one investment company, Fidelity Capital
Appreciation Fund, amounted to 522,500 shares. Edward C. Johnson 3d,
FMR Corp., through its control of Fidelity, and the funds each has sole
power to dispose of the 522,500 shares owned by the funds. Neither FMR
Corp. nor Edward C. Johnson 3d, Chairman of FMR Corp., has the sole
power to vote or direct the voting of the shares owned directly by the
Fidelity Funds, which power resides with the funds' Boards of Trustees.
Fidelity carries out the voting of the shares under written guidelines
established by the funds' Boards of Trustees. Members of the Edward C.
Johnson 3d family and trusts for their benefit are the predominant
owners of Class B shares of common stock of FMR Corp., representing
approximately 49% of the voting power of FMR Corp. Mr. Johnson 3d owns
12.0% and Abigail P. Johnson owns 24.5% of the aggregate outstanding
voting stock of FMR Corp. Mr. Johnson 3d is Chairman of FMR Corp. and
Ms. Johnson is a Director of FMR Corp. The Johnson family group
and all other Class B shareholders have entered into a shareholders'
voting agreement under which all Class B shares will be voted in
accordance with the majority vote of Class B shares. Accordingly,
through their ownership of voting common stock and the execution of the
shareholders' voting agreement, members of the Johnson family may be
deemed, under the Investment Company Act of 1940, to form a controlling
group with respect to FMR Corp.

(9) Includes 6,000 shares of Common Stock subject to currently exercisable
warrants.

(10) Represents shares of Common Stock subject to currently exercisable
options.

(11) Includes 53,000 shares of Common Stock subject to currently exercisable
options.

(12) Includes (a) 1,000 shares of Common Stock owned by Mr. Sidders' spouse,
(b) 2,000 shares of Common Stock which Mr. Sidders and his spouse own
jointly, (c) 10,000 shares of Common Stock subject to currently
exercisable warrants owned by Mr. Sidders, (d) 1,000 shares of Common
Stock subject to currently exercisable

35
<PAGE>

warrants owned by Mr. Sidders' spouse, and (e) 2,000 shares of Common
Stock subject to currently exercisable warrants which Mr. Sidders and
his spouse own jointly.

(13) Includes 233,000 shares of Common Stock subject to currently
exercisable options and 19,000 shares of Common Stock subject to
currently exercisable warrants.

ITEM 12 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Big Buck has entered into a loan agreement with NBD Bank for three
separate loan facilities which aggregate $3.0 million. Messrs. Rolinski, Murphy
and Zaremba, each a director of Big Buck, have personally guaranteed repayment
of all amounts under this loan agreement. Messrs. Rolinski, Murphy and Zaremba
do not intend to personally guarantee future obligations of Big Buck.

All future transactions between Big Buck and its officers, directors
and principal shareholders and their affiliates will be approved by a majority
of the Board, including a majority of the independent and disinterested
non-employee directors, and will be on terms no less favorable to Big Buck than
could be obtained from unaffiliated third parties.

ITEM 13 EXHIBITS, LIST AND REPORTS ON FORM 8-K

(a) Exhibits

3.1 Restated Articles of Incorporation (incorporated by reference
to Big Buck's Current Report on Form 8-K, filed on October 3,
1997 (File No. 0-20845)).
3.2 Amended and Restated Bylaws (incorporated by reference to Big
Buck's Registration Statement on Form SB-2, filed on April 15,
1996 (File No. 333-3548)).
4.1 Specimen Form of Big Buck's Common Stock Certificate
(incorporated by reference to Big Buck's Registration
Statement on Form SB-2, filed on April 15, 1996 (File No.
333-3548)).
4.2 Form of Warrant Agreement (including Form of Redeemable Class
A Warrant) (incorporated by reference to Big Buck's
Registration Statement on Form SB-2, filed on April 15, 1996
(File No. 333-3548)).
4.3 Form of Subscription and Investment Representation Agreement,
dated December 1995, between Big Buck and Pyramid Partners, LP
(including Form of Common Stock Purchase Warrant)
(incorporated by reference to Big Buck's Registration
Statement on Form SB-2, filed on April 15, 1996 (File No.
333-3548)).
10.1 1996 Stock Option Plan (incorporated by reference to Big
Buck's Annual Report on Form 10-KSB, filed on March 23, 1998
(File No. 0-20845)).
10.2 1996 Director Stock Option Plan (incorporated by reference to
Big Buck's Registration Statement on Form SB-2, filed on April
15, 1996 (File No. 333-3548)).
10.3 Loan Agreement dated July 28, 1995, by and among Big Buck,
William F. Rolinski, Dr. Blair A. Murphy, Walter Zaremba,
Casimer I. Zaremba and NBD Bank (incorporated by reference to
Big Buck's Registration Statement on Form SB-2, filed on April
15, 1996 (File No. 333-3548)).
10.4 Escrow Agreement dated June 7, 1996, by and among Big Buck,
William F. Rolinski, Dr. Blair A. Murphy, Casimer I. Zaremba,
Henry T. Siwecki, Norwest Bank Minnesota, National
Association, and the Commissioner of Commerce for the State of
Minnesota (incorporated by reference to Big Buck's Annual
Report on Form 10-KSB, filed on March 31, 1997 (File No.
0-20845)).
10.5 Real Estate Purchase and Leaseback Agreement by and between
Eyde Brothers Development Co., Landlord, and Big Buck, Tenant,
dated April 11, 1997 (incorporated

36
<PAGE>

by reference to Big Buck's Quarterly Report on Form 10-QSB,
filed on May 9, 1997 (File No. 0-20845)).
10.6 Lease Agreement by and between Eyde Brothers Development Co.,
Landlord, and Big Buck, Tenant, dated April 11, 1997
(incorporated by reference to Big Buck's Quarterly Report on
Form 10-QSB, filed on May 9, 1997 (File No. 0-20845)).
10.7 Real Estate Purchase and Leaseback Agreement by and between
Michael G. Eyde, Landlord, and Big Buck, Tenant, dated August
1, 1997 (incorporated by reference to Big Buck's Quarterly
Report on Form 10-QSB, filed on August 12, 1997 (File No.
0-20845)).
10.8 Lease Agreement by and between Michael G. Eyde, Landlord, and
Big Buck, Tenant, dated October 1, 1997 (incorporated by
reference to Big Buck's Annual Report on Form 10-KSB, filed on
March 23, 1998 (File No. 0-20845)).
10.9 Stock Option Agreement between Big Buck and Michael G. Eyde,
dated August 1, 1997 (incorporated by reference to Big Buck's
Annual Report on Form 10-KSB, filed on March 23, 1998 (File
No. 0-20845)).
10.10 Limited Partnership Agreement by and among BBBP Management
Company, Bass Pro Outdoor World, L.P. and Big Buck, dated
November 5, 1998 (incorporated by reference to Big Buck's
Quarterly Report on Form 10-QSB, filed on November 12, 1998
(File No. 0-20845)).
10.11 Shareholders' Agreement by and among BBBP Management Company,
Bass Pro Outdoor World, L.P. and Big Buck, dated November 5,
1998 (incorporated by reference to Big Buck's Quarterly Report
on Form 10-QSB, filed on November 12, 1998 (File No.
0-20845)).
10.12 Commercial Sublease Agreement by and between Bass Pro Outdoor
World, L.P. and Buck and Bass, L.P., dated November 5, 1998
(incorporated by reference to Big Buck's Quarterly Report on
Form 10-QSB, filed on November 12, 1998 (File No. 0-20845)).
10.13 Common Stock Purchase Warrant issued by Big Buck to Bass Pro
Outdoor World, L.P., dated November 5, 1998 (incorporated by
reference to Big Buck's Quarterly Report on Form 10-QSB, filed
on November 12, 1998 (File No. 0-20845)).
10.14 Loan Agreement dated November 20, 1998, by and between Big
Buck, Borrower, and Crestmark Bank, Lender.
10.15 Real Estate Mortgage Note dated November 20, 1998, by and
between Big Buck, Borrower, and Crestmark Bank, Lender.
10.16 Security Agreement dated November 20, 1998, by and between Big
Buck, Borrower, and Crestmark Bank, Lender.
10.17 Common Stock Purchase Warrant issued by Big Buck to Seger
Financial, Inc., dated November 20, 1998.
10.18 Stock Option Agreement between Big Buck and William F.
Rolinski, dated December 29, 1998.
10.19 Stock Option Agreement between Big Buck and Gary J. Hewett,
dated December 29, 1998.
10.20 Stock Option Agreement between Big Buck and Anthony P.
Dombrowski, dated December 29, 1998.
21.1 Subsidiaries of Big Buck.
23.1 Consent of Independent Public Accountants.
24.1 Power of Attorney (included on signature page to Form 10-KSB).
27.1 Financial Data Schedule.
99.1 Cautionary Statement.

37
<PAGE>

(b) Reports on Form 8-K

(1) Big Buck filed no Current Reports on Form 8-K during the
quarter ended January 3, 1999.

38
<PAGE>

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Gaylord, State of
Michigan on March 29, 1999.

BIG BUCK BREWERY & STEAKHOUSE, INC.

By /s/ William F. Rolinski
-------------------------------------------
William F. Rolinski
President and Chief Executive Officer
(Principal Executive Officer)

POWER OF ATTORNEY

KNOW ALL BY THESE PRESENT, that each person whose signature appears
below constitutes and appoints William F. Rolinski and Anthony P. Dombrowski as
his or her true and lawful attorney-in-fact and agent, with full powers of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities, to sign any or all amendments to this
report, and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the SEC, granting unto said attorney-in-fact and
agent, full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes as he or she might or could do in person, hereby ratifying
and confirming all that said attorney-in-fact and agent, or her substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.

In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant, and in the capacities and
on the date indicated.

Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ William F. Rolinski President, Chief Executive Officer and March 29, 1999
- ------------------------------------------- Director (Principal Executive Officer)
William F. Rolinski

/s/ Anthony P. Dombrowski Chief Financial Officer and Treasurer March 29, 1999
- -------------------------------------------- (Principal Financial Officer and Principal
Anthony P. Dombrowski Accounting Officer)

/s/ Gary J. Hewett Chief Operating Officer, Executive Vice March 29, 1999
- -------------------------------------------- President and Director
Gary J. Hewett

/s/ Blair A. Murphy Director March 29, 1999
- --------------------------------------------
Blair A. Murphy

/s/ Patrick M. Sidders Director March 29, 1999
- --------------------------------------------
Patrick M. Sidders

- -------------------------------------------- Director March 29, 1999
Henry T. Siwecki

/s/ Casimer I. Zaremba Director March 29, 1999
- --------------------------------------------
Casimer I. Zaremba
</TABLE>

39
<PAGE>

INDEX TO EXHIBITS
<TABLE>
<CAPTION>

Exhibit
Number Description
- ------- -----------
<C> <S>
3.1 Restated Articles of Incorporation (incorporated by reference to Big
Buck's Current Report on Form 8-K, filed on October 3, 1997 (File No.
0-20845)).

3.2 Amended and Restated Bylaws (incorporated by reference to Big Buck's
Registration Statement on Form SB-2, filed on April 15, 1996 (File No.
333-3548)).

4.1 Specimen Form of Big Buck's Common Stock Certificate (incorporated by
reference to Big Buck's Registration Statement on Form SB-2, filed on
April 15, 1996 (File No. 333-3548)).

4.2 Form of Warrant Agreement (including Form of Redeemable Class A
Warrant) (incorporated by reference to Big Buck's Registration
Statement on Form SB-2, filed on April 15, 1996 (File No. 333-3548)).

4.3 Form of Subscription and Investment Representation Agreement, dated
December 1995, between Big Buck and Pyramid Partners, LP (including
Form of Common Stock Purchase Warrant) (incorporated by reference to
Big Buck's Registration Statement on Form SB-2, filed on April 15, 1996
(File No. 333-3548)).

10.1 1996 Stock Option Plan (incorporated by reference to Big Buck's Annual
Report on Form 10-KSB, filed on March 23, 1998 (File No. 0-20845)).

10.2 1996 Director Stock Option Plan (incorporated by reference to Big
Buck's Registration Statement on Form SB-2, filed on April 15, 1996
(File No. 333-3548)).

10.3 Loan Agreement dated July 28, 1995, by and among Big Buck, William F.
Rolinski, Dr. Blair A. Murphy, Walter Zaremba, Casimer I. Zaremba and
NBD Bank (incorporated by reference to Big Buck's Registration
Statement on Form SB-2, filed on April 15, 1996 (File No. 333-3548)).

10.4 Escrow Agreement dated June 7, 1996, by and among Big Buck, William F.
Rolinski, Dr. Blair A. Murphy, Casimer I. Zaremba, Henry T. Siwecki,
Norwest Bank Minnesota, National Association, and the Commissioner of
Commerce for the State of Minnesota (incorporated by reference to Big
Buck's Annual Report on Form 10-KSB, filed on March 31, 1997 (File No.
0-20845)).

10.5 Real Estate Purchase and Leaseback Agreement by and between Eyde
Brothers Development Co., Landlord, and Big Buck, Tenant, dated April
11, 1997 (incorporated by reference to Big Buck's Quarterly Report on
Form 10-QSB, filed on May 9, 1997 (File No. 0-20845)).

10.6 Lease Agreement by and between Eyde Brothers Development Co., Landlord,
and Big Buck, Tenant, dated April 11, 1997 (incorporated by reference
to Big Buck's Quarterly Report on Form 10-QSB, filed on May 9, 1997
(File No. 0-20845)).

10.7 Real Estate Purchase and Leaseback Agreement by and between Michael G.
Eyde, Landlord, and Big Buck, Tenant, dated August 1, 1997
(incorporated by reference to Big Buck's Quarterly Report on Form
10-QSB, filed on August 12, 1997 (File No. 0-20845)).

10.8 Lease Agreement by and between Michael G. Eyde, Landlord, and Big Buck,
Tenant, dated October 1, 1997 (incorporated by reference to Big Buck's
Annual Report on Form 10-KSB, filed on March 23, 1998 (File No.
0-20845)).

10.9 Stock Option Agreement between Big Buck and Michael G. Eyde, dated
August 1, 1997 (incorporated by reference to Big Buck's Annual Report
on Form 10-KSB, filed on March 23, 1998 (File No. 0-20845)).

</TABLE>

40
<PAGE>

<S> <C>
10.10 Limited Partnership Agreement by and among BBBP Management Company,
Bass Pro Outdoor World, L.P. and Big Buck, dated November 5, 1998
(incorporated by reference to Big Buck's Quarterly Report on Form
10-QSB, filed on November 12, 1998 (File No. 0-20845)).

10.11 Shareholders' Agreement by and among BBBP Management Company, Bass Pro
Outdoor World, L.P. and Big Buck, dated November 5, 1998 (incorporated
by reference to Big Buck's Quarterly Report on Form 10-QSB, filed on
November 12, 1998 (File No. 0-20845)).

10.12 Commercial Sublease Agreement by and between Bass Pro Outdoor World,
L.P. and Buck and Bass, L.P., dated November 5, 1998 (incorporated by
reference to Big Buck's Quarterly Report on Form 10-QSB, filed on
November 12, 1998 (File No. 0-20845)).

10.13 Common Stock Purchase Warrant issued by Big Buck to Bass Pro Outdoor
World, L.P., dated November 5, 1998 (incorporated by reference to Big
Buck's Quarterly Report on Form 10-QSB, filed on November 12, 1998
(File No. 0-20845)).

10.14 Loan Agreement dated November 20, 1998, by and between Big Buck,
Borrower, and Crestmark Bank, Lender.

10.15 Real Estate Mortgage Note dated November 20, 1998, by and between Big
Buck, Borrower, and Crestmark Bank, Lender.

10.16 Security Agreement dated November 20, 1998, by and between Big Buck,
Borrower, and Crestmark Bank, Lender.

10.17 Common Stock Purchase Warrant issued by Big Buck to Seger Financial,
Inc., dated November 20, 1998.

10.18 Stock Option Agreement between Big Buck and William F. Rolinski, dated
December 29, 1998.

10.19 Stock Option Agreement between Big Buck and Gary J. Hewett, dated
December 29, 1998.

10.20 Stock Option Agreement between Big Buck and Anthony P. Dombrowski,
dated December 29, 1998.

21.1 Subsidiaries of Big Buck.

23.1 Consent of Independent Public Accountants.

24.1 Power of Attorney (included on signature page to Form 10-KSB).

27.1 Financial Data Schedule.

99.1 Cautionary Statement.
</TABLE>

<PAGE>

EXHIBIT 10.14

LOAN AGREEMENT

CRESTMARK: CRESTMARK BANK, A MICHIGAN BANK

BORROWER: BIG BUCK BREWERY & STEAKHOUSE, INC., A MICHIGAN CORPORATION

TYPE/AMOUNT: TERM LOAN ($1,400,000.00)

DATE: NOVEMBER 20, 1998

<PAGE>

LOAN AGREEMENT

This Agreement is made this 20th day of November, 1998 by and between
Crestmark Bank, a Michigan bank, whose address is 850 East Long Lake Road, Troy,
Michigan 48098 ("Crestmark") and Big Buck Brewery & Steakhouse, Inc., whose
principal place of business and chief executive office is located at 550 South
Wisconsin, Gaylord, Michigan ("Borrower").

W I T N E S S E T H :

WHEREAS, Borrower desires to borrow certain sums of money from
Crestmark on the terms and conditions as hereinafter set forth;

WHEREAS, Crestmark is willing to lend such sums to Borrower, provided
Borrower complies with all terms and conditions hereinafter set forth; and

WHEREAS, the repayment of the Loan will be secured by a second lien on
all assets of the Borrower.

NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter contained, and in reliance upon the representations and warranties
hereinafter contained, and subject to the terms and conditions hereinafter
contained, it is hereby agreed between the parties as follows:

1.1 DEFINITIONS:

In this Agreement and in the Collateral Documents (unless the context
thereof requires a contrary definition or unless the same shall be defined
therein, in which latter event, the definitions shall be cumulative and not
exclusive), the following words, phrases, and expressions shall have the
respective meanings attributed to them, to be equally applicable to both the
singular and plural forms, unless the plural form is the term so defined.

