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                                                                    EXHIBIT 10.2
                                           
                         SUBSCRIPTION AND PURCHASE AGREEMENT
                                           
                      9% Convertible Secured Debentures due 2002
                          Warrants to Purchase Common Stock
                                           

    THIS SUBSCRIPTION AND PURCHASE AGREEMENT (the "Agreement") dated as of 
the 8th day of May, 1997 by and between RENAISSANCE ENTERTAINMENT 
CORPORATION, a Colorado corporation (the "Company"), and Charles S. Leavell 
(the "Investor"). Investor and the other persons who have entered into 
identical Subscription and Purchase Agreements with the Company are herein 
collectively referred to as the "Investors."

    In consideration of the mutual promises, representations, warranties, 
covenants and conditions set forth in this Agreement, the Company and the 
Investor mutually agree as follows:

                                      ARTICLE 1
                                           
                          DESCRIPTION OF PROPOSED FINANCING
                                           
    1.1    AUTHORIZATION OF THE DEBENTURES AND WARRANTS.  The Company has 
authorized the issuance and sale of (i) a maximum of $1,500,000 aggregate 
principal amount of nine percent (9%) Convertible Secured Debentures due 
2002, each in the principal amount of Fifty Thousand Dollars ($50,000) or an 
integral multiple thereof (the debenture(s) issued pursuant to this Agreement 
and the other debentures being issued pursuant to identical Subscription and 
Purchase Agreements entered into between the Company and Investors being 
herein referred to collectively as the "Debentures"), and (ii) warrants to 
purchase up to 300,000 shares of the Company's Common Stock (the "Warrants"). 
The Debentures, which will be identical in all respects, except as to date, 
name of Investor and amount of investment, shall be in the form attached 
hereto as Appendix A and the Warrants shall be in the form attached hereto as 
Appendix B.

    1.2    PURCHASE AND SALE OF THE DEBENTURES; ISSUANCE OF WARRANTS.  
Subject to the terms and conditions of this Agreement and in reliance upon 
the representations and warranties contained herein, the Company agrees to 
sell to Investors the principal amount of Debentures for which each such 
Investor shall subscribe and to issue to Investor Warrants representing the 
right to purchase Ten Thousand (10,000) shares of the Company's Common Stock 
for each Fifty Thousand Dollars ($50,000) principal amount of Debentures 
acquired.  Investor, in reliance upon the representations and warranties of 
the Company contained herein, agrees to purchase from the Company the 
principal amount of the Debentures set forth in Section 15.2 hereof.

    1.3    CLOSING.  Closing(s) of the purchase and sale of the Debentures 
contemplated by this Agreement (herein the "Closing") shall take place at 
such times as agreed between the Company and the Investor.  At the Closing, 
the Company shall deliver to each Investor (i) one or more Debentures made 
payable to the order of such Investor, against delivery to the Company by the 
Investor of a certified or cashier's check or other form of payment 
acceptable to the Company in the amount of the purchase price of the 
Debenture(s) subscribed for in Section 15.2 below, and (ii) one or more 
Warrants registered in Investor's name for the Warrants to be issued as 
described above.

                                      ARTICLE 2
                                           
                    REPRESENTATIONS AND WARRANTIES OF THE COMPANY
                                           
    The Company hereby represents and warrants to the Investors that:

    2.1    MISLEADING STATEMENTS.  No statement by the Company in this 
Agreement or in any document, written statement or certificate furnished or 
to be furnished to the Investors pursuant to this Agreement (including 

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the Disclosure Schedule attached hereto and made a part hereof for all 
purposes) or in connection with the transactions contemplated by this 
Agreement, when taken together, contains or will contain any untrue statement 
of a material fact or omits or will omit to state a material fact necessary 
to make the statements therein made not misleading.

    2.2    CORPORATE ORGANIZATION.  (a)  Company is a corporation duly 
incorporated, validly existing and in good standing under the laws of the 
State of Colorado and has the corporate power and authority to carry on the 
Company's business as it is now being conducted and to own and lease the 
property and assets that it now owns and leases in connection with the 
Company's business. Company is duly licensed or qualified and in good 
standing as a foreign corporation in each jurisdiction in which the character 
of the properties owned or leased by it or the nature of the business 
conducted by it makes such licensing or qualification necessary.  The 
jurisdictions in which the Company and its subsidiary, Creative Faires 
Limited, are qualified are listed in Section 2.2 of the Disclosure Schedule.

           (b)  True, accurate and complete copies of Company's Articles of 
Incorporation and By-Laws, as in effect on the date hereof, have heretofore 
been delivered to Investor.

    2.3    CAPITALIZATION.  (a)  The authorized capital stock of Company 
consists of 1,000,000 shares of Preferred Stock, $1.00 par value, and 
50,000,000 shares of Common Stock, $.03 par value, and as of May 5, 1997, no 
shares of Preferred Stock and 10,809,362 shares (including 1,173,100 shares 
being held in escrow pending the potential sale of such shares to foreign 
investors represented by Credit Bancorp) of Common Stock were issued and 
outstanding.  All of the issued and outstanding shares of Common Stock are 
validly issued, fully paid, nonassessable and free of preemptive rights.

           (b)  As of the date hereof, there are no outstanding 
subscriptions, options, calls, contracts, commitments, understandings, 
restrictions, arrangements, rights or warrants, including any right of 
conversion or exchange under any outstanding security, instrument or other 
agreement obligating Company to issue, deliver or sell, or cause to be 
issued, delivered or sold, additional shares of the capital stock or 
obligating Company to grant, extend or enter into any such agreement or 
commitment, except as set forth in Section 2.3 to the Disclosure Schedule, 
and there are no voting trusts, proxies or other agreements or understandings 
to which Company is a party or is bound with respect to the voting of any 
shares of its capital stock.

    2.4    AUTHORIZATION.  (a)  Company has all requisite corporate power and 
authority to enter into, execute, deliver and consummate the transactions 
contemplated by this Agreement, the Debenture, the Warrant, the Mortgage, the 
Deed of Trust and any other instruments and agreements contemplated herein 
required to be executed and delivered by it pursuant to this Agreement 
(collectively, the "Related Instruments").  The Board of Directors of Company 
has taken all action required by law, the Articles of Incorporation and 
By-Laws of the Company or otherwise to authorize the execution and delivery 
of this Agreement and the consummation of the transactions contemplated 
hereby, including the execution, delivery and consummation of the Related 
Instruments. No other corporate act or proceeding on the part of Company is 
necessary to authorize this Agreement or any of the Related Instruments or 
the transactions contemplated hereby or thereby.  This Agreement is, and each 
of the Related Instruments, when executed and delivered to Investor by 
Company, will be, a valid and binding obligation of Company enforceable 
against Company in accordance with its terms.

           (b)  Company has previously delivered to Investor true and 
complete copies, certified by the Secretary or an Assistant Secretary of 
Company, of the resolutions duly and validly adopted by the Board of 
Directors of Company evidencing its authorization of the execution and 
delivery of this Agreement and the Related Instruments and the consummation 
of the transactions contemplated hereby and thereby (which resolutions have 
not been modified, revoked or rescinded in any respect).

    2.5    NO VIOLATION.  Neither the execution and delivery by Company of 
this Agreement or any of the Related Instruments, nor the consummation by 
Company, of the transactions contemplated hereby or thereby will violate any 
material provision of the General Corporation Law of the State of Colorado, 
the Articles of Incorporation or By-Laws of Company, or, violate, or be in 
conflict with, or constitute a default (or an event or 

                                       -2-

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condition which, with notice or lapse of time or both, would constitute a 
default) under, or result in the termination of, or accelerate the 
performance required by, or cause the acceleration of the maturity of any 
liability or obligation pursuant to, or, violate any statute or law or any 
judgment, decree, order, writ, injunction, regulation or rule of any court or 
governmental authority.

    2.6    REPORTS AND FINANCIAL STATEMENTS.  Since December 31, 1996, 
Company has filed all material forms, statements, reports and documents 
(including all exhibits, amendments and supplements thereto) required to be 
filed by it under the federal securities laws ("Company's SEC Reports"), 
copies of which have been previously delivered to Investor by Company.  As of 
their respective dates, the Company's SEC Reports did not contain any untrue 
statement of a material fact or omit to state a material fact required to be 
stated therein or necessary to make the statements therein, in light of the 
circumstances under which they were made, not misleading.  Financial 
Statements contained in Company's SEC Reports have been prepared in 
accordance with Generally Accepted Accounting Principles (except as may be 
indicated therein or in the notes thereto) and fairly present the financial 
position of Company as of the dates thereof and the results of their 
operations and changes in financial position for the periods then ended.

    2.7    NO UNDISCLOSED OR CONTINGENT LIABILITIES.  Except as and to the 
extent set forth in Section 2.7 of the Disclosure Schedule, Company has no 
material liabilities or obligations relating to the Company's business of any 
nature (whether absolute, secured, contingent or otherwise and whether due or 
to become due) which are not fully reflected or reserved against in the 
financial statements for the nine-months ended December 31, 1996 (the 
"Financial Statements") except for liabilities and obligations incurred in 
the ordinary course of business and consistent with past practice since the 
date thereof. The reserves for liabilities and obligations reflected in the 
Financial Statements have been calculated in accordance with generally 
accepted accounting principles.

    2.8    ABSENCE OF CERTAIN CHANGES.  Except as and to the extent set forth 
in Section 2.8 of the Disclosure Schedule, since December 31, 1996, Company 
in respect of the Company's business, has not taken any action not in the 
ordinary course of business and consistent with past practices.

    2.9    LITIGATION.  Except as set forth in Section 2.9 of the Disclosure 
Schedule, there are no claims, actions, suits, proceedings, investigations or 
inquiries pending against the Company's business which would have a material 
adverse effect on the Company's business taken as a whole.

    2.10   TITLE TO PROPERTY, ENCUMBRANCES.  Except as set forth on Section 
2.10 to the Disclosure Schedule, Company has good, valid and marketable title 
to each parcel of real property owned by it and is in possession of and has 
good title to, or has valid leasehold interests in, all tangible personal 
property used in or reasonably necessary for the conduct of its business.

    2.11   PLANT AND EQUIPMENT.  Except as set forth in Section 2.11 of the 
Disclosure Schedule, all plants, structures, machinery, equipment and 
personal property or real property improvements owned, leased or used by the 
Company have no material defects (ordinary wear and tear excepted) and are in 
good and normal operating condition and repair, and are adequate for the uses 
to which they are being put.

    2.12   LEASES.  Section 2.12 of the Disclosure Schedule contains an 
accurate and complete list of all material leases (including all material 
amendments thereof and material modifications thereto) (the "Leases") 
pursuant to which Company leases real or personal property for the exclusive 
use or benefit of the Company's business.  Company has not received any 
written notification that it is in default with respect to any of the Leases; 
and, except as set forth in Section 2.12 of the Disclosure Schedule, no event 
or condition has occurred which (whether with or without notice, lapse of 
time or the happening or occurrence of any other event) would constitute a 
material default thereunder.

    2.13   COMPLIANCE WITH APPLICABLE LAW.  Except as set forth in Section 
2.13 of the Disclosure Schedule, Company is presently complying in all 
respects with all material laws, rules, regulations, orders, ordinances, 
judgments, decrees, orders, writs and injunctions of all governmental 
authorities.

                                       -3-

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    2.14   TAXES.  Company has (i) timely filed all material returns required 
to be filed by it with respect to all federal, state and local taxes 
(collectively referred to as "Taxes"), (ii) paid all Taxes shown to have 
become due pursuant to such returns, including federal and state payroll 
taxes, and (iii) paid all other Taxes for which a notice of assessment or 
demand for payment has been received.

    2.15   EMPLOYEE PLANS.  Section 2.15 of the Disclosure Schedule contains 
an accurate and complete list of all employee benefit plans ("Plans").  
Company has no commitment to provide any additional Plan, policy or 
arrangement, or to modify an existing Plan covering employees engaged in the 
Company's business.

    2.16   LABOR MATTERS.  Except as set forth in Section 2.16 of the 
Disclosure Schedule, Company is presently complying in all material respects 
with all material laws respecting employment and employment practices, and is 
not engaged in any unfair labor practice or unlawful employment practice 
relating to the Company's business.

    2.17   ENVIRONMENTAL PROTECTION.  Except as set forth in Section 2.17 of 
the Disclosure Schedule, Company has obtained all material permits, licenses 
and other authorizations which are required in respect of the operation of 
the Company's business under federal, state and local laws relating to 
pollution or protection of the environment (the "Environmental Laws"), other 
than those permits, licenses and other authorizations, the failure to so have 
obtained will not, individually or in the aggregate, have a material adverse 
effect on the Company's business taken as a whole.

    2.18   CONSENTS AND APPROVALS.  Except as set forth in Section 2.18 of 
the Disclosure Schedule, Company is not required to obtain, transfer or cause 
to be transferred any material consent, approval, license, permit or 
authorization of, or make any declaration, filing or registration with, any 
third party in connection with (a) the execution and delivery by Company of 
this Agreement or the Related Instruments or (b) the consummation by Company 
of the transaction contemplated hereby or thereby.

    2.19   CONTRACTS AND COMMITMENTS.  Except as set forth in Section 2.19 of 
the Disclosure Schedule:

           (a)  Company is not a party to or bound by any agreements, contracts
     or commitments which are material to the Company's business taken as a 
     whole; and

           (b)  Company is not in default under or in violation of, nor is
     there any basis for any valid claim of default under or violation of, any
     material contract, agreement or commitment made or obligation relating to 
     the Company's business.

    2.20   INSURANCE.  Company's insurance contracts, including those 
covering its properties, buildings, fixtures, equipment, inventory and 
employees, are of types and in amounts considered adequate for similar 
businesses.  Such insurance contracts shall be maintained in full force and 
effect.

    2.21   COMPANY COVENANTS.  So long as any Debentures are outstanding:

           (a)  Neither the Company nor any subsidiary (unless it is
    wholly owned by the Company) will pay any dividends or distributions
    to shareholders, except for dividends or distributions in Common Stock
    of the Company;
     
           (b)  Company will deliver to the Investor, within 120 days
    after the end of each fiscal year, an officer's certificate stating
    whether or not to the best knowledge of the signers thereof the
    Company is in default in the performance or compliance of any of the
    provisions of this Agreement, the Debenture or the Mortgage;
     
           (c)  All of the Company's SEC Reports and filings and all of
    the Company's communications with shareholders will be furnished to
    investor at the same time as they are filed with the SEC or furnished
    to shareholders; and

                                       -4-
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           (d)  Notice will be given to Investors of the occurrence of any
    Event of Default (as defined in Section 11.1) or any fact, condition
    or event that with the giving of notice or passage of time or both
    would become an Event of Default or if Company becomes aware of any
    material adverse change in the business prospects, financial condition
    (including, without limitation, a proceeding in bankruptcy,
    insolvency, reorganization or the appointment of a receiver or
    trustee).

                                      ARTICLE 3
                                           
                    REPRESENTATIONS AND WARRANTIES OF THE INVESTOR
                                           
    The Investor represents and warrants that:

    3.1    HIGH RISK INVESTMENT.  The Investor is aware that investment in 
the Debentures (the "Offering") involves risks.  The Investor represents that 
Investor has read and carefully considered the disclosures set forth in this 
Subscription and Purchase Agreement and all documents furnished pursuant to 
this Agreement, and understands that an investment in this Offering should be 
considered only by a person able to withstand a total loss of such investment.

    3.2    BINDING OBLIGATION.  This Agreement and any other agreement 
between the Company and the Investor expressly contemplated by this 
Agreement, constitute a valid and legally binding obligation of the Investor.

    3.3    CORPORATE INVESTORS.  If the Investor is a corporation, it hereby 
represents and warrants that:

           (a)     ORGANIZATION AND STANDING.  The Investor is a corporation
    duly and validly existing and in good standing under the laws of its
    jurisdiction of incorporation, and has all requisite corporate power and
    authority to own its properties and to carry on its business as now
    conducted.

           (b)     AUTHORIZATION.  All corporate action on the part of the
    Investor, its officers and directors necessary for the authorization,
    execution and delivery of this Agreement and all additional agreements
    expressly contemplated by this Agreement and the performance of all
    obligations of the Investor hereunder have been taken.


                                      ARTICLE 4
                                           
                          FEDERAL AND OTHER SECURITIES LAWS
                                           
    4.1    INVESTMENT REPRESENTATIONS AND WARRANTIES.  The Investor further 
represents and warrants that:

           (a)     INVESTMENT EXPERIENCE.  The Investor represents that
    Investor is experienced in evaluating and extending financing to companies
    such as the Company, has such knowledge and experience in financial and
    business matters as to be capable of evaluating the merits and risks of the
    investment, and has the ability to bear the economic risks of the
    investment and to make an informed investment decision with respect
    thereto.  The Investor further represents that Investor has had, during the
    course of the transaction and prior to the purchase of the Debentures, the
    opportunity to ask questions of, and receive answers from, the Company
    concerning the terms and conditions of the Offering and to obtain
    additional information (to the extent the Company possessed such
    information or could acquire it without unreasonable effort or expense)
    necessary to verify the accuracy of any information furnished to or to
    which Investor had access.

           (b)     INVESTOR REPRESENTATIVE.  If the Investor has used the
    services of a Purchaser Representative, the Investor has received
    confirmation in writing from such Purchaser Representative concerning the
    specific details of any and all past, present or future relationships,
    actual or contemplated, between himself 

                                       -5-

<PAGE>

    or his affiliates and the Company or any of its affiliates, and any 
    compensation received or to be received as a result of any such 
    relationships.

           (c)     ACQUISITION FOR INVESTMENT FOR INVESTOR'S OWN ACCOUNT.  This
    Agreement is made with the Investor in reliance upon Investor's
    representation to the Company, which by its acceptance hereof the Investor
    hereby confirms and which by acceptance of any Debenture, the Holder
    thereof shall also confirm, that the Debentures are being and the shares of
    Common Stock issuable upon conversion of the Debentures will be, unless
    such shares have been registered pursuant to the Securities Act of 1933, as
    amended (the "1933 Act") and applicable state blue sky laws, acquired for
    investment for Investor's (Debenture Holder's) own account, not as a
    nominee or agent and not with a view to the sale or distribution of any
    part thereof, and that Investor (Debenture Holder) has no present intention
    of selling, granting participation in, or otherwise distributing the same. 
    Any resales of the Debentures or any shares of Common Stock issued upon the
    conversion thereof will be in conformity with applicable law.  By executing
    this Agreement (or a Debenture), Investor (Debenture Holder) further
    represents that Investor (Debenture Holder) does not have any contract,
    undertaking, agreement, or arrangement with any person in violation of any
    United States federal or state law to sell, transfer, or grant
    participation to such person, or to any third person, with respect to the
    Debentures or any shares of Common Stock issued upon the conversion
    thereof.  Investor (Debenture Holder) realizes that the basis for the
    exemption from the registration requirements of the 1933 Act, relied upon
    by the Company in connection with the Offering, may not be present if,
    notwithstanding such representation, the Investor (Debenture Holder) has in
    mind merely acquiring the Debentures for a fixed or determinable period and
    selling the Debentures in the future, and Investor hereby confirms the
    absence of any such intention.

           (d)     TRANSFER OR DISPOSITION OF SECURITIES.  The Investor
    understands that the Debentures and any shares of Common Stock issued upon
    the conversion thereof may not be sold, transferred, or otherwise disposed
    of without registration under the 1933 Act, and that in the absence of an
    effective registration statement, such securities must be held
    indefinitely.  The Investor represents that, in the absence of an effective
    registration statement, it will sell, transfer, or otherwise dispose of
    such securities only in a manner consistent with the representations set
    forth herein and in accordance with the provisions of this Agreement.

    4.2    CERTIFICATE LEGENDS.  The Investor agrees that all certificates 
evidencing the Debentures, the Warrants and any shares of Common Stock issued 
in respect thereto shall bear a legend in substantially the following form, 
and by which the Investor agrees to be bound:

    THE SECURITY DESCRIBED HEREIN HAS NOT BEEN REGISTERED UNDER THE
    SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT") OR UNDER THE
    SECURITIES LAWS OF ANY STATE OF THE UNITED STATES.  NO SALE OR
    DISTRIBUTION OF THIS SECURITY MAY BE EFFECTED WITHOUT AN EFFECTIVE
    REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL
    REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
    REQUIRED UNDER THE 1933 ACT AND APPLICABLE STATE BLUE SKY LAWS.

    4.3    STOP TRANSFER INSTRUCTION.  The Company shall make a notation 
regarding the restrictions on transfer of the Debentures and Warrants in its 
stock books, and the Company shall not be required to transfer on its books 
any of such securities that have been sold or transferred in violation of any 
of the provisions of this Agreement, or to treat as the owner of such 
securities any transferee to whom such securities have been so transferred.

                                       -6-

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                                      ARTICLE 5
                                           
                 CONDITIONS TO INVESTOR'S OBLIGATIONS AT THE CLOSING
                                           
    The obligations of the Investor under Section 1.2 of this Agreement are 
subject to the fulfillment on or before the Closing of each of the following 
conditions:

    5.1    REPRESENTATIONS AND WARRANTIES TRUE ON THE CLOSING DATE.  The 
representations and warranties of the Company contained in Article 2 shall be 
true on and as of the Closing with the same force and effect as if they had 
been made at the Closing.

    5.2    PERFORMANCE.  The Company shall have conformed and complied with 
all agreements and conditions contained in this Agreement required to be 
performed or complied with by it on or before the Closing.

    5.3    QUALIFICATIONS.  All authorizations, approvals, or permits, if 
any, of any governmental authority or regulatory body of the United States or 
of any state, that are required in connection with the lawful issuance and 
sale of the Debentures pursuant to this Agreement shall have been duly 
obtained and shall be effective on and as of the Closing.

    5.4    OPINIONS AND CERTIFICATES.  All opinions of counsel to the Company 
and all corporate certificates or documents in connection with the 
transactions contemplated hereby and all documents and instruments incident 
to such transactions shall be in form and substance satisfactory to the 
Investor, and the Investor shall have received all such counterpart originals 
or certified or other copies of such documents as Investor may reasonably 
request.

    5.5    DELIVERY OF DEBENTURES AND WARRANTS.  The Investor shall have 
received one or more properly executed Debenture and Warrant certificates 
representing the Debentures and Warrants which the Investor is purchasing at 
the Closing.

    5.6    OFFICERS' CERTIFICATE.  Company shall have delivered to the 
Investor a certificate, dated the Closing Date, executed by its chief 
executive and chief financial officers certifying the fulfillment of the 
conditions specified in Sections 5.1 and 5.2 hereof.

    5.7    MORTGAGE/TITLE POLICY.  The Debentures shall be secured by a valid 
Security Agreement and Fixture Financing Statement on the Company's faire 
sites in Kenosha, Wisconsin and Fredericksburg, Virginia, including a 
Mortgage (the "Mortgage") subject to prior mortgage liens in favor of Bank 
One, Kenosha N.A., with respect to the Wisconsin site, and a Deed of Trust, 
Assignment of Leases and Security Agreement (the "Deed of Trust") subject to 
a prior deed of trust, assignment of leases and security agreement in favor 
of Union Bank and Trust Company, with respect to the Virginia site.  The 
Mortgage shall be insured by Landmark Title Corporation and evidenced by a 
Mortgagee's Policy in the amount of the Debentures.

                                      ARTICLE 6
                                           
                  CONDITIONS TO THE COMPANY'S OBLIGATIONS AT CLOSING
                                           
    The obligations of the Company under Section 1.2 of this Agreement are 
subject to the fulfillment on or before the Closing of each of the following 
conditions as to the Investor:

    6.1    REPRESENTATIONS AND WARRANTIES TRUE ON THE CLOSING.  The 
representations and warranties of the Investor contained in Articles 3 and 4 
shall be true on and as of the Closing with the same force and effect as if 
they had been made at the Closing.

                                       -7-

<PAGE>

    6.2    QUALIFICATIONS.  All authorizations, approvals, or permits, if 
any, of any governmental authority or regulatory body of the United States or 
of any state that are required in connection with the lawful issuance and 
sale of the Debentures and Warrants pursuant to this Agreement shall have 
been duly obtained and shall be effective on and as of the Closing.

    6.3    PAYMENT OF PURCHASE PRICE.  Investor shall have delivered to the 
Company the total consideration for the Debentures and Warrants which the 
Investor is purchasing at the Closing.
                                                                              
        
                                      ARTICLE 7
                                           
                                      DEBENTURES
                                           
    7.1    PRINCIPAL AND INTEREST PAYMENTS.  The Company shall pay interest 
to the registered holders of the Debentures (the "Holders") on the principal 
amount of the Debentures on the first business day of each calendar quarter 
(the "Interest Payment Dates") of each year commencing on the first such day 
to occur after Closing with respect to the purchase of such Debenture, at the 
rate of Nine Percent (9%) per annum, accruing from the date of issuance after 
as well as before maturity and default and after judgment.  Accrued but 
unpaid interest shall bear interest at the rate of Nine Percent (9%) per 
annum until paid, commencing with the date on which such interest was due and 
payable.  Unless earlier converted into Common Stock in accordance with 
Article 8 hereof, or accelerated in accordance with Article 11, the entire 
outstanding amount of the Debentures and all accrued but unpaid interest 
shall be due and payable in full on April 1, 2002.

    7.2    REISSUE OF DEBENTURES.  No Debenture shall be reissued with 
respect to the principal amount of any Debentures which are paid pursuant to 
this Agreement, and the Company shall cancel and terminate any Debenture 
which has been fully paid or presented to it for exchange pursuant to any of 
the provisions of this Agreement.

    7.3    REGISTRATION AND TRANSFER OF DEBENTURES.

           (a)     The Company shall, at all times while any Debentures are
    outstanding, act as the registrar of the Debentures and shall cause to be
    kept at its principal office in the City of Boulder, Colorado, or in such
    other place or places and by such other registrar or registrars, if any, as
    the Company may designate, a register in which shall be entered the names
    and addresses of the Holders of Debentures and particulars of the
    Debentures held by them respectively and of all transfers of Debentures. 
    The name of the Holder shall be noted on the Debentures by the Company or
    other registrar.

           (b)     No transfer of a Debenture shall be valid unless made by the
    Holder or his executors or administrators or other legal representatives or
    his or their attorney duly appointed by an instrument in writing in form
    and execution satisfactory to the Company, upon compliance with the
    provisions of this Agreement and the Debentures and such other requirements
    as the Company and/or other registrar may reasonably prescribe, and unless
    such transfer shall have been duly entered on the appropriate register
    and/or noted on such Debenture by the Company or other registrar.  The
    person in whose name a Debenture is registered shall be deemed to be the
    owner thereof.

    7.4    EXCHANGES OF DEBENTURES.  Debentures are issuable in denominations 
of Fifty Thousand Dollars ($50,000) and integral multiples thereof.  
Debentures of any authorized denomination may be exchanged for Debentures of 
any other authorized denomination or denominations, any such exchange to be 
for Debentures of an equivalent aggregate principal amount, as requested by 
the Holders, and bearing the same interest rate and date of maturity as the 
original Debentures. Any exchange of Debentures may be made at the offices of 
the Company or at the offices of any registrar where a register is maintained 
for the Debentures pursuant to the provisions of Section 7.3.  Any Debentures 
tendered for exchange together with a sum sufficient to cover any tax or 
other governmental charge payable in connection with the transfer shall be 
surrendered to the Company or appropriate registrar and shall be canceled.

                                       -8-

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                                      ARTICLE 8
                                           
                                      CONVERSION
                                           
    8.1    RIGHT OF CONVERSION.  At any time after April 30, 1998 and prior 
to maturity, the Holders of the Debentures shall have the right from time to 
time to convert all or a portion of the principal balance thereof unpaid and 
outstanding from time to time into shares of the Common Stock of the Company; 
such conversion shall be made at the conversion price in effect at the time 
of conversion, determined as hereinafter provided (the "Conversion Price").  
The initial Conversion Price shall be Four Dollars Fifty Cents ($4.50) per 
share (the "Initial Conversion Price").  The Conversion Price shall be the 
lesser of the Initial Conversion Price (adjusted as set forth below) or 
Seventy percent (70%) of the fair market value (as defined below) of the 
Company's Common Stock on the Date of Conversion (as hereinafter defined).  
Such right of conversion is conditioned upon the Holder's agreement to 
convert a minimum principal amount of the Debentures of Ten Thousand Dollars 
($10,000) at any time such Holder elects to exercise Holder's conversion 
rights unless, at the time the Holder elects to convert the Debenture, Holder 
holds less than Ten Thousand Dollars ($10,000) in principal amount of the 
Debentures, in which instance, the entire amount shall be converted.

    The fair market value per share of Common Stock at any date shall be (i) 
the average of the mean of the closing bid and asked prices of the Common 
Stock for the last 10 consecutive trading days before the relevant date, as 
reported in the Wall Street Journal (or, if not so reported, as otherwise 
reported by the National Association of Securities Dealers, Inc. (the "NASD") 
or the NASD's Automated Quotation System ("NASDAQ")), or, (ii) in the event 
the Common Stock is listed on a stock exchange or on the NASDAQ National 
Market System (or other national market system), the fair market value per 
share shall be the average of the closing prices on the exchange or on the 
NASDAQ National Market System (or other national market system), as the case 
may be, for the last 10 consecutive trading days before the relevant date, as 
reported in the Wall Street Journal (or, if not so reported, as otherwise 
reported by the stock exchange, NASDAQ or other national market system).

    8.2    EXERCISE OF CONVERSION RIGHT.

           (a)     In order to exercise the conversion right provided in
    Section 8.1, a Holder of the Debentures shall surrender the Debentures at
    the office of the Company or other registrar appointed by the Company,
    together with a conversion notice in the form attached to the Debenture as
    Exhibit A thereto.  Such Holder shall thereupon be deemed the holder of the
    underlying shares of Common Stock, and the principal amount so converted of
    such Debentures shall be deemed to have been paid in full.  No adjustments
    with respect to interest or dividends shall be made on the portion of any
    Debenture converted under this Section.  Thereupon such Holder and/or,
    subject to the terms of this Agreement, including payment of all applicable
    stamp or security transfer taxes or other governmental charges, Holder's
    nominee(s) or assignee(s), shall be entitled to be entered in the books of
    the Company as of the Date of Conversion (or such later date as is
    specified in subsection 8.2(b)) as the holder of the number of shares of
    Common Stock into which the applicable principal amount of such Debenture
    is convertible in accordance with the provisions of this Article 8 and, as
    soon as practicable thereafter, the Company shall deliver to such Debenture
    Holder and/or, subject as aforesaid, the Holder's nominee(s) or
    assignee(s), a certificate or certificates for such shares of Common Stock
    and, if applicable, a check for any amount payable under Section 8.5.

           (b)     For the purposes of this Article 8, a Debenture shall be
    deemed to be surrendered for conversion in the case of Section 8.1, on the
    date (herein called "Date of Conversion") on which it is surrendered by
    delivery to the Company at its principal office in Boulder, Colorado, or
    other registrar, if any, appointed by the Company and of which the Holder
    of the Debenture is notified in writing, and, in the case of a Debenture
    surrendered by mailing or other means of transmission, on the date on which
    it is received by the Company at its principal office in Boulder, Colorado,
    or other registrar, if any, appointed by the Company and of which the
    Holder of the Debenture is notified in writing; provided that if a
    Debenture is surrendered for conversion on a day on which the register of
    Common Stock is closed, the person or persons 

                                       -9-

<PAGE>
    entitled to receive Common Stock shall become the holder or holders of 
    record of such shares or Common Stock as at the date on which such register
    is next reopened.

           (c)     Except as otherwise provided herein, any part, being Ten
    Thousand Dollars ($10,000) or an integral multiple thereof, of a Debenture
    of a denomination in excess of Ten Thousand Dollars ($10,000) may be
    converted as provided in this Article 8 and all references in this
    Agreement to conversion of Debentures shall be deemed to include conversion
    of such parts.

           (d)     The Holder of any Debenture of which part only is converted
    shall upon the exercise of its right of conversion, surrender the said
    Debenture to the Company or other registrar, if any, and the Company or
    other registrar, if any, shall cancel the same and shall without charge
    forthwith certify and deliver to the Holder a new Debenture or Debentures
    in an aggregate principal amount equal to the unconverted part of the
    principal amount of the Debenture so surrendered, provided that such new
    Debenture(s) shall be issued only in denominations of Ten Thousand Dollars
    ($10,000) or integral multiples thereof.

           (e)     The Holder of a Debenture surrendered for conversion in
    accordance with this Section shall be entitled to receive accrued and
    unpaid interest on the principal amount thereof being converted to the
    Interest Payment Date on or next preceding the Date of Conversion thereof,
    but there shall be no payment or adjustment by the Company on account of
    any interest accrued or accruing thereon from the latest Interest Payment
    Date and the Common Stock issued upon such conversion shall rank only in
    respect of dividends declared in favor of shareholders of record on and
    after the Date of Conversion or such later date as such Holder shall become
    the holder of record of such Common Stock pursuant to subsection 8.2(b),
    from which applicable date they will for all purposes be and be deemed to
    be issued and outstanding as fully paid and nonassessable shares of Common
    Stock.

    8.3    ADJUSTMENT OF CONVERSION PRICE.  The Conversion Price shall be
subject to adjustment as follows:

           (a)     In case the Company shall (i) pay a dividend in shares of
    its capital stock (other than an issuance of shares of capital stock to
    holders of Common Stock who have elected to receive a dividend in shares in
    lieu of cash), (ii) subdivide its outstanding shares of Common Stock, (iii)
    reduce, consolidate or combine its outstanding shares of Common Stock into
    a smaller number of shares, or (iv) issue by reclassification of its shares
    of Common Stock any shares of the Company, the number of shares a Holder of
    a Debenture thereafter surrendered for conversion shall be entitled to
    receive shall be the number of shares of Common Stock of the Company which
    he would have owned or would have been entitled to receive after the
    happening of any of the events described above had such Debenture been
    converted immediately prior to the happening of such event.  Such
    adjustment shall be made successively whenever any such effective date or
    record date shall occur.  An adjustment made pursuant to this subsection
    (a) shall become effective retroactively, immediately after the record date
    in the case of a dividend and shall become effective immediately after the
    effective date in the case of a subdivision, reduction, consolidation,
    combination or reclassification.

           (b)     If the Company shall at any time issue or sell or be deemed
    pursuant to the provisions of subsections 8.3(c) and (d) hereof to have
    issued or sold shares of its Common Stock for consideration per share less
    than the Initial Conversion Price then in effect with respect to such
    Common Stock, then the Initial Conversion Price shall be reduced by
    multiplying it by a fraction, the numerator of which equals the number of
    shares of Common Stock outstanding prior to the sale or issuance plus the
    number of shares of Common Stock which would have been issued in the
    transaction if the Initial Conversion Price had been applied, and the
    denominator of which equals the number of shares of Common Stock
    outstanding after the sale or issuance plus the number of shares of Common
    Stock actually issued in the transaction.

           (c)     In case at any time after the date hereof the Company shall
    in any manner grant (whether directly or by assumption in a merger or
    otherwise) any rights to subscribe for or to purchase, or any options for
    the purchase of, Common Stock or any stock or other securities convertible
    into or exchangeable for Common Stock (such rights or options being herein
    called "Options" and such convertible or exchangeable 

                                       -10-
<PAGE>

    stock or securities being herein called "Convertible Securities") at an 
    option or conversion price per share of Common Stock (determined by 
    dividing: (i) the total amount, if any, received or receivable by the 
    Company as consideration for the granting of such Options, plus the minimum 
    aggregate amount of additional consideration payable upon the exercise of 
    such Options, plus, in the case of such Options which relate to Convertible 
    Securities, the minimum aggregate amount of additional consideration, if 
    any, payable upon the issue or sale of such Convertible Securities and upon 
    the conversion or exchange thereof, by (ii) the total maximum number of 
    shares of Common Stock of the Company, issuable upon the exercise of such 
    Options and in the case of Convertible Securities, upon conversion thereof) 
    less than the Initial Conversion Price then in effect with respect to such 
    Common Stock, then the total maximum number of shares of Common Stock 
    issuable upon the exercise and conversion of such Options and Convertible 
    Securities shall be deemed to be outstanding and to have been issued and 
    sold by the Company as of the date of the issue or sale of the Options, for 
    such price per share.  No sale, issuance or transfer of shares of Common 
    Stock shall be deemed to have been made upon the actual issuance of such 
    Common Stock except as otherwise provided in subsection 8.3(e) hereof.

           (d)     In case at any time after the date hereof the Company shall
    in any manner issue or sell (whether directly or by assumption in merger or
    otherwise) any Convertible Securities, whether or not the rights to
    exchange or convert thereunder are immediately exercisable, and the price
    per share of Common Stock issuable upon such conversion or exchange
    (determined by dividing: (i) the total amount received or receivable by the
    Company, as consideration for the issue or sale of such Convertible
    Securities, plus the minimum aggregate amount of additional consideration,
    if any, payable to the Company upon the conversion or exchange thereof, by
    (ii) the total maximum number of shares of Common Stock issuable upon the
    conversion or exchange of all such Convertible Securities) shall be less
    than the Initial Conversion Price then in effect with respect to such
    Common Stock, then the total maximum number of shares of Common Stock
    issuable upon conversion of all such Convertible Securities shall be deemed
    to be outstanding and to have been issued and sold by the Company as of the
    date of the issue or sale of the Convertible Securities, for such price per
    share.  No sale, issuance or transfer of shares of Common Stock shall be
    deemed to have been made upon the actual issuance of such Common Stock
    except as otherwise provided in subsection 8.3(e) hereof.

           (e)     If the purchase price payable or number of shares of Common
    Stock subject to purchase as provided for in any Options referred to in
    subsection 8.3(c) hereof, the additional consideration, if any, payable
    upon the conversion or exchange of any Convertible Securities referred to
    in subsections 8.3(c) or (d), or the rate at which any Convertible
    Securities referred to in subsections 8.3(c) or (d) are convertible into
    Common Stock shall change so as to reduce the deemed sale price of Common
    Stock previously calculated under subsections 8.3(c) and/or (d), then a
    sale of shares of Common Stock shall be deemed to have occurred for the
    purposes of subsections 8.3(c) and/or (d), as applicable, with appropriate
    adjustments to be made to the number of shares of Common Stock deemed to
    have been sold to reflect the prior related deemed sale and such
    adjustments by the adjustment of the Initial Conversion Rate and Initial
    Conversion Price pursuant to subsections 8.3(c) or (d), as applicable.

           (f)     In case of any consolidation of the Company with or merger
    of the Company with or into another corporation or in case of any sale,
    transfer or lease to another corporation of all or substantially all of the
    property of the Company, the Company or such successor or purchasing
    corporation, as the case may be, shall execute an agreement that the Holder
    of a Debenture shall have the right thereafter upon payment of the Initial
    Conversion Price in effect immediately prior to such action to purchase
    upon conversion of the Debenture the kind and amount of shares and other
    securities and property which the Holder would have owned or would have
    been entitled to receive after the happening of such consolidation, merger,
    sale, transfer or lease had the Debenture been converted immediately prior
    to such action.  The Company shall give prompt written notice of the
    execution of any such agreement to the Holder of each Debenture at the
    address of such Holder as shown on the records of the Company.  Such
    agreement shall provide for subsequent adjustments, which shall be as
    nearly equivalent as may be practicable to the adjustments provided for in
    this Section 8.3, after the happening of such consolidation, merger, sale,
    transfer or lease.  

                                       -11-

<PAGE>

    The provisions of this subsection 8.3(f) shall similarly apply to successive
    consolidations, mergers, sales, transfers or leases.

           (g)     The provisions of this Section 8.3 shall not apply to any
    currently outstanding securities of the Company or any management stock
    grants or sales, stock options or shares of Common Stock issued upon
    exercise of stock options issued to officers, directors, employees or
    consultants of the Company pursuant to a plan heretofore adopted and
    approved by the Board of Directors of the Company.

           (h)     Upon the expiration of any Option or the termination of any
    right to convert or exchange any Convertible Securities without the
    issuance of shares of Common Stock, the Initial Conversion Price shall be
    readjusted to the Initial Conversion Price which would have prevailed
    absent the adjustment made as a result of the issuance of such Options or
    Convertible Securities.

           (i)     In case any Options shall be issued in connection with the
    issue or sale of other securities of the Company, together comprising one
    integral transaction in which no specific consideration is allocated to
    such Options by the parties thereto, such Options shall be deemed to have
    been issued without consideration.

           (j)     In case any shares of Common Stock, Options or Convertible
    Securities shall be issued or sold or deemed to have been issued or sold
    for cash, the consideration received therefor shall be deemed to be the
    amount received therefor by the Company.  In case any shares of Common
    Stock, Options or Convertible Securities shall be issued or sold for a
    consideration other than cash, the amount of the consideration other than
    cash received by the Company shall be the fair market value of such
    consideration, as determined by the Board of Directors of the Company.

           (k)     If the Common Stock issuable upon the conversion of the
    Debentures shall be changed into the same or a different number of shares
    of any class or classes of stock, whether by capital reorganization,
    reclassification or otherwise (other than a subdivision or combination of
    shares or stock dividend provided for above, or a reorganization, merger,
    consolidation or sale of assets provided for in this Section 8.3), then,
    and in each such event, each Holder of Debentures shall have the right
    thereafter to convert such Debentures into the kind and amount of shares of
    Common Stock and other securities and property receivable upon such
    reorganization, reclassification, or other change by the Holders of the
    number of shares of Common Stock into which such Debentures might have been
    converted, as reasonably determined by the Company's board of directors,
    immediately prior to such reorganization, reclassification, or change, all
    subject to further adjustment as provided herein.

           (l)     If at any time or from time to time there shall be a capital
    reorganization of the Common Stock (other than a subdivision, combination,
    reclassification or exchange of shares provided for elsewhere in this
    Section 8.3) or a merger or consolidation of the Company with or into
    another corporation, or the sale of all or substantially all of the
    Company's properties and assets to any other person, then, as a part of
    such reorganization, merger, consolidation or sale, provision shall be made
    as reasonably determined by the Company's board of directors so that the
    Holders of the Debentures shall thereafter be entitled to receive upon
    conversion of such Debentures, the number of shares of stock or other
    securities or property of the Company or of the successor corporation
    resulting from such merger or consolidation or sale, to which a Holder of
    Common Stock deliverable upon conversion would have been entitled on such
    capital reorganization, merger, consolidation or sale.

           (m)     The adjustments provided for in this Section 8.3 are
    cumulative and shall apply to successive divisions, subdivisions,
    reductions, combinations, consolidations, issues, distributions or other
    events contemplated herein resulting in any adjustment under the provisions
    of this Section, provided that, notwithstanding any other provision of this
    Section, no adjustment of the Initial Conversion Price shall be required
    unless such adjustment would require an increase or decrease of at least
    one (1) percent in the Initial Conversion Price then in effect; provided,
    however, that any adjustments which by reason of this subsection (l) are
    not required to be made shall be carried forward and taken into account in
    any subsequent adjustment.

                                       -12-

<PAGE>

           (n)     Upon each adjustment of the Initial Conversion Price, the
    Company shall give prompt written notice thereof addressed to the
    registered Holders at the address of such Holders as shown on the records
    of the Company, which notice shall state the Initial Conversion Price
    resulting from such adjustment and the increase or decrease, if any, in the
    number of shares issuable upon the conversion of such Holder's Debentures,
    setting forth in reasonable detail the method of calculation and the facts
    upon which such calculation is based.

           (o)     In the event of any question arising with respect to the
    adjustments provided for in this Section 8.3, such question shall be
    conclusively determined by a firm of independent certified public
    accountants appointed by the Company (who may be the auditors of the
    Company) and acceptable to the holders of at least 50% of the principal
    amount of the Debentures outstanding; such accountants shall have access to
    all necessary records of the Company and such determination shall be
    binding upon the Company, and the Debenture Holders.

    8.4    RESERVATION OF SHARES.  The Company agrees that, so long as any
Debenture shall remain outstanding, the Company shall at all times reserve and
keep available, free from preemptive rights, out of its authorized capital stock
for the purpose of issue upon conversion of the Debentures, the full number of
shares of Common Stock then issuable upon conversion of the Debentures.

    8.5    FRACTIONAL SHARES.  No fractional shares or scrip representing
fractional shares shall be issued upon the conversion of the Debentures.  If,
upon conversion of any Debenture as an entirety, the registered Holder would,
except for the provisions of this Section 8.5, be entitled to receive a
fractional share of Common Stock, then an amount equal to such fractional share
multiplied by the then fair market value of shares of the Company's Common Stock
shall be paid by the Company to such registered Holder.  For purposes of such
valuation, fair market value shall be determined as provided by Section 8.1
hereof.

    8.6    VALIDITY OF SHARES.  The Company agrees that all shares of Common
Stock which may be issued upon conversion of the Debentures will, upon issuance,
be legally and validly issued, fully paid and nonassessable and free from all
taxes, liens and charges with respect to the issue thereof.

    8.7    SHAREHOLDER RIGHTS.  Until conversion, and then only to the extent
that a portion of the principal of the Debentures remains unconverted, the
Holders of the Debentures (in that capacity) shall have no rights as
shareholders of the Company.

    8.8    NOTICE OF CERTAIN EVENTS.  If at the time:

           (a)     the Company shall declare any dividend or distribution
    payable to the Holders of its Common Stock;

           (b)     the Company shall offer for subscription pro rata to the
    Holders of Common Stock any additional shares of stock of any class or
    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 of all or substantially all of its
    assets to, another corporation or business organization; or

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

then, in any one or more of said cases, the Company shall give the registered 
Holders of the Debentures written notice, by certified or registered mail, of 
the date on which a record shall be taken for such dividend, distribution or 
subscription rights or for determining shareholders entitled to vote upon 
such reorganization, reclassification, consolidation, merger, sale, 
dissolution, liquidation or winding up and of the date when any such 
transaction shall 

                                       -13-

<PAGE>

take place, as the case may be.  Such notice shall also specify the date as 
of which the Holders of 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 thirty (30) days prior to the transaction in 
question and not less than twenty (20) days prior to the record date in 
respect thereto.

                                      ARTICLE 9
                                           
                                  SECURITY AGREEMENT
                                           
    9.1  GRANT OF SECURITY INTEREST.  (a)  In order to secure the payment of 
the Debentures and the performance by the Company of its obligations 
hereunder and such other obligations of the Company to the Debenture Holders 
which may arise from time to time during the term of the Debentures (all of 
which are referred to herein as the "Obligations") the Company hereby grants 
to the Debenture Holders a security interest in two parcels of real estate of 
the Company, one situated in the County of Kenosha, State of Wisconsin (the 
"Wisconsin real estate"), and the other situated in the County of Stafford, 
State of Virginia (the "Virginia real estate"), such security interests to be 
in substantially the form of the Real Estate Mortgage attached hereto as 
Appendix C (the "Mortgage") and the Deed of Trust, Assignment of Leases and 
Security Agreement attached hereto as Appendix D (the "Trust Agreement") (the 
Wisconsin real estate and the Virginia real estate being hereinafter referred 
to as the "Collateral").

    (b)  The Wisconsin real estate is currently subject to three outstanding 
mortgages to Bank One, the first in the amount of $1,000,000 (with an 
outstanding balance of approximately $800,000), the second in the amount of 
$250,000 (with an outstanding balance of approximately $200,000) and the 
third in the amount of approximately $690,190, and a mortgage in the amount 
of $350,000 with respect to certain outstanding Convertible Secured Notes 
(the "Notes") of the Company (the mortgage to be filed with respect to the 
Notes being hereinafter referred to as the "Secured Note Mortgage").  Bank 
One has agreed to subordinate the third Bank One mortgage to the Mortgage and 
the Secured Note Mortgage.  Investors acknowledge that while the Secured Note 
Mortgage will be filed subsequent to the filing of the Mortgage, the 
indebtedness represented by the Notes is pari passu to the indebtedness 
represented by the Debentures and that the Wisconsin real estate secures 
payment of the Notes and the Debentures on a pro-rata basis.  The Company 
represents and warrants that the aggregate outstanding balance of the first 
two mortgages to Bank One shall not, so long as any Debentures remain 
outstanding, exceed $1,000,000.

    (c)  The Virginia real estate is currently subject to two outstanding 
Deeds of Trust, Assignment of Leases and Security Agreements to the Union 
Bank and Trust Company in the aggregate amount of $1,750,000 (with an 
aggregate outstanding balance of $1,716,753).  The Company has also deposited 
with the Union Bank and Trust Company as additional security for the bank 
loans a CD in the amount of $825,000.  The Note holders do not have a 
security interest in the Virginia real estate.

    9.2  FILINGS.  The Company shall, at its expense, execute, deliver, file 
and record the Mortgage and Trust Agreement and other documents that are 
reasonably required in order to perfect the Debenture Holders' security 
interest in the Collateral. In the event that the Mortgage and Trust 
Agreement initially filed in connection with the Collateral are in an amount 
less than One Million Five Hundred Thousand Dollars ($1,500,000), Investor 
agrees to consent to and to provide any and all written agreements necessary 
to file a new or amended Mortgage and new or amended Trust Agreement with 
respect to the Collateral, provided that such new or amended Mortgage and 
Trust Agreement are being filed in connection with the sale of Debentures and 
are for not more than One Million Five Hundred Thousand Dollars ($1,500,000).

    9.3    TERMINATION/AMENDMENT OF SECURITY INTEREST.  Upon full and 
punctual payment and performance of the Obligations, the security interest 
created hereby shall terminate and all rights of the Debenture Holders in the 
Collateral shall revert to the Company.

                                       -14-

<PAGE>

                                      ARTICLE 10
                                           
                                      REDEMPTION
                                           
    10.1 RIGHT OF REDEMPTION.  The Company may, at its option, redeem the 
Debentures as a whole or from time to time in part, at Redemption Prices 
which shall consist of the applicable percentage of the principal amount of 
the Debentures redeemed set forth below.

    If redeemed during the periods set forth below:

              PERIOD                                  PERCENTAGE
    -------------------------------         -----------------------------

    May 1, 1997 to January 31, 1998         100% plus each Investor shall
                                            relinquish Warrants representing
                                            the right to acquire 5,000 shares
                                            of the Company's Common Stock for
                                            every $50,000 principal amount of
                                            Debentures redeemed
              
    February 1, 1998 to April 29, 1998      110%
              
    April 30, 1998 to April 29, 1999        107%
              
    April 30, 1999 to April 29, 2000        104%
              
    April 30, 2000 and Thereafter           100%

plus, in each case, any interest accrued on the Debentures so redeemed to the 
Redemption Date.  

    10.2  SELECTION OF DEBENTURES TO BE REDEEMED.  If less than all the 
Debentures are to be redeemed, the particular Debentures to be redeemed shall 
be selected pro-rata not more than 60 days prior to the Redemption Date by 
the Company, from the outstanding Debentures not previously called for 
redemption.

    For all purposes of this Agreement, unless the context otherwise 
requires, all provisions relating to the redemption of Debentures shall 
relate, in the case of any Debenture redeemed or to be redeemed only in part, 
to the portion of the principal of such Debentures which has been or is to be 
redeemed.

    10.3  NOTICE OF REDEMPTION; CONVERSION OF DEBENTURES.  Notice of 
redemption shall be given simultaneously by facsimile transmission or 
overnight courier and by certified mail, postage prepaid, return receipt 
requested, mailed not less than 30 nor more than 60 days prior to the date 
selected by the Company for redemption (the "Redemption Date"), to each 
Holder of Debentures to be redeemed. All notices of redemption shall state:

           (1)     the Redemption Date,

           (2)     the Redemption Price,

           (3)     if less than all outstanding Debentures are to be redeemed,
    the identification (and, in the case of partial redemption, the respective
    principal amounts) of the Debentures to be redeemed from the Holder to whom
    the notice is given,

           (4)     that on the Redemption Date the Redemption Price will become
    due and payable upon each such Debenture, and that interest thereon shall
    cease to accrue on said date, and

           (5)     the place where such Debentures are to be surrendered for
    payment of the Redemption Price.

                                       -15-

<PAGE>

    10.4  DEBENTURES REDEEMED IN PART.  Any Debenture which is to be redeemed 
only in part shall be surrendered at the office or agency of the Company and 
the Company shall execute and deliver to the Holder of such Debenture without 
service charge, a new Debenture or Debentures, of any authorized denomination 
as requested by such Holder in aggregate principal amount equal to and in 
exchange for the unredeemed portion of the principal of the Debentures so 
surrendered.

                                      ARTICLE 11
                                           
                                       REMEDIES
                                           
    11.1  EVENTS OF DEFAULT.  "Event of Default," wherever used herein, means 
any one of the following events (whatever the reason for such Event of 
Default and whether it shall be occasioned by the provisions of this Article 
11 or be voluntary or involuntary or be effected by operation of law pursuant 
to any judgment, decree or order of any court or any order, rule or 
regulation of any administrative or governmental body):

           (1)     default in the payment of any interest upon any Debenture
    when the same becomes due and payable, and continuance of such default for
    a period of ten (10) days;

           (2)     default in the payment of the principal of any Debenture
    when the same becomes due and payable;

           (3)     default in the performance, or breach, of any covenant or
    warranty of the Company in this Agreement (other than a covenant or
    warranty a default in whose performance or whose breach is elsewhere in
    this Section specifically dealt with), and continuance of such default or
    breach for a period of thirty (30) days after there has been given, by
    registered or certified mail, to the Company by the Holders of at least Ten
    Percent (10%) in principal amount of the outstanding Debentures, a written
    notice specifying such default or breach and requiring it to be remedied
    and stating that such notice is a "Notice of Default" hereunder;

           (4)     a court having jurisdiction in the premises shall enter a
    decree or order for relief in respect of the Company in an involuntary case
    under any applicable bankruptcy, insolvency or other similar law now or
    hereafter in effect, or appointing a receiver, liquidator, assignee,
    custodian, trustee, sequestrator (or similar official) of the Company or
    for any substantial part of its property, or ordering the winding-up or
    liquidation of its affairs and such decree or order shall remain unstayed
    and in effect for a period of thirty (30) consecutive days;
    
           (5)     the Company shall commence a voluntary case under any
    applicable bankruptcy, insolvency or other similar law now or hereafter in
    effect, or shall consent to the entry of an order for relief in an
    involuntary case under any such law, or shall consent to the appointment of
    or taking possession by a receiver, liquidator, assignee, trustee,
    custodian, sequestrator (or other similar official) of the Company or for
    any substantial part of its property, or shall make any general assignment
    for the benefit of creditors, or shall fail generally to pay its debts as
    they become due, or shall take any corporate action in furtherance of any
    of the foregoing.
    
           (6)     the failure of the Company to pay any indebtedness due any
    other person or entity and such failure shall continue beyond any
    applicable grace period and result in the acceleration of maturity of such
    indebtedness;
    
           (7)     the Company shall suffer to exist beyond any applicable
    grace period any other event of default under any material agreement
    binding the Company, provided such event of default has not been waived in
    writing by the appropriate party or parties to such agreement; or

                                       -16-

<PAGE>

           (8)     the Company shall admit its inability to pay its debts as
    they mature or shall make an assignment for the benefit of its creditors.

    11.2  ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.  If an Event of 
Default occurs and is continuing, then and in every such case the Holders of 
not less than Fifteen Percent (15%) in principal amount of the Debentures 
outstanding may declare the principal of all the Debentures to be immediately 
due and payable, by a notice in writing to the Company and upon any such 
declaration such principal shall become immediately due and payable.

    At any time after such a declaration of acceleration has been made and 
before a judgment or decree for payment of the money due has been obtained, 
the Holders of a majority in principal amount of Debentures outstanding, by 
written notice to the Company, may rescind and annul such declaration and its 
consequences if:

           (1)     the Company has paid or deposited into a trust account a sum 
    sufficient to pay:

              (a)  all overdue installments of interest on all Debentures,

              (b)  the principal of any Debentures which have become due
           otherwise than by such declaration of acceleration and interest
           thereon at the rate borne by the Debentures,

              (c)  to the extent that payment of such interest is lawful,
           interest upon overdue installments of interest at the rate borne by
           the Debentures, and

           (2)     all Events of Default, other than the non-payment of the
    principal of Debentures which have become due solely by such acceleration,
    have been cured or waived as provided in Section 11.8.

    No such rescission shall affect any subsequent default or impair any right
consequent thereon.

    11.3  COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY HOLDERS.  The
Company covenants that if:

           (1)     default is made in the payment of any installment of
    interest on any Debenture when such interest becomes due and payable and
    such default continues for a period of ten (10) days, or

           (2)     default is made in the payment of the principal of any
    Debenture at the maturity thereof,

the Company, will, upon demand of the Holders hereof pursuant to Section 
11.2, pay to such Holders, the whole amount then due and payable on this 
Debenture for principal and interest, with interest upon the overdue 
principal and, to the extent that payment of such interest shall be legally 
enforceable, upon overdue installments of interest, at the rate borne by the 
Debenture.

    If the Company falls to pay such amounts forthwith upon such demand, the 
Holder may institute a judicial proceeding for the collection of the sums so 
due and unpaid, and may prosecute such proceeding to judgment or final 
decree, and may enforce the same against the Company or any other obligor 
upon this Debenture and collect the monies adjudged or decreed to be payable 
in the manner provided by law out of the property of the Company or any other 
obligor upon this Debenture, wherever situated.

    11.4   REMEDIES WITH RESPECT TO COLLATERAL ON DEFAULT.  (a) If an Event 
of Default occurs and is continuing, then and in every such case the Holders 
of not less than Fifteen Percent (15%) in principal of the Debentures 
outstanding may, in addition to their other rights hereunder and in the 
Mortgage and Trust Agreement, exercise any one of the following rights and 
remedies with respect to the Collateral: (1) exercise and enforce any and all 
of the rights and remedies available after default to a secured party under 
the Uniform Commercial Code as adopted in Wisconsin, with respect to the 
Wisconsin real estate, and Virginia, with respect to the Virginia real 
estate, in which case notice to the Company of any public or private sale or 
any other disposition of the Collateral or 

                                       -17-

<PAGE>

any other action shall be deemed commercially reasonable if given at least 
ten (10) calendar days prior to the date of such disposition or other action; 
(2) with respect to any portion of the Collateral constituting a right to 
payment, notify the person or entity obligated to make such payment that such 
right has been assigned to the Debenture Holders for security and shall be 
paid directly to the nominee of the Debenture Holders.  The Company will join 
in giving such notice if requested by the Debenture Holders.  

    (b)    At any time after the occurrence of an Event of Default, the 
Debenture Holders may, but need not, (i) demand, sue for, collect or receive 
any money or property constituting the Collateral which is payable to the 
Company, or grant an extension to, compromise, settle, modify, waive, amend 
or change such obligation; and (ii) give receipt for any payment received 
from such obligor, which receipt shall be deemed conclusive evidence of such 
payment as against the Company.

    11.5  UNCONDITIONAL RIGHT OF DEBENTURE HOLDERS TO RECEIVE PRINCIPAL AND 
INTEREST.  Subject to the provisions of this Agreement, the Holder of any 
Debenture shall have the right which is absolute and unconditional to receive 
payment of the principal of and interest on such Debenture on the respective 
dates expressed in such Debenture and to institute suit for the enforcement 
of any such payment and such right shall not be impaired without the consent 
of such Holder.

    11.6  RESTORATION OF RIGHTS AND REMEDIES.  If any Debenture Holder has 
instituted any proceeding to enforce any right or remedy under this Agreement 
and such proceeding has been discontinued or abandoned for any reason, or has 
been determined adversely to such Debenture Holder, then and in every such 
case the Company and the Debenture Holder shall, subject to any determination 
in such proceeding, be restored severally and respectively to their former 
positions hereunder, and thereafter all rights and remedies of the Debenture 
Holder shall continue as though no such proceeding had been instituted.