1.1.1 "ACCOUNT RECEIVABLE" OR "ACCOUNT" has the meaning ascribed to
such terms under the Uniform Commercial Code, and, without limiting the
foregoing, shall also mean and include any and all other forms of obligations
now owned or hereafter arising or acquired by Borrower evidencing any obligation
for payment for goods of any kind, nature, or description sold or leased or
services rendered, and all proceeds of any of the foregoing.

1.1.2 "ACCOUNT DEBTOR" means any party liable to Borrower for the
payment of an Account.

1.1.3 "AGREEMENT" means this Loan and Financing Agreement, and all
amendments, modifications, extensions and renewals hereof.

1.1.4 "BORROWER" means as defined in the preamble to this Agreement.

1.1.5 "BUSINESS DAYS" means each weekday on which Crestmark is open
during Crestmark's normal course of business.

1.1.6 "COLLATERAL" means any and all of the following now or hereafter
owned (except as provided herein) by Borrower or others pledging same to
Crestmark pursuant to this Agreement or pursuant to any of the Collateral
Documents, including but not by way of limitation thereof:

a. all Accounts Receivable and/or Accounts, cash, documents,
chattel paper, certificates of deposit, instruments, contract rights, general
intangibles, goodwill, patents, tradenames, trademarks, copyrights,

<PAGE>

licenses, brands, trade secrets, customer lists, route lists, computer software,
report catalogs, choses in action, notes, drafts, acceptances, tax refunds,
judgments, sums due and any other form of obligation requiring the payment of
money to Borrower, and any claim by Borrower for any of the foregoing;

b. all Inventory, goods, merchandise, products, supplies,
commodities, raw materials, finished goods and work in process;

c. all Equipment, including all machinery, furniture,
fixtures, trade fixtures, tools, dies, leasehold improvements, furnishings, and
titled vehicles and all repossessions and returns of any of the foregoing
located at the locations listed on Exhibit B hereto;

d. all other property (real, personal, tangible, intangible,
or any combination thereof) of Borrower, including, monies, deposit, accounts,
claims and credit balances;

e. all property, collateral or security described in the
Collateral Documents;

f. all accessions, accessories, parts, attachments, additions,
substitutions and replacements of any of the foregoing, used or intended for use
in connection with any of the foregoing;

g. all proceeds, products, proceeds of insurance, proceeds of
eminent domain proceedings and condemnation awards arising from or relating to
all of the foregoing, now or hereafter owned or claimed by Borrower or others
pledging same to Crestmark pursuant hereto or pursuant to the Collateral
Documents; and

h. excepting therefrom all equipment, machinery, furniture and
fixtures, trade fixtures, tools, dies, leasehold improvements, furnishings
located at locations other than those locations listed on Exhibit B.

1.1.7 "COLLATERAL DOCUMENTS" means any and all documents, instruments,
notes, agreements, and written memoranda, referred to in this Agreement or
executed in connection herewith or therewith, now or hereafter existing, and
specifically, but not by way of limitation, the Note and those documents
identified in Section .

1.1.8 "CONSISTENT BASIS" means, in reference to the application of
Generally Accepted Accounting Principles, that the accounting principles
observed in the current period are comparable in all material respects to those
applied in the preceding periods.

1.1.9 "CRESTMARK" means as defined in the preamble to this Agreement.

1.1.10 "DEFAULT" means and shall exist upon the occurrence of any
breach, omission, violation, misstatement, non-observance or non-performance by
Borrower of any representation, warranty, covenant, term, condition, obligation,
provision or undertaking under this Agreement or any of the Collateral
Documents, including, but not limited to, Borrower's failure to pay any
Indebtedness immediately on demand by Crestmark.

1.1.11 "EVENT OF DEFAULT" shall mean, by way of example, but not by way
of limitation, the occurrence of any event, act, omission, breath failure,
violation or other non-observance or non-performance by Borrower or any Person,
of any covenant, condition, agreement, duty provision or undertaking under this
Agreement or any of the Collateral Documents.

1.1.12 "EQUIPMENT" has the meaning ascribed to such term under the
Uniform Commercial Code, and without limiting the foregoing, shall also mean and
include all goods, equipment, furniture, fixtures, trade fixtures, leasehold
improvements, machinery, tools, contrivances and other items of personal
property (other than Inventory) of every kind and description, and wheresoever
located, together with all additions, attachments,

<PAGE>

accessions, parts, replacements, substitutions and renewals thereof or
therefore, and all proceeds of any of the foregoing, now owned or hereafter
acquired by any party, person or entity pledging same to Crestmark.

1.1.13 "GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" means those
principles set forth in Opinion of the Accounting Principles Board of the
American Institute of Certified Public Accountants and the Financial Accounting
Standards Board, or which have other substantial authoritative support and are
applicable in the circumstances as of the date of the report.

1.1.14 "INDEBTEDNESS" means and includes by way of example, but not by
way of limitation:

a. the Loan, and all loans, indebtedness, expenses and
liabilities of Borrower to Crestmark whether arising under this Agreement, any
of the Collateral Documents, or any other agreement of whatsoever kind, nature
and description, primary or secondary, direct, absolute or contingent, due or to
become due, and whether now existing or hereafter arising and howsoever
evidenced or acquired, and whether joint, several, or joint and several; and

b. all present and future Money Advances made by Crestmark in
connection with the Loan or any loan and the Collateral Documents, or otherwise,
and whether made at Crestmark's option or otherwise, and the Loan, the Note and
all notes now or hereafter executed or existing in connection herewith, and
interest accrued thereon, from time to time; and

c. all future advances made by Crestmark for the protection or
preservation of Crestmark's rights and interests in the Collateral, or arising
under this Agreement or the Collateral Documents, including, but not by way of
limitation, advances for taxes, levies, assessments, insurance or maintenance of
the Collateral, and reasonable attorneys fees; and

d. all costs and expenses, including without limitation
reasonable attorneys' fees, incurred by Crestmark in connection with or arising
out of the protection, enforcement or collection of the Indebtedness or expenses
incurred in answering general legal issues involving the Borrower; and

e. all costs and expenses incurred by Crestmark in connection
with, or arising out of, the sale, disposition, liquidation or other realization
[including, but not by way of limitation, the taking, retaking or holding, and
all proceedings (judicial or otherwise)] of the Collateral, including, without
limitation, reasonable attorneys' fees.

1.1.15 "INVENTORY" has the meaning ascribed to such term under the
Uniform Commercial Code, and without limiting the foregoing, shall also mean and
include all goods, merchandise, products and commodities, held, acquired or
processed by Borrower and intended for sale or lease, and all raw materials,
goods in process and finished goods and supplies of every nature used or usable
in connection with the processing, shipping and sale thereof, regardless of
where the same may be situated, kept or stored, and whether now owned or
hereafter acquired by Borrower, and all of the proceeds of any of the foregoing.

1.1.16 "LOAN" means the Term Loan as hereinafter set forth in Section
2, any Money Advances made thereunder, and the Note, collectively.

1.1.17 "MONEY ADVANCE" means a loan or disbursement of money by
Crestmark, or any other advance of credit by Crestmark, including, but not
limited to, amounts for the payment of interest, fees and expenses of Borrower
under the Loan or any loan.

1.1.18 "NOTE" means the Real Estate Mortgage Note and any other note
executed by Borrower evidencing the Loan or a loan, including all renewals,
extensions, amendments, modifications, restatements, roll-overs or substitutions
thereof, from time to time.

<PAGE>

1.1.19 "PERMITTED ENCUMBRANCE" means and include any of the existing
agreements and obligations set forth or described on Exhibit "A" attached hereto
and made a part hereof, if any, without increase, amendment, modification,
extension thereto, or refinancing thereof. If Exhibit "A" is left blank, no
Permitted Encumbrances shall exist.

1.1.20 "PERSON" means, by way of example but not by way of limitation,
an individual, partnership, limited partnership, corporation, limited liability
company, trust, unincorporated organization, entity, government, governmental
agency or governmental subdivision.

1.1.21 "UNIFORM COMMERCIAL CODE" means Act 174 of the Michigan Public
Acts 1962, as amended, and except as otherwise expressly provided herein all
other terms used herein, but not defined herein, shall have the meanings
assigned to them in Article 9, or absent definition in Article 9, in any other
Article of the Uniform Commercial Code.

1.2 LOAN COMMITMENT:

Subject to the terms and conditions contained herein, and upon the
condition that no Default shall exist, Crestmark agrees that it shall make Money
Advances under the Loan pursuant to the following commitment:

1.2.1 TERM LOAN COMMITMENT:

a. Commitment: Bank agrees to make a money advance of ONE
MILLION FOUR HUNDRED THOUSAND ($1,400,000.00) Dollars, the proceeds of which are
to be used to invest in a Missouri Limited Partnership with Bass Pro Outdoor
World, L.P., for the down payment on a site in Atlanta, Georgia, and for working
capital, to be repaid in accordance with a Real Estate Mortgage Note
(hereinafter referred to as "Term Loan");

b. Conditions: subject to the terms and conditions contained
in this Agreement, and upon the condition that no Event of Default shall then
exist and further provided that all conditions precedent hereto and thereto have
been met in the sole discretion of Bank, Bank agrees that it shall fund the Term
Loan.

1.2.2 COMMITMENT FEE: Borrower has paid or will pay to Crestmark a
non-refundable Commitment Fee in the aggregate amount of FOURTEEN THOUSAND
DOLLARS ($14,000.00) for the extension of the Loan, which fee has been fully
earned by Crestmark.

1.3 LOAN ACCOUNT:

1.3.1 DEBITS TO LOAN ACCOUNT: All Indebtedness under this Agreement
shall be charged to a loan account ("Loan Account") in Borrower's name on
Crestmark's books. Crestmark shall render to Borrower, a monthly statement of
the Loan Account, which shall be deemed to be correct and accepted by and
binding upon Borrower, unless Crestmark receives a written statement of
exception within ten (10) Business Days of mailing such statement. Crestmark
shall debit the Loan Account the amount of each Money Advance or expense when
made or incurred.

1.4 EVIDENCE OF INDEBTEDNESS:

Borrower shall execute a Real Estate Mortgage Note in the
principal amount of ONE MILLION FOUR THOUSAND AND NO/100 ($1,400,000.00)
DOLLARS, evidencing the maximum amount provided for under the Loan.

<PAGE>

1.5 CROSS COLLATERALIZATION/CROSS DEFAULT:

CRESTMARK AND BORROWER AGREE THAT IT IS THEIR RESPECTIVE
INTENTIONS THAT SECTIONS 6 AND 12 RESPECTIVELY PROVIDE FOR CROSS
COLLATERALIZATION, WHEREBY ALL COLLATERAL IS SECURITY FOR ALL INDEBTEDNESS AND
UPON THE OCCURRENCE OF A DEFAULT, ALL INDEBTEDNESS SHALL BE MATURED, IMMEDIATELY
DUE AND PAYABLE, NOTWITHSTANDING ANY MATURITY DATE THEREOF, IF ANY, TO THE
CONTRARY. BORROWER FURTHER AGREES THAT THE LOAN SHALL BE CROSS-DEFAULTED WITH
ALL LOANS FROM CRESTMARK OR NBD BANK TO BORROWER. ACCORDINGLY, ANY DEFAULT UNDER
THIS AGREEMENT SHALL BE A DEFAULT UNDER EACH OF THE LOANS TO BORROWER, AND ANY
DEFAULT UNDER ANY LOAN TO BORROWER BY CRESTMARK OR NBD BANK SHALL BE A DEFAULT
UNDER THE AGREEMENT.

1.6 GRANT OF SECURITY INTEREST:

1.6.1 GRANT OF SECURITY INTEREST: Borrower grants to Crestmark a
continuing security interest in and second lien on the Collateral, now existing
or hereafter arising, and all proceeds and products thereof, as security for the
timely repayment of all Indebtedness, as herein provided for, or as provided for
in the Collateral Documents. Borrower acknowledges that nothing contained in
this Agreement shall be (i) construed as an agreement by Crestmark to resort to
or look to a particular type of the Collateral as security for the repayment of
the Indebtedness or (ii) deemed to limit or reduce any security interest in or
lien upon any portion of the Collateral for the Indebtedness. While this
Agreement is in effect, Borrower shall not sell any Collateral except in the
ordinary course of business.

1.6.2 PERFECTION OF SECURITY INTEREST: Borrower shall execute and
deliver to Crestmark, concurrently with Borrower's execution of this Agreement
and at any time or times hereafter at the request of Crestmark (and pay the cost
of filing or recording same in all public offices deemed necessary by Crestmark)
all financing statements, assignments, certificates of title, applications for
vehicle titles, affidavits, reports, notices, schedules of Accounts,
designations of Inventory, letters of authority and all other documents that
Crestmark may reasonably request, in form satisfactory to Crestmark, to perfect
and maintain the perfection of Crestmark's security interests in the Collateral.
Borrower shall also make appropriate entries on its books and records disclosing
Crestmark's security interests in the Collateral.

1.6.3 BORROWER REMAINS LIABLE: Anything contained herein to the
contrary notwithstanding, (a) Borrower shall remain liable for all damages,
obligations, and liabilities under the contracts and agreements included in the
Collateral to perform all of its duties and obligations to the same extent as if
this Agreement had not been executed, (b) the exercise by Crestmark of any of
its rights under this Agreement or the Collateral Documents shall not release
the Borrower from any of its duties or obligations under the contracts and
agreements included in the Collateral and (c) Crestmark shall have no obligation
or liability under the contracts and agreements included in the Collateral, nor
shall Crestmark be obligated to perform any of the obligations or duties of
Borrower thereunder or to take any action to collect or enforce any claim for
payment. Borrower shall pay all taxes, levies, assessments and charges of any
kind upon or related to the Collateral, Borrower's business, income, revenues
and assets.

1.7 COLLATERAL DOCUMENTS:

Borrower and others herein required have also executed and delivered to
Crestmark the following documents, which are part of the Collateral Documents:

1.7.1 SECURITY AGREEMENT: A Security Agreement dated of even date
herewith granting Crestmark a valid, enforceable, second security interest in
all assets of Borrower, now owned or hereafter acquired, described in the
Security Agreement, junior only to the first lien of NBD Bank.

1.7.2 FINANCING STATEMENTS: A Uniform Commercial Code Financing
Statement executed by Borrower and satisfactory to Crestmark, sufficient to
perfect a valid and enforceable security interest and lien of

<PAGE>

the second priority, in and to all assets of Borrower, now owned or hereafter
acquired, as described in the Security Agreement.

1.7.3 SECOND MORTGAGE: A Second Mortgage in form and substance
satisfactory to Crestmark in recordable form, executed by Guarantor in favor of
Crestmark, with respect to Borrower's store, located in Gaylord, Michigan,
("Premises") Said mortgage shall be sufficient, upon recording, to create a
valid, enforceable mortgage lien of the second priority in and to the store,
together with an A.L.T.A. Mortgage Title Insurance Commitment, in form and
substance satisfactory to Crestmark. The final policy to be issued pursuant to
such commitment insuring such Second Mortgage in the amount required by
Crestmark, as a second lien priority. Borrower shall comply with all
requirements of the title insurance company necessary to insure Crestmark's
second lien priority, without exceptions. Bank's second mortgage lien shall be
junior only to NBD's first mortgage lien with a principal balance due and owing
no more than $1,878,543.83.

1.7.4 RESOLUTIONS: Certified Corporate Resolutions authorizing the
Borrower to enter into the Loan Agreement and the Collateral Documents.

1.7.5 MORTGAGOR'S CONSENT: A consent from NBD to the second mortgage
referenced above, together with such other information or representations as may
be required from NBD.

1.8 REPRESENTATIONS AND WARRANTIES:

Borrower represents and warrants to Crestmark that:

1.8.1 ORGANIZATION AND AUTHORITY: Borrower is a corporation, duly
organized and in good standing under the laws of the State of Michigan and has
the corporate power and authority to own its assets and transact its business.
The Person executing this Agreement has full power and complete authority to
execute this Agreement and all Collateral Documents on behalf of Borrower.
Borrower is in compliance with all SEC Rules and Regulations.

1.8.2 TRANSACTIONS LEGAL AND AUTHORIZED: The execution, delivery and
performance of this Agreement, the Collateral Documents and the other
instruments and documents related thereto have been duly authorized by
appropriate corporate action of Borrower, and the execution, delivery and
performance of this Agreement, the Collateral Documents and other instruments
related thereto are not in contravention of Borrower's Articles of Incorporation
or By-Laws, or of the terms of any contract, indenture, agreement or undertaking
to which Borrower is a party or by which it is bound.

1.8.3 ENFORCEABILITY OF OBLIGATIONS: Borrower's Indebtedness to
Crestmark, this Agreement and all Collateral Documents have been duly executed,
are valid, binding upon, in full force and effect and fully enforceable against
Borrower, or any other party thereto in accordance with their respective terms.

1.8.4 PERMISSIONS: Borrower has all requisite permissions, licenses,
registrations and permits required to conduct its business under the laws of the
United States as well as the laws of any state or any foreign country in which
it conducts business. The foregoing constitute all of the authorizations
required by any Person for the operation of Borrower's business in the same
manner as presently conducted, and as proposed to be conducted or conducted from
and after the date hereof. All of the foregoing have been validly issued and are
in full force and effect. To the best of the knowledge and belief of Borrower,
after due investigation, no event has occurred which permits, or after notice or
lapse of time, or both, would permit, revocation or termination of any of the
foregoing or which materially and adversely affects, or in the future may (so
far as Borrower can now reasonably foresee) materially and adversely affect, the
rights of Borrower.

1.8.5 LITIGATION: Borrower represents that there is no litigation or
other proceeding before any court or administrative agency, domestic or foreign,
is pending or threatened litigation.

<PAGE>

1.8.6 FINANCIAL STATEMENTS/REPORTS/CERTIFICATES:

a. EXISTING FINANCIAL INFORMATION/NO ADVERSE CHANGES: The
financial statements furnished to Crestmark and filed with the SEC are true and
correct and have been prepared in accordance with Generally Accepted Accounting
Principles applied on a Consistent Basis throughout the periods involved. The
balance sheet fairly presents the condition of Borrower as of the date thereof,
and the profit and loss statement fairly presents the results of operations.

b. FUTURE FINANCIAL INFORMATION: All financial information,
statements, reports and certificates required by this Agreement including, but
not by way of limitation, by Section hereof, will to the best knowledge of
Borrower, be true and accurate.

c. PROJECTED FINANCIAL INFORMATION: The projected financial
statements furnished to Crestmark are based upon reasonable assumptions or facts
then known to Borrower, and fairly present, to the best knowledge of Borrower,
the projected condition of Borrower as therein set forth, and fairly present, to
the best knowledge of Borrower, the projected results of operations. There have
been no material and adverse changes in the projections or financial statements
of Borrower, financial or otherwise subsequent to date of the most recent
projected financial statement furnished to Crestmark.