    11.7  RIGHTS AND REMEDIES CUMULATIVE.  No right or remedy herein 
conferred upon or reserved to the Debenture Holders is intended to be 
exclusive of any other right or remedy, and every right and remedy shall, to 
the extent permitted by law, be cumulative and in addition to every other 
right and remedy given hereunder or now or hereafter existing at law or in 
equity or otherwise.  The assertion or employment of any right or remedy 
hereunder, or otherwise, shall not prevent the concurrent assertion or 
employment of any other appropriate right or remedy.

    11.8  DELAY OR OMISSION NOT WAIVER.  No delay or omission of the Holder 
of this Debenture to exercise any right or remedy accruing upon any Event of 
Default shall impair any such right or remedy or constitute a waiver of any 
such Event of Default or an acquiescence therein.  Every right and remedy 
given by this Article or by law or the Holder may be exercised from time to 
time, and as often as may be deemed expedient, by such Holder.

    11.9  WAIVER OF PAST DEFAULTS.  The Holders of eighty-five percent (85%) 
in principal amount of the outstanding Debentures may on behalf of the 
Holders of all the Debentures waive any past default hereunder and its 
consequences, except a default

           (1)     in the payment of the principal of or interest on any
    Debenture; or

           (2)     in respect of a covenant or provision of this Agreement
    which under Article 12 cannot be modified or amended without the consent of
    the Holder of each outstanding Debenture affected.

    Upon any such waiver, such default shall cease to exist, and any Event of 
Default arising therefrom shall be deemed to have been cured, for every 
purpose of this Agreement; but no such waiver shall extend to any subsequent 
or other default or impair any right consequent thereon.

                                       -18-

<PAGE>

                                      ARTICLE 12
                                           
                     SUPPLEMENTAL AGREEMENTS REGARDING DEBENTURES
                                           
    12.1  SUPPLEMENTAL AGREEMENTS WITH CONSENT OF DEBENTURE HOLDERS.  With or 
without notice to any Debenture Holder but with the consent of the Holders of 
not less than 85% in principal amount of the then outstanding Debentures, the 
Company, when authorized by a duly adopted board resolution, and the 
Debenture Holders may enter into an agreement or agreements supplemental 
hereto for the purpose of adding any provisions to or changing in any manner 
or eliminating any of the provisions of this Agreement or of modifying in any 
manner the rights of the Holders of the Debentures under this Agreement; 
provided, however, that no such supplemental agreement as it relates to the 
Debentures and the terms and conditions thereof shall, without the consent of 
the Holder of each outstanding Debenture affected thereby:

           (1)     change the date of maturity of the principal of, or any
    installment of interest on, any Debenture, or reduce the principal amount
    thereof or the rate of interest thereon, or change the coin or currency in
    which, the principal of any Debenture or interest thereon is payable, or
    impair the right to institute suit for the enforcement of any such payment
    on or after the date of maturity thereof;

           (2)     reduce the percentage in principal amount of the outstanding
    Debentures, the consent of whose Holders is required for any such
    supplemental agreement or the consent of whose Holders is required for any
    waiver (of compliance with certain provisions of this Agreement or certain
    defaults hereunder and their consequences) provided for in this Agreement;

           (3)     modify any of the provisions of this Section or Section
    11.5, except to increase any such percentage or to provide that certain
    other provisions of this Agreement cannot be modified or waived without the
    consent of the Holder of each Debenture affected thereby; or

           (4)     adversely affect the right to convert the Debentures as
    provided in Article 8 hereof.

    It shall not be necessary for any consent or authorization of Debenture
Holders under this Section to approve the particular form of any proposed
supplemental agreement, but it shall be sufficient if such consent or
authorization shall approve the substance thereof.

    12.2  EFFECT OF SUPPLEMENTAL AGREEMENTS.  Upon the execution of any 
supplemental agreement under this Article, this Agreement shall be modified 
in accordance therewith, and such supplemental agreement shall form a part of 
this Agreement for all purposes; and every holder of Debentures theretofore 
or thereafter delivered hereunder shall be bound thereby.

    12.3  REFERENCE IN DEBENTURES TO SUPPLEMENTAL AGREEMENTS.  Debentures 
delivered after the execution of any supplemental agreement pursuant to this 
Article may bear a notation as to any matter provided for in such 
supplemental agreement.  If the Company shall so determine, new Debentures so 
modified as to conform, in the opinion of the board of directors, to any such 
supplemental agreement may be prepared, executed and delivered by the Company 
in exchange for outstanding Debentures.

                                      ARTICLE 13
                                           
                                      COVENANTS
                                           
    13.1  PAYMENT OF PRINCIPAL, PREMIUMS AND INTEREST.  The Company will duly 
and punctually pay the principal of and interest on the Debentures in 
accordance with the terms of the Debentures and this Agreement.

                                       -19-

<PAGE>

    13.2  MONEY FOR DEBENTURE PAYMENTS TO BE HELD IN TRUST.

           (a)     COMPANY AS PAYING AGENT.  While the Company acts as its own
    paying agent, it will, on or before each due date of the principal of, and
    premium, if any, or interest on any of the Debentures, segregate and hold
    in trust for the benefit of the persons entitled thereto a sum sufficient
    to pay the principal, and premium, if any, or interest so becoming due
    until such sums shall be paid to such persons or otherwise disposed of as
    herein provided.

           (b)     OUTSIDE PAYING AGENT.  Whenever the Company shall have one
    or more paying agents, it will, on or prior to each due date of the
    principal of, and premium, if any, or interest on any Debentures, deposit
    with, or make available to, the paying agent a sum sufficient to pay the
    principal, or interest so becoming due, such sum to be held in trust for
    the benefit of the persons entitled to such principal, or interest.

           (c)     UNCLAIMED PAYMENTS.  If any money deposited with any paying
    agent, or then held by the Company, in trust, for the payment of the
    principal of or interest on any Debenture is undeliverable and remains
    unclaimed for three years after such principal or interest has become due
    and payable, such money shall be paid to the Company on the written request
    of the Company, or, if then held by the Company, shall be discharged from
    such trust; and the Holder of such Debenture shall thereafter, as an
    unsecured general creditor, look only to the Company for payment thereof,
    and all liability of such paying agent with respect to such trust money,
    and all liability of the Company as trustee thereof, shall thereupon cease;
    provided, however, that such paying agent, before being required to make
    any such repayment, may at the expense of the Company cause to be published
    once, in a newspaper of general circulation in the county in which the
    Company then has its principal place of business, notice that such money
    remains unclaimed and that, after a date specified therein, which shall be
    not less than thirty (30) days from the date of such publication, any
    unclaimed balance of such money then remaining will be repaid to the
    Company.

    13.3  CORPORATE EXISTENCE.  The Company will do or cause to be done all 
things necessary to preserve and keep in full force and effect its corporate 
existence, including the corporate existence of any successor corporation, 
rights (charter and statutory) and franchises; provided, however, that the 
Company shall not be required to preserve any right or franchise if the 
Company shall determine that the preservation thereof is no longer desirable 
in the conduct of the business of the Company and that the loss thereof is 
not disadvantageous in any material respect to the Debenture Holders.

    13.4   OTHER OBLIGATIONS.  The Company will perform all of its 
undertakings, obligations, and covenants as set forth in this Agreement, the 
Debentures and the Warrants.

                                      ARTICLE 14
                                           
                                    MISCELLANEOUS
                                           
    14.1  REGISTRATION RIGHTS. The Company will use its best efforts to cause 
the shares of Common Stock issued upon conversion of the Debentures and 
issuable upon exercise of the Warrants (the "Registerable Securities") to be 
registered with the Securities and Exchange Commission, at the Company's 
expense, under the Securities Act of 1933 (the "1933 Act") prior to March 1, 
1998.  The Company will use its best efforts to keep such Registration 
Statement effective until the earlier of May 1, 2002 or until all of the 
Registerable Securities have been sold pursuant to such Registration 
Statement.  In the event that the Registration Statement to be filed with the 
Commission as set forth in this Section 14.1 has not been declared effective 
by the Commission by March 1, 1998, (i) the Company will pay Debenture Holder 
a penalty in cash equal to 2% of the principal amount of the Debentures 
relating thereto for every 30 days following February 1, 1998, until the 
Registration Statement is declared effective by the Commission, and (ii) the 
purchase price of the Warrants shall be reduced as follows: the Initial 
Purchase Price shall be reduced by 2% for every 30 days following February 1, 
1998, until the Registration Statement is declared effective and the 
alternative percentage of fair market value (initially 70%) shall be reduced 
in increments 

                                       -20-

<PAGE>

of 2% (e.g., 68%, 66%, etc.) for every 30 days following February 1, 1998, 
until the Registration Statement is declared effective by the Commission.  In 
connection with such registration:

           (1)     The Company will pay all costs and expenses incurred in
    connection with the registration of the Registerable Securities,
    including all registration filing fees, printing fees, fees and
    disbursements of counsel and accountants of the Company and one set of
    counsel for the Investors.  Transfer taxes, brokerage commissions and
    underwriters' discounts attributable to the Registerable Securities
    shall be for the account of the Investors;
     
           (2)     The Company will furnish at its expense to the
    Investors such number of copies of the preliminary, final,
    supplemental or amended prospectus in conformity with the requirements
    of the 1933 Act and rules and regulations thereunder, as may be
    reasonably required in order to facilitate the disposition of the
    Registerable Securities;
     
           (3)     Unless preempted by Federal law, the Company will
    register or qualify the Registerable Securities under any applicable
    state securities or blue sky laws in such jurisdictions as the
    Investors shall reasonably request;
     
           (4)     The Company will cause the Registerable Securities to
    be listed on the NASDAQ National Market (or principal exchange if
    applicable) on which the Common Stock is then listed; and
     
           (5)     The Company shall indemnify and hold harmless, to the
    full extent permitted by law, each Investor, its officers and
    directors and each person who controls such Investor within the
    meaning of the 1933 Act and any investment adviser against all losses,
    claims, damages, liabilities and expenses caused by any untrue or
    alleged untrue statement of a material fact contained in any
    registration statement, prospectus or preliminary prospectus or any
    omission or alleged omission to state therein a material fact required
    to be stated therein or necessary to make the statements therein not
    misleading, except insofar as the same are caused by or contained in
    any information with respect to the Investor furnished in writing to
    the Company by such Investor expressly for use therein.  The Company
    will indemnify the underwriters, if any, of the Registerable
    Securities, their officers and directors and each person who controls
    any such underwriter to the same extent.  The Company will reimburse
    each indemnified party for all legal expenses incurred in connection
    with investigating or defending any such claims.  Each Investor
    severally, but not jointly, shall indemnify and hold harmless the
    Company against all losses, claims, damages, liabilities, and expenses
    caused by any untrue or alleged untrue statement or a material fact in
    any registration statement, prospectus or preliminary prospectus or
    any omission or alleged omission to state therein a material fact
    required to be stated therein or necessary to make the statements
    therein not misleading; except that such indemnification shall be
    available in each case to the extent, but only to the extent, that
    such untrue statement or alleged untrue statement or omission or
    alleged omission was made in reliance upon information and in
    conformity with written information furnished to the Company by
    Investor specifically for use in the preparation thereof.  If the
    indemnification provided for herein is unavailable or insufficient to
    hold harmless an indemnified party, then each indemnifying party shall
    contribute to the amount paid or payable by such indemnified party as
    a result of the losses, claims, damages, or liabilities referred to
    above (a) in such proportion as is appropriate to reflect the relative
    benefits received by the Company on the one hand and the Investors on
    the other; or (b) if the allocation provided by clause (a) above is
    not permitted by applicable law, in such proportion as is appropriate
    to reflect the relative benefits referred to in clause (a) above but
    also the relative fault of the Company on the one hand and the
    Investors on the other in connection with the statements or omissions
    which resulted in such losses, claims, damages, or liabilities, as
    well as any other relevant equitable considerations.  Relative fault
    shall be determined by reference to, among other things, whether the
    untrue statement of a material fact or the omission to state a
    material fact relates to information supplied by the Company or the
    Investor and the parties' relative intent, knowledge, access to
    information, 

                                       -21-
<PAGE>

    and opportunity to correct or prevent such untrue statement or 
    omission.  For purposes of this subsection, the term "damages" shall 
    include any counsel fees or other expenses reasonably incurred by the 
    Company or the Investors in connection with investigating or defending 
    any action or claim which is the subject of the contribution provisions 
    of this section.
     
           Each party entitled to contribution agrees that upon the
    service of a summons or other initial legal process upon it in any
    action instituted against it in respect of which contribution may be
    sought, it shall promptly give written notice of such service to the
    party or parties from whom contribution may be sought, but the
    omission so to notify such party or parties of any such service shall
    not relieve the party from whom contribution may be sought from any
    obligation it may have hereunder or otherwise.
     
    14.2  SURVIVAL OF WARRANTIES.  The warranties, representations and 
covenants contained in or made pursuant to this Agreement shall survive 
the execution and delivery of this Agreement and the Closing(s) and 
shall in no way be affected by any investigation of the subject matter 
thereof made by or on behalf of the Company or the Investors, as the 
case may be.

    14.3  ENTIRE AGREEMENT.  This Agreement, the Debentures, the 
Warrants and Appendix hereto constitute the entire agreement between the 
parties, and no party shall be liable or bound to another party in any 
manner by any warranties, representations or covenants except as 
specifically set forth herein or therein. The terms and conditions of 
this Agreement shall inure to the benefit of and be binding upon the 
respective successors and assigns of the parties.  Nothing in this 
Agreement, express or implied, is intended to confer upon any third 
party any rights, remedies, obligations, or liabilities under or by 
reason of this Agreement, except as expressly provided in this Agreement.

    14.4  GOVERNING LAW.  This Agreement shall be governed by and 
construed under the laws of the State of Colorado.

    14.5  TITLES AND SUBTITLES.  The titles and subtitles used in this 
Agreement are used for convenience only and are not to be considered in 
construing or interpreting this Agreement.

    14.6  NOTICES.  Any notice required or permitted under this 
Agreement shall be given in writing and shall be deemed effectively 
given upon personal delivery or seven (7) days after deposit with the 
United States Post Office, by registered or certified mail, postage 
prepaid, addressed to the Company at 4440 Arapahoe Road, Suite 200, 
Boulder Colorado 80303, and to the Investor at the address specified 
below or at such other address as a party may designate by ten (10) 
days' advance written notice to the other parties.

    14.7   EXPENSES.  The Company shall pay the reasonable costs and 
expenses that the Investors shall incur with respect to the negotiation, 
execution and delivery of this Agreement.

    14.8  EFFECT OF AMENDMENT OR WAIVER.  The Investor hereby 
acknowledges that, by the operation of Articles 11 and 12 hereof, the 
Holders of Debentures have certain rights and powers to diminish or 
change certain rights of the Holders of Debentures, including Holders 
who have not agreed or consented thereto, under this Agreement.

    14.9  RIGHTS OF INVESTORS.  Each Holder of Debentures shall have the 
absolute right to exercise or refrain from exercising any right or 
rights that such holder may have by reason of this Agreement or any 
Debenture or share of Common Stock, including without limitation the 
right to consent to the waiver of any obligation of the Company under 
this Agreement and to enter into an agreement with the Company for the 
purpose of modifying this Agreement or any agreement effecting any such 
modification, and such holder shall not incur any liability to any other 
holder or holders of such securities with respect to exercising or 
refraining from exercising any such right or rights.

                                       -22-

<PAGE>

    14.10  SEVERABILITY.  If one or more provisions of this Agreement 
are held to be unenforceable under applicable law, such provisions shall 
be excluded from this Agreement, and the balance of this Agreement shall 
be interpreted as if such provisions were so excluded and shall be 
enforceable in accordance with its terms.

    14.11  COUNTERPARTS.  This Agreement may be executed in two or more 
counterparts, each of which shall be deemed an original, but all of 
which together shall constitute one and the same instrument.  The term 
this "Agreement" as used herein includes this and similar Subscription 
and Purchase Agreements entered into in connection with the offering of 
up to $1,500,000 aggregate principal amount of Debentures.

                                      ARTICLE 15
                                           
                                     SUBSCRIPTION
                                           
    15.1  OFFERING. The minimum subscription per Investor permitted in 
this Offering is $100,000; provided, however, that the Company may, in 
its sole discretion, lower the minimum investment in accordance with 
applicable law.

    15.2  SUBSCRIPTION AMOUNT.  The undersigned hereby subscribes for 
$250,000 in principal amount of Debentures and shall tender at Closing a 
certified check or bank draft in the amount of Two Hundred Fifty 
Thousand Dollars ($250,000) payable to the Company in full payment for 
such subscription.

    15.3  RESALE COMPLIANCE.  The undersigned agrees to comply with the 
1933 Act and the rules and regulations promulgated thereunder, and any 
other relevant securities legislation and policies governing the 
purchase, holding and resale of the Debentures subscribed for, 
including, without limitation, applicable state blue sky laws.

    The undersigned acknowledges that this subscription shall not be 
effective unless accepted by the Company as indicated below.

Entered into this 8th day of May, 1997.

                                  Charles S. Leavell  
                         -------------------------------------
                                (Name) (Please Print)

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

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

                         -------------------------------------
                             (Registration Instructions)

                         -------------------------------------
                     (Social Security or Tax Identification No.)

    THIS SUBSCRIPTION IS ACCEPTED BY THE COMPANY ON THE 8TH DAY OF MAY, 1997.

                             RENAISSANCE ENTERTAINMENT CORPORATION

                             By: 
                                -------------------------------------------
                                Charles S. Leavell, Chief Executive Officer

                                       -23-
<PAGE>

                                                                    APPENDIX A

THE SECURITIES DESCRIBED HEREIN HAVE NOT BEEN REGISTERED UNDER THE SECURITIES 
ACT OF 1933, AS AMENDED (THE 1933 ACT") OR UNDER THE SECURITIES LAWS OF ANY 
STATE OF THE UNITED STATES.  NO REGULATORY BODY HAS ENDORSED THESE 
SECURITIES. NO SALE OR DISTRIBUTION OF THE SECURITIES MAY BE EFFECTED WITHOUT 
AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL 
REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED 
UNDER THE 1933 ACT AND APPLICABLE STATE BLUE SKY LAWS.

No. D-1                           $500,000.00

                        RENAISSANCE ENTERTAINMENT CORPORATION
                                           
                      9% CONVERTIBLE SECURED DEBENTURE DUE 2002
                                           
    THIS DEBENTURE is one of a duly authorized issue of Debentures of 
Renaissance Entertainment Corporation, a corporation duly organized and 
existing under the laws of the State of Colorado (the "Company"), designated 
as its 9% Convertible Secured Debentures Due 2002, in an aggregate principal 
amount not exceeding $1,500,000, issued pursuant to that certain Subscription 
and Purchase Agreement dated May 8, 1997, between the Company and the 
original purchasers of the Debentures (the "Purchase Agreement").  Reference 
is hereby made to the Purchase Agreement for a complete description of the 
rights and obligations of, and limitations and restrictions on, the Company 
and the Holder of this Debenture.  The terms and conditions of the Debenture 
noted hereinafter are subject in every respect to the terms and conditions of 
the Purchase Agreement. In the event of a conflict between the provisions of 
this Debenture and the Purchase Agreement, the Purchase Agreement shall 
control.

    FOR VALUE RECEIVED, the Company promises to pay to Charles H. Leavell the 
registered holder hereof (the "Holder"), the principal sum of Five Hundred 
Thousand Dollars ($500,000.00), on April 1, 2002, subject to acceleration in 
certain events, and to pay interest on the principal sum outstanding from 
time to time quarterly in arrears on the first business day of each calendar 
quarter of each year ("Interest Payment Dates"), after as well as before 
maturity and default and after judgment, at the rate of 9% per annum accruing 
from the date of initial issuance.  Payment of interest shall commence on the 
first such business day to occur after the date hereof (and shall be pro 
rated for such period from the date of initial issuance) and shall continue 
on the first business day of each succeeding calendar quarter until payment 
in full of the principal sum has been made or duly provided for.  All accrued 
and unpaid interest shall bear interest at the same rate as the due date of 
the interest payment until paid but shall not be subject to conversion.  
December 15, March 15, June 15 and September 15 of each year shall serve as 
the record date (the "Record Date") for determining ownership of this 
Debenture with respect to payments of interest to be made on the following 
Interest Payment Date.  The interest so payable on any Interest Payment Date 
will, as provided in the Purchase Agreement, be paid to the person in whose 
name this Debenture (or one or more predecessor Debentures) is registered on 
the records of the Company regarding registration and transfers of the 
Debentures (the "Debenture Register") at the Record Date for such Interest 
Payment Date; provided, however, that the Company's obligation to a 
transferee of this Debenture arises only if such transfer, sale or other 
disposition is made in accordance with the terms and conditions of the 
Purchase Agreement.  The principal of, and interest on, this Debenture are 
payable in such coin or currency of the United States of America as at the 
time of payment is legal tender for payment of public and private debts, at 
the address last appearing on the Debenture Register of the 

                                       A-1

<PAGE>

Company as designated in writing by the Holder from time to time.  The 
Company will pay interest on this Debenture by sending a check for such 
interest due, less any amounts required by law to be deducted, to the 
registered holder of this Debenture and addressed to such holder at the last 
address appearing on the Debenture Register.  The forwarding of such check 
shall constitute a payment of interest hereunder and shall satisfy and 
discharge the liability for interest on this Debenture to the extent of the 
sum represented by such check plus any amounts so deducted unless such check 
is not paid at par.

    This Debenture is subject to the following additional provisions:

    1.     All terms used in this Debenture which are defined in the Purchase 
Agreement shall have the meanings assigned to them in the Purchase Agreement.

    2.     The Debentures are issuable in denominations of Fifty Thousand 
Dollars ($50,000) and integral multiples thereof.  As provided in the 
Purchase Agreement, the Debentures are exchangeable for an equal aggregate 
principal amount of Debentures of different authorized denominations, as 
requested by the Holders surrendering the same.  No service charge will be 
made for such registration of transfer or exchange; however, the Company may 
require payment of a sum sufficient to cover any tax or other governmental 
charge payable in connection with the transfer or exchange of this Debenture.

    3.     The Company shall be entitled to withhold from all payments of 
principal of, and interest on, this Debenture any amounts required to be 
withheld under the applicable provisions of the United States income tax laws 
or other applicable laws at the time of such payments.

    4.     This Debenture has been issued and, subject to the exercise of 
certain registration rights as provided in the Purchase Agreement, any shares 
of Common Stock issued upon conversion hereof, will be issued subject to 
investment representations and may be transferred or exchanged only as 
provided in the Purchase Agreement.  Prior to due presentment for transfer of 
this Debenture, the Company and any agent of the Company may treat the Person 
in whose name this Debenture is duly registered on the Company's Debenture 
Register as the owner hereof for the purpose of receiving payment as herein 
provided and for all other purposes, whether or not this Debenture be 
overdue, and neither the Company nor any such agent shall be affected by 
notice to the contrary.

    5.     If an Event of Default occurs and is continuing, the Holders of 
not less than Fifteen Percent (15%) in principal amount of the 9% Convertible 
Secured Debentures then outstanding may declare the principal of all such 
Debentures to be immediately due and payable in the manner and to the extent 
provided in the Purchase Agreement, and such declarations may be in certain 
events rescinded, in the manner and with the effect provided in the Purchase 
Agreement.

    6.     Subject to the provisions of the Purchase Agreement, the Holder of 
this Debenture is entitled, at its option, at any time after April 30, 1998, 
until maturity hereof to convert the principal amount of this Debenture or 
any portion of the principal amount hereof which is at least Ten Thousand 
Dollars ($10,000) or, if at the time of such election to convert the 
aggregate principal amount of all Debentures registered to the Holder is less 
than Ten Thousand Dollars ($10,000), then the whole amount thereof, into 
shares of Common Stock of the Company at the lesser of Four Dollars Fifty 
Cents ($4.50) per share (subject to adjustment as provided in the Purchase 
Agreement) or Seventy (70) percent of the fair market value (as defined) of 
the Company's Common Stock on the Date of Conversion, upon surrender of this 
Debenture to the Company at its office in Boulder, Colorado, with the form of 
conversion notice attached hereto as Exhibit A executed by the Holder of this 
Debenture evidencing such Holder's intention to convert this Debenture or a 
specified portion (as above provided) hereof, and accompanied, if required by 
the Company, by proper assignment hereof in blank. No amount of accrued but 
unpaid interest shall be subject to conversion.  As provided in the Purchase 
Agreement, the conversion price is subject to adjustment in certain events.

    7.     The Purchase Agreement contains provisions permitting the Holders 
of a majority of the aggregate principal amount of all such Debentures at the 
time outstanding, on behalf of the Holders of all the Debentures, to waive 
compliance by the Company with certain provisions of the Purchase Agreement 
and certain past defaults 

                                       A-2

<PAGE>

under the Purchase Agreement and their consequences.  Any such consent or 
waiver shall be conclusive and binding upon all Holders and upon all future 
Holders of this Debenture and of any debenture issued upon registration of 
transfer hereof or in exchange herefor or in lieu hereof whether or not 
notation of such consent or waiver is made upon this Debenture.

    8.     No reference herein to the Purchase Agreement and no provision of 
this Debenture or of the Purchase Agreement shall alter or impair the 
obligation of the Company, which is absolute and unconditional, to pay the 
principal of, and interest on, this Debenture at the time, place and rate, 
and in the coin or currency, herein prescribed.  This Debenture and all other 
Debentures now or hereafter issued under the Purchase Agreement are direct 
obligations of the Company.  This Debenture ranks equally and ratably with 
all other Debentures now or hereafter issued under the Purchase Agreement.

    9.     No recourse shall be had for the payment of the principal of, or 
the interest on, this Debenture, or for any claim based hereon, or otherwise 
in respect hereof, or based on or in respect of the Purchase Agreement or any 
Purchase Agreement supplemental thereto, against any incorporator, 
shareholder, officer or director, as such, past, present or future, of the 
Company or any successor corporation, whether by virtue of any constitution, 
statute or rule of law, or by the enforcement of any assessment or penalty or 
otherwise, all such liability being, by the acceptance hereof and as part of 
the consideration for the issue hereof, expressly waived and released.

    10.    The Holder of this Debenture, by acceptance hereof, agrees that 
this Debenture is being and any shares of Common Stock acquired pursuant to 
the conversion of this Debenture will, unless such condition is waived by the 
Company, be acquired for investment and that such Holder will not offer, sell 
or otherwise dispose of this Debenture or such Common Stock except under 
circumstances which will not result in a violation of the 1933 Act or any 
applicable state Blue Sky law.  This Debenture and any certificate for shares 
of Common Stock issued upon conversion hereof, unless such requirement is 
waived by the Company, shall bear a legend in substantially the following 
form:

    THE SECURITIES DESCRIBED HEREIN, HAVE NOT BEEN REGISTERED UNDER THE
    SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT",) OR UNDER THE
    SECURITIES LAWS OF ANY STATE OF THE UNITED STATES.  NO SALE OR
    DISTRIBUTION OF THESE SECURITIES MAY BE EFFECTED WITHOUT AN EFFECTIVE
    REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL
    REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
    REQUIRED UNDER THE 1933 ACT AND APPLICABLE STATE BLUE SKY LAWS.

    11.    This Debenture shall be governed by and construed in accordance 
with the laws of the State of Colorado.

                                       A-3

<PAGE>

    IN WITNESS WHEREOF, the Company has caused this instrument to be duly 
executed by an officer thereunto duly authorized.

                                       RENAISSANCE ENTERTAINMENT CORPORATION

                                       By:
                                          -------------------------------------
                                          James R. McDonald
                                          Chief Financial Officer

Dated May 14, 1997


                                       A-4

<PAGE>

                                      EXHIBIT A
                                           
                                 NOTICE OF CONVERSION
                                           

TO: RENAISSANCE ENTERTAINMENT CORPORATION

    The undersigned Holder of this Debenture hereby irrevocably elects to 
convert this Debenture, or portion hereof (which is at least $10,000, unless 
the undersigned holds Debentures aggregating less than $10,000, in which 
event, the amount converted shall be the entire amount of principal of such 
Debentures) below designated, into shares of Common Stock of Renaissance 
Entertainment Corporation in accordance with the terms of the Purchase 
Agreement dated May 8, 1997, and directs that the shares issuable and 
deliverable upon such conversion, together with any check in payment for 
fractional shares and any Debentures representing any unconverted principal 
amount hereof, be issued and delivered to the undersigned unless a different 
name has been indicated below.  If shares are to be issued in the name of a 
person other than the undersigned, the undersigned will pay all transfer 
taxes, if any, payable with respect thereto.

Dated
     --------------------------------

                                       ----------------------------------------
                                                  Signature of Holder

                                       Principal Amount to be Converted

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

THE DEBENTURES AND SHARES OF COMMON STOCK ACQUIRED UPON CONVERSION THEREOF 
ARE TRANSFERABLE ONLY AS PROVIDED IN THE PURCHASE AGREEMENT.

Provide the following information if shares of Common Stock and/or Debentures 
are to be issued otherwise than to the Holder.  Please print name and address 
(including zip code) of other person.