1.8.7 OWNERSHIP OF COLLATERAL; NO LIENS: Borrower is the owner of and
has good and indefeasible title to of all of the Collateral. The Collateral is
not subject to any liens, purchase options, mortgages, pledges, encumbrances,
claims (legal or equitable), or charges of any kind except Permitted
Encumbrances. Furthermore, no part of the Collateral has been disposed of since
the date of execution hereof, except in the ordinary and usual course of
business, and all Collateral is, and will be located at Borrower's addresses
specified herein, unless disclosed to Crestmark from time to time in writing,
prior to being moved. Borrower's security interest in the Collateral is a first
priority security interest, and Borrower will defend and indemnify Crestmark
against the claims and demands of all other persons claiming an interest in the
Collateral.

1.8.8 LOCATION OF COLLATERAL: All of the Collateral is located in
Michigan at the locations listed on Exhibit B attached hereto, and Borrower
shall not move the Collateral outside of Michigan without the prior written
consent of Crestmark. Borrower shall not change its name, adopt an assumed name,
or move its chief executive office without giving Crestmark at least thirty (30)
days prior written notice.

1.8.9 TAX RETURNS/TAXES: Borrower has filed all federal, state, local
and foreign tax returns which are required to be filed and has paid all taxes,
withholdings, assessments and other government charges which have become due.
Borrower does not know of any proposed material additional tax assessment
against it, or any of its properties, or any basis therefore.

1.8.10 NON-RELIANCE: Crestmark has not undertaken to advise Borrower
with respect to the adequacy of the financial accommodations herein set forth,
but the financial accommodations are solely the decision of Crestmark as to the
type and amount of credit Crestmark is willing to extend and Borrower has made
the decision, exclusive of any statements of Crestmark, or any of its officers
or employees, to accept the same without inducement and/or reliance upon
Crestmark and/or any of its officers and employees.

1.8.11 FULL DISCLOSURE: Neither this Agreement nor any written
statement furnished by or on behalf of Borrower to Crestmark in connection with
the negotiation or the making of the Loan contemplated hereby, taken as a whole,
contains any untrue statement of a material fact or omits a material fact
necessary to make the statements contained therein or herein not misleading.
There is no fact relating to Borrower or the business of Borrower which Borrower
has not disclosed to Crestmark in writing, which materially and adversely
affects, nor as far as Borrower can now foresee, will materially and adversely
affect any of the properties, business, prospects,

<PAGE>

profits or conditions (financial or otherwise) of Borrower, or the ability of
Borrower to consummate the transactions or perform and carry out its obligations
and undertakings contemplated or provided in this Agreement.

1.8.12 SOLVENCY: The Borrower is solvent, able to pay its debts as they
mature, does not have unreasonably small capital and has assets the fair market
value of which exceeds its liabilities. The Borrower will not be rendered
insolvent, undercapitalized or unable to pay maturing debts as a result of the
execution of this Agreement or the Collateral Documents.

1.8.13 FORECLOSURE: The Premises are not subject to the institution of
remedial proceedings, foreclosure or other exercise of rights and remedies by
the holder of any security interest against the Collateral or any portion
thereof.

1.8.14 BANKRUPTCY: The Borrower is not the subject of any bankruptcy,
reorganization, arrangement, insolvency or other similar proceeding.

1.8.15 CASUALTY LOSS OR JUDGMENT: The Collateral has not suffered any
loss, substantial damage, destruction, or the issuance or filing of any
attachment, levy, garnishment or the commencement of any related proceeding upon
or in respect to the Borrower or the Collateral.

1.8.16 NO MATERIAL ADVERSE CHANGE: No material adverse change has
occurred in the existing or prospective financial condition, business, assets or
liabilities of the Borrower.

1.8.17 SURVIVAL AND CONTINUATION: All representations, warranties,
indemnifications, consents and agreements contained in this Agreement and/or any
of the Collateral Documents shall survive the execution of this Agreement, the
Collateral Documents and any investigations by Crestmark and shall be, and
continue at all times while any Indebtedness is outstanding, to be true and
accurate. Borrower shall immediately notify Crestmark, in writing, if any of the
foregoing are or have become untrue.

1.9 AFFIRMATIVE COVENANTS:

Borrower covenants and agrees, that so long as any Money
Advances are outstanding or commitments therefore exist under this Agreement and
until all Indebtedness due Crestmark is paid in full, Borrower shall:

1.9.1 PAYMENTS ON INDEBTEDNESS: Pay all Indebtedness when due,
including the principal amount of each Money Advance and accrued interest
thereon, in accordance with the terms of the Note and this Loan Agreement,
whether by acceleration or otherwise. Furthermore, Borrower shall not have any
Money Advances outstanding hereunder contrary to any provisions, limitations or
restrictions hereof, including, but not limited to, any Money Advances in excess
of the Term Loan which are not immediately repaid to Crestmark.

1.9.2 PERFORMANCE OF OBLIGATIONS: Perform or cause to be performed, all
of the terms, conditions, obligations and covenants of Borrower or any other
Person as required by this Agreement, the Collateral Documents or any other
agreement, note or other document executed between (a) Crestmark and (b)
Borrower and/or another Person, whether now existing or hereafter created and
take all action (or not fail to take any action or suffer or permit any
omission) necessary to maintain the representations and warranties made as true
and accurate.

1.9.3 MAINTENANCE OF EXISTENCE: Maintain its corporate existence and
all rights, licenses, leases, agreements and franchises helpful in continuing
the operation of its business in the same manner as of the date of execution
hereof.

<PAGE>

1.9.4 INFORMATION: Furnish promptly and in a form satisfactory to
Crestmark, such information as Crestmark may request, from to time, and to
permit a representative of Crestmark access to any of its premises, computer
systems and financial records.

1.9.5 NOTIFICATION OF DISPUTES: Notify Crestmark promptly of any claim
adverse to, litigation, or administrative or tax proceeding, or other action
threatened or instituted against Borrower or any property of Borrower or any
other material matter which is not fully covered by insurance which could
adversely impair Borrower's financial condition or its ability to conduct its
business including, but not limited to, any inquiry or proceedings initiated by
any state, federal or foreign regulatory agency. For the purposes of this
Agreement, any single such claim, litigation, proceeding, matter, action or
inquiry in which the sum in dispute is Ten Thousand ($10,000.00) Dollars, or all
such claims, litigation, proceedings, matters, actions or inquiries in which the
aggregate sums in dispute are Twenty-Five Thousand ($25,000.00) Dollars or more,
shall be deemed to be material and adverse.

1.9.6 PAYMENT OF TAXES: Pay when due all taxes, assessments, and other
governmental charges to which Borrower or it's property is or shall be subject
before such charges become delinquent, except that no such charge need be paid
so long as its validity or amount is being contested in good faith by
appropriate proceedings and Borrower shall have established a cash reserve with
respect thereto; provided, however, that any such tax, assessment, or charge
shall be paid forthwith (under protest) upon the filing of any lien securing the
same, commencement of levy, other form of execution, or any other collection
action. Borrower shall, in any case involving a contested payment due from
Borrower in excess of Five Thousand ($5,000.00) Dollars, give written notice
thereof to Crestmark.

1.9.7 PAYMENT OF EXPENSES: Pay, on demand, all pre-closing expenses
incurred by Crestmark in consummating this Agreement and the Collateral
Documents, including reasonable attorneys' fees. Pay the Service Fee on the date
when due and any and all post-closing expenses, on demand, that may arise or
relate to this Agreement, the Collateral Documents or the Borrower, including
reasonable attorneys' fees.

1.9.8 INSURANCE: Maintain and/or cause any other Person pledging any of
the Collateral to maintain with respect to the Collateral pledged by such Person
insurance in such form and amount as is satisfactory to Crestmark, with loss
payable clauses in favor of Crestmark and providing that any losses under the
policies shall be payable to Crestmark. If Borrower fails to obtain or maintain
any required policies, then Crestmark, without waiving any Default by Borrower
relating thereto, may (but without any obligation) at any time thereafter make
such payment or obtain such coverage and take such other actions as Crestmark
deems advisable. Borrower shall not take out separate insurance concurrent in
form or contributing in the event of a loss. Borrower shall also maintain
insurance pursuant to all applicable Worker's Compensation laws, and liability
insurance for damage to persons. All such insurance shall be in such form, with
such companies and in such amounts as shall be acceptable to Crestmark and each
policy shall provide that the insurance company will provide at least thirty
(30) days notice to Crestmark prior to any cancellation or material alteration
or amendment of any policy. In the event any proceeds shall be payable to
Borrower, or otherwise become available, as a result of a casualty to any
Collateral, all such proceeds shall be the property of Crestmark, immediately
turned over to Crestmark and applied to the Indebtedness due Crestmark

1.9.9 COMPLIANCE WITH LAWS: Continue at all times to comply with all
laws, ordinances, regulations or requirements of any governmental authority
relating to Borrower's business, property or affairs, including, without
limitation, all environmental laws and the Fair Labor Standards Act of 1938, 29
U.S.C. 200, et seq., as amended from time to time.

1.9.10 CONTINUATION OF BUSINESS: Maintain and conduct its business in
substantially the same manner as such business is now or has heretofore been
carried on.

<PAGE>

1.9.11 PRESERVATION OF COLLATERAL: Maintain the Collateral and every
part thereof, in good repair, working order and condition and, from time to
time, make all needful and proper repairs, renewals, replacements, additions,
improvements and such maintenance thereto, so that at all times the efficiency
of the Collateral shall be fully preserved and maintained. With respect to
Accounts, Borrower shall pursue collections diligently and present evidence
thereof to Crestmark, if requested. Borrower shall, upon request, immediately
deliver to Crestmark evidence of ownership and/or certificates of title relative
to the Collateral and shall place on or otherwise identify the Collateral with
such marks or other methods of identification sufficient to give notice of
Borrower's ownership thereof.

1.9.12 NOTICE OF DEFAULT: Immediately upon becoming aware of any
Default under this Agreement, give written notice thereof to Crestmark,
specifying the nature and period of existence thereof, and what action Borrower
is taking or proposes to take with respect thereto, but such notice shall not
cure the existence of a Default or prohibit Crestmark from exercising its
remedies hereunder.

1.9.13 FINANCIAL INFORMATION/REPORTS: Within the time periods
specified, and if no time period is specified, five (5) Business Days shall be
deemed the time period, deliver to Crestmark, all financial information,
reports, certificates, notices and other information herein required of
Borrower, pursuant to any provision of this Agreement or the Collateral
Documents.

1.9.14 KEY PERSONNEL: William F. Rolinski shall continue to be part of
the active management and operation of Borrower's business.

1.10 NEGATIVE COVENANTS:

1.10.1 NEGATIVE PLEDGE: Create, assume or otherwise suffer to exist any
mortgage, pledge or other encumbrance, or claim therefore, upon any of its
property (tangible, intangible, personal, real) or Collateral, now owned or
hereafter acquired, or increase, modify, amend, change or alter any
indebtedness, or security interest securing any such indebtedness, giving rise
to a Permitted Encumbrance, if any.

1.10.2 DIVIDENDS: Declare or pay any dividend, or make any other
distribution of, or with regard to, its capital stock or other equity security,
or purchase or retire any of its capital stock or other equity security.
Provided, however, with respect to any year in which Borrower is taxed by the
Internal Revenue Service as an "S" corporation, Borrower may make a distribution
of profits to its shareholders in an amount not to exceed the sum necessary to
enable its shareholders to pay their personal state and federal taxes directly
attributable to the profits earned by Borrower for the year.

1.10.3 LOANS/LIABILITIES: Make a loan, or incur or assume any
obligations or liability as lender, guarantor, surety, indemnitor or otherwise
with respect to any indebtedness or other obligation of any Person, unless such
obligation or liability does not materially adversely affect Borrower's ability
to repay the Loan at maturity.

1.10.4 DISTRIBUTIONS: Make, directly or indirectly, any disbursements,
loans, advances or distributions, in money or otherwise, other than customary
salary and bonuses, to any stockholders, officers or directors.

1.10.5 TRANSACTIONS WITH AFFILIATES/NO SUBSIDIARIES: Enter into any
transaction with any stockholders of Borrower or such stockholders' affiliates,
except on terms not less favorable than would be usual and customary in similar
transactions between persons or entities dealing at arm's length. Borrower does
not have and will not organize or acquire any subsidiaries.

<PAGE>

1.10.6 DEFAULT IN PAYMENT OF OTHER DEBT: Default in the payment of any
indebtedness owed to NBD Bank or any successor or assign of NBD Bank for
borrowed money.

1.10.7 JUDGMENT: Suffer or permit any judgment, decree or order not
fully covered by insurance to be entered by a court of competent jurisdiction
against Borrower or Guarantor or permit or suffer any writ or warrant of
attachment or any similar process to be filed against Borrower or Guarantor or
against any property or asset of Borrower or Guarantor.

1.11 BOOKS/RECORDS/FINANCIAL REPORTS/CERTIFICATES:

Borrower covenants and agrees, that so long as any Money Advances are
outstanding or commitments therefore exist under this Agreement, and until all
Indebtedness due Crestmark is paid in full, it will keep proper books of
accounts in a manner satisfactory to Crestmark. Crestmark shall have the right,
at any time, to verify any of the collateral, documentation or books, whether
such documentation is furnished weekly, monthly or annually in whatever manner
and in whatever frequency it deems necessary, including through telephone
contact with customers or vendors.

1.12 REMEDIES UPON DEFAULT:

Upon the occurrence of any Default, Crestmark can charge the Default
Interest Rate on the Note, and Crestmark has the following rights and remedies,
provided further that the rights or remedies contained herein or otherwise
available shall be cumulative and not exclusive, together with any and all other
rights and remedies which may be available, whether contained in this Agreement,
the Collateral Documents, or available by virtue of law or equity, including the
Uniform Commercial Code and any action by Crestmark shall not serve to release
or discharge any other security, property or Collateral held by Crestmark in
connection with this transaction.

1.12.1 ACCELERATION: All Indebtedness shall accelerate without notice
or demand, and immediately be due and payable, without presentation, notice or
demand, notwithstanding the maturity or due date, if any, therein to the
contrary, all of which are expressly waived by Borrower.

1.12.2 ACCESS TO PREMISES/REPOSSESSION OF COLLATERAL: Crestmark or any
of its agents or representatives shall have the right to enter the premises of
Borrower or any other place(s) where the books, records and Collateral of
Borrower may then be kept and maintained, and remove all such books, records and
Collateral for such time as Crestmark may desire in order to effectively collect
and liquidate the Collateral. All expenses relating thereto, including moving
expenses, the leasing of additional facilities and the hiring of security guards
shall be borne by Borrower. Upon request by Crestmark, Borrower shall assemble
the Collateral and make it available to Crestmark at a time and place to be
designated by Crestmark which is reasonably convenient to Crestmark and
Borrower; Borrower shall fully cooperate with all of Crestmark's efforts to
preserve the Collateral and will take such actions to preserve the Collateral as
Crestmark may direct. Borrower also agrees that Crestmark shall also have the
right to peacefully retake the Collateral, and Borrower waives any right it may
have in such instances, to a judicial hearing prior to such retaking.

1.12.3 DISPOSITION OF THE COLLATERAL: Crestmark or any of its agents or
representatives shall have the right to sell and deliver the Collateral at a
public or private sale (by way of one or more contracts or transactions), by way
of parcels or in bulk, for cash, credit or otherwise, at such prices and upon
such terms as Crestmark or its agents deem advisable. Crestmark shall have no
obligation to preserve any rights to the Collateral or marshal any Collateral
for the benefit of any Person, including Guarantor.

1.12.4 WAIVERS: To the extent permitted by applicable law, Borrower
agrees to waive and does hereby absolutely and irrevocably waive and relinquish
the benefits and advantages of any valuation, stay, appraisement, extension or
redemption laws now or hereafter existing which, but for this provision, might
be applicable to any

<PAGE>

sale made under the judgment, order or decree of any court, or otherwise, based
on any note contemplated hereby, or on any claim for interest on such notes, or
any security interest set forth in this Agreement.

1.12.5 APPOINTMENT OF RECEIVER: Crestmark shall be entitled, to the
extent provided by law, to the appointment of a receiver of the business and
premises of Borrower, and of the rents and profits derived therefrom, and all
Collateral. This appointment shall be in addition to any other rights, relief or
remedies afforded Crestmark. Such receiver, in addition to any other rights to
which he shall be entitled, shall be authorized to sell any and all property of
Borrower for the benefit of Crestmark pursuant to provisions of Michigan law and
the Uniform Commercial Code of Michigan. In the event of any deficiency,
Borrower and Guarantor shall remain liable therefor.

1.12.6 INJUNCTIONS: Borrower and Guarantor acknowledge that upon the
occurrence of a Default, no remedy at law will provide adequate relief to
Crestmark; therefore, Borrower agrees that Crestmark shall be entitled to
temporary and permanent injunctive, or other equitable relief in any such case
without proving actual damages, it being acknowledged that the nature of
Borrower's business dictates such relief is necessary in order to preserve the
Collateral and rights of Crestmark.

1.12.7 EXPENSES: Borrower shall pay to Crestmark, on demand, any and
all expenses, including reasonable attorneys' fees and collection expenses,
incurred or paid by Crestmark in protecting or enforcing its rights under this
Agreement, the Collateral Documents or pursuant to any other document or
agreement relating to the Loan. Crestmark shall apply the net proceeds of any
sale, disposition or holding of Collateral, after deducting all costs and
expenses of every kind incurred arising from the retaking, holding, preparing
for sale, selling, leasing or collecting or in any way relating to the rights of
Crestmark hereunder, to the payment of any portion of the Indebtedness, in whole
or in part, whether due or not due, absolute or contingent, making proper rebate
for interest or discount on items not then due, and only after so applying such
net proceeds and ascertainment by Crestmark of any other amounts required by any
existing or future provision of law, need Crestmark account to Borrower for
surplus, if any. Borrower shall remain liable to Crestmark for the payment of
any deficiency of any Indebtedness, together with interest thereon, until paid.
Crestmark shall not be required to proceed against any other party, or against
any other security for any Indebtedness or pursue any other right or remedy
hereunder, or under any other instrument or agreement, but all such rights and
remedies shall be cumulative and in addition to all other rights and remedies of
Crestmark.

1.12.8 ENFORCEMENT OF RIGHTS: Crestmark shall be entitled to enforce
its rights hereunder and to avail itself of its security interests in the
Collateral, simultaneously or successively, in such order and priority as
Crestmark shall determine. All rights, remedies and security interests in the
Collateral shall continue in full force and effect until all Indebtedness of
Borrower and Guarantor shall be satisfied in full, and no single action or
actions shall be deemed an election of remedies.

1.12.9 RIGHT OF OFFSET: Crestmark or its assigns shall have the right
of offset against any funds (i) of Borrower on deposit with or in the possession
of Crestmark, (ii) of Borrower on deposit in any account of Borrower established
pursuant to this Agreement or the Collateral Documents.

1.12.10 APPLICATION OF PROCEEDS: The proceeds of any sale or other
disposition of the Collateral shall be applied by Crestmark, first upon all
expenses authorized by this Agreement, the Collateral Documents or by law,
including reasonable attorney's fees incurred by Crestmark; the balance of the
proceeds of such sale or other disposition shall be applied to the payment of
the Indebtedness, first to interest, then to principal, then to other
Indebtedness, and the surplus, if any, shall be paid over to the Borrower or to
such other Person or Persons as may be entitled thereto under applicable law.
The Borrower and Guarantor shall remain liable for any deficiency, which the
Borrower or Guarantor shall pay to Crestmark immediately upon demand.

Nothing herein contained shall be construed to make Crestmark
an agent or Trustee of Borrower for any purpose whatsoever, and Crestmark shall
not be responsible or liable for any shortage, discrepancy,

<PAGE>

damage, loss or destruction or any part of the Collateral wherever the same may
be located and regardless of the cause thereof (except to the extent it is
determined by final judicial decision that Crestmark's act or omission
constituted gross negligence or willful misconduct). Crestmark shall not, under,
circumstances or in any event whatsoever, have any liability for any error or
omission or delay of any kind occurring in the settlement, collection or payment
of any of the Accounts, liquidation of the Collateral or any instrument received
in payment thereof or for any damage resulting therefrom (except to the extent
it is determined by a final judicial decision that Crestmark's error, omission
or delay constituted gross negligence or willful misconduct). Crestmark does
not, by anything herein or in any assignment or otherwise, assume any of the
Borrower's obligations under any contract or agreement assigned to Crestmark,
and Crestmark shall not be responsible in any way for the performance by the
Borrower or Guarantor of any kind of the terms and conditions thereof.

1.13 NOTICE:

Any notice served to or upon Borrower shall be given to
Borrower for all purpose by being sent certified mail, return receipt requested,
postage prepaid, or other expedited mail service, addressed to Borrower at the
address hereinabove set forth, or at such other address as shall be designated
by Borrower to Crestmark in writing, and any such notice shall be given to
Crestmark, for all purposes, by being sent certified mail, return receipt
requested, postage prepaid, or other expedited mail service, to 850 East Long
Lake Road, Troy, Michigan 48098 Michigan, or at such other address as Crestmark
may designate to Borrower in writing.

1.14 TERMINATION:

Crestmark may terminate this Agreement and its obligations
hereunder upon Event of Default, provided this Agreement shall not have been
terminated earlier because of an Event of Default, this Agreement terminates on
May 18, 1999. All of Borrowers obligations, duties, promises, covenants,
representations or warranties under this Agreement and Borrower's obligations,
duties, promises, covenants, representations or warranties under the Collateral
Documents, shall continue and remain in full force and effect until (i) the
Indebtedness is irrevocably paid in full in cash and (ii) Borrower receives
written notification of the termination of Loan from Crestmark.

1.15 CONDITIONS PRECEDENT TO ADVANCES:

1.15.1 CONDITIONS PRECEDENT TO INITIAL MONEY ADVANCES: The obligation
of Crestmark to make an initial disbursement or initial Money Advance is subject
to all the conditions and requirements of this Agreement and delivery of the
following required documents or other action, all of which are conditions
precedent:

a. CORPORATE STATUS: A Certificate of Good Standing of
Borrower certified by the State of Michigan, and any other State in which it
conducts business, to the effect that Borrower is authorized to do business
within said jurisdiction.

b. RESOLUTIONS: Certified resolutions of Borrower authorizing
the consummation of the transactions contemplated hereby and providing for the
execution of a written direction of payment if proceeds are to be paid to a
Person other than Borrower.

c. CERTIFIED DOCUMENTS: A true copy, as of the date of
execution hereof, of the Articles of Incorporation, and By-Laws of Borrower,
including all amendments to the foregoing, certified to by the secretary of
Borrower and a certified list of all names under which Borrower has over the
last five (5) years or now conducts business in each jurisdiction where it has
or now conducts business under such name(s).

<PAGE>

1.16 MISCELLANEOUS:

1.16.1 BINDING EFFECT: This Agreement shall be binding upon and shall
inure to the benefit of Borrower and Crestmark, and their respective successors
and assigns, provided that the foregoing shall not authorize any assignment by
Borrower of its rights or duties hereunder, which assignment, in whole or in
part, by Borrower shall not be permissible.

1.16.2 DELAY/WAIVER: No delay or failure of Crestmark in exercising any
right, remedy, power or privilege hereunder shall affect such right, remedy,
power or privilege, nor shall any single or partial exercise thereof preclude
the exercise of any other right, remedy, power or privilege. No delay or failure
of Crestmark at any time to demand strict adherence to the terms of this
Agreement shall be deemed to constitute a course of conduct inconsistent with
Crestmark's right at any time to demand strict adherence to the terms of this
Agreement or the Collateral Documents.

1.16.3 INCORPORATION BY REFERENCE: The Collateral Documents are
incorporated herein by reference, and in the event any provision thereof is
inconsistent with the provisions of this Agreement, then this Agreement shall be
deemed paramount unless the rights and remedies of Crestmark would be adversely
affected or diminished thereby.

1.16.4 APPLICABLE LAW: This Agreement and the Collateral Documents
shall be interpreted, and the rights of the parties hereunder shall be
determined, under the laws of the State of Michigan.

1.16.5 FURTHER ASSURANCES: Borrower, from time to time, upon written
request of Crestmark, will make, execute, acknowledge and deliver all such
further and additional instruments and take all such further action as may be
required, to carry out the intent and purpose of this Agreement and to provide
for the payment of the Loan, note(s), borrowings and Money Advances, according
to the intent and purpose herein and therein expressed.

1.16.6 HOLD HARMLESS/INDEMNITY: Borrower hereby assumes responsibility
and liability for, and hereby holds harmless and indemnifies Crestmark from and
against, any and all liabilities, demands, obligations, injuries, costs, damages
(direct, indirect or consequential), awards, loss of interest, principal, or any
portion of the Indebtedness, charges, expenses, payments of monies and
reasonable attorney fees, incurred or suffered, directly or indirectly, by
Crestmark and/or asserted against Crestmark by any Person whatsoever, including
Borrower, which arise in whole or in part out of this Agreement, or the
Collateral Documents, or the relationship herein set forth or the exercise of
any right or remedy including the realization, disposition or sale of the
Collateral, or any portion thereof, or the exercise of any right in connection
therewith even if the above are caused by the sole action, inaction, omission or
negligence of Crestmark, but Borrower shall not be liable if the damages result
solely from the fraud or gross negligence of Crestmark.

1.16.7 SURVIVAL AND CONTINUATION: All representations, warranties,
covenants, indemnifications, consents and agreements contained in this Agreement
and/or any of the Collateral Documents shall survive the execution of this
Agreement, the Collateral Documents and any investigations by Crestmark and
shall be, and continue at all times while any Indebtedness is outstanding, to be
true and accurate. Borrower shall immediately notify Crestmark, in writing, if
any of the foregoing are or have become untrue.

1.16.8 COMPLETE AGREEMENT: This Agreement incorporates and/or contains
the entire agreement of the parties hereto and none of the parties shall be
bound by anything not expressed in writing.

1.16.9 SEVERABILITY: If any provision of this Agreement is in conflict
with any statute or rule of law or is otherwise unenforceable for any reason,
then that provision shall be deemed null and void to the extent of the conflict
or unenforceability and shall be deemed severable. The offending provision shall
not invalidate any other provision of this Agreement.

<PAGE>

1.16.10 AMENDMENT: This Agreement and the Collateral Documents may only
be amended, modified or extended by written instrument executed by Crestmark and
Borrower.

1.16.11 DUPLICATE ORIGINALS: Two or more duplicate originals of this
Agreement may be signed by the parties, each of which shall be an original but
all of which together shall constitute one and the same instrument.

1.16.12 TIME OF ESSENCE: Time shall be of the essence in this
Agreement.

1.16.13 REINSTATEMENT: Borrower further agrees that to the extent
Borrower makes a payment or payments to Crestmark, which payment or payments or
any part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to a trustee, receiver or
any other party under any bankruptcy act, state or federal law, common law or
equitable cause, then to the extent of such payment or repayment, the obligation
or part thereof intended to be satisfied shall be revived and continued in full
force and effect as if said payment had not been made.

1.16.14 CONSENT TO JURISDICTION: BORROWER HEREBY WAIVES ANY PLEA OF
JURISDICTION OR VENUE ON THE GROUNDS THAT BORROWER IS NOT A RESIDENT OF OAKLAND
COUNTY, MICHIGAN, AND HEREBY SPECIFICALLY AUTHORIZE, AT THE OPTION OF CRESTMARK,
ANY ACTION BROUGHT TO ENFORCE BORROWER'S OBLIGATIONS TO CRESTMARK TO BE
INSTITUTED AND PROSECUTED IN EITHER THE CIRCUIT COURT OF OAKLAND COUNTY,
MICHIGAN, OR IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF
MICHIGAN, AT THE OPTION OF CRESTMARK, AND BORROWER HEREBY SUBMITS TO THE
JURISDICTION OF SUCH COURT.

1.16.15 RELEASE OF CLAIMS AGAINST CRESTMARK: In consideration of
Crestmark's making the Loan described in this Agreement, Borrower does hereby
release and discharge Crestmark of and from any and all claims, harm, injury,
and damage of any and every kind, known or unknown, legal or equitable, which
Borrower has against Crestmark from the date of Borrower's first contact with
Crestmark up to the date of this Agreement. Borrower confirms to Crestmark that
it has reviewed the effect of this release with competent legal counsel of their
choice, or have been afforded the opportunity to do so, prior to execution of
this Agreement and the Collateral Documents and each acknowledges and agree that
Crestmark is relying upon this release in extending the Loan to Borrower.

1.16.16 WAIVER OF JURY TRIAL: BORROWER DOES KNOWINGLY AND VOLUNTARILY
AND INTELLIGENTLY WAIVE THEIR CONSTITUTIONAL RIGHT TO A TRIAL BY JURY WITH
RESPECT TO ANY CLAIM, DISPUTE, CONFLICT OR CONTENTION, IF ANY, AS MAY ARISE
UNDER THIS AGREEMENT OR UNDER THE COLLATERAL DOCUMENTS, AND AGREE THAT ANY
LITIGATION BETWEEN THE PARTIES CONCERNING THIS AGREEMENT AND THE COLLATERAL
DOCUMENTS SHALL BE HEARD BY A COURT OF COMPETENT JURISDICTION SITTING WITHOUT A
JURY. BORROWER HEREBY CONFIRMS TO CRESTMARK THAT THEY HAVE REVIEWED THE EFFECT
OF THIS WAIVER OF JURY TRIAL WITH COMPETENT LEGAL COUNSEL OF THEIR CHOICE, OR
HAVE BEEN AFFORDED THE OPPORTUNITY TO DO SO, PRIOR TO SIGNING THIS AGREEMENT AND
THE COLLATERAL DOCUMENTS AND EACH ACKNOWLEDGE AND AGREE THAT CRESTMARK IS
RELYING UPON THIS WAIVER IN EXTENDING THE LOAN TO BORROWER.

<PAGE>

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

CRESTMARK: BORROWER:

CRESTMARK BANK, BIG BUCK BREWERY & STEAKHOUSE, INC.,
A MICHIGAN BANK A MICHIGAN CORPORATION

By: /S/ DOMINICK DEBELLO By: /S/ WILLIAM F. ROLINSKI
--------------------------- ----------------------------
DOMINICK DEBELLO WILLIAM F. ROLINSKI
Its: Vice President Its: President

<PAGE>

EXHIBIT A

PERMITTED ENCUMBRANCES

1. Those certain equipment filings as reflected in the U.C.C. index
searches held by Crestmark as of the date certified, without, increase,
amendment, modification, extension or refinancing.

2. A First Real Estate Mortgage held by NBD as Mortgagee on the Gaylord
store.

<PAGE>

EXHIBIT B

LOCATION OF COLLATERAL

550 S. Wisconsin
Gaylord, Michigan 49735

2550 Takata Drive
Auburn Hills, Michigan 48326

2500 28th Street SW
Grand Rapids, MI 49512

<PAGE>

EXHIBIT 10.15

REAL ESTATE MORTGAGE NOTE

PRINCIPAL AMOUNT: TROY, MICHIGAN
$1,400,000.00

DUE DATE: MAY 20, 1999 DATED: NOVEMBER 20, 1998

FOR VALUE RECEIVED, the undersigned promises to pay to the order of
Crestmark Bank, a Michigan banking corporation, ("Lender") at its offices
located at 850 East Long Lake Road, Troy, Michigan 48098 or at such other place
as Lender may designate in writing, the principal sum of One Million Four
Hundred Thousand and No/100 ($1,400,000.00) Dollars, plus interest as
hereinafter provided, in lawful money of the United States, or such sum as has
been advanced, interest thereon and all expenses then outstanding under this
Note and the Loan Agreement.

The unpaid principal balance outstanding from time to time under this
Real Estate Mortgage Note ("Note") shall bear interest on a basis of a year of
360 days for the actual number of days elapsed in a month, at a rate equal to
ten percent (10%) per annum (the "Effective Rate").

The interest hereunder shall be repaid in monthly installments of
interest only, commencing on the first day of December, 1998 and continuing on
the first day of each calendar month thereafter, until May 20, 1999, when the
unpaid principal balance and all accrued interest thereon, if any, shall be due
and payable in full, or such earlier date upon which the indebtedness is due and
payable as a result of acceleration or otherwise (the earlier of such date being
the "Due Date"). The Borrower acknowledges that the monthly payments required
hereunder are not amortized and will not amortize the indebtedness evidenced by
the maturity hereof, and that the final payment due hereunder at maturity will
be a balloon payment of all then outstanding principal and interest. Anything
herein contained to the contrary, notwithstanding, all unpaid principal and
accrued and unpaid interest shall be due and payable in full on the Due Date
above stated.

The Money Advance and all interest and expenses hereunder shall be
charged to a loan account in Borrower's name on Lender's books (the "Loan
Account"), and Lender shall debit to such account the amount of each loan or
advance when made and credit to such account the amount of each repayment
hereunder. Lender shall render Borrower from time to time a statement of account
setting forth the Borrower's loan balance in said Loan Account which shall be
deemed to be correct and accepted by and binding upon Borrower, unless Lender
receives a written statement of exceptions within ten (10) Business Days after
such statement has been rendered to Borrower. Such statement of account shall be
prima facie evidence of the loans and advances owing to Lender by Borrower
hereunder, together with interest accrued thereon.

Any payment made by mail will be deemed tendered and received only upon
actual receipt by Lender at the address of Lender designated for such payment
whether or not Lender has authorized payment by mail or any other manner.
Borrower hereby expressly assumes all risk of loss or liability resulting from
non-delivery or delay in delivery of any payment transmitted by mail or in any
other manner.

No delay or failure of Lender in exercising any right, remedy, power or
privilege hereunder shall affect such right, remedy, power or privilege, nor
shall any single or partial exercise thereof preclude the exercise of any other
right, remedy, power or privilege. No delay or failure of Lender at any time to
demand strict adherence to the terms of this Note shall be deemed to constitute
a course of conduct inconsistent with Lender's right at any time, before or
after any Event of Default, to demand strict adherence to the terms of this
Note.

<PAGE>

This Note may be prepaid, in full or in part, at any time, but only
upon the simultaneous payment of the following prepayment fees:

(a) at any time on or after the date hereof but prior to December
20, 1998, the prepayment fee shall be Seventy Thousand
($70,000.00) Dollars;

(b) at any time on or after December 20, 1998 but prior to January
20, 1999, the prepayment fee shall be Fifty Eight Thousand
Three Hundred Thirty Three and 33/100 ($58,333.33) Dollars;

(c) at any time on or after January 20, 1999 but prior to February
20, 1999, the prepayment fee shall be Forty Six Thousand Six
Hundred Sixty Six and 66/100 ($46,666.66) Dollars; and

(d) At any time on or after February 20, 1999 there shall be no
prepayment fee.

Nothing herein contained, nor any transaction relating thereto, or
hereto, shall be construed or so operate as to require the Borrower to pay, or
be charged, interest at a greater rate than the maximum allowed by the
applicable law relating to this Note. Should any interest or other charges,
charged, paid or payable by the Borrower in connection with this Note, or any
other document delivered in connection herewith, result in the charging,
compensation, payment or earning of interest in excess of the maximum allowed by
the applicable law as aforesaid, then any and all such excess shall be and the
same is hereby waived by the holder, and any and all such excess paid shall be
automatically credited against and in reduction of the principal due under this
Note. If Lender shall reasonably determine that the Effective Interest Rate
(together with all other charges or payments related hereto that may be deemed
interest) stipulated under this Note is, or may be, usurious or otherwise
limited by law, the unpaid balance of this Note, with accrued interest at the
highest rate then permitted to be charged by stipulation in writing between
Lender and Borrower, at the option of Lender, shall immediately become due and
payable.