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

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

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

                                       ----------------------------------------
                                       Social Security or Other Taxpayer
                                              Identifying Number

                                       A-5

<PAGE>

                                                               APPENDIX B
No. W-1 
                                                               Warrant to
                                                        Purchase 100,000 Shares

                     WARRANT TO PURCHASE COMMON STOCK OF 
                    RENAISSANCE ENTERTAINMENT CORPORATION

    THIS CERTIFIES THAT for value received Charles H. Leavell is entitled, 
subject to the terms and conditions hereinafter set forth, to purchase from 
RENAISSANCE ENTERTAINMENT CORPORATION, a Colorado corporation (the 
"Company"), 100,000 fully paid and non-assessable shares of Common Stock of 
the Company (herein called the "Common Stock"), upon presentation and 
surrender of this Warrant with the Subscription Form duly executed, at any 
time during the term hereof, at the principal office of the Company or at 
such other office as shall have theretofore been designated by the Company by 
notice pursuant hereto and upon payment therefor of the Purchase Price, in 
lawful money of the United States of America, determined as set forth below.  
The term of this Warrant shall commence on the date hereof, and terminate, if 
not exercised prior thereto, at 5:00 p.m. Mountain Time, on April 30, 2002 
(the "Expiration Date").

    This Warrant is one of a series of Warrants issued pursuant to that 
certain Subscription and Purchase Agreement dated May 8, 1997, (the "Purchase 
Agreement").

    This Warrant is subject to the following terms and conditions:

    1.     The purchase rights represented by this Warrant are exercisable at 
any time after April 30, 1998 and prior to 5:00 p.m. Mountain Time on the 
Expiration Date, at the option of the registered holder hereof (the 
"Holder"), in whole or in part (but not as to a fractional share of Common 
Stock).  In the case of the purchase of less than all the shares purchasable 
under this Warrant, the Company shall cancel this Warrant upon the surrender 
hereof and shall execute and deliver a new Warrant of like tenor for the 
balance of the shares purchasable hereunder.

    2.     The purchase price for each share of Common Stock purchasable 
pursuant to the exercise of this Warrant shall be the lesser of Three Dollars 
($3.00) per share (the "Initial Purchase Price") or Seventy percent (70%) of 
the fair market value (as defined in the Purchase Agreement) of the Company's 
Common Stock on the date of exercise of the Warrant.  The Initial Purchase 
Price, and from time to time the number of shares of Common Stock subject to 
purchase hereunder are subject to adjustment in certain circumstances 
provided for below. The purchase price, as defined above, is hereinafter 
referred to as the "Purchase Price".

           (a)     In case the Company shall (i) pay a dividend in shares of
    its capital stock (other than an issuance of shares of capital stock to
    holders of Common Stock who have elected to receive a dividend in shares in
    lieu of cash), (ii) subdivide its outstanding shares of Common Stock, (iii)
    reduce, consolidate or combine its outstanding shares of Common Stock into
    a smaller number of shares, or (iv) issue by reclassification of its shares
    of Common Stock any shares of the Company, the number of shares of Common
    Stock issuable upon exercise of this Warrant shall be the number of shares
    of Common Stock of the Company which the Warrant Holder would have owned or
    would have been entitled to receive after the happening of any of the
    events described above had this Warrant been exercised immediately prior to
    the happening of such event.  Such adjustment shall be made successively
    whenever any such effective date or record date shall occur.  An adjustment
    made pursuant to this subsection (a) shall become effective retroactively,
    immediately after the record date in the case of a dividend and shall
    become effective immediately after the effective date in the case of a
    subdivision, reduction, consolidation, combination or reclassification.

                                       b-1

<PAGE>

           (b)     If the Company shall at any time issue or sell or be deemed
    pursuant to the provisions of subsections 2(c) and (d) hereof to have
    issued or sold shares of its Common Stock for consideration per share less
    than the Initial Purchase Price then in effect with respect to such Common
    Stock, then the Initial Purchase Price shall be reduced by multiplying it
    by a fraction, the numerator of which equals the number of shares of Common
    Stock outstanding prior to the sale or issuance plus the number of shares
    of Common Stock which would have been issued in the transaction if the
    Initial Purchase Price had been applied, and the denominator of which
    equals the number of shares of Common Stock outstanding after the sale or
    issuance plus the number of shares of Common Stock actually issued in the
    transaction.

           (c)     In case at any time after the date hereof the Company shall
    in any manner grant (whether directly or by assumption in a merger or
    otherwise) any rights to subscribe for or to purchase, or any options for
    the purchase of, Common Stock or any stock or other securities convertible
    into or exchangeable for Common Stock (such rights or options being herein
    called "Options" and such convertible or exchangeable stock or securities
    being herein called "Convertible Securities") at an option or conversion
    price per share of Common Stock (determined by dividing: (i) the total
    amount, if any, received or receivable by the Company as consideration for
    the granting of such Options, plus the minimum aggregate amount of
    additional consideration payable upon the exercise of such Options, plus,
    in the case of such Options which relate to Convertible Securities, the
    minimum aggregate amount of additional consideration, if any, payable upon
    the issue or sale of such Convertible Securities and upon the conversion or
    exchange thereof, by (ii) the total maximum number of shares of Common
    Stock of the Company, issuable upon the exercise of such Options and in the
    case of Convertible Securities, upon conversion thereof) less than the
    Initial Purchase Price then in effect with respect to such Common Stock,
    then the total maximum number of shares of Common Stock issuable upon the
    exercise and conversion of such Options and Convertible Securities shall be
    deemed to be outstanding and to have been issued and sold by the Company as
    of the date of the issue or sale of the Options, for such price per share. 
    No sale, issuance or transfer of shares of Common Stock shall be deemed to
    have been made upon the actual issuance of such Common Stock except as
    otherwise provided in subsection 2(e) hereof.

           (d)     In case at any time after the date hereof the Company shall
    in any manner issue or sell (whether directly or by assumption in merger or
    otherwise) any Convertible Securities, whether or not the rights to
    exchange or convert thereunder are immediately exercisable, and the price
    per share of Common Stock issuable upon such conversion or exchange
    (determined by dividing: (i) the total amount received or receivable by the
    Company, as consideration for the issue or sale of such Convertible
    Securities, plus the minimum aggregate amount of additional consideration,
    if any, payable to the Company upon the conversion or exchange thereof, by
    (ii) the total maximum number of shares of Common Stock issuable upon the
    conversion or exchange of all such Convertible Securities) shall be less
    than the Initial Purchase Price then in effect with respect to such Common
    Stock, then the total maximum number of shares of Common Stock issuable
    upon conversion of all such Convertible Securities shall be deemed to be
    outstanding and to have been issued and sold by the Company as of the date
    of the issue or sale of the Convertible Securities, for such price per
    share.  No sale, issuance or transfer of shares of Common Stock shall be
    deemed to have been made upon the actual issuance of such Common Stock
    except as otherwise provided in subsection 2(e) hereof.

           (e)     If the purchase price payable or number of shares of Common
    Stock subject to purchase as provided for in any Options referred to in
    subsection 2(c) hereof, the additional consideration, if any, payable upon
    the conversion or exchange of any Convertible Securities referred to in
    subsections 2(c) or (d), or the rate at which any Convertible Securities
    referred to in subsections 2(c) or (d) are convertible into Common Stock
    shall change so as to reduce the deemed sale price of Common Stock
    previously calculated under subsections 2(c) and/or (d), then a sale of
    shares of Common Stock shall be deemed to have occurred for the purposes of
    subsections 2(c) and/or (d), as applicable, with appropriate adjustments to
    be made to the number of shares of Common Stock deemed to have been sold to
    reflect the prior related deemed sale and such adjustments by the
    adjustment of the Initial Purchase Rate and Initial Purchase Price pursuant
    to subsections 2(c) or (d), as applicable.

                                       B-2

<PAGE>

           (f)     In case of any consolidation of the Company with or merger
    of the Company with or into another corporation or in case of any sale,
    transfer or lease to another corporation of all or substantially all of the
    property of the Company, the Company or such successor or purchasing
    corporation, as the case may be, shall execute an agreement that the Holder
    of a Warrant shall have the right thereafter upon payment of the Initial
    Purchase Price in effect immediately prior to such action to purchase upon
    exercise of the Warrant the kind and amount of shares and other securities
    and property which the Holder would have owned or would have been entitled
    to receive after the happening of such consolidation, merger, sale,
    transfer or lease had the Warrant been exercised immediately prior to such
    action.  The Company shall give prompt written notice of the execution of
    any such agreement to the Holder of each Warrant at the address of such
    Holder as shown on the records of the Company.  Such agreement shall
    provide for subsequent adjustments, which shall be as nearly equivalent as
    may be practicable to the adjustments provided for in this section 2, after
    the happening of such consolidation, merger, sale, transfer or lease.  The
    provisions of this subsection 2(f) shall similarly apply to successive
    consolidations, mergers, sales, transfers or leases.


           (g)     The provisions of this section 2 shall not apply to any
    currently outstanding securities of the Company or any management stock
    grants or sales, stock options or shares of Common Stock issued upon
    exercise of stock options issued to officers, directors, employees or
    consultants of the Company pursuant to a plan heretofore adopted and
    approved by the Board of Directors of the Company.

           (h)     Upon the expiration of any Option or the termination of any
    right to convert or exchange any Convertible Securities without the
    issuance of shares of Common Stock, then with respect to any Warrants which
    then remain outstanding, the Initial Purchase Price shall be readjusted to
    the Initial Purchase Price which would have prevailed absent the adjustment
    made as a result of the issuance of such Options or Convertible Securities.

           (i)     In case any Options shall be issued in connection with the
    issue or sale of other securities of the Company, together comprising one
    integral transaction in which no specific consideration is allocated to
    such Options by the parties thereto, such Options shall be deemed to have
    been issued without consideration.

           (j)     In case any shares of Common Stock, Options or Convertible
    Securities shall be issued or sold or deemed to have been issued or sold
    for cash, the consideration received therefor shall be deemed to be the
    amount received therefor by the Company.  In case any shares of Common
    Stock, Options or Convertible Securities shall be issued or sold for a
    consideration other than cash, the amount of the consideration other than
    cash received by the Company shall be the fair market value of such
    consideration, as determined by the Board of Directors of the Company.

    3.     In case at any time:

           (a)     The Company shall declare any cash dividend on its Common
    Stock at a rate in excess of the rate of the last cash dividend theretofore
    paid;

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

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

           (d)     There shall be any capital reorganization, or
    reclassification of the capital stock of the Company or consolidation or
    merger of the Company with, or sales of all or substantially all of its
    assets to, another corporation; or

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

                                       B-3

<PAGE>

then, in any one or more of said cases, the Company shall give written 
notice, by first class mail, postage prepaid, addressed to the Holder at the 
address of such holder as shown on the books of the Company, of the date on 
which (1) the books of the Company shall close or a record shall be taken for 
such dividend, distribution or subscription rights, or (2) 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 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 20 days prior to 
the action in question and not less than 20 days prior to the record date or 
the date on which the Company's transfer books are closed in respect thereto.

    4.     If any event occurs as to which, in the sole opinion of the Board 
of Directors of the Company, the other provisions of this Warrant are not 
strictly applicable or if strictly applicable would not fairly protect the 
rights of the Holder in accordance with the essential intent and principles 
of such provisions, then the Board of Directors shall make such adjustment in 
the application of such provisions as may be necessary, in the sole judgment 
of such Board, in accordance with such essential intent and principles, to 
protect such rights as aforesaid.

    5.     Exercise of this Warrant shall be made by the surrender hereof by 
the Holder to the Company at its principal office together with (i) the 
attached Subscription Form designating the number of shares of Common Stock  
being purchased, (ii) a certified check or cash in payment for such shares 
and (iii) a letter of transmittal setting forth the computation of the amount 
of said payment.  The Company shall thereafter promptly (in any event within 
seven (7) business days after such exercise) issue certificates for the 
number of shares of the Common Stock of the Company purchased at the Purchase 
Price in effect at the time of such exercise. The Holder shall be deemed to 
be the record owner of such shares of Common Stock as of the close of 
business on the date of such exercise.  The Holder shall not be entitled to 
receive a fractional share, but in lieu thereof the Company shall pay in cash 
an amount equal to the market value of such fractional share if the Common 
Stock has a market value, or if not, the book value of such fractional share. 
 The Company shall thereupon cancel this Warrant; and in the event that less 
than the entire number of shares purchasable are purchased, shall issue a new 
Warrant for the number not so purchased.

    6.     The Company covenants and agrees that all shares which may be 
issued upon the exercise of this Warrant will, upon issuance, be duly and 
validly authorized and issued, fully paid and nonassessable, and free from 
all taxes, liens and charges with respect to the issue thereof; and without 
limiting the generality of the foregoing, the Company covenants and agrees 
that it will, from time to time, take all such action as may be requisite to 
assure that the par value or stated value per share of the Common Stock to be 
acquired upon the exercise of this Warrant is at all times equal to or less 
than the then effective Purchase Price per share of the Common Stock issuable 
pursuant to exercise of this Warrant.  The Company further covenants and 
agrees that during the period within which this Warrant may be exercised, the 
Company will at all times have authorized and reserved for the purpose of the 
issue upon exercise of this Warrant a sufficient number of shares of its 
Common Stock to provide for such exercise.

    7.     (a)     The Holder represents that he is acquiring this Warrant 
and, in the absence of an effective registration statement under the 
Securities Act of 1993 (the "1933 Act") for the shares of Common Stock 
issuable hereunder, such shares for the purpose of investment and not with a 
view to or for sale in connection with any distribution thereof.  The Holder 
and the holder of any shares of Common Stock issued upon exercise hereof, by 
his acceptance hereof, agrees that he will notify the Company in writing 
before selling or otherwise disposing of this Warrant or any shares of Common 
Stock issued to him upon exercise hereof, describing briefly the nature of 
any such sale or other disposition, and no such sale or other disposition 
shall be made unless and until (i) the Company has received an opinion of 
counsel reasonably acceptable to it that no registration (or perfection of an 
exemption) under the 1933 Act is required with respect to such sale or 
disposition (which opinion may be conditioned upon the transferee's assuming 
the Holder's obligation under this paragraph 7) or (ii) an appropriate 
registration statement with respect to such Warrant or such Common Stock, or 
both, has been filed with the Securities and Exchange Commission (the 
"Commission") and declared effective by the Commission. The Company may 
require that this Warrant and  certificates representing shares of Common 
Stock issued upon exercise hereof be stamped or imprinted with an appropriate 
legend reflecting the foregoing restrictions.  For the purposes of this 
paragraph 7, the 

                                       B-4

<PAGE>

term "Securities" shall include this Warrant and the shares of Common Stock 
issued or issuable upon the exercise hereof.

    (b)    The restrictions imposed by this paragraph 7 on the transfer of 
the Securities shall terminate as to any portion of the Securities when:

           (i)     Such portion of the Securities shall have been effectively
    registered under the 1933 Act and sold by the holder thereof in accordance
    with such registration or exemption; or

           (ii)    Written opinions to the effect that such a registration is
    no longer required or necessary under any Federal or State law or
    regulation of governmental authority shall have been received from legal
    counsel for the Company and counsel for the holder of such portion of the
    Securities; or, if a favorable opinion is obtained from holder's counsel,
    and counsel for the Company declines to render such an opinion, upon the
    holder's undertaking to indemnify the Company, on terms satisfactory to the
    Company, against all liability or loss the Company may sustain in
    connection with such transfer; or

    Whenever the restrictions imposed by this paragraph 7 shall terminate, as 
provided above, any holder of the Securities as to which such restrictions 
shall have terminated shall be entitled to receive promptly from the Company, 
without expense to him, a new certificate, not bearing the restrictive legend 
referred to in clause (a) hereof.

    8.     This Warrant shall be redeemable, in whole or in part, at the 
option of the Company by resolution of its Board of Directors, at any time 
and from time to time prior to any exercise thereof at a redemption price in 
cash equal to Twenty Cents ($.20) per Warrant to be redeemed (the "Redemption 
Price").  If less than all of the Warrants then outstanding are to be 
redeemed, the particular Warrants to be redeemed shall be selected pro-rata 
from the then outstanding Warrants.  Not less than 30 nor more than 60 days 
prior to the date fixed for redemption, a notice (the "Redemption Notice") 
specifying the time and place thereof and the Redemption Price per Warrant to 
be redeemed shall be given by mail to the holders of record of the Warrants 
selected for redemption at their respective addresses as the same shall 
appear on the books of the Company. The holders of the Warrants to be 
redeemed shall have the right to exercise such Warrants at any time prior to 
any such redemption (including a redemption that occurs prior to April 30, 
1998).  Upon tender of the Redemption Price in accordance with the Redemption 
Notice, the Warrants to be redeemed as indicated in the Redemption Notice 
shall no longer be deemed to be outstanding and the holders thereof shall 
have no claim against the Company, except the right to receive the Redemption 
Price payable upon such redemption, without interest, upon surrender (and 
endorsement, if required by the Company) of the Warrant certificates.

    9.     The Holder has been granted certain rights to have the shares of 
Common Stock issuable upon exercise of the Warrant registered under the 1933 
Act, all as more fully described in the Purchase Agreement.  

    10.    This Warrant is exchangeable, upon the surrender hereof by the 
Holder at the principal office of the Company, for new warrants of like tenor 
and date representing in the aggregate the right to purchase the number of 
shares purchasable hereunder, each of such new Warrants to represent the 
right to purchase such number of shares as shall be designated by said Holder 
at the time of such surrender.  Subject to paragraph 7 hereof, this Warrant 
and all rights hereunder are transferable in whole or in part by the Holder, 
in person or by duly authorized attorney, upon surrender of this Warrant duly 
endorsed, at the principal office of the Company.


    11.    Upon the receipt by the Company of evidence reasonably 
satisfactory to it of the loss, theft, destruction or mutilation of this 
Warrant, and, in case of loss, theft or destruction, of indemnity or security 
reasonably satisfactory to it, and reimbursement to the Company of all 
reasonable expenses incidental thereto, and upon surrender and cancellation 
of this  Warrant, if mutilated, the Company will make and deliver a new 
Warrant of like tenor, in lieu of this Warrant.

                                       B-5

<PAGE>

    12.    All notices, requests, consents and other communications hereunder 
shall be in writing and shall be deemed to have been made when delivered or 
mailed first-class postage prepaid or delivered to a telegraph office for 
transmission:

           (a)     If to the Holder at such address as may have been furnished
    by such holder to the Company in writing; and

           (b)     If to the Company at such address as may have been furnished
    by the Company to the Holder of this Warrant in writing.

    13.    This Warrant shall be binding upon any successors or assigns of 
the Company.

    14.    This Warrant shall be construed in accordance with and governed by 
the laws of the State of Colorado.

    IN WITNESS WHEREOF, the Company has caused this Warrant to be duly 
executed and delivered as of the date set forth below by one of its officers 
thereunto duly authorized.

Dated:  May 14, 1997.

                             RENAISSANCE ENTERTAINMENT CORPORATION

                             By
                               ----------------------------------------
                               Its Chief Financial Officer


                                       B-6


<PAGE>

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

                              SUBSCRIPTION 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 shares of Common Stock of 
RENAISSANCE ENTERTAINMENT CORPORATION to which such Warrant relates and 
herewith makes payment of $________, therefor in cash or by certified check 
and requests that the certificates for such shares be issued in the name of, 
and be delivered to,  ____________________________, the address for which is 
set forth below the signature of the undersigned.

Dated:
      ------------------------
                                                                          
                                       ----------------------------------------
                                       (Signature)

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

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

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

    To be signed only upon transfer of Warrant

    FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers 
unto _______________________________ the right to purchase shares of Common 
Stock of RENAISSANCE ENTERTAINMENT CORPORATION to which the within Warrant 
relates and appoints _______________, attorney, to transfer said right on the 
books of RENAISSANCE ENTERTAINMENT CORPORATION with full power of 
substitution in the premises.

Dated:
------------------------------
                                                                          
                                       ----------------------------------------
                                       (Signature)

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

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

                                       B-7

<PAGE>

                                    MORTGAGE DEED
                                         AND
                                  SECURITY AGREEMENT
                                         AND
                             FIXTURE FINANCING STATEMENT

    THIS INDENTURE, made as of the 14th day of May, 1997, by and between 
Renaissance Entertainment Corporation, a Colorado corporation, having its 
principal office at 4410 Arapahoe Avenue, Suite 200, Boulder, Colorado 80303 
("Mortgagor"), and Dorsar Partners, L.P., a Texas Limited Partnership having 
an address at c/o Steven L. Feinberg, 1855 North Mesa, Suite 120, El Paso, 
Texas 79912-5939, Charles H. Leavell having an address at c/o The Leavell 
Company, 4487 North Mesa, Suite 204, El Paso, Texas 79902 and Charles S. 
Leavell having an address at c/o Renaissance Entertainment Corporation, 4440 
Arapahoe Avenue, Suite 200, Boulder, Colorado 80303 (collectively, 
"Mortgagee"),

                                 W I T N E S S E T H:
                                           
    That Mortgagor, in consideration of the sum of ONE MILLION and 00/100THS 
($1,000,000.00) DOLLARS, the receipt whereof is hereby acknowledged, and all 
additions, increases, modifications and renewals thereof does hereby GRANT, 
BARGAIN, SELL, MORTGAGE, WARRANT AND CONVEY unto Mortgagee, its successors 
and assigns, forever, all that tract or parcel of land situate in the County 
of Kenosha, and State of Wisconsin, described in Exhibit A attached hereto 
and by this reference made a part hereof, (the "Land");

    TOGETHER with all of the buildings and improvements of every kind and 
description now or hereafter located on the Land (the "Improvements");

    TOGETHER with all of the following property, rights and interests (the 
Land, the Improvements and such property, rights and interests being 
collectively called the "Premises"):

           (a)     Mortgagor's right, title and interest, including all mineral
    and water rights as well as any after-acquired title or reversion, in and
    to the beds of the ways, roads, streets, avenues and alleys adjoining the
    Land; and
     
           (b)     all and singular the tenements, hereditaments, easements,
    appurtenances, passages, waters, water rights, water courses, riparian
    rights, other rights, liberties and privileges thereof or in any way now or
    hereafter appertaining thereto, including homestead and any other claim at
    law or in equity as well as any after-acquired title, franchise or license
    and the reversion and reversions and remainder and remainders thereof; and
    
           (c)     all rents, issues, proceeds and profits accruing and to
    accrue from the Premises; and
    
                                       
<PAGE>

           (d)     all materials intended for construction, reconstruction,
    alteration and repair of the Improvements, all of which materials shall be
    deemed to be included within the Premises immediately upon the delivery
    thereof to the Premises and all fixtures and articles of personal property
    now or hereafter owned by Mortgagor and attached to or contained in and
    used in connection with the Premises, including, but not limited to, all
    furniture, furnishings, apparatus, machinery, motors, transformers,
    elevators, fittings, radiators, gas ranges, ovens, dishwashers, ice boxes,
    mechanical refrigerators, awnings, shades, screens, blinds, office
    equipment, carpeting, furniture and other furnishings, and all plumbing,
    heating, fireplaces, and fireplace equipment, lighting, cooking, laundry,
    ventilating, refrigerating, incinerating, air-conditioning and sprinkler
    equipment, cabanas, swimming pool equipment and fixtures and all
    appurtenances to any of the foregoing; and all renewals or replacements
    thereof or articles in substitution therefor, whether or not the same are
    or shall be attached to the Improvements in any manner; it being mutually
    agreed that all the aforesaid property owned by Mortgagor and placed by it
    on the Premises shall, so far as permitted by law, be deemed to be affixed
    to the realty, security for the said indebtedness and covered by this
    Mortgage.
    
           (e)     All proceeds of any insurance payable to Mortgagor and all
    subsequent owners of the Premises as a result of the damage or destruction
    thereto.
    
           (f)     Together with all awards and other compensation hereafter
    paid to Mortgagor and all subsequent owners of the Premises for any taking
    by eminent domain or condemnation, either permanent or temporary, of all or
    any part of the Premises or any easement or appurtenance thereof, including
    severance and consequential damages and change in grade of streets, and any
    conveyance by private sale in lieu thereof.
    
    This Mortgage shall also constitute a security agreement as defined in the
Uniform Commercial Code with respect to (and the Mortgagor hereby grants
Mortgagee a security interest in) all personal property and fixtures owned by
Mortgagor and included in the Premises.  The Mortgagor shall, from time to time,
at the request of Mortgagee, execute any and all financing statements covering
such personal property and fixtures  (in a form satisfactory to Mortgagee) which
Mortgagee may reasonably consider necessary or appropriate to perfect its
security interest.  The Mortgagor will pay to Mortgagee, on demand, the amount
of any and all costs and expenses (including reasonable attorneys' fees and
legal expenses) paid or incurred by Mortgagee in connection with the exercise of
any right or remedy referred to in this paragraph.  As to those items of
collateral described in this Mortgage that are or are to become fixtures, it is
intended that THIS MORTGAGE SHALL BE EFFECTIVE AS A FINANCING STATEMENT FILED AS
A FIXTURE FILING from the date of its filing in the real estate records of the
County where the Premises are situated.  The name of the record owner of the
Premises is the Mortgagor set forth in page one of this Mortgage.  Information
concerning the security interest created by this instrument may be obtained from
Mortgagee, as secured party, at its address as set forth  in page one of this
Mortgage.  The address of the Mortgagor, as debtor, is as set forth in page one
to this Mortgage.  The Mortgagor's federal identification number is 84-1094630. 
This document covers goods which are or are to become fixtures.  Upon the
occurrence of a default, the giving of any 

                                       2

<PAGE>

required notice and the expiration of any applicable grace or cure period, 
Mortgagee may, at its option, sell or otherwise dispose of such personal 
property and fixtures by public or private proceedings, separate from or 
together with the sale of the Premises, in accordance with the provisions of 
the Wisconsin Uniform Commercial Code, and Mortgagee may with respect to such 
fixtures or personal property, exercise any other rights or remedies of a 
secured party under the Wisconsin Uniform Commercial Code.  Unless such 
personal property and/or fixtures are perishable or threatened to decline 
speedily in value or are of a type customarily sold on a recognized market, 
Mortgagee shall give Mortgagor at least ten (10) days prior written notice of 
the time and place of any public sale of such fixtures or personal property 
or other intended disposition thereof.  Upon occurrence of any event of 
default, the Mortgagee reserves the option, pursuant to the appropriate 
provisions of the Wisconsin Uniform Commercial Code to proceed with respect 
to such personal property and/or fixtures as part of the Premises in 
accordance with its rights and remedies with respect to the Premises, in 
which event the default provisions of the Wisconsin Uniform Commercial Code 
shall not apply.

    TO HAVE AND TO HOLD the same unto Mortgagee and its successors and 
assigns forever.

    AND MORTGAGOR COVENANTS AND WARRANTS that Mortgagor is lawfully seized of 
an indefeasible estate in fee simple of the Premises; that the same is free 
from all encumbrances and liens whatsoever, except the "Permitted Exceptions" 
identified on Exhibit B hereto, that Mortgagor has good and legal right, 
power and authority to so convey the same and that Mortgagor and its 
successors and assigns in interest will forever WARRANT AND DEFEND the title 
of the Premises and the lien and priority of this Mortgage against the lawful 
claims and demands of all persons whomsoever, subject to the Permitted 
Exceptions; and that Mortgagor will execute, acknowledge and deliver all and 
every such further assurances unto Mortgagee of the title to all and singular 
the Premises hereby conveyed and intended so to be, or which Mortgagor may be 
or shall become hereinafter bound so to do.  All such covenants and 
warranties shall run with the land solely for the benefit of Mortgagee, its 
successors and assigns.

    PROVIDED, NEVERTHELESS, that if Mortgagor shall well and truly pay to 
Mortgagee, or order, the principal sum of ONE MILLION and 00/100THS 
($1,000,000.00) DOLLARS, evidenced by: (i) that certain 9% Convertible 
Secured Debenture Due 2002 dated May 14, 1997 and issued by Mortgagor to 
Dorsar Partners, L. P.; (ii) that certain 9% Convertible Secured Debenture 
Due 2002 dated May 14, 1997 and issued by Mortgagor to Charles S. Leavell and 
(iii) that certain 9% Convertible Secured Debenture Due 2002 dated May 14, 
1997 and issued by Mortgagor to Charles H. Leavell (collectively the 
"Debentures") with interest on such principal sum from the date of the 
Debentures at the rate specified in the Debentures.  The Debentures are being 
issued, respectively, pursuant to: (i) that certain Subscription and Purchase 
Agreement dated as of May 8, 1997 and executed between Mortgagor and Dorsar 
Partners, L. P.; (ii) that certain Subscription and Purchase Agreement dated 
May 8, 1997 and executed between Mortgagor and Charles S. Leavell and (iii) 
that certain Subscription and Purchase Agreement dated as of May 8, 1997 and 
executed between Mortgagor and Charles H. Leavell (collectively the 
"Subscription Agreements").  The Debentures mature not later than April 1, 
2002.  The provisions of the Debentures are incorporated herein by reference.

                                       3


<PAGE>

    AND PROVIDED, that if Mortgagor shall fully perform all of the terms, 
covenants, conditions and warranties of this Mortgage, then this indenture is 
to be NULL AND VOID and shall be released of record at the expense of 
Mortgagor, OTHERWISE to remain in full force and effect.

    MORTGAGOR FURTHER COVENANTS AND AGREES AS FOLLOWS:

    1.   To pay promptly the principal of, premium, if any, and interest, 
fixed, contingent or otherwise, on the indebtedness evidenced by the 
Debentures together with all other sums arising under the Debentures, the 
Subscription Agreements and this Mortgage and secured hereby, at the times 
and in the manner herein and in the Debentures provided.