Upon the occurrence of a Default as set forth in the Loan Agreement,
the entire unpaid principal balance and all accrued interest shall, at the sole
discretion of Lender, regardless of the Due Date, be immediately due and
payable, together with (to the extent permitted under applicable law) the costs,
reasonable attorney's fees, and reasonable outside consultants' fees incurred by
Lender in collecting or enforcing payment. During any period of a Default as
defined in the Loan Agreement, the outstanding principal amount hereof shall
bear interest at a rate which is equal to eight (8%) percent per annum greater
than the Effective Interest Rate otherwise charged hereunder. If any required
installment is not paid when due, then, at the option of Lender, in addition to
all other sums due hereunder, a late charge of five cents ($.05) for each dollar
of the installment so overdue may be charged to cover the extra expense and
other costs incurred in connection with delinquent payments and not as
additional interest or a penalty, it being understood and agreed that Lender
shall incur additional costs as a result of any late payment, the precise amount
of which may be difficult to ascertain.

Borrower hereby grants to Lender a security interest in any
indebtedness or liability of Lender to Borrower, however evidenced, including a
security interest in all of Borrower's deposits, instruments, negotiable
documents and chattel paper which at any time are in the possession or control
of Lender, as further security for repayment of the Indebtedness of Borrower;
and Borrower hereby grants to Lender all rights and privileges afforded a
secured party under the Michigan Uniform Commercial Code with respect to any
such indebtedness or liability in which lender is hereby granted a security
interest.

All payments hereunder shall, at option of Lender, first be applied
against accrued interest, and the balance against principal. Acceptance by
Lender of any payment in an amount less than the amount then due shall be deemed
an acceptance on account only, and the failure to pay the entire amount then due
shall be and continue to be an event of default, and at any time thereafter and
until the entire amount then due has been paid, Lender shall be entitled to
exercise all rights conferred upon it by this Note upon occurrence of default as
herein set forth.

<PAGE>

Borrower hereby waives presentment for payment, demand, notice of
non-payment, notice of protest and protest of this Note, or diligence in
collection or bringing suit. The liability of Borrower hereunder shall be
absolute and unconditional, without regard to the liability of any other party
hereto.

This Note is secured by, and executed pursuant to, a Loan Agreement and
a Security Agreement each of even date herewith between Borrower and Lender, as
the same may be amended, modified or altered from time to time (herein referred
to as the "Loan Documents") and the Collateral, the Premises and Collateral
Documents therein described. Reference is hereby made to the Loan Agreement and
Collateral Documents for additional terms relating to the transaction giving
rise to this Note, defined terms not otherwise defined herein, the security
given for this Note and additional terms and conditions under which this Note
matures, accelerates, is repaid or may be prepaid.

The term "Borrower" shall mean each person executing this Note, each
individually and together collectively, and their obligations to Bank shall be
joint and several.

"BORROWER"

BIG BUCK BREWERY & STEAKHOUSE, INC.
a Michigan Corporation

/S/ WILLIAM F. ROLINSKI
----------------------------
By: WILLIAM F. ROLINSKI
Its: President

FEIN: 38-3196-031
-----------

<PAGE>

EXHIBIT 10.16

SECURITY AGREEMENT

This Agreement is made this 20th day of November, 1998 by and between
Crestmark Bank, whose address is 850 East Long Lake, Troy, Michigan 48098
(hereinafter referred to as "Bank") and Big Buck Brewery & Steakhouse, Inc., a
Michigan corporation, whose address is 500 S. Wisconsin, Gaylord, Michigan,
(hereinafter defined and referred to as "Borrower").

W I T N E S S E T H :

WHEREAS, Borrower is requesting a term loan (the "Loan") from Bank
pursuant to a Loan and Security Agreement dated of even date herewith between
Bank and Borrower, including all extensions, modifications, alterations, and
amendments thereof ("Loan Agreement").

NOW, THEREFORE, for and in consideration hereof, the parties hereto
agree as follows:

1. GRANT OF SECURITY INTEREST: Borrower hereby grants to Bank a
continuing security interest in the "Collateral" described in Paragraph 2 below
to secure (i) the repayment of the Loan and all other loans and advances
(including all renewals and extensions thereof), and the Indebtedness (as
defined in the Loan Agreement), and (ii) all obligations of any and every kind
and nature heretofore, now or hereafter owing to Bank from Borrower, however
incurred or evidenced (hereinafter collectively referred to as "Liabilities")
plus all interest, costs, expenses, and reasonable attorneys' fees, which may be
made or incurred by Bank in the disbursement, administration, and collection of
said Liabilities, and in the protection, maintenance, and liquidation of the
Collateral. This Agreement shall be and become effective when, and continue in
effect, as long as any Liabilities of Borrower to Bank are outstanding and
unpaid, and Borrower will not sell, assign, transfer, pledge or otherwise
dispose of or encumber any Collateral except in the ordinary course of business
while this Agreement is in effect without the written consent of Bank.

2. COLLATERAL: The "Collateral" covered by this Agreement is all of
Borrower's property described below, which Borrower now owns or shall hereafter
acquire or create, immediately upon the acquisition or creation thereof, and
includes, but is not limited to, any items listed on any schedule or list
attached hereto:

A. ACCOUNTS: All of Borrower's Accounts, documents, Chattel
Paper, instruments, contract rights, general intangibles, choses in action, now
owned or hereafter acquired, including any right to any refund of any taxes
heretofore or hereafter paid to any governmental authority (all of which are
hereinafter individually and collectively referred to as "Accounts"), regardless
of whether any such Accounts are acceptable or unacceptable to Bank.

B. INVENTORY: All of Borrower's Inventory and goods, now owned
or hereafter acquired, including but not limited to, raw materials, work in
process, finished goods, tangible property, stock in trade, wares, and
merchandise used in or consumed in the ordinary course of business, including
goods whose sale, lease or other disposition by Borrower has given rise to any
Accounts and which goods have been returned to, or repossessed by, or stopped in
transit by Borrower.

C. EQUIPMENT: All of Borrower's Equipment and fixtures, now
owned or hereafter acquired, including all machinery, furniture, furnishings,
and vehicles, together with all accessions, parts, attachments, accessories,
tools and dies, or appurtenances thereto, or appertaining, attached, kept, used,
or intended for use in connection therewith, and all substitutions, improvements
and replacements thereof and additions thereto located at the addressed listed
on Exhibit B hereto.

<PAGE>

D. FIXTURES: All fixtures, whether now or to be hereafter
attached, to the following described real property:

See attached Description of Real Estate, together with
all related rights.

E. ALL ASSETS: All of Borrower's Accounts, Equipment located
at the addresses on Exhibit B hereto, Inventory, fixtures, documents, chattel
paper, instruments, contract rights, general intangibles, including any right to
any refund of any taxes, now owned or hereafter existing or acquired.

F. PROCEEDS, ETC.: All Proceeds of the Collateral, and
proceeds of hazard insurance and eminent domain or condemnation awards of all of
the foregoing described properties or interests in properties, including all
products of, and accessions to, such properties or interests in properties.
Plus, any and all deposits or other sums at any time credited by or due from
Bank to Borrower and any and all instruments, documents, policies, and
certificates of insurance, securities, goods, accounts receivable, choses in
action, chattel paper, cash, property and the proceeds thereof (whether or not
the same are Collateral or Proceeds thereof hereunder) owned by Borrower or in
which Borrower has an interest, which are now or at any time hereafter in
possession or control of Bank or in transit by mail or carrier to or from Bank
or in possession of any third party acting on Bank's behalf, without regard to
whether Bank received the same in pledge, for safekeeping, as agent for
collection or transmission or otherwise, or whether Bank has conditionally
released the same (excluding, nevertheless, any of the foregoing assets of
Borrower which are now or at any time hereafter in possession or control of Bank
under any written trust agreement wherein Bank is trustee and Borrower is
trustor).

G. ACCESSIONS, ETC. All accessions, parts, attachments
and accessories used or intended for use in connection with any of the foregoing
described properties or interests in properties.

H. EXCLUDING therefrom all Equipment and fixtures, now owned
or hereafter acquired, including all machinery, furniture, furnishing with all
accessions, parts, attachments, accessories, tool and dies, or appurtenances
thereto, or appertaining, attached, kept, or used at locations other than the
locations listed on Exhibit B hereto.

The properties and interest in properties described in this
Paragraph 2 are sometimes hereinafter individually and collectively referred to
as the "Collateral".

3. PERFECTION OF SECURITY INTEREST: Borrower shall execute and deliver
to Bank, concurrently with Borrower's execution of this Agreement and at any
time or times hereafter at the request of Bank (and pay the cost of filing or
recording same in all public offices deemed necessary by Bank) all financing
statements, assignments, certificates of title, applications for vehicle titles,
affidavits, reports, notices, schedules of Accounts, designations of Inventory,
letters of authority and all other documents that Bank may reasonably request,
in form satisfactory to Bank, to perfect and maintain the perfection of Bank's
security interests in the Collateral. Borrower shall also make appropriate
entries on its books and records disclosing Bank's security interests in the
Collateral.

4. WARRANTIES: Borrower warrants and agrees that while any of the
Liabilities remain unperformed and unpaid: (a) Borrower has or forthwith will
acquire full legal title to the Collateral and is the lawful owner of all of the
Collateral with an unqualified right to subject the Collateral to the security
interest herein granted to Bank; (b) except for Permitted Encumbrances (as set
forth in the Loan Agreement), Bank's security interest in the Collateral is a
second priority security interest, other than financing statements showing NBD
Bank is the secured party, there are no financing statements covering any of the
Collateral in any public office and Borrower will defend and indemnify Bank
against the claims and demands of all other persons claiming an interest in the
Collateral; (c) all of the Collateral is located in the State of Michigan at the
addresses of Borrower set forth herein, and Borrower's business locations shall
not be changed nor the Collateral moved outside of Michigan without the prior
written consent of Bank, and Borrower further warrants that the Collateral,
wherever located, is covered by

<PAGE>

this Agreement; (d) the Collateral will not be used, nor will Borrower permit
the Collateral to be used, for any unlawful purpose; (e) Borrower will neither
change its name, form of business entity nor address of its principal office
without giving written notice thereof at least fifteen (15) business days prior
to the effective date of such change; and Borrower agrees that all documents,
instruments and agreements demanded by Bank in response to such change shall be
prepared, filed and recorded at Borrower's expense prior to the effective date
of such change; (f) Borrower shall at all times maintain the Collateral in first
class condition and repair; (g) the execution and delivery of this Agreement and
any instruments evidencing Liabilities will not violate nor constitute a breach
of Borrower's Articles of Incorporation, By-Laws, Partnership Agreement, or any
agreement or restriction of any type whatsoever to which Borrower is a party or
is subject; (h) all financial statements and information relating to Borrower
delivered or to be delivered by Borrower to Bank are true and correct and, to
the best of Borrower's knowledge, prepared in accordance with generally accepted
accounting principles, and there has been no material adverse change in the
financial condition of Borrower since the submission of any such financial
information to Bank; (i) there are no actions or proceedings which are
threatened or pending against Borrower which might result in any material
adverse change in Borrower's financial condition or which might materially
affect any of Borrower's assets; and (j) Borrower has duly filed all federal,
state, and other governmental tax returns which Borrower is required by law to
file, and all such taxes required to be paid have been paid in full. Borrower
will indemnify and hold Bank harmless from and against any and all claims,
expenses and costs, including reasonable attorneys' fees, arising from or
related to any breach of these warranties.

5. BORROWER REMAINS LIABLE: Anything contained herein to the contrary
notwithstanding, (a) Borrower shall remain liable under the contracts and
agreements included in the Collateral to perform all of its duties and
obligations to the same extent as if this Agreement had not been executed, (b)
the exercise by Bank of any of its rights under the Loan Agreement, Collateral
Documents or this Agreement shall not release the Borrower from any of its
duties or obligations under the contracts and agreements included in the
Collateral and (c) Bank shall have no obligation or liability under the
contracts and agreements included in the Collateral by reason of this Agreement,
nor shall Bank be obligated to perform any of the obligations or duties of
Borrower thereunder or to take any action to collect or enforce any claim for
payment assigned thereunder.

6. INSURANCE, TAXES, ETC.: Borrower shall (a) pay all taxes, levies,
assessments, judgments and charges of any kind upon or relating to the
Collateral, to Borrower's business, and to Borrower's ownership or use of any of
its assets, income or gross receipts; (b) at its own expense, keep and maintain
all of the Collateral fully insured against loss or damage by fire, theft,
explosion and other risks in such amounts, with such companies, under such
policies and in such form as shall be satisfactory to Bank, which policies shall
expressly provide that loss thereunder shall be payable to Bank as its interest
may appear (and Bank shall have a security interest in the proceeds of such
insurance and may apply any such proceeds which may be received by it toward
payment of Borrower's Liabilities, whether or not due, in such order of
application as Bank may determine); (c) maintain at its own expense public
liability and property damage insurance in such amounts with such companies,
under such policies and in such form as shall be reasonably satisfactory to
Bank; and, upon Bank's request, shall furnish Bank with such policies and
evidence of payment of premiums thereon. If Borrower at any time hereafter
should fail to obtain or maintain any of the policies required above or pay a
premium in whole or in part relating thereto, or shall fail to pay any such tax,
assessment, levy, or charge or to discharge any such lien or encumbrance, then
Bank, without waiving or releasing any obligation or default of Borrower
hereunder, may at any time hereafter (but shall be under no obligation to do so)
make such payment or obtain such discharge or obtain and maintain such policies
of insurance and pay such premiums, and take such action with respect thereto as
Bank deems advisable. All sums so disbursed by Bank, including reasonable
attorneys' fees, court costs, expenses, and other charges relating thereto,
shall be part of Borrower's Liabilities, secured hereby, and payable on demand.

7. INFORMATION: Borrower shall permit Bank or its agents to have access
to and to inspect and verify the Collateral in the name of Bank or Borrower.
Borrower will make same available at any time for such purposes. In addition,
Borrower shall promptly supply Bank with financial and such other information
concerning its affairs and assets as Bank may request from time to time.

<PAGE>

8. DEFAULT:

A. The occurrence of any of the following events shall
constitute a Default (as such term is used herein); (a) the non-payment, when
due, of any amount payable on any of the Liabilities or any extension or renewal
thereof or the failure to perform any agreement of Borrower contained herein;
(b) any statement, representation or warranty of Borrower herein, in the Loan
Agreement, the Collateral Documents (as defined in the Loan Agreement) or in any
other writing furnished by Borrower to Bank, at any time, is untrue in any
respect as of the date made; (c) any Obligor (which term, as used herein, shall
mean Borrower and each other party primarily or secondarily liable on any of the
Liabilities) becomes insolvent or unable to pay debts as they mature or makes an
assignment for the benefit of creditors, conveys any assets to a trustee for the
benefit of Obligor's creditors, conveys substantially all of its assets, or any
proceeding is instituted by or against any Obligor alleging that such Obligor is
insolvent or unable to pay debts as they mature or a petition of any kind is
filed under the Federal Bankruptcy Act by or against such Obligor; (d) entry of
any final judgment, and the expiration of any appeal period related thereto,
against any Obligor or order of attachment, execution, sequestration or other
order in the nature of a writ is levied on the Collateral; (e) death of any
Obligor who is a natural person, or of any partner of any Obligor which is a
partnership; (f) dissolution or transfer of a substantial part of the property
of any Obligor which is a corporation or a partnership; and (g) the occurrence
of a Default as set forth in the Loan Agreement.

B. Upon the occurrence of a Default, the notes and all other
Liabilities may (notwithstanding any provisions thereof) at the option of Bank
and without demand or notice of any kind, be declared, and thereupon immediately
shall become due and payable, and Bank may exercise from time to time any rights
and remedies, including the right to immediate possession of the Collateral,
available to it under the Loan Agreement, Collateral Documents and applicable
law. Bank shall have the right to hold any property then in or upon said
Collateral at time of repossession not covered by this Agreement until return is
demanded in writing by Borrower. Borrower agrees, in case of Default, to
assemble, at its expense, all the Collateral at a convenient place acceptable to
Bank and to pay all costs of Bank of collection of the notes and all other
Liabilities, and enforcement of rights hereunder, including reasonable
attorneys' fees and legal expenses, including participation in Bankruptcy
proceedings, and expense of locating the Collateral and expenses of any repairs
to any realty or other property to which any of the Collateral may be affixed or
be a part.

C. BORROWER AGREES THAT BANK SHALL, IN THE EVENT OF ANY
DEFAULT, HAVE THE RIGHT TO PEACEFULLY RETAKE ANY OF THE COLLATERAL, BORROWER
WAIVES ANY RIGHT IT MAY HAVE, IN SUCH INSTANCE, TO A JUDICIAL HEARING PRIOR TO
SUCH RETAKING.

9. GENERAL: Time shall be deemed of the very essence of this
Agreement. Except as otherwise defined in this Agreement, all terms in this
Agreement shall have the meanings provided by the Michigan Uniform Commercial
Code. Bank shall be deemed to have exercised reasonable care in the custody and
preservation of any Collateral in its possession if it takes such action for
that purpose as Borrower requests in writing, but failure of Bank to comply with
any such request shall not of itself be deemed a failure to exercise reasonable
care, and failure of Bank to preserve or protect any rights with respect to such
Collateral against any prior parties or to do any act with respect to the
preservation of such Collateral not so requested by Borrower shall not be deemed
a failure to exercise reasonable care in the custody and preservation of such
Collateral. Any delay on the part of Bank in exercising any power, privilege or
right hereunder, or under any other instrument executed by Borrower to Bank in
connection herewith shall not operate as a waiver thereof, and no single or
partial exercise thereof, or the exercise of any other power, privilege or right
shall preclude other or further exercise thereof, or the exercise of any other
power, privilege or right. The waiver by Bank of any Default by Borrower shall
not constitute a waiver of any subsequent defaults, but shall be restricted to
the default so waived. If any part of this Agreement shall be contrary to any
law which Bank might seek to apply or enforce, or should otherwise be defective,
the other provisions of this Agreement shall not be affected thereby, but shall
continue in full force and effect. All rights, remedies and powers of Bank
hereunder are irrevocable and cumulative, and not alternative or exclusive, and
shall be in addition to all

<PAGE>

rights, remedies and powers given hereunder or in or by any other instruments or
by the Michigan Uniform Commercial Code, or any laws now existing or hereafter
enacted.

This Agreement has been delivered in Michigan, and shall be
construed in accordance with the laws of the State of Michigan. Whenever
possible each provision of this Agreement shall be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of this
Agreement shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement. The rights and privileges of Bank hereunder shall inure to the
benefit of its successors and assigns and this Agreement shall be binding on all
heirs, executors, administrators, assigns and successors of Borrower.

10. COUNTERPARTS: This Security Agreement may be executed in several
counterparts, and each executed counterpart shall constitute an original
instrument, but such counterparts shall together constitute but one and the same
instrument.

11. ENTIRE AGREEMENT: Borrower acknowledges that this is the entire
Agreement between the parties except to the extent that writings signed by the
party to be charged are specifically incorporated herein by reference either in
this Agreement or in such writings, and acknowledges receipt of a true and
complete copy of this Agreement.

<PAGE>

IN WITNESS WHEREOF, the parties hereto execute this Agreement on the
date and year first written above.

"BORROWER"

BIG BUCK BREWERY & STEAKHOUSE, INC.,
A MICHIGAN CORPORATION

By:/s/ William L. Rolinski
-----------------------------
William L. Rolinski
Its: President

"BANK"

Crestmark Bank,
a Michigan bank

By:/S/ DOMINICK DEBELLO
-----------------------------
Dominick DeBello
Its: Vice President

<PAGE>

EXHIBIT A

Land in the City of Gaylord, County of Otsego, State of Michigan, described as:

A parcel of land on part of the Southwest 1/4 section of Section 4, Town 30
North, Range 3 West, City of Gaylord, Michigan, described as commencing at the
Southwest corner of said Section 4; thence South 85 degrees 09 minutes 56
seconds East, 1319.45 feet along the South line of said Section 4; thence North
04 degrees 46 minutes 14 seconds West 1312.68 feet along the West 1/8 line of
said Section 4 to the Point of Beginning; thence North 85 degrees 06 minutes 05
seconds West 480.00 feet along the South 1/8 line of said Section 4; thence
South 04 degrees 46 minutes 29 seconds East 400.02 feet; thence North 85 degrees
01 minutes 25 seconds West 79.61 feet; thence along the Easterly line of Limited
Access Highway I-75, the following two (2) courses: 1) 772.83 feet along a curve
to the left, said curve having a radius of 11459.16 feet, a central angle of 03
degrees 51 minutes 15 seconds, a long chord of 772.69 feet bearing North 15
degrees 39 minute 25 seconds West, 2) North 17 degrees 35 minutes 21 seconds
West 25.36 feet; thence North 88 degrees 28 minutes 44 seconds East 704.32 feet;
thence South 04 degrees 46 minutes 14 seconds East 437.69 feet to the Point of
Beginning, and being subject to an easement for highway purposes over and across
a parcel of land described as: Commencing at the South 1/4 corner of Section 4,
Town 30 North, Range 3 West, City of Gaylord, Otsego County, Michigan,
proceeding North 85 degrees 09 minutes 56 seconds West 1319.46 feet along the
South line of said Section 4 and North 04 degrees 46 minutes 14 seconds West
1312.68 feet along the West 1/8 line to the center 1/8 corner of the Southwest
1/4 of said Section 4 and the Point of Beginning; thence North 85 degrees 06
minutes 05 seconds West 7.10 feet along the South 1/8 line; thence North 04
degrees 46 minutes 14 seconds West 415.12 feet; thence North 00 degrees 47
minutes 39 seconds West; 100.94 feet; thence South 04 degrees 46 minutes 14
seconds East 517.02 feet along the West 1/8 line to the Point of Beginning.

Tax Code No. 101-104-195-04

<PAGE>

EXHIBIT B

LOCATION OF COLLATERAL

550 S. Wisconsin
Gaylord, Michigan 49735

2550 Takata Drive
Auburn Hills, Michigan 48326

2500 28th Street SW
Grand Rapids, MI 49512

<PAGE>

EXHIBIT 10.17

NO SALE, OFFER TO SELL OR TRANSFER OF THESE SECURITIES SHALL BE MADE WITHOUT (i)
THE OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH SALE, OFFER, OR
TRANSFER MAY BE MADE WITHOUT REGISTRATION OR QUALIFICATION UNDER THE SECURITIES
ACT AND APPLICABLE STATE SECURITIES LAWS OR (ii) SUCH REGISTRATION OR
QUALIFICATION.

BIG BUCK BREWERY & STEAKHOUSE, INC.
COMMON STOCK PURCHASE WARRANT

Big Buck Brewery & Steakhouse, Inc., a Michigan corporation (the
"Company"), hereby agrees that, for value received, Seger Financial, Inc. or its
assigns, is entitled, subject to the terms set forth below, to purchase from the
Company at any time or from time to time before 5:00 p.m., Minneapolis,
Minnesota time, on November 20, 2003, Fourteen Thousand Five Hundred Eighty-Two
(14,582) shares of the Company's Common Stock at an exercise price of Two
Dollars and Seventy-Six and One-Quarter Cents ($2.7625) per share (the "Warrant
Shares").

1. EXERCISE OF WARRANT. The purchase rights granted by this Warrant
shall be exercised by the holder surrendering this Warrant with the Warrant
Exercise Form attached hereto duly executed by such holder, to the Company at
its principal office, accompanied by payment, in cash, by cashier's check
payable to the order of the Company or by wire transfer to an account specified
by the Company, of the purchase price payable in respect of the Warrant Shares
being purchased. If less than all of the Warrant Shares purchasable hereunder
are purchased, the Company will, upon such exercise, execute and deliver to the
holder hereof a new Warrant evidencing the number of Warrant Shares not so
purchased. As soon as practicable after the exercise of this Warrant and payment
of the purchase price, the Company will cause to be issued in the name of and
delivered to the holder hereof, or as such holder may direct, a certificate or
certificates representing the Warrant Shares purchased upon such exercise. The
Company may require that such certificate or certificates contain on the face
thereof a legend substantially as follows:

"No sale, offer to sell or transfer of the shares represented by this
certificate shall be made without (i) the opinion of counsel
satisfactory to the Company that such sale, offer, or transfer may be
made without registration or qualification under the Securities Act and
applicable state securities laws or (ii) such registration or
qualification."

2. NEGOTIABILITY AND TRANSFER. This Warrant is issued upon the
following terms, to which each holder hereof consents and agrees:

(a) This Warrant may not be sold, transferred, assigned or
hypothecated without (i) the opinion of counsel satisfactory to the
Company that such sale, offer, or transfer may be made without
registration or qualification under the Securities Act and applicable
state securities laws or (ii) such registration or qualification.

(b) Until this Warrant is duly transferred on the books of the
Company, the Company may treat the registered holder of this Warrant as
absolute owner hereof for all purposes without being affected by any
notice to the contrary.

(c) Each successive holder of this Warrant, or of any portion
of the rights represented hereby, shall be bound by the terms and
conditions set forth herein.

3. ANTIDILUTION ADJUSTMENTS. If the Company shall at any time hereafter
subdivide or combine its outstanding shares of Common Stock, or declare a
dividend payable in Common Stock, the exercise price in effect immediately prior
to the subdivision, combination, or record date for such dividend payable in
Common Stock shall

<PAGE>

forthwith be proportionately increased, in the case of combination, or
proportionately decreased, in the case of subdivision or declaration of a
dividend payable in Common Stock, and the number of Warrant Shares purchasable
upon exercise of this Warrant immediately preceding such event, shall be changed
to the number determined by dividing the then current exercise price by the
exercise price as adjusted after such subdivision, combination, or dividend
payable in Common Stock and multiplying the result of such division against the
number of Warrant Shares purchasable upon the exercise of this Warrant
immediately preceding such event, so as to achieve an exercise price and number
of Warrant Shares purchasable after such event proportional to such exercise
price and number of Warrant Shares purchasable immediately preceding such event.
All calculations hereunder shall be made to the nearest cent or to the nearest
one-hundredth of a share, as the case may be. No fractional Warrant Shares are
to be issued upon the exercise of this Warrant, but the Company shall pay a cash
adjustment in respect of any fraction of a share which would otherwise be
issuable in an amount equal to the same fraction of the market price per share
of Common Stock on the day of exercise as determined in good faith by the
Company. In case of any capital reorganization or any reclassification of the
shares of Common Stock of the Company, or in the case of any consolidation with
or merger of the Company into or with another corporation, or the sale of all or
substantially all of its assets to another corporation, which is effected in
such a manner that the holders of Common Stock shall be entitled to receive
stock, securities, or assets with respect to or in exchange for Common Stock,
then, as a part of such reorganization, reclassification, consolidation, merger,
or sale, as the case may be, lawful provision shall be made so that the holder
of the Warrant shall have the right thereafter to receive, upon the exercise
hereof, the kind and amount of shares of stock or other securities or property
which the holder would have been entitled to receive if, immediately prior to
such reorganization, reclassification, consolidation, merger, or sale, the
holder had held the number of Warrant Shares which were then purchasable upon
the exercise of the Warrant. In any such case, appropriate adjustment (as
determined in good faith by the Board of Directors of the Company) shall be made
in the application of the provisions set forth herein with respect to the rights
and interest thereafter of the holder of the Warrant, to the end that the
provisions set forth herein (including provisions with respect to adjustments of
the exercise price) shall thereafter be applicable, as nearly as reasonably may
be, in relation to any shares of stock or other property thereafter deliverable
upon the exercise of the Warrant.

4. NOTICE OF CORPORATE ACTION. If at any time:

(a) The Company shall pay any dividend upon its Common Stock
payable in stock or make any distribution (other than a cash dividend)
to the holders of its Common Stock;

(b) The Company shall offer for subscription purposes to the
holders of its Common Stock any additional shares of stock of any class
or any other rights;

(c) There shall be any capital reorganization or
reclassification of the capital stock of the Company, or consolidation
or merger of the Company with, or sale, conveyance, lease or other
transfer of all or substantially all of its assets to, another
corporation; or

(d) There shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;

then, the Company shall give notice to the holder hereof of the date on which
(i) the books of the Company shall close or a record shall be taken for each
stock dividend, distribution or subscription rights or (ii) such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up shall take place, as the case may be. Such notice shall also specify
the date as of which the holders of the Common Stock of record shall participate
in such dividend, distribution or subscription rights or shall be entitled to
exchange their Common Stock for securities or other property deliverable upon
such reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation, or winding up, as the case may be. Such written notice shall be
given at least twenty (20) days prior to the action in question and not less
than twenty (20) days prior to the date on which the Company's transfer books
are closed in respect thereto.

<PAGE>

5. NOTICES. All notices and other communications in connection with
this Warrant must be in writing and, except as otherwise provided herein, will
be deemed to have been duly given (i) when mailed by certified or registered
mail, postage prepaid, return receipt requested, (ii) when sent by facsimile,
with written confirmation of receipt, or (iii) when delivered to the addressee
if sent by a nationally recognized overnight delivery service (receipt
requested). Any notice required or permitted to be given to the holder of this
Warrant shall be mailed, sent or delivered to the registered holder of the
Warrant at his or her last known post office address or facsimile number
appearing on the books of the Company.

6. RESERVATION OF COMMON STOCK. The Company will at all times reserve
and keep available such number of its authorized but unissued shares of Common
Stock as will be sufficient to permit the exercise in full of this Warrant.

7. MISCELLANEOUS. Whenever reference is made herein to the issue or
sale of shares of Common Stock, the term "Common Stock" shall include any stock
of any class of the Company other than preferred stock that has a fixed limit on
dividends or a payment preference in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Company. The Company will not, by
amendment of its Articles of Incorporation or through reorganization,
consolidation, merger, dissolution, or sale of assets, or by any other voluntary
act or deed, avoid or seek to avoid the observance or performance of any of the
covenants, stipulations, or conditions to be observed or performed hereunder by
the Company, but will, at all times in good faith, assist, insofar as it is
able, in the carrying out of all provisions hereof and in the taking of all
other action which may be necessary in order to protect the rights of the holder
hereof against dilution. The representations, warranties, and agreements herein
contained shall survive the exercise of this Warrant. References to the "holder
of" include the immediate holder of Warrant Shares purchased on the exercise of
this Warrant, and the word "holder" shall include the plural thereof. This
Common Stock Purchase Warrant shall be interpreted under the laws of the State
of Michigan. All Warrant Shares or other securities issued upon the exercise of
the Warrant shall be validly issued, fully paid and nonassessable.
Notwithstanding anything contained herein to the contrary, the holder of this
Warrant shall not be deemed a shareholder of the Company for any purpose
whatsoever until and unless this Warrant is duly exercised.

IN WITNESS WHEREOF, the undersigned has caused this Warrant to be
signed by its duly authorized officer this 20th day of November, 1998.

BIG BUCK BREWERY & STEAKHOUSE, INC.

By /S/WILLIAM F. ROLINSKI
-------------------------------
William F. Rolinski
President and Chief Executive
Officer

<PAGE>

WARRANT EXERCISE FORM

To be signed only upon exercise of Warrant.

The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, __________ of the Warrant Shares of Big Buck Brewery &
Steakhouse, Inc. to which such Warrant relates and herewith makes payment of
$__________ therefor in cash, by cashier's check payable to the order of the
Company or by wire transfer to an account specified by the Company, and requests
that such Warrant Shares be issued and be delivered to the address for which is
set forth below the signature of the undersigned.

Dated:______________________

---------------------------------
(Taxpayer's I.D. Number)

---------------------------------
(Signature)

---------------------------------
(Address)

<PAGE>

ASSIGNMENT FORM

To be signed only upon authorized transfer of Warrant.

FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and
transfers unto _______________________________ the right to purchase Warrant
Shares of Big Buck Brewery & Steakhouse, Inc. to which the within Warrant
relates and appoints _____________________________, attorney, to transfer said
right on the books of such corporation with full power of substitution in the
premises.

Dated: _____________________________

-------------------------
(Signature)

-------------------------
(Address)

<PAGE>

EXHIBIT 10.18
Option Agreement O-1

BIG BUCK BREWERY & STEAKHOUSE, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT

Big Buck Brewery & Steakhouse, Inc. (the "Company"), desiring to afford
an opportunity to the Grantee named below to purchase certain shares of the
Company's Common Stock, to provide the Grantee with an added incentive as an
employee of the Company, hereby grants to the Grantee, and the Grantee hereby
accepts, an option to purchase the number of such shares specified below, during
a term ending at 5:00 p.m. (prevailing local time at the Company's principal
offices) on the expiration date of this Option specified below, at the option
exercise price specified below, subject to and upon the following terms and
conditions:

1. IDENTIFYING PROVISIONS. As used in this Option, the following
terms shall have the following respective meanings:

(a) Grantee: WILLIAM F. ROLINSKI
-------------------
(b) Date of grant: DECEMBER 29, 1998
-----------------
(c) Number of shares optioned: 30,000
------
(d) Option exercise price per share: $3.00
-----
(e) Expiration date: DECEMBER 28, 2008
-----------------

This Option is not intended to be and shall not be treated as an
incentive stock option under Section 422 of the Internal Revenue Code.

2. VESTING SCHEDULE AND EXPIRATION. Subject to the provisions for
termination herein, this Option may be exercised immediately after the date of
grant as to all optioned shares, until and including the expiration date of this
Option whereupon the Option shall expire and may thereafter no longer be
exercised.

3. TERMINATION PROVISIONS. The right to exercise this Option is subject
to the following additional restrictions and limitations:

(a) TERMINATION OF EMPLOYMENT. If the Grantee's employment by
the Company is terminated for any reason other than death, the Option
may not be exercised more than three months after such termination nor
after the expiration date of this Option, whichever date is earlier,
unless such termination is by reason of the Grantee's permanent and
total disability, in which case such period of three months shall be
extended to one year. In all other respects, this Option shall
terminate upon such termination of employment.

(b) DEATH OF GRANTEE. If the Grantee shall die while this
Option remains exercisable, the Grantee's legal representative or
representatives or the persons entitled to do so under the Grantee's
last will and testament or under applicable intestate laws shall have
the right to exercise this Option, and such right shall expire and this
Option shall terminate one year after the date of the Grantee's death
or on the expiration date of this Option, whichever date is earlier. In
all other respects, this Option shall terminate upon such death.

(c) CONTINUITY OF EMPLOYMENT. This Option shall not be
exercisable in any part during the Grantee's lifetime unless at all
times beginning with the date of grant and ending no more than three
months prior to the date of exercise the Grantee has, except for
military service leave, sick leave or other bona fide leave of absence
(such as temporary employment by the United States Government), been in
the continuous

<PAGE>

employ of the Company, except that such period of three months shall be
extended to one year following any termination of such employment by
reason of the Grantee's permanent and total disability.

4. RESTRICTIONS ON TRANSFERABILITY OF OPTION. This Option may not be
transferred by the Grantee other than by will or the laws of descent and
distribution and may be exercised during the Grantee's lifetime only by the
Grantee or the Grantee's guardian or legal representative.

5. ADJUSTMENTS AND CORPORATE REORGANIZATIONS. If the outstanding shares
of stock of the class then subject to this Option are increased or decreased, or
are changed into or exchanged for a different number or kind of shares or
securities or other forms of property (including cash) or rights, as a result of
one or more reorganizations, recapitalizations, spin-offs, stock splits, reverse
stock splits, stock dividends or the like, appropriate adjustments shall be made
in the number and/or kind of shares or securities or other forms of property
(including cash) or rights for which this Option may thereafter be exercised,
all without any change in the aggregate exercise price applicable to the
unexercised portions of this Option, but with a corresponding adjustment in the
exercise price per share or other unit. No fractional share of stock shall be
issued under this Option or in connection with any such adjustment. Such
adjustments shall be made by or under authority of the Company's board of
directors whose determinations as to what adjustments shall be made, and the
extent thereof, shall be final, binding and conclusive.