    2.   To keep the Premises free from statutory liens of every kind; to 
pay, (except when payment for all such items has been made under Paragraph 3 
hereof) before delinquent and before any interest or penalty for non-payment 
attaches thereto, all taxes, assessments, water rates, sewer rentals and 
other governmental charges, fines, or impositions of every nature and to 
whomever assessed that may now or hereafter be levied or assessed upon the 
Premises or any part thereof, or upon the rents, issues, income or profits 
thereof, whether any or all said taxes, assessments, water rates, sewer 
rentals or charges, fines or impositions be levied directly or indirectly or 
as excise taxes or income taxes; to deliver to Mortgagee, at least ten (10) 
days before delinquent, receipted bills evidencing payment therefor; to pay 
in full, under protest in the manner provided by statute, any tax, 
assessment, rate, rental, fine, imposition or charge aforesaid which 
Mortgagor may desire to contest; and in the event of the passage, after the 
date of this Mortgage, of any law of the State of  Wisconsin, deducting from 
the value of land for the purpose of taxation, any lien thereon or changing 
in any way the laws for the taxation of mortgages or debts secured by 
mortgage for state or local purposes, or the manner of the collection of any 
such taxes, so as to impose a tax or otherwise to affect this Mortgage, or 
upon the rendition of any Court of competent jurisdiction of a decision that 
any undertaking by Mortgagor as in this paragraph or elsewhere in this 
Mortgage provided is legally inoperative, then the principal indebtedness 
together with accrued interest and all other sums due hereunder (but not 
including any prepayment premium) and under the Debentures will be due and 
payable at the election of Mortgagee thirty (30) days' after written notice 
to the Mortgagor, of such election, provided, however, said option and right 
shall be unavailing and the Debentures and Mortgage shall remain in effect as 
though said law had not been enacted, if, notwithstanding such law, Mortgagor 
lawfully may pay any such tax or taxes assessment, rate, rental, fine, 
imposition or charge to or for Mortgagee and does in fact pay same when 
payable.  An assessment which is payable in installments at the application 
of Mortgagor or any lessee of the Premises shall nevertheless, for the 
purpose of this paragraph, be deemed due and payable in its entirety on the 
day the first installment becomes due and payable or a lien unless Mortgagee 
agrees that such assessment may be paid in installments, which agreement 
shall not be unreasonably withheld.  Except when payment has been made under 
Paragraph 3 hereof, Mortgagor shall deliver to Mortgagee receipted bills 
evidencing payment of such installments at least ten (10) days before 
delinquent.  In the event of a default under this Mortgage, including a 
default under the foregoing, Mortgagee shall have the option, in addition to 
its other remedies, to 

                                       4

<PAGE>

require the Mortgagor to pay immediately the outstanding balance of any 
assessments being paid in installments.

    3.   To keep the Improvements insured against loss or damage resulting 
from fire, windstorm and other hazards, casualties and contingencies 
(including but not limited to War Risk Insurance, if available) in an amount 
equal to the replacement cost thereof, and to pay promptly, when due, any 
premiums on such insurance.  All insurance policies shall be in such form and 
with such endorsements as shall be reasonably acceptable to Mortgagee and 
shall be carried in companies approved by Mortgagee and policies and 
renewals, marked 'Paid', shall be delivered to Mortgagee at least ten (10) 
days before the expiration of the old policies and  shall have attached 
thereto standard non-contributing mortgagee clause (in favor of and, subject 
to the rights of the prior mortgage holder, entitling Mortgagee to collect 
any and all of the proceeds payable under all such insurance) as well as 
standard waiver of subrogation endorsement, all to be in form acceptable to 
Mortgagee.  In the event of a change in ownership or occupancy of the 
Premises immediate notice thereof by mail shall be delivered by Mortgagor to 
all insurers and in the event of loss, Mortgagor will give immediate notice 
by mail to Mortgagee.  The Mortgagor hereby authorizes Mortgagee, at its 
option, but subject to the rights of the prior mortgage holder, to collect, 
adjust and compromise any losses under any of the insurance aforesaid and 
after deducting costs of collection to apply the proceeds at its option as 
follows:  (1)  As a credit upon any portion as selected by Mortgagee, of the 
indebtedness secured hereby, or (2) To restoring the improvements in which 
event Mortgagee shall not be obligated to see the proper application thereof 
nor shall the amount so released or used be deemed a payment on any 
indebtedness secured hereby, or (3) To deliver same to the owner of the 
premises.  In the event of foreclosure of this Mortgage, or other transfer of 
title to the Premises in extinguishment of the indebtedness secured hereby, 
all right, title and interest of Mortgagor in and to any insurance policies 
then in force shall pass to the purchaser or grantee of the Premises subject 
to the rights of the prior mortgage holder.  Mortgagor shall not carry 
separate insurance, concurrent in kind or form and contributing, in the event 
of loss, with any insurance policies required hereunder.  Mortgagor shall at 
all times be in compliance with the terms and provisions of all insurance 
policies required hereunder or in fact maintained by Mortgagor with respect 
to the Premises whether or not required hereunder.

    That notwithstanding any provisions herein to the contrary and in 
particular the foregoing provisions of this Section 3, in the event of any 
such loss or damage as therein described to the improvements upon the 
Premises, it is hereby understood, covenanted and agreed that, subject to the 
rights of the prior mortgage holder, the Mortgagee shall make the proceeds 
received under any such insurance policies as therein described available for 
the restoration of the improvements so damaged, subject to the following 
conditions:  (a) that Mortgagor is not then in default under any of the 
terms, covenants and conditions hereof; (b) that Mortgagee shall first be 
given satisfactory proof that such improvements have been fully restored or 
that by the expenditure of such money will be fully restored, free and clear 
of all liens, except as to the lien of this Mortgage; (c) that in the event 
such proceeds shall be insufficient to restore or rebuild the said 
improvements, Mortgagor shall deposit promptly with Mortgagee funds which, 
together with the insurance proceeds, shall be sufficient to restore and 
rebuild the said Premises; (d) that in the event Mortgagor shall fail within 
a reasonable time, subject to delays beyond its control, to 

                                       5

<PAGE>

restore or rebuild the said improvements, then Mortgagee, at its option, may 
restore or rebuild the said improvements for or on behalf of the Mortgagor 
and for such purpose may do all necessary acts; (e) that the excess of said 
insurance proceeds above the amount necessary to complete such restoration 
shall be applied as hereinbefore provided as a credit upon any portion as 
selected by Mortgagee, of the indebtedness secured hereby; and (f) the holder 
of the prior mortgage on the Premises, if the same remains unsatisfied at 
such time, has consented to making such proceeds available for restoration.  
In the event any of the said conditions are not or cannot be satisfied, then 
the alternate disposition of such insurance proceeds as provided above in 
this Section 3 shall again become applicable.

    Under no circumstances shall Mortgagee become personally obligated to 
take any action to restore or rebuild the said improvements.  In the event of 
foreclosure of this Mortgage, or other transfer of title to the Premises in 
extinguishment of the indebtedness secured hereby, subject to the rights of 
the prior mortgage holder, all right, title and interest of the Mortgagor, in 
and to any insurance policies then in force, and to the proceeds of any such 
policies, shall pass to the purchaser or grantee.

    4.   The Premises are subject to prior Real Estate Mortgages and an 
Assignment of Rents in favor of Bank One, Kenosha, NA more fully described in 
Exhibit B hereto.  Mortgagor agrees that it will timely pay and perform all 
things required to be paid and performed pursuant to said Real Estate 
Mortgages and the note or notes secured thereby.  In the event that Mortgagor 
shall fail to pay or perform anything so required pursuant to said Real 
Estate Mortgages and note or notes, Mortgagee shall have the right, but shall 
have no obligation, to pay or perform the same and the amount so paid or the 
cost of any such performance together with interest thereon at the rate 
provided in the Debentures, shall be repayable by the Mortgagor without 
demand and shall be an additional lien upon the Premises prior to any right, 
title, interest or claim attaching or accruing subsequent to the lien of this 
Mortgage and shall be secured by and collectible as a part of this Mortgage.

    5.   To carry and maintain such liability and indemnity insurance 
(including, but without limitation, water damage and the so-called assumed 
and contractual liability coverage) as may reasonably be required from time 
to time by Mortgagee in forms, amounts and with companies satisfactory to 
Mortgagee. Such insurance policies shall name Mortgagee as an additional 
insured. Certificates of such insurance, premiums prepaid, shall be deposited 
with Mortgagee and shall contain provision for thirty (30) days' notice to 
Mortgagee prior to any cancellation thereof.

    6.   That none of the Improvements shall be altered, removed or demolished
nor shall any fixtures, appliances or articles of personal property on, in or
about the Improvements be severed, removed, sold or mortgaged, without the
consent of Mortgagee which may be withheld in Mortgagee's sole discretion except
that such consent of Mortgagee shall not be required in the case of:  (i) the
severance, removal or sale of any fixtures, chattels or articles of personal
property, provided that they are promptly replaced by similar fixtures, chattels
and articles of personal property, at least equal in quality and condition as
those replaced, free from any security interest in or encumbrance thereon or
reservation of title thereto; and (ii) alterations, removals or 

                                       6

<PAGE>

demolitions done for the purpose of making improvements done in the ordinary 
course of operating the Premises as income producing property provided that 
any such alteration, removal or demolition costs less than $25,000; to 
permit, commit or suffer no waste, impairment or deterioration of the 
Premises or any part thereof; to keep and maintain the Premises and every 
part thereof in thorough repair and condition; to effect such repairs as 
Mortgagee may reasonably require and from time to time to make all needful 
and proper replacements so that the Premises will, at all times, be in good 
condition, fit and proper for the respective purposes for which they were 
originally erected or installed; to comply with all statutes, orders, 
requirements or decrees relating to the Premises by any federal, state or 
municipal authority; to observe and comply with all conditions and 
requirements necessary to preserve and extend any and all rights, licenses, 
permits (including but not limited to zoning variances, special exceptions 
and non-conforming uses), privileges, franchises and concessions which are 
applicable to the Premises or which have been granted to or contracted for by 
Mortgagor in connection with any existing or presently contemplated use of 
the Premises; and to permit Mortgagee or its agents, at all reasonable times, 
to enter upon and inspect the Premises.

    7.   To save Mortgagee harmless from all costs and expenses, including 
reasonable attorneys' fees, and costs of a title search, continuation of 
abstract and preparation of survey, incurred by reason of any action, suit, 
proceeding, hearing, motion or application before any court or administrative 
body (excepting an action to foreclose or to collect the debt secured hereby) 
in and to which Mortgagee may be or become a party by reason hereof, 
including but not limited to condemnation, bankruptcy and administrative 
proceedings, as well as any other of the foregoing wherein proof of claim is 
by law required to be filed or in which it becomes necessary to defend or 
uphold the terms of and the lien created by this Mortgage, and all money paid 
or expended by Mortgagee in that regard, together with interest thereon from 
date of such payment at the rate set forth in the Debentures shall be so much 
additional indebtedness secured hereby and shall be immediately and without 
notice due and payable by Mortgagor.

    8.   That Mortgagor will give Mortgagee immediate written notice of the 
actual or threatened commencement of any proceedings under eminent domain 
affecting all or any part of the Premises or any easement therein or 
appurtenance thereof, including severance and consequential damage and change 
in grade of streets, and will deliver to Mortgagee copies of any and all 
papers served in connection with any such proceedings.  Mortgagor further 
covenants and agrees, subject to the rights of the prior mortgage holder, to 
make, execute and deliver to Mortgagee, at any time or times upon request, 
free, clear and discharged of any encumbrances of any kind whatsoever except 
the rights of the holder of the prior mortgage, any and all further 
assignments and/or other instruments deemed necessary by Mortgagee for the 
purpose of validly and sufficiently assigning all awards and other 
compensation heretofore and hereafter to be made to Mortgagor (including the 
assignment of any award from the United States Government at any time after 
the allowance of the claim therefor, the ascertainment of the amount thereof 
and the issuance of the warrant for payment thereof) for any taking, either 
permanent or temporary, under any such proceedings.

    Mortgagor further agrees that should the Premises or any part thereof,
including any easement or appurtenance thereof, be taken or damaged, permanently
or temporarily, by reason 

                                       7

<PAGE>

of any public improvement or condemnation proceedings, including severance 
and consequential damage and change in grade of streets, or damage by 
earthquake or in any other manner, subject to the rights of the prior 
mortgage holder, Mortgagee shall be entitled to any compensation, award, 
payment or relief therefor and Mortgagor does hereby appoint Mortgagee its 
Attorney-in-Fact, coupled with an interest, and authorizes, directs and 
empowers such Attorney, at the option of the Attorney on behalf of the 
Mortgagor, its successors or assigns, to commence, appear in and prosecute, 
in its own name, any action or proceedings, to adjust or compromise any claim 
therefor and to collect and receive proceeds thereof, and to give proper 
receipts and acquittances therefor and after deducting expenses of 
collection, to apply the net proceeds as a credit on any portion, as selected 
by Mortgagee, of the indebtedness secured hereby notwithstanding the fact 
that the amount owing thereon may not then be due and payable hereunder or 
that the indebtedness is otherwise adequately secured, provided, however, 
that no prepayment premium shall be due in connection with any net proceeds 
applied to the indebtedness.

    9.   That Mortgagor within five (5) days upon request by mail, will 
furnish a written statement duly acknowledged confirming the amount of the 
principal balance of the Debentures and all interest accrued thereon and all 
other amounts due upon this Mortgage and whether any offsets or defenses 
exist against the mortgage debt.

    10.  That upon default by Mortgagor in the performance or observance of 
any of the terms, covenants, conditions or warranties herein or in the 
Debentures contained, after any notice required by the terms of the 
Debentures and the expiration of any applicable cure or grace period, 
Mortgagee may, at its option, and whether electing to declare the whole 
indebtedness due and payable or not, perform the same without waiver of any 
other remedy, and any amount paid or advanced by Mortgagee in connection 
therewith or any other costs, charges or expenses incurred in the protection 
of the Premises and the maintenance of this lien including reasonable 
attorneys' fees, with interest thereon, at the rate set forth in the 
Debentures shall be repayable by the Mortgagor without demand and shall be an 
additional lien upon the Premises prior to any right, title, interest or 
claim attaching or accruing subsequent to the lien of this Mortgage and shall 
be secured by and collectible as a part of this Mortgage.

    11.  That upon any default by Mortgagor in the payment of the principal 
sum secured hereby or of any installment thereof, or of interest thereon, as 
they severally become due, or any default, in the performance or observance 
of any other term, covenant or condition in this Mortgage or in the 
Debentures or in any instrument now or hereafter evidencing or securing said 
debt, and the continuance of any such default after the giving of any 
required notice and the expiration of any applicable grace period provided in 
Paragraph 33 of this Mortgage, then in any or either of said events, the 
whole indebtedness secured hereby together with accrued interest and all 
other sums due hereunder or under the Debentures, shall, at the option of 
Mortgagee, become immediately due and payable together with interest at the 
rate set forth in the Debentures and together with reasonable attorneys' fees 
and without relief from valuation or appraisement laws, and thereupon, or at 
any time during the existence of any such default, Mortgagee may exercise 
with respect to all personal property and fixtures which are a part of the 
Premises, all the rights and remedies accorded upon default to a secured 
party under the Uniform Commercial Code as in effect in the State of 
Wisconsin, and may proceed to foreclose this Mortgage by judicial 

                                       8

<PAGE>

proceedings, anything hereinbefore or in said Debentures contained to the 
contrary notwithstanding, and any failure to exercise said option shall not 
constitute a waiver of the right to exercise the same at any other time. 
Mortgagee may become the purchaser at any such foreclosure sale, and for the 
purpose of making settlement or payment of the purchase price, shall be 
entitled to use the Debentures and any claims for interest accrued and unpaid 
thereon, together with all other sums, with interest, advanced and unpaid 
hereunder, and all statutory charges for such foreclosure, including maximum 
attorney's fees allowed by law in order that there may be credited as paid on 
the purchase price the sums then due under the Debentures including principal 
and interest thereon and all other sums, with interest, advanced and unpaid 
hereunder, and all charges and expenses of such foreclosure including 
attorneys' fees allowed by law.

    12.  That upon default by Mortgagor as aforesaid and the election of 
acceleration by Mortgagee as aforesaid, Mortgagor does hereby authorize and 
empower Mortgagee forthwith to foreclose this Mortgage by sale of the 
Premises at public auction according to the statute in such case provided, 
and to apply the proceeds of the sale to pay all amounts then due on this 
Mortgage, including principal, interest and the amount of any taxes, 
assessments and insurance premiums and any other sum which may then be due to 
Mortgagee, and also to pay all costs and expenses of such foreclosure sale, 
including but not limited to attorneys' fees, cost of continuation of 
abstract, examination of title and title insurance, all of which costs, 
expenses and fees the Mortgagor agrees to pay.

    13.  That in case of foreclosure of this Mortgage in any court of law or 
equity, whether or not any order or decree shall have been entered therein, 
and to the extent permitted by law, a reasonable sum as aforesaid shall be 
allowed for attorneys' fees of the plaintiff in such proceeding, for 
stenographers' fees and for all moneys expended for documentary evidence and 
the cost of a complete abstract of title and title report for the purpose of 
such foreclosure, such sums to be secured by the lien hereunder; and, to the 
extent permitted by law, there shall be included in any judgment or decree 
foreclosing this Mortgage and be paid out of said rents, issues and profits 
from the Premises or the proceeds of any sale made in pursuance of any such 
judgment or decree:  (1) all costs and expenses of such suit or suits, 
advertising, sale and conveyance, including reasonable attorneys', 
solicitors' and stenographers' fees, outlays for documentary evidence and the 
cost of said abstract, examination of title and title report; (2) all moneys 
advanced by Mortgagee, if any, for any purpose authorized in this Mortgage, 
with interest as herein provided; (3) all the accrued interest and Default 
Interest remaining unpaid on the indebtedness hereby secured; (4) any 
Acceleration Premium then arising; and (5) all the said principal money 
remaining unpaid.  The overplus of the proceeds, if any, shall be paid to the 
said Mortgagor on reasonable request, or as the court may direct.

    14.  That in case of any foreclosure sale of the Premises, the same may 
be sold in one or more parcels.  Mortgagor, for Mortgagor and all who may 
claim through or under Mortgagor, waives any and all right to have the 
Premises marshaled upon foreclosure of the lien hereof and agrees that any 
court having jurisdiction to foreclose such lien may order the Premises sold 
as an entirety. Mortgagor agrees that to the extent permitted by law, this 
Mortgage may be foreclosed by Mortgagee at Mortgagee's option, pursuant to 
the provisions of Section 846.101, 846.102 and/or 846.103 of the Wisconsin 
statutes or any successor thereof.

                                       9

<PAGE>

    15.  That the failure of Mortgagee to exercise the option for 
acceleration of maturity and/or foreclosure following any default as 
aforesaid or to exercise any other option granted to Mortgagee hereunder in 
any one or more instances, or the acceptance by Mortgagee of partial payments 
hereunder shall not constitute a waiver of any such default, but such option 
shall remain continuously in force. Acceleration of maturity, once claimed 
hereunder by Mortgagee, may, at the option of Mortgagee, be rescinded by 
written acknowledgment to that effect by Mortgagee, but the tender and 
acceptance of partial payments alone shall not in any way affect or rescind 
such acceleration of maturity.

    16.  That in the event of foreclosure of this Mortgage, Mortgagor does 
hereby authorize and empower Mortgagee, its successors and assigns:  (a) to 
pay all taxes, special assessments, assessments, water rates, sewer rentals 
and other governmental charges of every kind and nature that may then have 
been or that thereafter during the period of redemption from sale under such 
foreclosure may be levied or assessed upon the Premises or any part thereof; 
(b) to keep the Improvements insured and to pay the premiums therefor as 
required hereunder during the period of redemption from the sale under such 
foreclosure; and (c) to keep the Premises in thorough repair as required 
hereunder during the period of redemption of the sale from such foreclosure, 
and any amount so paid or advanced by Mortgagee under the authority of this 
paragraph, together with interest thereon at the rate set forth in the 
Debentures, shall be an additional lien upon the Premises prior to any right, 
title, interest or claim thereon attaching or accruing subsequent to the lien 
of this Mortgage and shall be secured by and collectible as part of the 
within Mortgage.

    17.  That at the option of Mortgagee, this Mortgage shall become subject 
and subordinate, in whole or in part (but not with respect to priority of 
entitlement to any insurance proceeds, award in condemnation or any 
intervening judgment lien) to any and all Leases of all or any part of the 
Premises upon the execution and recording in the offices of the County 
Recorder in and for Kenosha County, Wisconsin, by Mortgagee of a unilateral 
declaration to that effect.

    18.  That the rights and remedies herein provided are cumulative and 
Mortgagee may recover judgment thereon, issue execution therefor, and resort 
to every other right or remedy available at law or in equity, without first 
exhausting and without affecting or impairing the security or any right or 
remedy afforded by this Mortgage and no enumeration of special rights or 
powers by any provisions of this Mortgage shall be construed to limit any 
grant of general rights or powers, or to take away or limit any and all 
rights granted to or vested in Mortgagee by virtue of the laws of Wisconsin.

    19.  The Mortgagor hereby waives, to the extent permitted by law, the 
benefits of all valuation, appraisement, homestead, exemption, stay and 
moratorium laws, now in force or which may hereafter become laws.

    20.  That Mortgagee, without notice, and without regard to the 
consideration, if any, paid therefor, and notwithstanding the existence at 
that time of any inferior liens thereon, may 

                                       10

<PAGE>

release any part of the security described herein or any person liable for 
any indebtedness secured hereby without in any way affecting the priority of 
the lien of this Mortgage, to the full extent of the indebtedness remaining 
unpaid hereunder upon any part of the security not expressly released and may 
agree with any party obligated on said indebtedness or having any interest in 
the security described herein to extend the time for payment of any part or 
all of the indebtedness secured hereby. Such agreement shall not, in any way, 
release or impair the lien hereof, but shall extend the lien hereof as 
against the title of all parties having any interest in said security which 
interest is subject to said lien.

    21.  In the event Mortgagee (a) releases, as aforesaid, any part of the 
security described herein or any person liable for any indebtedness secured 
hereby, (b) grants an extension of time of any payments of the debt secured 
hereby; (c) takes other or additional security for the payment thereof; (d) 
waives or fails to exercise any right granted herein or in the Debentures, 
said act or omission shall not release the Mortgagor, subsequent purchasers 
of the Premises or any part thereof, or makers or sureties of this Mortgage 
or of the Debentures, under any covenant of this Mortgage or of the 
Debentures, nor preclude Mortgagee from exercising any right, power or 
privilege herein granted or intended to be granted in the event of any other 
default then made or any subsequent default.

    22.  That nothing herein contained nor any transaction related thereto 
shall be construed or so operate as to require the Mortgagor to make any 
payment or to do any act contrary to law; that if any clauses or provisions 
herein contained operate or would prospectively operate to invalidate this 
Mortgage in whole or in part then such clauses and provisions only shall be 
held for naught, as though not herein contained, and the remainder of this 
Mortgage shall remain operative and in full force and effect.  All notices, 
approvals, consents, requests and other communications required to be given 
hereunder shall be in writing and mailed postage prepaid by certified or 
registered mail, return receipt requested, or by personal delivery, to the 
addressees indicated in the opening paragraph of this Mortgage (or at such 
other place as either Mortgagor or Mortgagee, as the case may be, may, from 
time to time, designate in a written notice given to the other) and shall be 
deemed sufficiently served on the date of mailing thereof or on the date of 
personal delivery.

    23.  That the Premises herein mortgaged being located in the State of 
Wisconsin, this Mortgage and the rights and indebtedness hereby secured 
shall, without regard to the place of contract or payment, be construed and 
enforced according to the internal laws of the State of Wisconsin.

    24.  Mortgagor agrees that upon or any time (i) after the occurrence of a
default hereunder, or (ii) during the period of redemption after foreclosure of
this then in any such event, Mortgagee, shall upon application to the district
court where the Premises or any part thereof is located by an action separate
from the foreclosure or in the foreclosure action (it being understood and
agreed that the existence of a foreclosure is not a prerequisite to any action
for a receiver hereunder), be entitled to the appointment of a receiver for the
Rents, profits and all other income of every kind which shall accrue and be
owing for the use or occupation of the Premises or any part thereof.  Mortgagee
shall be entitled to the appointment of a receiver 

                                       11

<PAGE>

without regard to waste, adequacy of the security or solvency of Mortgagor or 
without the requirement of posting of any bond or security and without regard 
to the then value of the Premises.  The Mortgagee hereunder or any holder of 
the Debentures may be appointed as the receiver.  The receiver, who shall be 
an experienced property manager, shall collect (until the indebtedness 
secured hereby is paid in full and, in the case  of a foreclosure sale, 
during the entire redemption period) the Rents, profits and all other income 
of every kind, manage the Premises so to prevent waste, execute Leases within 
or beyond the period of the receivership if approved by the court and apply 
all Rents, profits and other income collected by the receiver to the 
following in such order as may be designated by Mortgagee: 

         A.   To the payment of all reasonable fees of the receiver, if any,
    approved by the court;
    
         B.   To the repayment of tenant security deposits, with interest
    thereon, if required by  applicable statutes;
    
         C.   To the payment when due of, delinquent or current, real estate
    taxes or special assessments with respect to the Premises, or the periodic
    escrow for the payment of the same;
    
         D.   To the payment when due of premiums for insurance of the type
    required hereby, or the periodic escrow for payment of the same, if any;
    
         E.   To the payment of expenses for normal maintenance of the
    Premises; and
    
         F.   If received prior to any foreclosure sale of the said Premises,
    to Mortgagee for payment of the indebtedness secured by this Mortgage, but
    no such payment made after acceleration of the indebtedness shall affect
    such acceleration;
    
         G.   If received during or with respect to the period of redemption
    after a foreclosure sale of the said Premises:
    
              (1)  If the purchaser at the foreclosure sale is not Mortgagee,
         first to Mortgagee to the extent of any deficiency of the sale
         proceeds to repay the indebtedness secured by this Mortgage, second to
         the purchaser as a credit to the redemption price, but if the said
         Premises are not redeemed, then to the purchaser of the said Premises;
    
              (2)  If the purchaser at the foreclosure sale is Mortgagee, to
         Mortgagee, to the extent of any deficiency of the sale proceeds to
         repay the indebtedness secured by this Mortgage and the balance to be
         retained by Mortgagee as a credit to the redemption price, but if the
         said Premises are not redeemed, then to Mortgagee, whether or not any
         such deficiency exists.
                                       12

<PAGE>

    As provided in applicable statutes, Mortgagee shall have the right at any 
time and without limitation to advance money to the receiver to pay any part 
of or all of the items which the receiver should otherwise pay if cash were 
available from the Premises and sums so advanced with interest at the rate 
provided in the Debentures, shall be secured hereby, or if advanced during 
the period of redemption, shall be a part of the sum required to be paid to 
redeem from the sale.

    Mortgagor for itself and any subsequent owner of the Premises hereby 
waives any and all defenses to the application for a receiver and hereby 
specifically consents to such appointment without notice but nothing herein 
contained is to be construed to deprive the holder of this Mortgage of any 
other right, remedy or privilege it may have under the law to have a receiver 
appointed.  The provision for the appointment of a receiver and the 
assignment of such rents, issues and profits is an express condition upon 
which the loan hereby secured is made.  The rights and remedies herein 
provided for shall be deemed to be cumulative and in addition to, and not in 
limitation of, those provided by law, and if there be no receiver so 
appointed, Mortgagee may proceed to collect the rents, issues and profits 
from the Premises.

    25.  That in the event of the sale or transfer by operation of law, or 
otherwise, of all or any part of the Premises, Mortgagee is hereby authorized 
and empowered to deal with such vendee or transferee with reference to the 
Premises, or the debt secured hereby, or with reference to any of the terms 
or conditions hereof, as fully and to the same extent as it might with 
Mortgagor, without in any way releasing or discharging Mortgagor from its 
liability or undertaking hereunder.

    26.  Mortgagor shall maintain and keep in full force and effect its legal 
existence, its right to carry on its business, and all franchises, rights and 
privileges heretofore or hereafter granted to or for Mortgagor, and shall 
file within the prescribed time any and all franchise tax reports and any 
other tax reports or returns, and pay all such taxes when due and payable all 
in compliance with the provisions of any present or future law.

    27.  Mortgagor represents and warrants that on the date on which this 
Mortgage is executed and delivered, neither it, this Mortgage, nor the 
Premises, nor the contemplated use of the Improvements on the Premises are in 
violation of any easements, covenants and whether restrictions of record or 
not, affecting or binding on the Premises.  Mortgagor further covenants that 
Mortgagor shall at all times faithfully and timely perform or cause to be 
performed all of the terms, covenants and conditions, on Mortgagor's part to 
be performed, contained in any agreements, easements, permits or other 
instruments affecting the Premises.  Mortgagor covenants and agrees that it 
will not waive or modify any of the terms of any of such agreements, 
easements, permits or other instruments or the rights or easements created 
thereby or cancel or surrender same or release or discharge any party 
thereunder or person bound thereby of or from any of the terms, covenants or 
conditions thereof or permit the release or discharge of any party thereunder 
in a manner that adversely affects mortgagee's security, without, in each 
instance, the prior written consent of Mortgagee.  Mortgagor shall take all 
necessary action to effect the performance of all of the obligations of the 
other parties to and the persons bound by the said agreements, easements, 
permits and other instruments.

                                       13

<PAGE>

    Mortgagor will promptly give to Mortgagee copies of all notices, advices, 
demands, requests, consents, statements, approvals, disapprovals, 
authorizations, determinations, satisfactions, waivers, designations, 
refusals, confirmations or denials which it shall give or receive under any 
of the aforesaid agreements, easements, permits and other instruments to the 
extent any of the foregoing adversely affect Mortgagee's security.

    28.  Mortgagor hereby represents and warrants that:

         (a)  the Premises and the operations presently conducted thereon
    are not in violation of any zoning ordinances, building codes or
    Environmental laws;
    
         (b)  neither Mortgagor nor to the knowledge of Mortgagor, after
    due inquiry, any other person or entity has ever caused or permitted
    any hazardous substance to be placed, held, located, generated,
    treated or disposed of, on, under or at the Premises except in
    conformance with applicable law;
    
         (c)  Mortgagor has not received any notice from any governmental
    agency that the Premises and the operations presently conducted
    thereon are the subject of any pending or threatened investigation,
    inquiry or proceeding under any Environmental laws;
    
         (d)  neither Mortgagor, nor to the knowledge of Mortgagor, after
    due inquiry, any other person, has ever caused or permitted any
    asbestos to be located on the Premises;
    
         (e)  to Mortgagor's knowledge, after due inquiry, no hazardous
    substance has ever migrated in, on, about or under the Premises;
    
         (f)  Mortgagor has no knowledge of any use of the Premises by any
    prior owner which violated any applicable Environmental laws; and
    
         (g)  Mortgagor has duly obtained or secured all necessary
    permits, licenses, and other governmental authorizations either
    necessary or appropriate under Environmental Laws.
    