Upon the dissolution or liquidation of the Company, or upon a
reorganization, merger or consolidation of the Company as a result of which the
outstanding securities of the class then subject to this Option are changed into
or exchanged for property (including cash), rights or securities not of the
Company's issue, or any combination thereof, or upon a sale of substantially all
the property of the Company to, or the acquisition of stock representing more
than eighty percent (80%) of the voting power of the stock of the Company then
outstanding by, another corporation or person, this Option shall terminate
unless provision be made in writing in connection with such transaction for the
assumption of this Option, or the substitution for this Option of an option
covering the stock of a successor employer corporation, or a parent or a
subsidiary thereof, with appropriate adjustments in accordance with the
provisions of this Section as to the number and kind of shares optioned and
their exercise prices, in which event this Option shall continue in the manner
and under the terms so provided.

If this Option shall terminate pursuant to the next preceding
paragraph, the Grantee or other person then entitled to exercise this Option
shall have the right, at such time prior to the consummation of the transaction
causing such termination as the Company shall designate, to exercise the
unexercised portion of this Option.

6. EXERCISE, PAYMENT FOR AND DELIVERY OF STOCK. This Option may be
exercised by the Grantee or other person then entitled to exercise it by giving
four business days' written notice of exercise to the Company specifying the
number of shares to be purchased and the total purchase price, accompanied by a
check to the order of the Company in payment of such price. If the Company is
required to withhold on account of any federal, state or local tax imposed as a
result of such exercise, the notice of exercise shall also be accompanied by a
check to the order of the Company in payment of the amount thus required to be
withheld.

7. RIGHTS IN STOCK BEFORE ISSUANCE AND DELIVERY. No person shall be
entitled to the privileges of stock ownership in respect of any shares issuable
upon exercise of this Option, unless and until such shares have been issued to
such person as fully paid shares.

8. REQUIREMENTS OF LAW. By accepting this Option, the Grantee
represents and agrees for himself or herself and his or her transferees by will
or the laws of descent and distribution that, unless a registration statement
under the Securities Act of 1933 is in effect as to shares purchased upon any
exercise of this Option, (a) any and all shares so purchased shall be acquired
for his or her personal account and not with a view to or for sale in connection
with any distribution, and (b) each notice of the exercise of any portion of
this Option shall be accompanied by a representation and warranty in writing,
signed by the person entitled to exercise the same, that the shares are being so
acquired in good faith for his or her personal account and not with a view to or
for sale in connection with any distribution.

<PAGE>

No certificate or certificates for shares of stock purchased upon
exercise of this Option shall be issued and delivered unless and until, in the
opinion of legal counsel for the Company, such securities may be issued and
delivered without causing the Company to be in violation of or incur any
liability under any federal, state or other securities law or any other
requirement of law or of any regulatory body having jurisdiction over the
Company.

9. NOTICES. Any notice to be given to the Company shall be addressed to
the Company in care of its Secretary at its principal office, and any notice to
be given to the Grantee shall be addressed to the Grantee at the address set
forth beneath the Grantee's signature hereto or at such other address as the
Grantee may hereafter designate in writing to the Company. Any such notice shall
be deemed duly given when enclosed in a properly sealed envelope or wrapper
addressed as aforesaid, registered or certified, and deposited, postage and
registry or certification fees prepaid, in a post office or branch post office
regularly maintained by the United States Postal Service.

10. RULES OF CONSTRUCTION. This Agreement has been executed and
delivered by the Company in Michigan and shall be construed and enforced in
accordance with the laws of said State, other than any choice of law rules
calling for the application of laws of another jurisdiction. The receipt of this
Option does not give the Grantee any right to continued employment by the
Company for any period, nor shall the granting of this Option or the issuance of
shares on exercise thereof give the Company any right to the continued services
of the Grantee for any period.

<PAGE>

IN WITNESS WHEREOF, the Company has granted this Option on the date of
grant specified above.

BIG BUCK BREWERY & STEAKHOUSE, INC.

By /S/ WILLIAM F. ROLINSKI
-----------------------
William F. Rolinski
President and Chief Executive Officer

/S/ WILLIAM F. ROLINSKI
-----------------------
William F. Rolinski

<PAGE>

EXHIBIT 10.19
Option Agreement O-2

BIG BUCK BREWERY & STEAKHOUSE, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT

1. IDENTIFYING PROVISIONS. As used in this Option, the following
terms shall have the following respective meanings:

(a) Grantee: GARY J. HEWETT
--------------
(b) Date of grant: DECEMBER 28, 1998
-----------------
(c) Number of shares optioned: 25,000
------
(d) Option exercise price per share: $3.00
-----
(e) Expiration date: DECEMBER 28, 2008
-----------------
This Option is not intended to be and shall not be treated as an
incentive stock option under Section 422 of the Internal Revenue Code.

3. TERMINATION PROVISIONS. The right to exercise this Option is subject
to the following additional restrictions and limitations:

<PAGE>

employ of the Company, except that such period of three months shall be
extended to one year following any termination of such employment by
reason of the Grantee's permanent and total disability.

<PAGE>

IN WITNESS WHEREOF, the Company has granted this Option on the date of
grant specified above.

BIG BUCK BREWERY & STEAKHOUSE, INC.

By /S/ WILLIAM F. ROLINSKI
---------------------------------------
William F. Rolinski
President and Chief Executive Officer

/S/ GARY J. HEWETT
--------------------------------------------
Gary J. Hewett

<PAGE>
EXHIBIT 10.20
Option Agreement O-3

BIG BUCK BREWERY & STEAKHOUSE, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT

1. IDENTIFYING PROVISIONS. As used in this Option, the following
terms shall have the following respective meanings:

(a) Grantee: ANTHONY P. DOMBROWSKI
---------------------
(b) Date of grant: DECEMBER 28, 1998
-----------------
(c) Number of shares optioned: 20,000
------
(d) Option exercise price per share: $3.00
-----
(e) Expiration date: DECEMBER 28, 2008
-----------------
This Option is not intended to be and shall not be treated as an
incentive stock option under Section 422 of the Internal Revenue Code.

3. TERMINATION PROVISIONS. The right to exercise this Option is subject
to the following additional restrictions and limitations:

<PAGE>

employ of the Company, except that such period of three months shall be
extended to one year following any termination of such employment by
reason of the Grantee's permanent and total disability.

<PAGE>

IN WITNESS WHEREOF, the Company has granted this Option on the date of
grant specified above.

BIG BUCK BREWERY & STEAKHOUSE, INC.

By /S/ WILLIAM F. ROLINSKI
---------------------------------------
William F. Rolinski
President and Chief Executive Officer

/S/ ANTHONY P. DOMBROWSKI
--------------------------------------------
Anthony P. Dombrowski

<PAGE>

EXHIBIT 21.1

SUBSIDIARIES OF BIG BUCK

NAME OF SUBSIDIARY STATE OF INCORPORATION

BBBP Management Company Michigan

<PAGE>

EXHIBIT 23.1

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the
incorporation of our report dated February 19, 1999 included in this Form
10-KSB, into Big Buck's previously filed Registration Statement File Nos.
333-29149, 333-29151, 333-34731, 333-71161 and 333-03548.

/s/ Arthur Andersen LLP

Minneapolis, Minnesota
March 29, 1999

<PAGE>
<ARTICLE> 5

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-02-2000
<PERIOD-START> DEC-29-1997
<PERIOD-END> JAN-03-1999
<CASH> 500,236
<SECURITIES> 0
<RECEIVABLES> 216,147
<ALLOWANCES> 0
<INVENTORY> 308,286
<CURRENT-ASSETS> 1,299,488
<PP&E> 20,505,509
<DEPRECIATION> (1,657,541)
<TOTAL-ASSETS> 20,819,986
<CURRENT-LIABILITIES> 3,278,329
<BONDS> 0
0
0
<COMMON> 52,820
<OTHER-SE> 10,291,478
<TOTAL-LIABILITY-AND-EQUITY> 20,819,986
<SALES> 15,561,753
<TOTAL-REVENUES> 15,561,753
<CGS> 5,270,518
<TOTAL-COSTS> 13,978,089
<OTHER-EXPENSES> (8,520)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 800,718
<INCOME-PRETAX> (1,359,754)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,359,754)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,359,754)
<EPS-PRIMARY> (0.26)
<EPS-DILUTED> (0.26)

</TABLE>

<PAGE>

EXHIBIT 99.1

CAUTIONARY STATEMENT

BIG BUCK BREWERY & STEAKHOUSE, INC., OR PERSONS ACTING ON BEHALF OF BIG
BUCK, OR OUTSIDE REVIEWERS RETAINED BY BIG BUCK MAKING STATEMENTS ON BEHALF OF
BIG BUCK, OR UNDERWRITERS OF BIG BUCK'S SECURITIES, FROM TIME TO TIME, MAY MAKE,
IN WRITING OR ORALLY, "FORWARD-LOOKING STATEMENTS" AS DEFINED UNDER THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995. THIS CAUTIONARY STATEMENT, WHEN USED
IN CONJUNCTION WITH AN IDENTIFIED FORWARD-LOOKING STATEMENT, IS FOR THE PURPOSE
OF QUALIFYING FOR THE "SAFE HARBOR" PROVISIONS OF THE LITIGATION REFORM ACT AND
IS INTENDED TO BE A READILY AVAILABLE WRITTEN DOCUMENT THAT CONTAINS FACTORS
WHICH COULD CAUSE RESULTS TO DIFFER MATERIALLY FROM SUCH FORWARD-LOOKING
STATEMENTS. THESE FACTORS ARE IN ADDITION TO ANY OTHER CAUTIONARY STATEMENTS,
WRITTEN OR ORAL, WHICH MAY BE MADE, OR REFERRED TO, IN CONNECTION WITH ANY SUCH
FORWARD-LOOKING STATEMENT.

THE FOLLOWING MATTERS, AMONG OTHERS, MAY HAVE A MATERIAL ADVERSE EFFECT
ON THE BUSINESS, FINANCIAL CONDITION, LIQUIDITY, RESULTS OF OPERATIONS OR
PROSPECTS, FINANCIAL OR OTHERWISE, OF BIG BUCK. REFERENCE TO THIS CAUTIONARY
STATEMENT IN THE CONTEXT OF A FORWARD-LOOKING STATEMENT OR STATEMENTS SHALL BE
DEEMED TO BE A STATEMENT THAT ANY ONE OR MORE OF THE FOLLOWING FACTORS MAY CAUSE
ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE IN SUCH FORWARD-LOOKING STATEMENT
OR STATEMENTS.

LACK OF PROFITABILITY; SHORT OPERATING HISTORY

Big Buck incurred net losses of $1,359,754 and $1,040,000 during the
fiscal years ended January 3, 1999 and December 28, 1997, respectively. To date,
Big Buck has opened three Big Buck Brewery & Steakhouses in the following
Michigan cities: Gaylord, Grand Rapids and Auburn Hills. Prior to the opening of
the Gaylord unit in May 1995, Big Buck had no operations or revenues.
Accordingly, Big Buck's operations are subject to all of the risks inherent in
the establishment of a new business enterprise, including a short operating
history. The likelihood of success of Big Buck must be evaluated in light of the
problems, expenses, difficulties, complications and delays frequently
encountered in connection with the establishment of a business. There can be no
assurance that future operations of any unit will be profitable. Future revenues
and profits, if any, will depend upon various factors, including the quality of
restaurant operations, the acceptance of Big Buck's beer and general economic
conditions. In general, restaurants experience a decline in revenue growth or in
actual revenues following a period of excitement which accompanies their
opening. There can be no assurance that Big Buck will operate profitably or that
it will successfully implement its plans to open additional units, in which case
Big Buck will continue to depend on the revenues of the Gaylord, Grand Rapids
and Auburn Hills units.

FUTURE CAPITAL REQUIREMENTS; UNCERTAINTY OF ADDITIONAL FUNDING

Big Buck's ability to execute its business strategy depends on its
ability to obtain substantial financing for the development of additional units.
The failure of Big Buck to raise capital when needed could have a material
adverse effect on Big Buck's business, operating results and financial
condition. No assurance can be given that Big Buck will be able to secure
additional financing when required, if at all. If Big Buck is able to obtain
financing, there can be no assurance that it will be on terms favorable or
acceptable to Big Buck. To obtain additional financing, Big Buck anticipates
that it will be required to sell additional equity securities. New investors may
seek and obtain substantially better terms than those available to investors
purchasing shares of Common Stock on the open market and Big Buck's issuance of
securities in the future may result in substantial dilution. Ultimately, if
additional capital does not become available to Big Buck when required, it will
be required to scale back or eliminate its expansion plans and it may be
required to scale back its operations.

<PAGE>

EXPANSION PLAN RISKS

Development is currently underway for the fourth Big Buck Brewery &
Steakhouse in Grapevine, Texas, a suburb of Dallas. During 1998, Big Buck
contributed $891,000 to the limited partnership which will own and operate such
unit. Big Buck may be required to contribute up to an additional $4.5 million,
upon ten business days' notice, to complete construction of the Grapevine unit.
Without additional financing, Big Buck will be unable to complete construction
of this unit. If such funds are not available when required by the joint
venture, Big Buck may be in material default under the joint venture agreement.
In the event of material default, Bass Pro would be entitled to purchase Big
Buck's interest in the joint venture at 40% of book value, thereby eliminating
Big Buck's interest in the Grapevine unit. Further, Bass Pro has the right to
purchase up to 15% of Big Buck's interest in the joint venture, at 100% of Big
Buck's original cost, within 24 months of the opening of the Grapevine unit;
provided, however, that Big Buck's interest in the joint venture may not be
reduced below 51%.

In addition to the availability of adequate financing, successful
expansion of Big Buck's operations will be largely dependent upon a variety of
factors, some of which are currently unknown or beyond Big Buck's control,
including customer acceptance of Big Buck Brewery & Steakhouses and Big Buck
Beer; the ability of management to identify suitable sites and to negotiate
purchases of such sites; the ability of management to secure future joint
venture agreements or other methods of financing; timely and economic
development and construction of units; timely approval from local governmental
authorities; the hiring of skilled management and other personnel; the ability
of management to apply its policies and procedures to a larger number of units;
the general ability to successfully manage growth; and the general state of the
economy. There can be no assurance that Big Buck will be able to open the
Grapevine unit or any additional units.

Big Buck's strategy includes operating a brewery at each unit.
Successful operation of separate breweries will require Big Buck to overcome
various organizational challenges such as increasing and maintaining production
and establishing and maintaining quality control over numerous geographically
separated units. In attempting to expand beer distribution, Big Buck will be
required to establish and manage relationships with wholesale distributors,
retailers and consumers in new markets. Big Buck is the sole promoter of sales
of its beer in new markets. Consumer tastes and preferences may vary from market
to market. There can be no assurance that Big Buck will be successful in
entering new markets.

STATE LAWS MAY LIMIT GROWTH

Big Buck is licensed under Michigan law as a "microbrewery." A
microbrewery in Michigan is limited to the production of not more than 30,000
barrels of beer per year by all breweries owned or controlled by the same
entity, whether within or outside Michigan. Without a change in current law, Big
Buck intends to limit its sales of beer off-site so as to reserve its brewing
capacity for sales of beer on-site, which provide Big Buck substantially higher
margins, but do not reach the same customer base. There can be no assurance that
legislation raising the barrelage ceiling will pass, that any such legislation
will pass in a form which would facilitate Big Buck's expansion plans, or that
if such legislation is not passed, Big Buck will be able to become licensed to
brew in excess of 30,000 barrels of beer per year.

JOINT VENTURE

Big Buck plans to operate the Grapevine unit, which is currently under
construction, pursuant to a joint venture agreement with Bass Pro. Based on its
effective 89.9% interest in the joint venture (Big Buck holds an 89.1% interest
in the limited partnership and an 80% interest in the general partner which
currently owns 1% of the limited partnership), Big Buck may be required to
contribute up to an additional $4.5 million, upon ten business days' notice, to
complete construction of the Grapevine unit. Without additional financing, Big
Buck will be unable to complete construction of this unit. If such funds are not
available when required by the joint venture, Big Buck may be in material
default under the joint venture agreement. In the event of material default,
Bass Pro would be entitled to purchase Big Buck's interest in the joint venture
at 40% of book value, thereby eliminating Big Buck's

<PAGE>

interest in the Grapevine unit. Further, Bass Pro has the right to purchase up
to 15% of Big Buck's interest in the joint venture, at 100% of Big Buck's
original cost, within 24 months of the opening of the Grapevine unit; provided,
however, that Big Buck's interest in the joint venture may not be reduced below
51%.

Pursuant to a separate commercial sublease agreement, the limited
partnership created by the joint venture leases the Grapevine site from Bass Pro
over a 15-year term. The lease may be extended at the option of Bass Pro for
seven additional five-year terms. The sublessee is obligated to pay an annual
percentage rent in the amount of 5.5% on gross sales less than $11.0 million per
year and 6.5% on gross sales in excess of $11.0 million per year (with a minimum
annual base rent of $385,000). Bass Pro may terminate in the event of a default
which is not cured within the applicable grace period. A default is defined to
include, but is not limited to, (a) the sublessee's failure to open the unit for
business on the same date as the sublessor's Outdoor World superstore is open
for business, (b) the sublessee's failure to remain open during all business
days, (c) the sublessee's failure to maintain on duty a fully trained service
staff, (d) the sublessee's failure to provide high quality food of the type
provided at the Gaylord unit, (e) the sublessee's failure to achieve gross sales
in the first full calendar year immediately following the opening and for each
calendar year thereafter of $7.0 million, (f) the sublessee encumbering in any
manner any interest in the subleased premises, or (g) the sublessee's failure to
conduct full and complete customer surveys no less frequently than each calendar
quarter.

The minimum annual base rent is required whether the Grapevine unit is
profitable or not. In the event that the sublessee is required to pay in excess
of the minimum annual base rent, the funds available to Big Buck for working
capital and development plans will be reduced. In the event of a default and
termination of the joint venture agreement, Big Buck's interest in the Grapevine
unit would be eliminated. This would have a material adverse impact on Big
Buck's business, operating results and financial condition.