    29.  Mortgagor hereby covenants and agrees that:

         (a)  its own use of the Premises and the operations and
    activities conducted thereon will at all times be in compliance with
    all Environmental laws and that it will exercise its best efforts to
    secure compliance by other users of the Premises with all
    Environmental Laws;
    
         (b)  Mortgagor will not cause or permit any hazardous substance
    ever to be generated, handled, used, stored treated or placed on,
    under or at, or to 

                                       14

<PAGE>

    escape, leak, seep, spill or be discharged, emitted or released from, the 
    Premises or any part thereof, except in compliance with Environmental laws, 
    PROVIDED, HOWEVER, that Mortgagor may store reasonable quantities of 
    chemicals, cleansers and other materials reasonably required for maintenance
    and operation of the Premises provided the same are properly stored, are 
    used in the ordinary course of business, and in compliance with all 
    applicable laws;
    
         (c)  the use of the Premises by Mortgagor of the Premises will
    not result in the unlawful release or presence of any hazardous
    substance or solid waste in, on or under the Premises and Mortgagor
    will exercise its best efforts to assure that the use of the Premises
    by any tenant, licensee or other occupant will not result in the
    unlawful release or presence of any hazardous substance or solid waste
    in, on or under the Premises;
    
         (d)  Mortgagor shall immediately notify Mortgagee of the
    occurrence of any violation or receipt of any notice or complaint of
    any violation or alleged violation of any Environmental Laws and shall
    give immediate notice to the Mortgagee of any violation, or receipt of
    any notice or complaint of any violation or alleged violation, of any
    Environmental Laws.  Mortgagor will, at the Mortgagor's expense,
    furnish Mortgagee with any and all environmental reports, tests,
    analyses, and studies reasonably requested by Mortgagee to determine
    whether the Premises has been or is being used for the handling,
    generation, disposal, storage, or transportation of any hazardous
    substances, and whether the Premises and all activities conducted
    thereon are in compliance with all Environmental Laws.
    
         (e)  Mortgagee, its agents and representatives, may from time to
    time make periodic inspections of the Premises and in connection
    therewith may make such tests of the air, soil, groundwater, and
    building materials, as Mortgagee, its agents and representatives,
    shall deem necessary;
    
         (f)  Mortgagor shall use its best efforts to cause any and all
    tenants, licensees and other occupants of the Premises to conduct
    their respective businesses and uses of the Premises so as to comply
    in all respects with Environmental Laws; and
    
         (g)  In the event reasonable evidence exists of the occurrence or
    existence of the violation of any Environmental Law on the Premises,
    Mortgagee (by its officers, employees and agents) at any time and from
    time to time may contract for the services of persons (the "Site
    Reviewers") to perform such environmental site assessments ("Site
    Assessments") on the Premises as are reasonably necessary for the
    purpose of determining whether there exists on the Premises any
    environmental condition which could reasonably be expected to result
    in any liability, cost or expense to the owner, occupier or operator
    of the Premises arising under any of the Environmental Laws.  The Site
    Reviewers are 

                                       15

<PAGE>

    hereby authorized to enter upon the Premises for purposes of 
    conducting Site Assessments.  The Site Reviewers are further authorized 
    to perform both above and below the ground testing for environmental 
    damage or the presence of hazardous materials on the Premises and such 
    other tests on the Premises as may be reasonably necessary to conduct 
    the Site Assessments in the reasonable opinion of the Site Reviewers.  
    Mortgagor agrees to supply to the Site Reviewers such historical and 
    operational information regarding the Premises as may be reasonably 
    requested by the Site Reviewers to facilitate the Site Assessments and 
    will make available for meetings with the Site Reviewers appropriate 
    personnel having knowledge of such matters.  The results of Site 
    Assessments shall be furnished to Mortgagor upon request.  The 
    reasonable cost of performing such Site Assessments shall be paid by 
    Mortgagor.
    
    For purposes of this section, the term "Environmental Laws" shall mean 
and include any and all laws, statutes, ordinances, rules, regulations, 
orders, or determinations of any governmental authority pertaining to health 
or to the environment, and relating to the Premises, including without 
limitation, the Clean Air Act, as amended, the Comprehensive Environmental 
Response, Compensation and Liability act of 1980, as amended by the Superfund 
Amendments and Reauthorization Act of 1986 ("SARA"), and as may be further 
amended (collectively "CERCLA"), the Federal Water Pollution Control Act 
Amendments, the Occupational Safety Health Act of 1970, as amended, the 
Resource Conservation and Recovery Act of 1976, as amended ("RCRA"), the 
Hazardous Materials Transportation Act of 1975, as amended, the Safe Drinking 
Water Act, as amended, and the Toxic Substances Control Act, as amended.  
Likewise, the terms "hazardous substance" and "Release" shall have the 
meanings specified in CERCLA and the terms "solid Waste" and "disposal" (or 
"disposed") shall have the meanings specified in RCRA; PROVIDED, HOWEVER, in 
the event either CERCLA or RCRA is amended so as to broaden the meaning of 
any term defined therein, such broader meaning shall apply subsequent to the 
effective date of such amendment, AND PROVIDED FURTHER that, to the extent 
the laws of the state in which the mortgaged premises is located establish a 
meaning for "hazardous substance," "release," "solid waste" or "disposal" 
which is broader than that specified in either CERCLA or RCRA, such broader 
meaning shall apply with regard to the Premises.

    30.  Mortgagor covenants and warrants that the Premises are and will be 
the subject of validly issued and outstanding permits and that the Premises 
are (and Mortgagor covenants that they will remain) permitted by and are 
consistent with any and all zoning, ecological, environmental and use 
restrictions and all other governmental laws, rules and regulations 
applicable to the Premises and Mortgagor agrees that these covenants and 
warranties shall be fully accurate and in force continually hereafter for so 
long as the indebtedness secured hereby is unpaid.

    31.  Mortgagor covenants not to initiate, join in, or consent to any change
in any  zoning ordinance, private restrictive covenants or other public or
private restriction changing, limiting or restricting the uses which may be made
of the Premises or any part thereof, without the prior written consent of
Mortgagee in each instance.  Without limiting the generality of the foregoing,
(a) Mortgagor shall not by act or omission permit all or any part of the
Premises to be 

                                       16

<PAGE>

availed of to qualify for fulfillment of any municipal or governmental 
requirements for the construction or maintenance of any building or other 
improvements on premises not part of the Premises, and (b) Mortgagor shall 
not by act or omission impair the integrity of the Premises as zoning lots 
separate and apart from all other premises not subject to this Mortgage.  Any 
attempt by Mortgagor to take any action which would violate any of the 
foregoing provisions of this paragraph 31 shall be void.

    32.  Notwithstanding anything herein or in the Debentures secured hereby 
to the contrary, it is hereby agreed that in no event shall the amount paid, 
or agreed to be paid, to Mortgagee as interest pursuant to the terms of the 
Debentures exceed the highest lawful rate permissible under applicable usury 
laws if any.  If Mortgagee would, but for the operation of this paragraph, 
ever receive as interest an amount which would exceed the highest lawful 
rate, such amount which would be excessive interest shall be applied to the 
reduction of the unpaid principal balance due hereunder and not to the 
payment of interest.

    Mortgagor covenants and agrees that the indebtedness secured by this 
Mortgage and the proceeds of such indebtedness are for business purposes only.

    Mortgagor hereby represents and warrants that no portion of the Premises 
is homestead property of Mortgagor.

    33.  Upon the occurrence of: (a) default in the payment of any interest 
upon any Debenture when the same becomes due and payable, and continuance of 
such default for a period of ten (10) days; (b) default in the payment of the 
principal of any Debenture when the same becomes due and payable; (c) default 
in the performance, or breach, of any covenant or warranty of the Mortgagor 
in this Mortgage (other than a covenant or warranty a default in whose 
performance or whose breach is elsewhere in this Section specifically dealt 
with), and continuance of such default or breach for a period of thirty (30) 
days after there has been given, by registered or certified mail, to the 
Mortgagor by the Holders of at least Ten Percent (10%) in principal amount of 
the outstanding Debentures, a written notice specifying such default or 
breach and requiring it to be remedied and stating that such notice is a 
"Notice of Default" hereunder; (d) a court having jurisdiction in the 
premises shall enter a decree or order for relief in respect of the Mortgagor 
in an involuntary case under any applicable bankruptcy, insolvency or other 
similar law now or hereafter in effect, or appointing a receiver, liquidator, 
assignee, custodian, trustee, sequestrator (or similar official) of the 
Mortgagor or for any substantial part of its property, or ordering the 
winding-up or liquidation of its affairs and such decree or order shall 
remain unstayed and in effect for a period of thirty (30) consecutive days; 
(e) the Mortgagor shall commence a voluntary case under any applicable 
bankruptcy, insolvency or other similar law now or hereafter in effect, or 
shall consent to the entry of an order for relief in an involuntary case 
under any such law, or shall consent to the appointment of or taking 
possession by a receiver, liquidator, assignee, trustee, custodian, 
sequestrator (or other similar official) of the ;Mortgagor or for any 
substantial part of its property, or shall make any general assignment for 
the benefit of creditors, or shall fail generally to pay its debts as they 
become due, or shall take any corporate action in furtherance of any of the 
foregoing. (f) the failure of the Mortgagor to pay any indebtedness due any 
other person or entity and such failure shall continue beyond any 

                                       17

<PAGE>

applicable grace period and result in the acceleration of maturity of such 
indebtedness; (g) the Mortgagor shall suffer to exist beyond any applicable 
grace period any other event of default under any material agreement binding 
the Mortgagor, provided such event of default has not been waived in writing 
by the appropriate party or parties to such agreement; or (g) the Mortgagor 
shall admit its inability to pay its debts as they mature or shall make an 
assignment for the benefit of its creditors: then at such time, or upon the 
happening of any such event, or at any time thereafter unless cured to 
Mortgagee's satisfaction, as the case may be, the entire principal sum 
secured hereby, together with accrued interest or any portion thereof as 
selected by Mortgagee and all other sums due hereunder, under the Debentures 
and any other document, instrument or agreement now or hereafter evidencing 
or securing the indebtedness, shall, at the option of Mortgagee, become 
immediately due and payable and shall thereupon be collectible by exercise of 
any remedy available under this Mortgage or any other document given as 
additional security for the indebtedness secured hereby as fully and 
completely as if all of the said sums of money were originally stipulated to 
be paid on such day, anything in said Debentures or in this Mortgage to the 
contrary notwithstanding, with reasonable attorneys' fees and other costs and 
charges and without relief from valuation or appraisement laws.  In addition, 
such principal sum and all such other sums shall bear interest from the date 
of such default until paid at the rate provided in the Debentures, such 
interest to be paid on demand.  The remedies provided under this paragraph 
shall be in addition to and not a limitation on any other rights or remedies 
contained in this Mortgage or available as a result of any default by 
Mortgagor hereunder.  Thereupon, or at any time during the existence of any 
such default, Mortgagee may proceed to foreclose this Mortgage, anything 
herein or in said Debentures contained to the contrary notwithstanding, 
including a partial foreclosure.  Any failure of Mortgagee to exercise any 
option which Mortgagee may have hereunder, under the documents and 
instruments evidencing and securing the debt, or at law or in equity, shall 
not constitute a waiver of the right to exercise the same at any other time.

    34.  That all covenants hereof shall run with the land solely for the 
benefit of Mortgagor and its successors and assigns.

    35.  That this Mortgage and the rights and indebtedness hereby secured, 
without regard to the place of contract or payments, be construed and 
enforced according to the laws of the State of Wisconsin.

    36.  That Mortgagor will do, execute, acknowledge and deliver such 
further reasonable acts, deeds, conveyances, transfers and assurances 
necessary or proper, in the reasonable judgment of Mortgagee, for the better 
assuring, conveying, mortgaging, assigning and confirming unto the Mortgagee 
all property mortgaged hereby or property intended so to be; whether now 
owned by Mortgagor or hereafter acquired.

    37.  Each right, power and remedy herein conferred upon Mortgagee is
cumulative and in addition to every other right, power or remedy, existing or
implied, given now or hereafter existing at law or in equity, except as
specifically restricted herein and each and every right, power and remedy herein
set forth or otherwise so existing may be exercised from time to time as often
and in such order as may be deemed expedient by Mortgagee, and the exercise or
the 

                                       18

<PAGE>

beginning of the exercise of one right, power or remedy shall not be a waiver 
of the right to exercise at the same time or thereafter any other right, 
power or remedy; and no delay or omission of Mortgagee in the exercise of any 
right, power or remedy accruing hereunder or arising otherwise shall impair 
any such right, power or remedy, or be construed to be a waiver of any 
default or acquiescence therein.

    38.  Nothing in this Mortgage shall be construed as constituting the 
Mortgagee a mortgagee in possession.

    39.  The unenforceability or invalidity of any provision or provisions 
hereof shall not render any other provision or provisions herein contained 
unenforceable or invalid.

    40.  The individuals identified as Mortgagee hereunder shall hold their 
right, title and interest in and under this Mortgage and the Premises as 
tenants in common, with Charles H. Leavell having an undivided 50% interest 
and Dorsar Partners, L.P. and Charles S. Leavell each having an undivided 25% 
interest. All money and other proceeds from the exercise of the rights and 
remedies of Mortgagee granted pursuant to this Mortgage shall belong 50% to 
each of said individuals.

    IT IS SPECIFICALLY AGREED that time is of the essence of this contract 
and that the waiver of the options, or obligations secured hereby, shall not, 
at any time thereafter, be held to be abandonment of such rights.  Notice of 
the exercise of any option granted to Mortgagee herein, or in the Debentures 
secured hereby, is not required to be given.

    ALL OF THE COVENANTS herein contained shall bind, and the benefits and 
advantages thereof shall also inure to the respective heirs, executors, 
administrators, successors and assigns of the parties hereto.  Whenever used, 
the singular number shall include the plural, the plural the singular and the 
use of any gender shall  include all genders.

    IN WITNESS WHEREOF, the Mortgagor has signed and delivered this writing 
the day and year first above written.

                                       Renaissance Entertainment Corporation

                                       By 
                                         -----------------------------------
                                         James R. McDonald
                                         Its Chief Financial Officer

STATE OF COLORADO   )
                    ) ss.
COUNTY OF _________ )

    On this ____ day of May, 1997, before me, a Notary Public within and for 
said County, personally appeared James R. McDonald, to me personally known, 
who, being by me duly sworn did say that he is the Chief Financial Officer of 
Renaissance Entertainment Corporation, the 

                                       19

<PAGE>

corporation named as Mortgagor in the foregoing instrument, and that he 
signed said instrument on behalf of said corporation and as the free act and 
deed of said corporation.

                                       _________________________________________
                                       Print Name_______________________________
                                       Notary Public, ________ County, Colorado
                                       My Commission [Expires]__________________

This instrument was drafted by and after recording should be returned to:

GRAY, PLANT, MOOTY, MOOTY & BENNETT, P.A.
3400 City Center
33 South Sixth Street
Minneapolis, Minnesota  55402
JWT

                                       20

<PAGE>

                                      EXHIBIT A
                                           
                                  LEGAL DESCRIPTION
                                           
                                           
PARCEL I:     

Part of the Southeast Quarter and part of the Northeast Quarter of Section 
36, Town 1 North, Range 21 East of the Fourth Principal Meridian, lying and 
being in the Town of Bristol, Kenosha County, Wisconsin, and being more 
particularly described as: Beginning on the South line of the Southeast 
Quarter of said Section at a point 600.7 feet South 89 degrees 24 minutes 50 
seconds West from the Southeast corner of said Quarter Section; thence South 
89 degrees 24 minutes 50 seconds West along the South line of said Quarter 
Section 729.8 feet and to the West line of the East half of said Quarter 
Section; thence North 1 degree 53 minutes 10 seconds West along the West line 
of the East Half of said Quarter Section 2675.0 feet and to the North line of 
said Quarter Section; thence North 1 degree 46 minutes 40 seconds West along 
the West line of the Southeast Quarter of the Northeast Quarter of said 
Section 1325.36 feet and to the North line of said Quarter Quarter Section; 
thence North 89 degrees 02 minutes East along the North line of said Quarter 
Quarter Section 1051.34 feet and to the Westerly right-of-way line of 
Interstate Highway 94; thence South 2 degrees 03 minutes East along said 
right-of-way line 131.93 feet; thence South 21 degrees 06 minutes West along 
said right-of-way line 788.49 feet; thence South 2 degrees 03 minutes East 
along said right-of-way line 700 feet; thence South 17 degrees 45 minutes 50 
seconds East along said right-of-way line 1167.69 feet; thence South 10 
degrees 58 minutes 40 seconds East along said right-of-way line 482.66 feet; 
thence South 89 degrees 24 minutes 50 seconds West parallel to the South line 
of the Southeast Quarter of said Section 395.04 feet; thence South 0 degree 
35 minutes 10 seconds East at right angles to the South line of said Quarter 
Section 851.72 feet to the point of beginning.

PARCEL II:

The East Half of the West Half of the Southeast Quarter and the Southwest 
Quarter of the Northeast Quarter of Section Thirty-six (36), in Town One (1) 
North, Range Twenty-one (21) East of the Fourth Principal Meridian; in the 
Town of Bristol, County of Kenosha and State of Wisconsin.

                                       21

<PAGE>
                                      EXHIBIT B
                                           
                                PERMITTED ENCUMBRANCES
                                           
1.  Real Estate Mortgage from Ellora Corporation to Bank One, Kenosha, NA dated
    April 7, 1995 and recorded in the Kenosha County Register of Deeds office
    on April 12, 1995 as Document No. 988507, securing $1,000,000.00.

2.  Possible special charges by reason of any disallowance of any lottery tax
    credit claimed for taxes levied or to be levied.

3.  General and special taxes and assessments not yet due.

4.  Public or private rights, if any, in such portions of the insured premises
    as may be used, laid out, taken or dedicated in any manner whatsoever for
    highway or road purposes.

5.  Right of Way Authorization from Theodore Dooper to General Telephone
    Company of Wisconsin, dated September 21, 1965 and recorded in the office
    of the Register of Deeds for Kenosha County, Wisconsin on October 12, 1965
    in Volume 713 of Records at page 504, as Document No. 479482 (as to Parcel
    I).

6.  Easement from Theodore E. Dooper to Wisconsin Electric Power Company, dated
    July 23, 1963 and recorded in said Register's office on August 14, 1963 in
    Volume 645 of Records at page 235-36, as Document No. 453071 (as to Parcel
    I).

7.  Distribution Easement granted Wisconsin Electric Power Company and
    Wisconsin Bell, Inc. dated November 9, 1993 and recorded in the Kenosha
    County Register of Deeds office on November 17, 1993 in Volume 1637 of
    Records, Page 434-35, as Document No. 945420 (as to Parcel I).

8.  Holding Tank Agreement recorded in the Kenosha County Register of Deeds
    office on March 30, 1982 in Volume 1109 of Records, page 865, as Document
    No. 688487; and on June 30, 1988 in Volume 1316 of Records, Page 607, as
    Document No. 803280 (as to Parcel II).

9.  Easement granted by Victoria Slavik to Wisconsin Gas and Electric Company
    by instrument dated December 7, 1936 and recorded in said Register's office
    July 10, 1937 in Volume 198 of Deeds, Page 528 (as to Parcel II).

10. Terms and conditions contained in Holding Tank Agreement dated 3/28/95 and
    recorded in said Register's office on April 6, 1995 as Document No. 988072.

11. Real Estate Mortgage from Renaissance Entertainment Corporation to BankOne,
    Colorado, NA dated March 31, 1997 and recorded in the Kenosha County
    Register of 

                                       22

<PAGE>

    Deeds Office on April 11, 1997 as Document No. 1054187, securing a loan in 
    the original principal amount of $690,188.55.

12. Real Estate Mortgage from Ellora Corporation to BankOne, Kenosha, NA dated
    May 1, 1995 and recorded in the Kenosha County Register of Deeds Office on
    June 19, 1995 as Document No. 993640, securing $250,000; together with
    Assignment of Leases, Rents and Profits dated May 1, 1995 and recorded in
    said Register's Office on June 19, 1995 as Document No. 993641.

                                       23

<PAGE>

                         DEED OF TRUST, ASSIGNMENT OF LEASES
                                AND SECURITY AGREEMENT
                                           
    THIS DEED OF TRUST, ASSIGNMENT OF LEASES AND SECURITY AGREEMENT (this 
"Deed of Trust"), dated as of the 14th day of May, 1997, by and between 
RENAISSANCE ENTERTAINMENT CORPORATION, a Colorado Corporation (the 
"Grantor"); Lawyers Title Realty Services, Inc., a Virginia corporation 
located in Henrico County Virginia, as trustee hereunder (the "Trustee"); and 
Dorsar Partners, L.P., a Texas limited partnership, having an address at c/o 
Steven L. Feinberg, General Partner, 1855 North Mesa, Suite 120, El Paso, 
Texas 79912-5939, Charles H. Leavell having an address at c/o The Leavell 
Company, 4487 North Mesa, Suite 204, El Paso, Texas 79902 and Charles S. 
Leavell having an address at c/o Renaissance Entertainment Corporation, 4440 
Arapahoe Avenue, Suite 200, Boulder, Colorado 80303 (collectively, together 
with any subsequent holder or holders of the "Debentures" (defined below) are 
hereinafter referred to as the "Beneficiary").

    1.   Grantor is indebted to Beneficiary  on account of loans 
(collectively the "Loan") in the principal sum of ONE MILLION and 00/100THS 
($1,000,000.00) DOLLARS, as evidenced by: (i) that certain 9% Convertible 
Secured Debenture Due 2002 dated May 14, 1997 and issued by Grantor to Dorsar 
Partners, L.P.; (ii) that certain 9% Convertible Secured Debenture Due 2002 
dated May 14, 1997 and issued by Grantor to Charles S. Leavell and (iii) that 
certain 9% Convertible Secured Debenture Due 2002 dated May 14, 1997 and 
issued by Grantor to Charles H. Leavell (collectively the "Debentures") with 
interest on such principal sum from the date of the Debentures at the rate 
specified in the Debentures.  The Debentures are being issued, respectively, 
pursuant to: (i) that certain Subscription and Purchase Agreement dated as of 
May 8, 1997 and executed between Grantor and Dorsar Partners, L.P.; (ii) that 
certain Subscription and Purchase Agreement dated May 8, 1997 and executed 
between Grantor and Charles S. Leavell and (iii) that certain Subscription 
and Purchase Agreement dated as of May 8, 1997 and executed between Grantor 
and Charles H. Leavell (collectively the "Subscription Agreements").  The 
Debentures mature not later than April 1, 2002. The provisions of the 
Debentures are incorporated herein by reference.

    2.   As a condition to making the Loan, the Beneficiary has required, in 
order to secure the repayment of the Debentures, that the Grantor, among 
other things, convey the "Property" (defined below) to the Trustee and assign 
its interest in leases of the Property pursuant to this Deed of Trust. The 
Debentures, this Deed of Trust and every other document further evidencing, 
securing the repayment of, executed in connection with or otherwise related 
to the Loan are hereinafter referred to as the "Loan Documents".

                       DEED OF TRUST AND ASSIGNMENT OF LEASES:

             SECTION 1. CONVEYANCE IN TRUST AND ASSIGNMENT OF LEASES

    1.1  CONVEYANCE OF THE PROPERTY IN TRUST.  For and in consideration of the
premises and the making of the Loan, and in order to secure the Indebtedness
(hereinafter defined), the Grantor hereby grants and conveys to the Trustee,
with General Warranty and English covenants 

<PAGE>

of title, all of the following described property, whether now owned or held 
or hereafter acquired by the Grantor:

    ALL that certain land situated in the County of Stafford, Virginia, and 
more particularly described on Exhibit "A", and all rights, appurtenances, 
easements, privileges, remainders and reversions now or hereafter 
appertaining thereto, including, without limitation, all right, title, 
interest, property, claim and demand of the Grantor, if any, in and to the 
land lying in the bed of any street, road, avenue or alley adjacent thereto, 
either at law or in equity, in possession or expectancy, now existing or 
hereafter acquired (collectively, the "Land") subject, however, to the 
Permitted Exceptions described in Exhibit "B";

    TOGETHER WITH all building and improvements now or hereafter erected on 
the land (the "Improvements");

    TOGETHER WITH all fixtures and tangible personal property owned by the 
Grantor and now or hereafter attached to the land or the Improvements, and 
replacements thereof, including, but not limited to, all plumbing and 
electrical apparatus and equipment, cleaning and maintenance equipment, all 
boilers, tanks, engines, motors, incineration and power equipment, laundry 
equipment, conduits, switchboards, lifting, cleaning, fire-prevention, 
fire-extinguishing, refrigeration, ventilation and communications apparatus, 
elevators, escalators, shades, drapes, awnings, signs, screens, storm doors 
and windows, stoves, cabinets, partitions, ducts and compressors, piping and 
plumbing fixtures, pumps, heating, air conditioning and air cooling systems, 
fixtures and equipment and lighting and air cooling systems, fixtures and 
equipment and lighting systems, fixtures and all right, title and interest of 
Borrower in and to any such personal property and fixtures that may be 
subject to any lease, title retention or security agreement or other 
instrument (collectively, the "Equipment"). All Equipment is part and parcel 
of the Land and appropriated to the use of the Land and, whether affixed or 
annexed or not, shall for the purpose of this Deed of Trust be deemed 
conclusively to be conveyed hereby.

    TOGETHER WITH the Grantor's interest in all leases, subleases, service or
operating agreements and contracts of or relating to the Land, the Improvements
or the Equipment, whether now existing or hereafter entered into; and all rent,
income, revenues, royalties, issues and profits (collectively, the "Rents and
Profits") now or hereafter arising from the Land, the Improvements or the
Equipment; provided that, until the occurrence of an "Event of Default" (as
hereinafter defined), and the election of the Beneficiary to collect the Rents
and Profits after such Event OF Default, the Grantor shall have a license to
collect and dispose of the Rents and Profits subject to the provisions of 1.2
below, and provided further that such assignment shall not impose on the Trustee
or the Beneficiary of the Grantor's obligations under such leases, sublease,
service or operating agreements and contracts.

    TOGETHER WITH all proceeds of the conversion, whether voluntary or
involuntary, of any of the foregoing real or personal property into cash or
other liquid claims, including, without limitation, all awards, payments or
proceeds, and any interest thereon, and the right to receive the same, that may
be made as the result of any casualty, any exercise of the right of eminent
domain or deed in lieu thereof, the alteration of the grade of any street and
any injury to or decrease in 

                                       -2-

<PAGE>

the value of such property, together with the counsel fees, costs and 
disbursements incurred by the Beneficiary in connection with the collection 
of such awards, payments and proceeds (collectively, the "Proceeds"). The 
Grantor agrees to execute and deliver, from time to time such further 
instruments as maybe requested by the Beneficiary to confirm such assignment 
to the Beneficiary of the Proceeds.

    The Land, the Improvements, the Equipment, the Rents and Profits and the 
Proceeds, together with any substitutions therefore, replacements thereof and 
additions or attachments thereto, are sometimes hereinafter referred to 
collectively as the "Property". Nothing herein shall be deemed to be an 
authorization by the Beneficiary to the Grantor to sell, assign or otherwise 
dispose of the Property, except in accordance with the provisions of this 
Deed of Trust.

    1.2  ASSIGNMENT OF RENTS AND LEASES. The Grantor also irrevocably and 
absolutely assigns the Rents and Profits to the Beneficiary. Notwithstanding 
any contrary provisions hereof, this assignment is intended to effect an 
absolute and immediate assignments from the Grantor to the Lender of the 
Rents and Profits and not merely the creation of a lien thereon or a security 
interest therein. The Grantor shall have a license (the "Grantor's License") 
to manage and operate the Project and to collect, receive and apply for its 
own account all Rents as they become due; provided, however, that the 
Grantor's License shall cease and terminate upon the occurrence of an "Event 
of Default' (as defined below).  Upon the termination of the Grantor's 
License, the Beneficiary, its agents and employees are hereby expressly and 
irrevocably authorized before, in conjunction with, or after acceleration of 
the Debentures, at the Beneficiary's option, to enter and take possession of 
the Property (a) by entry at the business or rental office of the Grantor, if 
any, located upon the Property, or (b) by written notice served personally 
upon or sent by registered or certified mail to the Grantor in accordance 
with the provisions of Section 6.2 of this Deed of Trust, as the Beneficiary 
may elect, and no further authorization shall be required. The Grantor 
irrevocably appoints the Beneficiary through any of its authorized officers 
as the Grantor's attorney-in-fact to do, upon and during any termination of 
the Grantor's license, all things which the Grantor might otherwise do with 
respect to the Property and the Rents and Profits thereon, including, without 
limitation, collecting rents, issues and profits with or without suit and 
applying the same, less expenses of collection, to cure a default under the 
Indebtedness (defined below) or to cure any "Event of Default" (defined 
below), in such manner as the Beneficiary may elect, leasing, in the name of 
the Grantor, the whole or any part of the Property which may become vacant, 
and employing agents therefore and paying such agents reasonable compensation 
for their services. The foregoing appointment of the Beneficiary as the 
attorney-in-fact for the Grantor constitutes a power coupled with an interest 
and, as such, is irrevocable. The powers and rights granted in this section 
shall be other remedies provided in this Deed of Trust upon the occurrence of 
an Event of Default and may be exercised independently of or concurrently 
with any of such remedies.

    1.3  INDEBTEDNESS SECURED. The foregoing conveyance of the Property,
creation of security interest and assignment are made IN TRUST to secure to the
Beneficiary the following (sometimes hereinafter referred to collectively as the
"Indebtedness"): (i) the payment of all sums becoming due and payable by the
Grantor under the Debentures in the aggregate original principal amount of
$1,000,000.00 and evidencing the Loan, (ii) the payment of all sums 

                                       -3-

<PAGE>

becoming due and payable by the Grantor under the terms of this Deed of Trust 
and of each of the other "Loan Documents" (as hereinafter defined), and (iii) 
the performance of each and every covenant, agreement, term and condition of 
the Grantor that is set forth in this Deed of Trust and in each of the other 
Loan Documents.

    SECTION 2.     REPRESENTATIONS AND WARRANTIES OF THE GRANTOR     

    The Grantor hereby represents and warrants that:

    2.1    FORMATION AND AUTHORITY OF THE GRANTOR: VALIDITY OF THE LOAN
           DOCUMENTS.

           2.1.1   (1)  It is a corporation dully formed, validly existing and
    in good standing under the laws of the State of Colorado, (2) it has all
    requisite power and authority (i) to execute and deliver this Deed of Trust
    and all of the other Loan Documents, (ii) to enter into, perform, observe
    and otherwise comply fully with the provisions of this Deed of Trust and
    all of the other Loan Documents and (iii) to own and operate the Property
    and (3) all necessary actions have been taken by Grantor to confer upon the
    persons executing this Deed of Trust and all of the other Loan Documents on
    the Grantor's behalf the power and authority to do so.

           2.1.2   Neither the execution and delivery on behalf of the Grantor
    of, or the performance by the Grantor of its obligations under, this Deed
    of Trust or any of the other Loan Documents will conflict with or violate,
    or constitute a default or require any consent or waiver under, any
    provisions of any mortgage, deed of trust, indenture, evidence of
    indebtedness, agreement, or governmental or quasi-governmental order,
    decree, ruling or directive to which the Grantor is a party or by which the
    Grantor or the Property is bound.

    2.2    NO DEFAULTS OR LITIGATION.

           2.2.1   There are no material actions, suits or proceedings pending
    or overtly threatened against the Grantor, any Co-maker or the Property.


           2.2.2   Neither the Grantor nor Co-maker is in default with respect
    to any material judgment, order, writ, injunction, decree or demand of any
    court, arbitrator, administrative agency or any governmental or
    quasi-governmental authority.

    2.3    USE OF THE PROPERTY.  The use of the Property as an entertainment 
faire complies with all applicable zoning ordinances, subdivision ordinances, 
land use regulations and restrictive covenants affecting the Property, and 
all statutes, laws, ordinances, rules, orders and regulations of all 
governmental or quasi-governmental authorities with respect to such use have 
been satisfied.

    2.4    UTILITIES.  That all utility services and facilities necessary for
the operation of the Property as an entertainment Faire, including, without
limitation, public water, storm and sanitary sewer facilities, and electric,
telephone and other utility facilities necessary for the 

                                       -4-

<PAGE>

operation of the Property, are available at the boundaries of the Land, may 
be extended to and connected with the Property upon payment of standard 
tap-on or connection fees and are adequate to serve the Property.

    2.5    TAXES. The Land and the Improvements are assessed for taxation 
separately without regard to any other property, and that, for all purposes, 
the Land and the Improvements may be mortgaged, conveyed and otherwise dealt 
with as a separate lot or parcel.

    2.6    ENVIRONMENTAL MATTERS.

           2.6.1   The Property and the Grantor are not in violation of,
    or subject to, any existing, pending or threatened investigation by
    any federal, state or local governmental authority under any law,
    statute, ordinance, or regulation pertaining to health, industrial
    hygiene or the environment (collectively, "Environmental Laws"),
    including without limitation (i) the Comprehensive Environmental
    Response, Compensation, and Liability act of 1980, as amended, 42
    U.S.C. {9601 ET SEQ. ("CERCLA"), and (ii) the Resource Conservation
    and Recovery act of 1976, 41 U.S.C. {6901 ET SEQ. ("RCRA").

           2.6.2   The Grantor's use of the Property does not and will not
    result in the release or disposal of any Hazardous Substance onto the
    Property.

           2.6.3   To the Grantor's best knowledge and belief, there is no
    occurrence or condition on any other real property that could cause
    the Property or any part thereof to be subject to any restrictions on
    ownership, occupancy, transferability or use.

    2.7    PERMITS. All permits, licenses, registrations, certificates, 
authorizations and approvals required to have been obtained as of the date 
hereof have been obtained for the execution and delivery of the Loan 
Documents by the Grantor, the performance and enforcement of the obligations 
of the Grantor thereunder and the construction, ownership, operation and use 
of the Property by the Grantor, and the Grantor knows of no reason why any 
future required permits or approvals cannot be obtained as needed.

    2.8    ACCESS. The Property fronts on, and has unencumbered legal and 
physical access to, a publicly dedicated and maintained roadway.

    2.9    OTHER INDEBTEDNESS.  As of the date hereof the Grantor is not in 
default in the payment of the principal of or interest on any of its 
indebtedness for borrowed money and is not in default under any instrument 
under or subject to which indebtedness has been incurred, and no event has 
occurred and is continuing under the provisions of any such agreement that, 
with notice or the passage of time or both, would constitute a default 
thereunder.

    2.10   SURVIVAL OF THE GRANTOR'S REPRESENTATIONS AND WARRANTIES.  The 
representations and warranties made in this Deed of Trust shall remain true 
and correct in all material respects 

                                       -5-

<PAGE>

and shall survive so long as any of the Indebtedness shall remain unsatisfied 
or otherwise outstanding.

                        SECTION 3.   COVENANTS OF THE GRANTOR
                                           
    The Grantor covenants and agrees as follows:
          
    3.1    PAYMENT OF THE INDEBTEDNESS.  The Grantor shall (a) pay the 
obligations evidenced by the Debentures as therein provided, (b) pay and 
perform when due all payments and obligations required under any lien that 
may now or hereafter have priority over the lien of this Deed of Trust, and 
(c) pay all sums due under and perform all of its obligations under the 
Debentures, this Deed of Trust and the other Loan Documents.
          
    3.2    FURTHER ASSURANCES.  The Grantor shall, at its cost and without 
expense to the Trustee or the Beneficiary, do every such further act and 
execute, acknowledge and deliver every such further deed, conveyance, 
document, instrument, mortgage, assignment, notice of assignment, transfer 
and assurance as the Trustee or the Beneficiary shall reasonably require, at 
any time and from rime to time, in order to more fully convey, assign, 
transfer and confirm unto the Trustee or the Beneficiary the property and 
rights hereby conveyed or assigned, or which the Grantor may be or may 
hereafter become bound to convey or assign to the Trustee or the Beneficiary. 
The Grantor shall execute, acknowledge and deliver such financing statements 
or comparable security instruments as the Beneficiary may request, at any 
time and from time to time, in order to evidence more effectively, to perfect 
or to continue the perfection of the security interest created hereunder. If, 
in the opinion of the Beneficiary, it becomes necessary or desirable to file 
additional Financing or continuation statements in any jurisdiction in order 
to preserve, perfect or protect the security interest created under this Deed 
of Trust, the Grantor agrees, upon the written request of the Beneficiary, to 
execute such statements and cause them to be filed in such jurisdictions.

    3.3    RECORDATION OF INSTRUMENTS.  The Grantor shall pay all filing and 
recordation taxes and fees and any other expenses incident to the execution, 
acknowledgment, filing and recordation of this Deed of Trust, any Financing 
statements, each of the other Loan Documents and any instruments of further 
assurance and any instruments of release, partial release, termination or 
partial termination, as applicable.

    3.4    SUBSTITUTIONS.  Immediately upon the acquisition, construction, 
assembly, placement or conversion of any extensions, improvements, renewals, 
substitutions or replacements of, or any additions or appurtenance to, the 
Land, the improvements or the Equipment, as the case may be, and, in each 
such case, without further deed of trust, conveyance, assignment or other act 
by the Grantor, such extensions, improvements, renewals, substitutions, 
replacements, additions and appurtenances shall become subject to and 
encumbered by the liens and assignments contained in this Deed of Trust as 
fully and completely, and with the same effect, as though now owned by the 
Grantor and specifically described in Section 1, such 

                                       -6-
<PAGE>

encumbrance to be effective and self-operative without the necessity of any 
further action by the parties hereto.

    3.5    TAXES, ASSESSMENTS AND LIENS.

           3.5.1   The Grantor, from time to time when the same shall
    become due, shall pay and discharge all taxes of every kind and nature
    including, without limitation, real property taxes and assessments,
    general and special (collectively, the "Property Taxes"), all general
    and special levies, permits, inspection and license fees, all water
    and sewer rents and charges, and all other public charges of every
    nature, imposed upon or assessed against the Property. The Grantor,
    promptly upon the request of the Beneficiary, shall deliver to the
    Beneficiary receipts evidencing the payment of all such taxes,
    assessments, levies, fees, rents and other public charges.

           3.5.2   The Grantor, from time to time when the same shall
    become due, shall pay all lawful claims and demand of mechanics,
    materialmen, laborers, and others that, if unpaid, might result in, or
    permit the creation of, a mechanic's materialmen, laborers, and others
    that, if unpaid, might result in, or permit the creation of, a
    mechanic's materialmen's, judgment or other lien on the Property or
    any part thereof, or on the rents, and, if any such lien is filed,
    docketed or otherwise recorded, the Grantor shall notify the
    Beneficiary promptly and, at the sole cost of the Grantor, shall
    promptly "bond off' or satisfy and effect the release of such lien or
    shall provide affirmative title insurance coverage satisfactory to the
    Beneficiary.

    3.6    INSURANCE.

           3.6.1   The Grantor, at its expense and for the benefit of the
    Beneficiary (subject to the rights of the prior deed of trust holder),
    shall keep the Improvements and the Equipment insured, to the extent
    of full replacement cost, against loss by fire, casualty, and such
    other hazards and risks as are customarily insured against in
    connection with the ownership, operation and use of projects of like
    size and character as the Property. All such insurance shall be
    written in forms and amounts satisfactory to the Beneficiary, shall
    name Beneficiary as an additional insured under a standard mortgagee
    loss payable endorsement and shall be issued by companies having a
    rating of A:XII or better in Best's Key Rating Guide, shall be
    licensed to do business in the Commonwealth of Virginia and shall be
    satisfactory to the Beneficiary. Each such policy shall provide that
    it shall not be canceled (including, without limitation, any
    cancellation or lapse for nonpayment of premium), and that coverage
    thereunder shall not be reduced materially, without at least thirty
    (30) days prior written notice to the Beneficiary.

           3.6.2   The Grantor shall promptly notify the Beneficiary of
    any loss covered by such insurance. The Grantor hereby authorizes
    Beneficiary, at its option, but subject to the rights of the prior
    deed of trust holder, to collect, adjust 

                                       -7-

<PAGE>

    and compromise any losses under any of the insurance aforesaid and 
    after deducting costs of collection to apply the proceeds at its option 
    as follows:  (A)  As a credit upon any portion as selected by 
    Beneficiary, of the indebtedness secured hereby, or (B) To restoring the 
    improvements in which event Beneficiary shall not be obligated to see 
    the proper application thereof nor shall the amount so released or used 
    be deemed a payment on any indebtedness secured hereby, or (C) To 
    deliver same to the owner of the premises.

           3.6.3   The Grantor shall not take out separate insurance
    concurrent in form or contributing in the event of loss with the
    insurance required to be maintained under this Section 3.6, unless the
    Beneficiary is included thereon as a named payee under a standard
    mortgagee endorsement. The Grantor shall immediately notify the
    Beneficiary whenever any such separate insurance is taken out and
    shall promptly deliver to the Beneficiary the policy or policies of
    such insurance.

           3.6.4   All of the Grantor's rights, title and interest in and
    to all insurance policies described in this Section 3.6 are hereby
    assigned to the Beneficiary. Upon the occurrence of an Event of
    Default, the Beneficiary, on behalf of the Grantor, may adjust and
    compromise any claims under such insurance policies and collect,
    receive and apply the proceeds thereof as the Beneficiary shall see
    fit. The Beneficiary is hereby irrevocably appointed as the Grantor's
    attorney-in-fact, coupled with an interest, for such purposes, and may
    deduct from such proceeds any expenses incurred by the Beneficiary in
    connection therewith.

           3.6.5   Notwithstanding any provisions herein to the contrary
    and in particular the foregoing provisions of this Section 3.6, in the
    event of any such loss or damage as therein described to the
    improvements upon the Property, it is hereby understood, covenanted
    and agreed that, subject to the rights of the prior deed of trust
    holder, the Beneficiary shall make the proceeds received under any
    such insurance policies as therein described available for the
    restoration of the improvements so damaged, subject to the following
    conditions:  (a) that Grantor is not then in default under any of the
    terms, covenants and conditions hereof; (b) that Beneficiary shall
    first be given satisfactory proof that such improvements have been
    fully restored or that by the expenditure of such money will be fully
    restored, free and clear of all liens, except as to the liens of this
    Deed of Trust and the deeds of trust which are prior to this Deed of
    Trust; (c) that in the event such proceeds shall be insufficient to
    restore or rebuild the said improvements, Grantor shall deposit
    promptly with Beneficiary funds which, together with the insurance
    proceeds, shall be sufficient to restore and rebuild the said
    Property; (d) that in the event Grantor shall fail within a reasonable
    time, subject to delays beyond its control, to restore or rebuild the
    said improvements, then Beneficiary, at its option, may restore or
    rebuild the said improvements for or on behalf of the Grantor and for
    such purpose may do all necessary acts; (e) that the excess of said
    insurance proceeds above the amount necessary to complete such
    restoration shall 

                                       -8-

<PAGE>

    be applied as hereinbefore provided as a credit upon any portion as 
    selected by Beneficiary, of the indebtedness secured hereby; and (f) the 
    holder of any prior deed of trust on the Property, if the same remains 
    unsatisfied at such time, has consented to making such proceeds 
    available for restoration.  In the event any of the said conditions are 
    not or cannot be satisfied, then the alternate disposition of such 
    insurance proceeds as provided above in this Section 3.6 shall again 
    become applicable.

           3.6.6   Under no circumstances shall Beneficiary become
    personally obligated to take any action to restore or rebuild the said
    improvements.  In the event of foreclosure of this Deed of Trust, or
    other transfer of title to the Property in extinguishment of the
    indebtedness secured hereby, subject to the rights of the prior deed
    of trust holder, all right, title and interest of the Grantor, in and
    to any insurance policies then in force, and to the proceeds of any
    such policies, shall pass to the purchaser or grantee.

    3.7    RIGHT TO CURE.  If the Grantor shall fail to perform any of 
the covenants contained in this Deed of Trust or in any of the other 
Loan Documents, or shall fail to observe or perform any covenant, term 
or condition under any other instrument creating a lien or encumbrance 
on the Property, or shall fail to observe or perform any provision of 
any lease, restrictive covenant or other agreement affecting the 
Property, each of the Beneficiary and the Trustee shall have the option, 
but not the obligation, to advance funds for and otherwise cause the 
observance or performance of the same on the Grantor's behalf, and all 
monies so advanced shall be added to the principal balance of the 
Debentures, shall be payable by the Grantor to the Beneficiary on 
demand, and shall bear interest at the rate provided in the Debentures, 
and the payment thereof shall be secured hereby. No action taken by the 
Beneficiary or the Trustee pursuant to the provisions of this Section 
3.7 shall constitute, nor be deemed to constitute, a waiver or cure of 
any Event of Default.

    3.8    CONFIRMING; STATEMENT.  The Grantor, as often as the 
Beneficiary may reasonably request in writing, within ten (10) days 
after such request, shall promptly furnish a written statement, duly 
authorized and acknowledged, setting forth (1) the amount due, whether 
of principal, interest or otherwise, under the Note, this Deed of Trust 
and any of the other Loan documents, (2) the date to which payments of 
principal and interest have been made, (3) whether the Grantor has any 
defenses against or rights of setoff with respect to the payment or 
performance thereof, and (4) such other information with respect to the 
Loan as the Beneficiary may request

    3.9    MAINTENANCE OF THE PROPERTY.  The Grantor shall not commit, 
permit or suffer any material waste on the Property or make any change 
in the operation or use of the Property' that will in anyway create or 
materially increase any fire or other hazard. At all times, the Grantor 
shall maintain and keep the Property in good operating order and 
condition and shall promptly make, from time to time, all necessary 
repairs, renewals, replacements, additions and improvements in 
connection therewith, including, without limitation, all repairs, 
renewals, replacements, additions, improvements and rebuilding that may 
be required as a result of damage 

                                       -9-

<PAGE>

or loss to the Property occasioned by fire or other casualty, by the 
exercise of the power of eminent domain or by conveyance thereof. The 
Improvements and the Equipment shall not be removed, demolished or 
materially altered without the prior written consent of the Beneficiary, 
in its discretion.

    3.10   REMOVAL OF EQUIPMENT FIXTURE FILING.

           3.10.1  The Grantor shall not remove any Equipment from the
    Property, nor sell or otherwise dispose of the same, unless the
    Grantor replaces such Equipment prior to or promptly after each such
    removal, sale or disposal with property of a like kind and having a
    fair market value at least equal to the replacement value of the
    Equipment so removed. The liens and security interests created herein
    shall forthwith attach to all of such replacement property without the
    necessity of any further action by the parties hereto; provided.
    however, that the Grantor shall execute such additional Financing
    statements and security agreements, renewals thereof and amendments
    thereto and such other documents and instruments as may be required by
    the Beneficiary to perfect or continue the security interests created
    hereunder.

           3.10.2  The parties hereto agree that this Deed of Trust shall
    constitute a  security agreement" and that the recordation of this
    Deed of Trust shall constitute a "fixture filing' (as both of such
    terms are defined in the Uniform Commercial Code as adopted in the
    Commonwealth of Virginia, as amended from time to time (the "UCC")).

    3.11   EMINENT DOMAIN.  The Grantor shall notify the Beneficiary promptly 
upon learning of any action or proceeding relating to any condemnation or 
other taking or conveyance in lieu thereof, whether direct or indirect, of 
the Property, or any part thereof, and the Grantor shall appear in and 
prosecute any such action or proceeding. In the event of any such 
condemnation, taking or conveyance, and to the extent practicable, the 
Grantor, at its own expense, shall promptly rebuild, restore and repair the 
Property to the same condition as existed immediately prior to such 
condemnation, taking or conveyance. The Trustee and the Beneficiary may 
participate in any such action or proceeding, and the Grantor, from time to 
time, shall execute and deliver to the Trustee and the Beneficiary any and 
all instruments requested by them in order to permit such participation. In 
any such action or proceeding, the Trustee and the Beneficiary may be 
represented by counsel selected by them, and the Grantor shall reimburse the 
Beneficiary and the Trustee for all fees, costs and expenses incurred by them 
in connection with such representation promptly upon demand therefore. Any 
award or compensation payable in connection with such action or proceeding is 
hereby assigned to and shall be paid to the Beneficiary, subject to the 
rights of the prior deed of trust holders.  Grantor further covenants and 
agrees, subject to the rights of the prior deed of trust holder, to make, 
execute and deliver to Beneficiary, at any time or times upon request, free, 
clear and discharged of any encumbrances of any kind whatsoever except the 
rights of the holder of the prior deed of trust, any and all further 
assignments and/or other instruments deemed necessary by Beneficiary for the 
purpose of validly and sufficiently assigning all awards and other 
compensation heretofore and hereafter to be made 

                                       -10-

<PAGE>

to Grantor (including the assignment of any award from the United States 
Government at any time after the allowance of the claim therefor, the 
ascertainment of the amount thereof and the issuance of the warrant for 
payment thereof) for any taking, either permanent or temporary, under any 
such proceedings.  Grantor further agrees that should the Property or any 
part thereof, including any easement or appurtenance thereof, be taken or 
damaged, permanently or temporarily, by reason of any public improvement or 
condemnation proceedings, including severance and consequential damage and 
change in grade of streets, or damage by earthquake or in any other manner, 
subject to the rights of the prior deed of trust holder, Beneficiary shall be 
entitled, subject to the rights of the prior deed of trust holders, to any 
compensation, award, payment or relief therefor and Grantor does hereby 
appoint Beneficiary its Attorney-in-Fact, coupled with an interest, and 
authorizes, directs and empowers such Attorney, at the option of the Attorney 
on behalf of the Grantor, its successors or assigns, to commence, appear in 
and prosecute, in its own name, any action or proceedings, to adjust or 
compromise any claim therefor and to collect and receive proceeds thereof, 
and to give proper receipts and acquittances therefor and after deducting 
expenses of collection, to apply the net proceeds as a credit on any portion, 
as selected by Beneficiary, of the indebtedness secured hereby 
notwithstanding the fact that the amount owing thereon may not then be due 
and payable hereunder or that the indebtedness is otherwise adequately 
secured, provided, however, that no prepayment premium shall be due in 
connection with any net proceeds applied to the indebtedness.

    3.12   COSTS AND EXPENSES: INDEMNITY.  The Grantor shall pay all 
reasonable costs, fees and expenses of the Beneficiary in connection with 
approval, documentation, closing, disbursement, administration and collection 
of the Loan, including, without limitation, all appraisal fees, inspection 
fees, recording costs and fees. charges and expenses of legal counsel, 
architects, engineers and other consultants retained by the Beneficiary in 
connection with the Loan. The Grantor shall indemnify against and hold the 
Beneficiary harmless from any liability whatsoever for the costs, fees and 
expenses described in this Section 3.12. in the event the Beneficiary or the 
Trustee or both is made a party to or appears, either voluntarily or 
involuntarily, in any action or proceeding affecting or relating to any of 
the Property or any of the Indebtedness, or the validity or priority of any 
of the Loan Documents or any lien, right, title or security interest intended 
thereby, then the Grantor shall, upon demand, reimburse the Beneficiary or 
the Trustee or both, as applicable, for all costs, expenses, and liabilities 
incurred by the Beneficiary or the Trustee or both, as applicable, by reason 
thereof, including, without limitation, costs of litigation and attorney's 
fees, and the same shall be secured by this Deed of Trust.

    3.13   OPERATION OF THE PROPERTY.  The Grantor shall operate the Property 
as an entertainment faire center in strict compliance with all applicable 
governmental and quasi-governmental statutes, laws, ordinances, rules and 
regulations and orders.

    3.14   ENVIRONMENTAL COMPLIANCE.

           3.14.1  Neither the Grantor nor any third party will use,
    generate. manufacture, produce, store, release. discharge, or dispose
    of on, under or about the Property or transport to or from the
    Property any Hazardous Substance except 

                                       -11-

<PAGE>

    limited amounts of any Hazardous Substance used by Grantor in the 
    operation of the Property.  For the purposes of this Deed of Trust, 
    a Hazardous Substance shall be any substance that is regulated by or 
    defined as being harmful to the environment or public health in any 
    Environmental Laws.

           3.14.2  The Grantor shall give prompt written notice to the
    Beneficiary of:

                   3.14.2.1  any proceeding or inquiry by and governmental
    authority with respect to the presence of any Hazardous Substance on
    the Property or the migration thereof from or to other real property;
                   
                   3.14.2.2  all claims made or overtly threatened by any
    third party against the Grantor or the Property relating to any loss
    or injury resulting from any Hazardous Substance; and
      
                   3.14.2.3  the Grantor's discovery of any occurrence or
    condition on any real property adjoining or in the vicinity of the
    Property that could cause the Property or any part thereof to be
    subject to any restrictions on the ownership, occupancy,
    transferability or use of the Property under any Environmental Laws.
     
           3.14.3  The Beneficiary shall have the right to join and
    participate in, as a party if it so elects, any legal proceedings or
    actions initiated in connection with any Environmental Laws.

           3.14.4  In the event that any such Hazardous Substances are
    hereafter found on, under or about the Property, the Grantor shall
    take all necessary and appropriate actions and shall spend all
    necessary sums to cause the same to be cleaned up and/or removed in
    accordance with any Environmental Laws, and the Beneficiary shall in
    no event be liable or responsible for any costs or expenses incurred
    in so doing.

           3.14.5  The Grantor shall at all times observe and satisfy the
    requirements of, and maintain the Property in compliance with, all
    Environmental Laws.

           3.14.6  Should the Grantor at any time default in or fail to
    perform or observe any of its obligations under this Section 3.14, the
    Beneficiary shall have the right, but not the duty, without limitation
    upon any of the Beneficiary's rights pursuant hereto, to perform the
    same, and the Grantor agrees to pay to the Beneficiary, on demand, all
    costs and expenses incurred by the Beneficiary in connection
    therewith, including, without limitation, reasonable attorney's fees,
    together with interest from the date of expenditure at the rate
    provided in the Debentures. The Grantor hereby agrees to indemnify
    against and hold the 

                                       -12-

<PAGE>

    Beneficiary harmless from any loss,, liability, claim, demand, 
    damage, suit, action, cost and expense, including, without limitation, 
    attorneys' fees, incurred by or imposed on the Beneficiary by reason of 
    the Grantor's failure to perform or observe any of its obligations or 
    agreements under this Section 3.14.

           3.14.7  The obligations and indebtedness of the Grantor under
    this Section 3.14, notwithstanding anything contained herein or in any
    other document or agreement which may be construed to the contrary,
    shall survive the foreclosure of this Deed of Trust, the repayment of
    the Loan and the termination of the Debentures and the other Loan
    Documents.
                            SECTION 4.  SECURITY AGREEMENT
                                           
    4.1    CREATION OF A SECURITY INTEREST.   The Grantor hereby grants and 
conveys to the Beneficiary as security for the Indebtedness a security 
interest (a) in the Equipment, including, without limitation, any and all 
property of a similar type or kind hereafter located on or at the Property 
and owned by the Grantor, and (b) in any and all intangible property of the 
Grantor now or hereafter used in, arising out of, or relating to the 
ownership, development, management, operation or use of the Property, 
including, without limitation, (1) documents, instruments, accounts, chattel 
paper, general intangibles and proceeds (as each of such terms is defined in 
the UCC), (2) architectural and engineering plans and specifications for the 
Property or any portion thereof, (3) escrow accounts, insurance policies and 
business records of or with respect to the Property, (4) any and all of the 
Grantor's rights, if any to (i) all warranties and guarantees by 
manufacturers, suppliers and installers pertaining to any of the Improvements 
or the Equipment, for the purpose of securing all of the indebtedness.
    
    4.2    REPRESENTATION. WARRANTIES AND COVENANTS.  The Grantor hereby 
represents, warrants and covenants that, except for the security interest 
granted hereby, the Grantor is and, as to items of the Equipment to be 
acquired after the date hereof, shall be the sole owner of the Equipment free 
from any adverse liens, security interests, encumbrances or claims thereon or 
thereto of any kind whatsoever. The Grantor shall notify the Beneficiary of, 
and shall defend the Equipment against, all claims and demands of all persons 
at any rime claiming the same or any interest therein.
    
SECTION 5. EVENTS OF DEFAULT: REMEDIES

    5.1    EVENTS OF DEFAULT.  That (a) default in the payment of any 
interest upon any Debenture when the same becomes due and payable, and 
continuance of such default for a period of ten (10) days; (b)default in the 
payment of the principal of any Debenture when the same becomes due and 
payable; (c) default in the performance, or breach, of any covenant or 
warranty of the Grantor in this Deed of Trust (other than a covenant or 
warranty a default in whose performance or whose breach is elsewhere in this 
Section specifically dealt with), and continuance of such default or breach 
for a period of thirty (30) days after there has been given, by registered or 
certified mail, to the Grantor by the holders of at least Ten Percent (10%) 
in principal amount of the outstanding Debentures, a written notice 
specifying such default or 

                                       -13-

<PAGE>

breach and requiring it to be remedied and stating that such notice is a 
"Notice of Default" hereunder; (d) a court having jurisdiction in the 
premises shall enter a decree or order for relief in respect of the Grantor 
in an involuntary case under any applicable bankruptcy, insolvency or other 
similar law now or hereafter in effect, or appointing a receiver, liquidator, 
assignee, custodian, trustee, sequestrator (or similar official) of the 
Grantor or for any substantial part of its property, or ordering the 
winding-up or liquidation of its affairs and such decree or order shall 
remain unstayed and in effect for a period of thirty (30) consecutive days; 
(e) the Grantor shall commence a voluntary case under any applicable 
bankruptcy, insolvency or other similar law now or hereafter in effect, or 
shall consent to the entry of an order for relief in an involuntary case 
under any such law, or shall consent to the appointment of or taking 
possession by a receiver, liquidator, assignee, trustee, custodian, 
sequestrator (or other similar official) of the ;Grantor or for any 
substantial part of its property, or shall make any general assignment for 
the benefit of creditors, or shall fail generally to pay its debts as they 
become due, or shall take any corporate action in furtherance of any of the 
foregoing. (f) the failure of the Grantor to pay any indebtedness due any 
other person or entity and such failure shall continue beyond any applicable 
grace period and result in the acceleration of maturity of such indebtedness; 
(g) the Grantor shall suffer to exist beyond any applicable grace period any 
other event of default under any material agreement binding the Grantor, 
provided such event of default has not been waived in writing by the 
appropriate party or parties to such agreement; or (g) the Grantor shall 
admit its inability to pay its debts as they mature or shall make an 
assignment for the benefit of its creditors: the happening of any such event 
shall be an Event of Default hereunder.

    5.2    REMEDIES UPON AN EVENT OF DEFAULT.

           5.2.1   Upon the occurrence of an Event of Default, the
    Beneficiary, by written notice given to the Grantor, may, at its
    option, declare the entire unpaid principal balance of the Debentures,
    all accrued but unpaid interest and all unpaid late charges thereunder
    to be due and payable immediately, and, upon any such declaration,
    such principal balance, accrued but unpaid interest and unpaid late
    charges shall become and be due and payable immediately, and upon any
    such declaration, such principal balance, accrued but unpaid interest
    and unpaid late charges shall become and be due and payable
    immediately, without presentment, demand, protest of notice of
    dishonor, all of which are hereby waived by the Grantor, anything
    contained in the Debentures or in this Deed of Trust to the contrary
    notwithstanding. The Grantor further waives the benefits of the
    Homestead Exemption and any other exemptions provided by law.