SALE/LEASEBACKS

In April 1997, Big Buck sold the Grand Rapids site, including all
improvements thereto, to an unrelated third party, Eyde Brothers Development
Co., pursuant to a real estate purchase and leaseback agreement for $1.4
million. Pursuant to a separate lease agreement, Big Buck leases the Grand
Rapids site at a minimum annual base rent of $140,000 and a maximum annual base
rent of $192,500 over a ten-year term. The lease may be extended at the option
of Big Buck for two additional five-year terms. In addition to the annual base
rent, Big Buck is obligated to pay an annual percentage rent in the amount of 5%
on gross sales at the site in excess of $2.9 million per year. In the event that
such annual gross sales do not exceed $2.9 million for any two consecutive years
during the lease term, Big Buck will be obligated to repurchase the Grand Rapids
site for $1.4 million, plus $70,000 for each lease year on a pro rata basis.
Annual gross sales for the period from April 11, 1997 through April 10, 1998 did
not exceed $2.9 million. In the event that annual gross sales for the period
from April 11, 1998 through April 10, 1999 do not exceed $2.9 million, Big Buck
will be obligated to repurchase the Grand Rapids site for $1,540,000. Big Buck
has the option to purchase the Grand Rapids site from the lessor after the
seventh full lease year for $1.4 million, plus $70,000 for each lease year on a
pro rata basis. Should a repurchase be required, Big Buck believes that it would
be able to obtain mortgage financing sufficient to pay the required repurchase
price. There can be no assurance that such mortgage financing, in the event
repurchase were required, would be available on terms acceptable to Big Buck or
at all.

<PAGE>

for each lease year on a pro rata basis. Big Buck was required to pay Mr. Eyde
an annual percentage rent of $46,000 based upon annual gross sales for the
period from October 1, 1997 through September 30, 1998. The lessor has the
ability to require that Big Buck issue Common Stock (valued at $5.00 per share)
in payment of such repurchase price. Big Buck has the option to purchase the
Auburn Hills site from the lessor after the seventh full lease year for $4.0
million, plus $200,000 for each lease year on a pro rata basis. Independent of
annual gross sales, the lessor has the option to require Big Buck to purchase
the Auburn Hills site before the third full lease year at the same price.

Annual percentage rent is required whether the units are profitable or
not. In the event that Big Buck is required to pay annual percentage rent, the
funds available to Big Buck for working capital and development plans will be
reduced. In the event that annual percentage rent is not required over two
consecutive years, Big Buck may be forced to repurchase such sites at a premium
over their respective sale prices. There can be no assurance that Big Buck will
have sufficient funds to repurchase the Grand Rapids site or the Auburn Hills
site. In the event of a default and termination of either lease, Big Buck would
be unable to continue to operate the related unit, which would have a material
adverse impact on Big Buck's business, operating results and financial
condition.

POTENTIAL INABILITY TO REPAY EXISTING INDEBTEDNESS

Big Buck had a working capital deficit of $1,978,841 at January 3, 1999
and working capital of $255,000 at December 28, 1997. Big Buck has obtained
working capital through its credit facility with NBD Bank and obtained
additional working capital pursuant to a promissory note with Crestmark Bank.
The credit facility matures on October 1, 2000 and the promissory note, unless
extended, must be repaid in full by May 20, 1999. Big Buck currently owes NBD
approximately $1.9 million and Crestmark approximately $1.4 million. A first
priority lien in favor of NBD and a second priority lien in favor of Crestmark,
on substantially all of Big Buck's assets, secure this indebtedness. Interest
under the credit facility is payable at the rate of 10.2% per year and interest
under the promissory note is payable at 10% per year. The credit facility
contains certain financial and non-financial covenants which require Big Buck,
among other things, to maintain certain debt-ratios. As a consequence of its
expansion through debt financing, Big Buck has been in default under the
debt-ratio terms of its credit facility with NBD; however, Big Buck has received
a waiver from NBD of all defaults through January 3, 1999 under the credit
facility. The promissory note contains certain non-financial covenants. In the
event of a default which is not waived under either instrument, Big Buck's
assets would be at risk. There can be no assurance that Big Buck will be able to
repay or refinance its indebtedness to NBD or Crestmark. Without additional
financing, Big Buck's leveraged position and requirements for payments to NBD
and Crestmark may require Big Buck to liquidate all or a portion of its assets.

COMPETITION; CERTAIN FACTORS AFFECTING THE RESTAURANT AND BREWING INDUSTRIES

The restaurant industry is highly competitive with respect to price,
service, food quality (including taste, freshness, and nutritional value) and
location. New restaurants have a high failure rate. The restaurant industry is
also generally affected by changes in consumer preferences, national, regional
and local economic conditions, and demographic trends. The performance of
individual restaurants may also be affected by factors such as traffic patterns,
demographic considerations, and the type, number and location of competing
restaurants. In addition, factors such as inflation, increased food, labor and
employee benefit costs, and the lack of availability of experienced management
and hourly employees may also adversely affect the restaurant industry in
general and Big Buck's units in particular. Restaurant operating costs are
further affected by increases in the minimum hourly wage, unemployment tax rates
and similar matters over which Big Buck has no control. There are numerous well-

<PAGE>

established competitors, including national, regional and local restaurant
chains, possessing substantially greater financial, marketing, personnel and
other resources than Big Buck. Big Buck also competes with a large variety of
locally owned restaurants, diners and other establishments that offer moderately
priced food to the public and with other microbrewery/restaurants in a highly
competitive and developing microbrewery and brewpub restaurant market. Other
restaurants and companies could utilize the Big Buck Brewery & Steakhouse format
or a related format. There can be no assurance that Big Buck will be able to
respond to various competitive factors affecting the restaurant industry.

The domestic beer market is highly competitive due to the enormous
advertising and marketing expenditures by national and major regional brewers;
the continuing proliferation of microbreweries, regional craft breweries,
brewpubs and other small craftbrewers; the introduction of fuller-flavored
products by certain major national brewers; and a general surplus of domestic
brewing capacity, which facilitates existing contract brewer expansion and the
entry of new contract brewers. Although domestic demand for craftbrewed beers
has increased dramatically over the past decade, there can be no assurance that
this demand will continue. Big Buck anticipates intensifying competition in the
craftbrewed and fuller-flavored beer markets. Most of Big Buck's brewing
competitors possess financial, marketing, personnel and other resources
substantially greater than those of Big Buck, and there can be no assurance that
Big Buck will be able to succeed against intensified competition in the
craftbrewed and fuller-flavored beer markets.

BREWERY OPERATING HAZARDS

Big Buck's brewing operations are subject to certain hazards and
liability risks faced by all brewers, such as potential contamination of
ingredients or products by bacteria or other external agents that may be
wrongfully or accidentally introduced into products or packaging. Big Buck's
products are not pasteurized. While Big Buck has never experienced a
contamination problem in its products, the occurrence of such a problem could
result in a costly product recall and serious damage to Big Buck's reputation
for product quality. Big Buck's operations are also subject to certain injury
and liability risks normally associated with the operation and possible
malfunction of brewing and other equipment. Although Big Buck maintains
insurance against certain risks under various general liability and product
liability insurance policies, there can be no assurance that Big Buck's
insurance will be adequate.

BEER AND LIQUOR REGULATION

A significant percentage of Big Buck's revenue is derived from beer
sales. On-site sales of beer, including gift shop sales, accounted for 20.5% of
revenues and off-site sales of beer accounted for an additional 0.9% of revenues
during 1998. Big Buck must comply with federal licensing requirements imposed by
the Bureau of Alcohol, Tobacco and Firearms of the United States Department of
Treasury, as well as the licensing requirements of states and municipalities
where its units are or will be located. Failure to comply with federal, state or
local regulations could cause Big Buck's licenses to be revoked and force it to
cease brewing and/or selling its beer. Typically, licenses must be renewed
annually and may be revoked or suspended for cause at any time. Additionally,
state liquor laws may prevent or impede the expansion of Big Buck into certain
markets. While Big Buck has not experienced and does not anticipate any
significant problems in obtaining required licenses, permits or approvals, any
difficulties, delays or failures in obtaining such required licenses, permits or
approvals could delay or prevent the opening of a unit in a particular area. In
addition, changes in a jurisdiction's legislation, regulations or administrative
interpretations of liquor laws after the opening of a unit may prevent or hinder
Big Buck's expansion or operations in that jurisdiction or increase operating
costs.

RESTAURANT REGULATION

The restaurant industry is subject to numerous federal, state and local
government regulations, including those relating to the preparation and sale of
food and to building and zoning requirements. Big Buck is subject to regulation
by air and water pollution control divisions of the Environmental Protection
Agency of the United States

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and by certain states and municipalities in which its units are or will be
located. Big Buck is also subject to laws governing its relationship with
employees, including minimum wage requirements, overtime, working and safety
conditions and citizenship requirements. Restaurant operating costs are affected
by increases in the minimum hourly wage, unemployment tax rates, sales taxes and
similar matters, such as any government mandated health insurance, over which
Big Buck has no control.

TAXES; SMALL BREWER'S EXCISE TAX CREDIT

The federal government imposes an excise tax of $18.00 on each barrel
of beer produced for domestic consumption in the United States. However, each
brewer with production under 2,000,000 barrels per year is granted a small
brewer's excise tax credit in the amount of $11.00 per barrel on its first
60,000 barrels produced annually. No assurance can be given that the federal
government will not reduce or eliminate this credit. To the extent Big Buck's
production increases to amounts over 60,000 barrels per year, there will be an
increase in the average federal excise tax rate of Big Buck. Michigan imposes an
excise tax of $6.30 per barrel on each barrel of beer sold in Michigan. However,
each brewer which is a "microbrewery" under Michigan law (presently with
production of not more than 30,000 barrels per year) is granted a microbrewer's
excise tax credit in the amount of $2.00 per barrel. To the extent Big Buck's
production increases to amounts over 30,000 barrels per year, there will be an
increase in the average Michigan excise tax rate of Big Buck. Other states and
municipalities into which Big Buck may expand also impose excise or other taxes
or special charges on alcoholic beverages in varying amounts, which amounts are
subject to change. It is possible that in the future the rate of excise taxation
could be increased by either federal or state governments, or both. Increased
excise taxes on alcoholic beverages have been considered by the federal
government as an additional source of tax revenue in connection with various
proposals and could be included in future legislation. Future increases in
excise taxes on alcoholic beverages, if enacted, could adversely affect Big
Buck's business, operating results and financial condition.

DEPENDENCE ON KEY PERSONNEL; NEED FOR ADDITIONAL PERSONNEL

Big Buck's future success will depend in large part upon the continued
service of its key management personnel including William F. Rolinski, Gary J.
Hewett and Anthony P. Dombrowski. Given Big Buck's limited operating history,
Big Buck is dependent on its ability to identify, hire, train and motivate
qualified personnel necessary to enable it to continue operations. Big Buck does
not have key person life insurance policies on any of its employees. The
departure of key employees could have a material adverse effect on Big Buck's
business, operating results and financial condition. Big Buck's success will
also be dependent upon its ability to attract and retain qualified people,
including additional management personnel. While it has been successful to date
in attracting a management team and a restaurant staff, no assurance can be
given that Big Buck's current employees will continue to work for Big Buck or
that Big Buck will be able to obtain the services of additional personnel
necessary for Big Buck's growth. To date, Big Buck has not entered into any
agreements providing for the continued employment of its personnel.

NO ASSURANCE AS TO LIQUIDITY ON THE NASDAQ SMALLCAP MARKET

Big Buck's Common Stock, Class A Warrants and units (each consisting of
one share of Common Stock and one Class A Warrant) are currently listed on the
Nasdaq SmallCap Market. There can be no assurance that an active public market
will develop or be sustained for Big Buck's securities. In addition, if Big
Buck's securities do not continue to trade on the Nasdaq SmallCap Market, the
securities would become subject to certain rules of the

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SEC relating to "penny stocks." Such rules require broker-dealers to make a
suitability determination for purchasers and to receive the purchaser's prior
written consent for a purchase transaction, thus restricting the ability to
purchase or sell the securities in the open market.

POSSIBLE REDEMPTION OF THE CLASS A WARRANTS

Big Buck's Class A Warrants, which were sold in connection with Big
Buck's initial public offering, are subject to redemption at any time by Big
Buck at $0.01 per warrant, on 30 days' prior written notice, if the high closing
bid price of the Common Stock exceeds $9.00 per share (subject to adjustment)
for 20 consecutive trading days. If the Class A Warrants are redeemed, those
warrantholders will lose their right to exercise such warrants except during
such 30-day redemption period. Redemption of the Class A Warrants could force
the holders to exercise such warrants at a time when it may be disadvantageous
for the holders to do so or to accept the redemption price of $0.01 per warrant.

LIMITATION ON OWNERSHIP OF COMMON STOCK

The Michigan Liquor Control Act and Big Buck's Restated Articles of
Incorporation prohibit the acquisition of ten percent or more of the outstanding
Common Stock of Big Buck without the prior approval of the Michigan Liquor
Control Commission. A person seeking to acquire ten percent or more of the
outstanding Common Stock of Big Buck must (a) provide Liquor Control information
regarding such person, including without limitation thereto, information
regarding other alcoholic liquor business management experience, in such form,
and with such updates, as may be required by Liquor Control; (b) respond to
written or oral questions from Liquor Control; and (c) consent to the
performance of any background investigation that may be required by Liquor
Control, including without limitation thereto, an investigation of certain past
criminal convictions of such person. Further, no person shall acquire any
outstanding Common Stock of Big Buck in violation of the Michigan Liquor Control
Act, as it may be amended from time to time. If a person holds outstanding
Common Stock of Big Buck in violation of either of the above restrictions, such
person's securities holdings are subject to redemption at any time by Big Buck
by action of the Board of Directors. Redemption could force such disqualified
holders to sell their shares back to Big Buck at a time when it may be
disadvantageous for the holders to do so.

CONTROL BY MANAGEMENT

As of February 1, 1999, the current officers and directors of Big Buck
beneficially owned approximately 46% of the outstanding Common Stock.
Accordingly, such persons can exert substantial influence over the composition
of Big Buck's Board of Directors and generally direct the affairs of Big Buck
and may have the power to control the outcome of shareholder approvals of
business acquisitions, mergers and combinations and other actions.

SEASONALITY AND FLUCTUATIONS IN QUARTERLY RESULTS

Big Buck's sales and earnings are expected to fluctuate based on
seasonal patterns. Based on its existing units, Big Buck anticipates that its
highest earnings will occur in the second and third calendar quarters due to the
milder climate during those quarters in Michigan. Big Buck believes, however,
that future expansion into markets outside Michigan, if any, will mitigate the
effect of seasonality on its business. Quarterly results in the future are also
likely to be substantially affected by the timing of new unit openings. Because
of the effect of seasonality on Big Buck's business and the impact of new unit
openings, results for any quarter are not necessarily indicative of the results
for a full fiscal year.

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MICHIGAN ANTI-TAKEOVER LAWS

Big Buck is subject to Michigan statutes regulating business
combinations and restricting voting rights of certain persons acquiring shares
of Common Stock which may hinder or delay a change in control of Big Buck.

VOLATILITY OF MARKET PRICE OF COMMON STOCK

The market price of Big Buck's Common Stock has been subject to
significant fluctuations in response to numerous factors, including variations
in the annual or quarterly financial results of Big Buck or its competitors,
changes by financial research analysts in their estimates of the earnings of Big
Buck or its competitors, conditions in the economy in general or in the brewing
industry in particular, unfavorable publicity or changes in applicable laws and
regulations (or judicial or administrative interpretations thereof) affecting
Big Buck or the brewing industry. During 1997, Big Buck's Common Stock ranged
from a low of $1.75 on March 24, 1997 to a high of $7.25 on October 22, 1997.
During 1998, Big Buck's Common Stock ranged from a high of $5.875 on March 2,
1998 to a low of $2.125 on October 8, 1998. There can be no assurance that
purchasers of Big Buck's securities will be able to sell such securities at or
above the prices at which they were purchased.

IMPACT OF SALE OF SECURITIES; SECURITIES ELIGIBLE FOR FUTURE SALE

Big Buck had 5,285,000 shares of Common Stock outstanding as of March
1, 1999, and had warrants and stock options outstanding to purchase an
additional 3,758,082 shares of Common Stock, exercisable at prices ranging from
$2.625 to $8.00 per share. Big Buck has also registered certain shares of its
Common Stock for resale on the public market. The sale of such shares, and the
sale of additional shares which may become eligible for sale in the public
market from time to time upon the exercise of warrants and stock options, may be
dilutive to existing shareholders and could have the effect of depressing the
market price of Big Buck's Common Stock.

YEAR 2000 READINESS DISCLOSURE

STATE OF READINESS

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the process of contacting all critical suppliers and service providers to assess
the readiness of such parties and to determine the extent to which Big Buck may
be vulnerable to such parties' failure to resolve their own Year 2000 issues.
This effort is expected to be completed by July 1, 1999.

COSTS TO ADDRESS YEAR 2000 ISSUES

RISKS OF YEAR 2000 ISSUES

1. Disruption of Internal Computer Systems. If our internal computer
systems should fail, it could disrupt our accounting, restaurant management
and other systems. We believe that the failure of our internal computer
systems is unlikely. However, we expect that minor Year 2000 compliance
issues will continue to be identified through our discussions with our
hardware and software vendors. We intend to address these compliance issues
no later than the second calendar quarter of 1999.

2. Disruption of Supply Materials. The inability of our suppliers and
service providers to be Year 2000 ready could result in delays in product
delivery, disruption in the distribution channels and disruption in services
required to operate. We are in the process of surveying our suppliers and
service providers with regard to their Year 2000 readiness. We are hopeful of
receiving adequate responses from critical suppliers and service providers and
many non-critical suppliers and service providers by the second quarter of
1999. Where ultimate survey results show that the need arises, we will
arrange for back-up suppliers and service providers before the change-over
date.

CONTINGENCY PLANS

Big Buck recognizes the need for Year 2000 contingency plans in the
event that remediation is not fully successful or that the remediation
efforts of Big Buck's vendors, suppliers and service providers are not timely
completed. Big Buck intends to address contingency planning during calendar
1999. To the extent that Big Buck's vendors, suppliers, and service providers
are unable to provide sufficient evidence of Year 2000 readiness by July 1,
1999, Big Buck will seek to arrange for their replacement.

ABSENCE OF DIVIDENDS

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dividends, if any, on its Common Stock in the future is subject to the
discretion of the Board of Directors and will depend on Big Buck's earnings,
financial condition, capital requirements and other relevant factors. The
declaration or payment by Big Buck of dividends is also subject to the terms
of Big Buck's credit facility with NBD Bank and the terms of the loan
agreement governing Big Buck's promissory note with Crestmark Bank.