           5.2.2   Upon the occurrence of an Event of Default, the
    Beneficiary, at its option, may invoke the power of sale and any other
    remedies permitted by applicable law or provided herein. The
    Beneficiary shall be entitled to collect all costs and expenses
    incurred by it in pursuing such remedies, including, but not limited
    to, attorney's fees

           This Deed of Trust shall be governed by and construed in
    accordance with the applicable provisions of Sections 55-59.1,
    55-59.2, 55-59.3, 55-59.4, 55-60 

                                       -14-

<PAGE>

    and, to the extent not inconsistent with the provisions hereof, 
    Section 55-59 of the Code of Virginia, 1950, as amended and in 
    effect on the date of this Deed of Trust, with the following 
    further understanding as in such sections provided:

           Advertisement Required: Sale to be for cash on the Property or     
any part thereof, or at such other place as the Trustee shall select     
after first advertising the time, place and terms of sale once a week     for 
three (3) weeks in a newspaper having general circulation in the     County 
of Stafford, VA.

           Exemptions Waived.

           Subject to All upon Default.

           Substitution of Trustee Permitted, With or Without Cause.

           Right of Anticipation Reserved as provided in the Debentures.

           Renewal, Reinstatement or Extension Permitted.

           Any Trustee May Act.

           5.2.3   Upon the occurrence of an Event of Default, the     
Beneficiary, with or without entry, personally or by its agents or     
attorneys, insofar as applicable, may:

                   5.2.3.1   Exercise any or all of the remedies
           available to a secured party under the UCC;

                   5.2.3.2   Direct the Grantor to assemble the
           Equipment and make it available to the Beneficiary at
           the place designated by the Beneficiary, and the Grantor
           hereby covenants and agrees to do so promptly. The
           Beneficiary shall have the right to sell, assign and
           deliver all or any part of the Equipment at public or
           private sale, without advertisement, and to bid and
           become the purchaser thereof at any such public or
           private sale. If the provisions of the UCC require that
           notice of a public sale of any part of the Equipment be
           given to the Grantor, the Beneficiary shall give the
           Grantor such notice of sale as may be required under the
           UCC. If the provisions of the UCC impose no such notice
           requirement, the Beneficiary shall give the Grantor
           notice of such public or private sale at least ten (10)
           days before the time of such sale or other disposition.
           The proceeds of any such sale shall be applied First to
           the costs of such sale, including, without limitation,
           advertising costs, if any, and attorneys' fees, and
           second to all or any portion of the Indebtedness as the
           Beneficiary shall determine; and

                                       -15-

<PAGE>

                   5.2.3.3   Take such steps to protect and enforce
           its rights, whether by action, suit or proceeding in
           equity or at law, for the specific performance of any
           covenant, term, condition or agreement set forth in the
           Debentures, in this Deed of Trust or in any other Loan
           Document, or in furtherance of the execution of any
           power herein or therein granted, or for any foreclosure
           hereunder, or for the enforcement of any other
           appropriate legal or equitable remedies or otherwise, as
           the Beneficiary shall elect

                   In no event shall the Beneficiary, in the
           exercise of the remedies provided in this Deed of Trust,
           be deemed to be a "mortgagee in possession", and neither
           the Beneficiary nor the Trustee shall in any way be
           liable for any act, either of commission or omission, in
           connection with the exercise of such remedies.

           5.2.4   After the exercise by the Trustee of their power of
    sale pursuant to this Deed of Trust and pending the exercise by the
    Trustee or the Beneficiary or their agents or attorneys of their right
    to exclude the Grantor from all or any part of the Property, the
    Grantor agrees to pay the fair and reasonable rental value for the use
    and occupancy of the Property or any portion thereof that is in its
    possession for such period and, upon default in making any such
    payment, will vacate and surrender possession of the Property to the
    Trustee or the Beneficiary, as the case may be, or to a receiver, if
    any, and in default thereof may be evicted by any summary action or
    proceeding for recovery or repossession of premises for nonpayment of
    rent, however designated.

           5.2.5   Upon the occurrence of an Event of Default and upon
    written demand from the Beneficiary, the Grantor shall pay to the
    Beneficiary the whole amount which then shall have become due and
    payable under the Debentures, for principal, interest and late
    charges, as the case may be, and all sums required to be paid by the
    Grantor pursuant to any provision of this Deed of Trust and of any
    other Loan Document and, in addition thereto, such further amount as
    shall be sufficient to cover the costs and expenses of collection,
    including, without limitation, reasonable compensation to the Trustee
    and the Beneficiary, and to their respective agents and counsel, and
    any expenses incurred by the Trustee and the Beneficiary hereunder. In
    the event that the Grantor shall fail forthwith to pay such amounts
    upon demand, the Beneficiary shall be entitled and empowered to
    institute such actions or proceedings at law or in equity as may be
    advised by its legal counsel for the collection of the sums due and
    unpaid, and may prosecute any such action or proceedings to judgment
    or final decree, and may enforce any such judgment or final decree
    against the Grantor and collect, out of the property of the Grantor,
    wherever situated, as well as out of the Property, in any manner
    provided by law, monies so adjudged or decreed to be due and payable.

                                       -16-
<PAGE>

           The Beneficiary shall be entitled to recover judgment as
    aforesaid either before, after or during the pendency of any
    proceedings for the enforcement of the provisions of this Deed of
    Trust, and the right of the Beneficiary to recover such judgment shall
    not be affected by any entry or sale hereunder, or by the exercise of
    any other right, power or remedy for the enforcement of the provisions
    of this Deed of Trust, or of any other Loan document, or the
    foreclosure of the lien hereof; and, in the event of a sale of the
    Property, or any part thereof, and of the application of the proceeds
    of such sale to the payment of the indebtedness, the Beneficiary shall
    be entitled to enforce payment of and to receive all amounts then
    remaining due and unpaid upon, the Debentures, and to enforce payment
    of all other charges, payments and costs due under this Deed of Trust
    and under any other Loan Documents, and shall be entitled to recover
    judgment for any portion of the indebtedness remaining unpaid, with
    interest. In case of proceedings against the Grantor in insolvency or
    bankruptcy or involving the liquidation of any of its assets, then the
    Beneficiary shall be entitled to prove the whole amount of principal,
    interest and late charges due under the Debentures in the full amount
    thereof, and all other payments, charges and costs due under this Deed
    of Trust and under any other Loan Documents in the full amount
    thereof, and all other payments, charges and costs due under this Deed
    of Trust and under any other Loan Documents, without deducting
    therefrom any proceeds obtained from the sale of the whole or any part
    of the Property; provided, however, that in no event shall the
    Beneficiary receive a greater amount than such principal, interest and
    late charges and such other payments, charges and costs from the
    aggregate amount of the proceeds of the sale of the Property and the
    distributions from the insolvent or bankrupt estate of the Grantor.

           No recovery of any judgment by the Beneficiary and no levy of
    execution under any judgment upon the Property or upon any other
    property of the Grantor shall affect, in any manner or to any extent,
    the lien of this Deed of Trust upon the Property or any part thereof,
    or any liens, rights, powers or remedies of the Trustee or the
    Beneficiary hereunder, but such liens, rights, powers and remedies of
    the Trustee and the Beneficiary shall continue unimpaired as before.

           5.2.6.  Immediately upon the commencement of any action, suit
    or other legal proceeding by the Beneficiary to obtain judgment for
    all or any portion of the Indebtedness, or for the enforcement of the
    provisions of the Debentures, of this Deed of Trust or of any other
    Loan Document and following the occurrence of an Event of Default and
    the failure of the Grantor to cure such Event of Default within any
    applicable cure period, the Grantor shall, if required by the
    Beneficiary, consent to the appointment of a receiver or receivers for
    the Property and of all of the Rents. Upon the occurrence of an Event
    of Default and the failure of the Grantor to cure such Event of
    Default within any applicable cure period provided herein, and upon
    the commencement of any proceedings to foreclose this Deed of Trust,
    or to enforce any of the provisions hereof, of the Debentures or of
    any other Loan Document, or upon the commencement of any other
    judicial 

                                       -17-

<PAGE>

    proceedings to enforce any right of the Trustee or the
    Beneficiary hereunder, under the Debentures or under any other Loan
    Documents, the Trustee, the Beneficiary or both of them shall be
    entitled, as a matter of right, if it or they shall so elect, without
    giving notice to any other party and without regard to the adequacy or
    inadequacy of the security of the Property, forthwith, either before
    or after declaring the unpaid balance of the Debentures to be due and
    payable, to effect the appointment of a receiver or receivers.
    Notwithstanding the appointment of any receiver, liquidator or trustee
    of the Grantor or of any of its property, or of the Property or any
    part thereof, the Trustee and the Beneficiary shall be entitled to
    retain possession and control of all property now or hereafter held
    under this Deed of Trust.

    5.3    SALE OF THE PROPERTY.

           5.3.1   Upon completion of any sale or sales made by the
    Trustee under or by virtue of this Deed of Trust, the Trustee, or an
    officer of any court empowered to do so, shall execute and deliver to
    the accepted purchaser or purchasers a good and sufficient instrument,
    or good and sufficient instruments, conveying, assigning and
    transferring all estate, right, title and interest in and to the
    property and rights sold. The Trustee are hereby irrevocably appointed
    the true and lawful attorney-in-fact of the Grantor, in its name and
    stead, to make all necessary conveyances, assignments, transfers and
    deliveries of the Property and rights so sold, and for that purpose
    the Trustee may execute all necessary instruments of conveyance,
    assignment and transfer, and may substitute one or more persons with
    like power, the Grantor hereby ratifying and confirming all that such
    attorney-in-fact or such substitute or substitutes shall lawfully do
    by virtue hereof. Nevertheless, the Grantor shall ratify and confirm
    any such sale or sales by executing and delivering to the Trustee or
    to such purchaser or purchasers all such instruments as may be
    advisable, in the judgment of the Trustee of the Beneficiary, if so
    requested by the Trustee or the Beneficiary, for the purpose, and may
    be designated in such request. Any such sale or sale made under or by
    virtue of this Section 5, whether made under the power of sale herein
    granted or under or by virtue of judicial proceedings or a judgment or
    decree of foreclosure and sale, shall operate to divest all of the
    estate, right, title, interest, claim and demand whatsoever, whether
    at law or in equity, of the Grantor in and to the properties and
    rights so sold, and shall be a perpetual bar, both at law and in
    equity, against the Grantor and against any and all persons claiming
    or who may claim the same or any part hereof from, through or under
    the Grantor.

           5.3.2   Upon any sale made under or by virtue of this Section
    5, whether made under the power of sale herein granted or under or by
    virtue of judicial proceedings or of a judgment or decree of
    foreclosure and sale, the Beneficiary may bid for and acquire the
    Property or any part thereof and, in lieu of paying cash therefore,
    may make settlement for the purchase price by crediting against the
    Indebtedness the net sales price after deducting therefrom the
    expenses of the 

                                       -18-

<PAGE>
    sale and the costs of the action and any other sums that the Trustee 
    or the Beneficiary are authorized to deduct under this Deed of Trust.

    5.4    Waiver of Rights.  The Grantor shall not at any time insist upon, 
or plead in any manner whatsoever, claim or take any benefit or advantage of 
any moratorium law or any exemption from execution or sale of the Property or 
any part thereof, wherever enacted, now or at any time hereafter enforced, 
that may affect the covenants and terms of performance of this Deed of Trust 
or of any other Loan document, nor claim, take or insist upon any benefit or 
advantage of any law now or hereafter enacted providing for the valuation or 
appraisal of the Property, or any part thereof, prior to any sale or sales 
thereof that may be made pursuant to any provision contained herein, or 
pursuant to any decree, judgment or order of any court of competent 
jurisdiction; nor, after any such sale or sale, claim or exercise any right 
under any statute heretofore or hereafter enacted to redeem the property so 
sold or any part thereof, and the Grantor hereby expressly waives all benefit 
or advantage of any such law or laws. The Grantor, for itself and all who 
claim under it, hereby waives, to the extent that it lawfully may, all right 
to have the Property marshalled upon any sale or foreclosure hereunder.

    5.5    TRUSTEE.

           5.5.1   The Trustee shall be under no duty (i) to take any
    action hereunder except as expressly set forth herein, (ii) to perform
    any act that would involve them in expense of liability or to
    institute or defend any suit or action in respect hereof, unless
    properly indemnified to their satisfaction, or (iii) to account for
    the use or application of any payments under this Deed of Trust, under
    the Debentures or under any of the other Loan Documents, except as may
    otherwise be expressly provided by applicable law. The Trustee shall
    not be required to take notice, nor shall they be deemed to have
    knowledge, of any Event of Default or any event that, with notice or
    the passage of time or both, would constitute an Event of Default, and
    the Trustee may assume conclusively that there has been no such Event
    of Default or event that might constitute an Event of Default unless
    and until they shall have been notified thereof in writing by the
    Beneficiary.

           5.5.2   The Grantor shall pay the Trustee just compensation for
    any and all services performed and all their expenses, charges,
    counsel fees and other disbursements incurred on and about the
    administration and execution of the trust hereby created, and the
    performance of their duties and powers hereunder, which compensation,
    expenses, fees and disbursements shall constitute a part of the
    Indebtedness. The Grantor agrees to indemnify against and hold the
    Trustee harmless from any loss, claim, demand, suit, action,
    liability, damage, cost and expense, including, without limitation,
    attorneys' fees, incurred in the exercise and performance of their
    powers and duties hereunder.

    5.6    EXERCISE OF RIGHTS.  Any rights that may be exercised by the Trustee
or the Beneficiary or both pursuant to the provisions of this Section 5 upon the
occurrence of an Event 

                                       -19-

<PAGE>

of Default, any be exercised by the Trustee, the Beneficiary or both, as the 
case may be, for so long as such Event of Default shall continue thereafter.

    5.7    REMEDIES CUMULATIVE: NO WAIVERS.  No remedy conferred upon or 
reserved to the Trustee, the Beneficiary or both of them herein or in any of 
the other Loan Documents is intended to exclusive of any other remedy or 
remedies, and each and every such remedy shall be cumulative and shall be in 
addition to every other remedy given hereunder or under any of the other Loan 
Documents or now or hereafter existing at law, in equity or by statute. Every 
power and remedy given to the Trustee, the Beneficiary or both of them 
pursuant to the provisions of this Deed of Trust may be exercised from time 
to time and as often as may be deemed expedient by the Trustee of the 
Beneficiary. No delay by or omission of the Trustee or the Beneficiary in the 
exercise of any right or power accruing upon any Event of Default or upon any 
event that, with notice or the passage of time or both would constitute and 
Event of Default, shall impair any such right or power nor be construed to be 
a waiver of any such Event of Default or any acquiescence therein. A waiver 
of the breach of any covenant, term or condition contained herein or in any 
of the other Loan documents shall not be construed as a waiver any subsequent 
breach of the same covenant, term or condition. The acceptance by the 
Beneficiary of any sum in an amount less than the sum then due shall be 
deemed an acceptance on account only and upon the condition that it shall not 
constitute a waiver of the obligation of the Grantor to pay the entire sum 
then due. The Grantor's failure to pay the entire sum then due shall be and 
continue to be an Event of Default notwithstanding such acceptance of such 
amount on account, and, at all times thereafter and until the entire sum ten 
due shall have been paid, and notwithstanding the acceptance by the 
Beneficiary thereafter of further sums on account or otherwise, the 
Beneficiary and the Trustee shall be entitled to exercise all rights 
conferred upon them, or either of them, in this Deed of Trust and in every 
other Loan Document upon the occurrence of an Event of Default, or upon the 
occurrence of an event that, with notice or the passage of time or both, 
would constitute an Event of Default, and the right to whether any of such 
amounts are received prior or subsequent to notice of such sale. Consent by 
the Beneficiary to any transaction or action for which consent or approval of 
the Beneficiary is required hereunder or under any of the other Loan 
Documents shall not be deemed a waiver of the right to require such consent 
or approval with respect to future or successive transactions or actions.

                         SECTION 6.  MISCELLANEOUS PROVISIONS

    6.1    SAVINGS CLAUSE. Nothing contained herein, nor any transaction 
related hereto, shall be construed or shall so operate either presently or 
prospectively (a) to require the Grantor to make any payment or to take any 
action contrary to law, or (b) to permit the Trustee to take any action 
contrary to law. Should any one or more of the terms, provision, covenants or 
conditions of this Deed of Trust or any of the other Loan Documents be held 
to be void, invalid, illegal or unenforceable in any respect, the same shall, 
at the option of the Beneficiary, not affect any other term, provision, 
covenant or condition of this Deed of Trust, but the remainder hereof shall 
be effective as though such term, provisions, covenant or condition had never 
been contained herein.

                                       -2-

<PAGE>

    6.2    NOTICES. All notices, requests, demands and other communications 
with respect to this Deed of Trust shall be in writing and shall be delivered 
by hand, sent prepaid by UPS Next Day Air (or a comparable overnight delivery 
service) or sent by United States mail, certified, postage prepaid, return 
receipt requested, to the following addresses:

           (a)     If to the Grantor:
                   Renaissance Entertainment Corporation
                   4440 Arapaho Road, Suite 200
                   Boulder, Colorado 30303
                   Attn:  James R. McDonald, C.F.O.
           
           (b)     If to the Beneficiary:
                   Dorsar Partners, L.P.
                   c/o Steven L. Feinberg, General Partner
                   1855 North Mesa, Suite 120
                   El Paso, Texas 79902-5939
           
                   Charles H. Leavell
                   c/o The Leavell Company
                   4487 North Mesa, Suite 204
                   El Paso, Texas 79902
           
                   Charles S. Leavell
                   c/o Renaissance Entertainment Corporation
                   4440 Arapahoe Avenue, Suite 200
                   Boulder, Colorado 80303

Any notice, request, demand or other communication delivered or sent in the 
manner aforesaid shall be deemed given or made (as the case may be) (i) on 
the day on which it is actually delivered or delivery refused of (ii) on the 
second (2nd) business day after the day on which it is deposited in the 
United States mail, or an overnight delivery service, whichever first occurs. 
Any party to this Deed of Trust may change its address by notifying the other 
party hereto of the new address in manner permitted by this Section 6.2.

    6.3    CHOICE OF LAW.  This Deed of Trust shall be executed, construed, 
performed and enforced in accordance with the laws of the Commonwealth of 
Virginia.

    6.4    SUCCESSORS AND ASSIGNS.  To the extent not prohibited hereunder, 
all of the grants, covenants, terms provisions and conditions herein 
contained shall run with the Land shall apply to, bind and inure to the 
benefit of the successors and assigns of the Grantor, the successor in trust 
of the Trustee, and the endorsees, transferees, successors and assigns of the 
Beneficiary.

    6.5    AMENDMENTS.  Neither this Deed of Trust nor any provision hereof 
may be amended, waived, discharged or terminated orally, but only by an 
instrument in writing and signed by the parties hereto.

                                       -21-

<PAGE>

    6.6    RULES OF CONSTRUCTION.  The following rules of construction shall 
apply to this Deed of Trust unless the context otherwise requires:

           6.6.1   Singular words shall connote the plural as well as the
    singular, and vice versa, and the neuter gender shall connote the
    masculine and the feminine genders, and vice versa, as the context may
    require.

           6.6.2   All references herein to particular articles, sections
    or exhibits are references to the respective articles, sections or
    exhibits of or attached to this Deed of Trust.

           6.6.3   The article and section headings set forth herein are
    solely for convenience of reference and shall not constitute a part of
    this Deed of Trust nor shall they affect its meaning, construction or
    effect.

           6.6.4   Each party hereto and its counsel have reviewed and
    revised (or requested revision of) this Deed of Trust and the Loan
    Documents, and the normal rule of construction that any ambiguities
    are to be resolved against the drafting party shall not be applicable
    in the construction and interpretation of this Deed of Trust or the
    Loan Documents or any amendments or exhibits hereto.

    6.7    RIGHT TO RELEASE PERSONS LIABLE.  Without affecting the liability 
of the Grantor or any other person (except any person released in writing) 
for payment or performance of any of the Indebtedness, and without affecting 
the rights of the Beneficiary or the Trustee with respect to any security not 
expressly released in writing, the Beneficiary, at any time and from time to 
time, either before or after the maturity of the Debentures, and without 
notice or consent may:

           6.7.1   Release any person or persons liable for payment or
    performance of any of the Indebtedness:

           6.7.2   Make any agreement extending the time or otherwise
    altering the terms of payment or performance of all or any part of the
    Indebtedness, or modifying or waiving any of the Indebtedness, or
    subordinating, modifying or otherwise dealing with the lien hereof or
    of any of the other Loan Documents;

           6.7.3   Exercise or refrain from exercising or waive any right
    that the Beneficiary may have;

           6.7.4   Accept additional security of any kind; and

           6.7.5   Release or otherwise deal with any property, real or
    personal, securing the Indebtedness, including, without limitation,
    all or any part of the Property.

    6.8    NO JOINT VENTURE. Nothing contained in this Deed of Trust or in 
any of the other Loan Documents shall create a partnership or joint venture 
or principal-agent relationship 

                                       -22-

<PAGE>

between the Grantor and the Beneficiary or between the Beneficiary and any 
other party, or cause the Beneficiary to be liable in any way for the debts 
or obligations of the Grantor or any other party.

    6.9    WAIVER. The Grantor and Beneficiary hereby irrevocably waive the 
right to trial by jury in any suit' action or other proceeding, now pending 
or hereafter instituted, concerning or arising out of this Deed of Trust, any 
of the other Loan Documents or the loan transaction contemplated hereunder 
and thereunder, or the actions of Beneficiary in the enforcement hereof or 
thereof.

    WITNESS the following signatures:

                                       RENAISSANCE ENTERTAINMENT 
                                         CORPORATION, a Colorado corporation
                                       By
                                         -------------------------------------
                                       James R. McDonald
                                       Its Chief Financial Officer

STATE OF COLORADO        )
                         ) ss.
COUNTY OF _____________  )


    The foregoing instrument was acknowledged before me this     day of May, 
1997, by James R. McDonald, the Chief Financial Officer of Renaissance 
Entertainment Corporation, a Colorado corporation in the County of 
_____________, State of Colorado.

                                       -------------------------------------
                                       Notary Public

                                       My commission expires:

                                       -23-

<PAGE>

                                      EXHIBIT A
                                           
                                  LEGAL DESCRIPTION

   All those certain lots, pieces or parcels of land lying and 
being in the George Washington District, Stafford County, Virginia, 
described as "Parcel A 162.0986 Acres" and "Parcel B 87.9014 
Acres", as shown on that certain plat of survey made by Greenhorne 
and O'Mara, entitled "Boundary Survey of the Property of Sherwood 
Forest Associates," dated March 29, 1995, a copy of which is 
recorded in the Clerk's Office of the Circuit Court of Stafford 
County, Virginia, in Plat Book 27, page 278 and 279, and pursuant 
to which plat such parcels are more particularly described as 
follows:

PARCEL A

   Beginning at an iron pipe found on the northern right-of-way 
line of Kings Highway, Route 3 (such point also being the 
Northwestern corner of property now or formerly owned by Montrief) 
and proceeding along the northern right-of-way line of Route 3 
N. 81 DEG. 42' 56" W. 130.42 feet to a VDH monument; thence 
N. 87 DEG. 25' 34" W. 100.50 feet to an iron pipe set; thence 
N. 81 DEG. 42' 56" W. 175.21 feet to an iron pipe set; thence 
along a curve with a radius of 2806.70 feet and chord length of 
588.41 feet and are length of 589.49 feet; thence N. 69 DEG. 40' 54" W.
349.29 feet to an iron pipe set; thence S. 20 DEG. 19' 06" W. 24 
feet to an iron pipe set; thence n. 69 DEG. 44' 20" W. 943.08 feet 
to an iron pipe set at the southeastern corner of property now or 
formerly owned by Moushtaha Investment & Trading Company; thence 
leaving the northern right-of-way of Kings Highway Route 3 and 
proceeding N. 35 DEG. 49' 54" E. 2302.79 feet to an iron pipe set 
on the southern right-of-way of property now or formerly owned by 
CSX Railroad; thence along said railroad property S. 74 DEG. 42' 31" N.
3155.02 feet to a monument found; thence S. 40 DEG. 52' 46" E. 741.72 
feet to a fence post; thence S. 67 DEG. 02' 49" W. 1689.39 feet to an 
iron pipe found; thence S. 69 DEG. 10' 22" W. 337.70 feet to an 
iron pipe found; thence S. 69 DEG. 34' 50" W. 545.81 feet to an 
iron pipe set; thence S. 67 DEG. 33' 48" W. 325 feet to the point 
and place of beginning.

PARCEL B

   Beginning at a point at the intersection of the northern right-of-way line 
of property now or formerly owned by CSX Railroad with the eastern boundary 
of land now or formerly owned by Moushtaha Investment and Trading Company 
which point of 2409.58 feet from the intersection of the northern 
right-of-way of Route 3 and the southwestern corner of Parcel A described 
above and proceeding from said point of beginning N. 35 DEG. 49' 54" E. 
2892.64 feet to an iron pipe set; thence S. 45 DEG. 44' 27" E. 273.31 feet to 
an iron rod found; thence S. 69 DEG. 36' 39" W. 341.74 feet to a point; 
thence S. 55 DEG. 04' 26" E. 180.16 feet to a point; thence S. 36 DEG. 13' 
56" W. 196.27 feet to a point; thence S. 29 DEG. 31' 45" E. 42.69 feet to a 
point; thence S. 21 DEG. 36' 56" S. 248.46 feet to a point; thence S. 08 DEG. 
58' 38" E. 114.64 feet to a point; thence S. 21 DEG. 53' 33" E. 173.36 feet 
to a point; thence S. 00 DEG. 19' 23" E. 116.23 feet to a point; thence S. 12 
DEG. 55' 31" E. 154.13 feet to a point; thence S. 23 DEG. 29' 00" E. 312.79 
feet to a point; thence S. 37 DEG. 21' 54" E. 138.98 feet to a point; thence 
S. 74 DEG. 04' 59" E. 100.09 feet to a point; thence S. 40 DEG. 37' 15" E. 
427.66 feet to a point; thence N. 32 DEG. 54' 19" E. 88.87 feet to a point; 
thence S. 59 DEG. 48' 05" E. 499.67 feet to a point; thence S. 38 DEG. 02' 
02" E. 195.28 feet to a point; thence S. 11 DEG. 26' 35" E. 183.27 feet to a 
point; thence, S. 02 DEG 28' 34" E. 193.55 feet to a point; thence S. 58 DEG. 
03' 22" E. 183.94 feet to a point; thence S. 57 DEG. 59' 28" W. 385.64 feet 
to a monument found; thence along the northern line of CSX Railroad property 
N. 74 DEG. 42' 31" W. 2994.51 feet to the point and place of beginning.

                                       -24-

<PAGE>

   Being the same property conveyed to Renaissance Entertainment Corporation, 
by deed of H. Jason Gold, Trustee in Bankruptcy for the Estate of Sherwood 
Forest Associates, a Virginia general partnership, dated July 26, 1995, 
recorded in the Clerk's Office of the Circuit Court of Stafford County, 
Virginia, in Deed Book 1124, at page 682, and by corrected and re-recorded 
deed recorded in Deed Book 1146, page 558.

   Less and except 0.5178 acres dedicated to public use by plat recorded in 
Plat Book 28, page 108 in the Clerk's Office of the Circuit Court, Stafford 
County, Virginia.

                                       -25-

<PAGE>
                                      EXHIBIT B
                                           
                                 PERMITTED EXCEPTIONS
                                           
                                           
1.  Deed of Trust, Assignment of Leases, and Security Agreement from
    Renaissance Entertainment Corporation to Beale and Sasser, Trustee, dated
    November 7, 1995, recorded in Deed Book 1153, page 495.

2.  Deed of Trust from Renaissance Entertainment Corporation to Sasser and
    Beale, Trustee, dated January 22, 1996, recorded as LR960001577.

3.  Disclosure Statement regarding Mechanics' Lien filed by Wise Guys
    Contracting, Inc., recorded as LR960009403.

4.  Memorandum for Mechanics' Lien filed by Wise Guys Contracting, Inc.,
    recorded as LR960009404.

5.  Memorandum for Mechanics' Lien filed by Wise Guys Contracting, Inc.,
    recorded as LR960009405.

6.  Matters shown or noted on plat entitled "Boundary Survey of the Property of
    Sherwood Forest Associates," made by Greenhorne & O'Mara, dated 29 March
    1995, and recorded in Plat Book 27, pages 278-279 and Plat Book 28, pages
    168-169, including:

    a.  steams and creeks affecting property;
    b.  fences do not coincide with boundaries;
    c.  power pole and ex. overhead powerline (VEPCO DB 79, Pg 48);
    d.  CSX Railroad bisects property;
    e.  approximate location of abandoned dirt road.

7.  VEPCO easement recorded in Deed Book 79, at Page 48.

8.  Maintenance Agreement for Stormwater Detention Systems, dated July 24,
    1995, recorded in Deed Book 1130, page 537.

9.  Easement granted Bell-Atlantic-VA dated November 1, 1995, and recorded in
    Deed Book 1153, page 280.

10. Easement granted Bell Atlantic-VA dated November 1, 1995, and recorded in
    Deed Book 1153, page 284.

                                       -26-

<PAGE>

11. Lack of a located and recorded right of access to and from the land
    described as Parcel B, which is separated from other land of the insured
    and a public right of way by the CSX Railroad property.

12. Rights of others thereto entitled in and to the continued uninterrupted
    flow of streams or creeks running along boundaries or through the property
    (White Oak Run is designated on survey).

                                       -27-