SECURITY AGREEMENT

                            (LORETTA FOOD GROUP INC.)


     THIS SECURITY  AGREEMENT  ("Agreement') is made as of the 9th day of March,
2005,  by Loretta  Food  Group,  Inc.,  a Delaware  corporation,  with a mailing
address of 2405 Lucknow Drive,  Mississauga,  ON L5S 1H9 ('Debtor"), in favor of
Caithness  Financial  Services  Limited,  an Ontario  corporation with a mailing
address of 141 Adelaide Street, Suite 500, Toronto, ON M5H 3L5 ("Lender").

1. THE SECURED  INDEBTEDNESS.  For  valuable  consideration,  Debtor  makes this
Agreement  to  secure  the  payment  of all  present  and  future  indebtedness,
liabilities  and  obligations of Debtor to Lender,  however  created or arising,
whether under the following:

         the Senior Secured Promissory Note of even date hereof in the amount of
         Eight Hundred Eighty Thousand ($880,000) Dollars made by Debtor payable
         to Lender, arising from the Loan Agreement (the "Loan Agreement') dated
         March 8, 2005 between Loretta Baking Mix Products, Ltd. ("Loretta') and
         Lender,  and any other  note(s),  guaranty(ies),  loan and/or letter of
         credit  agreement(s),  indemnity  agreement(s) or other  evidence(s) of
         indebtedness to Lender made as of the date of this Agreement by Loretta
         or Debtor and all extensions, renewals, modifications, substitutions or
         replacements;

or under any other present or future  instrument or agreement between Loretta or
Debtor  and  Lender,  or  otherwise,  and  whether  direct,  indirect,  primary,
secondary,  fixed,  contingent,  joint or  several,  due or to become  due,  and
including,  without limit and any and all renewals,  extensions,  modifications,
substitutions  or  replacements  of any of  them,  and  the  performance  of the
covenants and  obligations  due or to become due to Lender,  including,  without
limit, those due under this Agreement, and the repayment of all sums expended by
Lender  in  connection  with  performance  of those  covenants  and  obligations
(individually and collectively, the "Indebtedness").

2.  GRANT  OF  SECURITY  INTEREST  IN  COLLATERAL.  To  secure  payment  of  the
Indebtedness,  Debtor grants Lender a continuing first security  interest in all
of the following assets and property of Debtor, wherever located and whether now
owned or existing or hereafter arising or acquired:

     All assets of Debtor, (the "Collateral") including, but not limited to:

         (a)  all  equipment  in all of its  forms,  and all  fixtures  wherever
         located,  now  or  hereafter  existing,  and  all  parts  thereof,  and
         accessions,  accessories,  supplies, and operating manuals thereto (the
         "Equipment");


<PAGE>

         (b)  all  inventory  in all of its  forms,  and all  products  thereof,
         wherever located, now or hereafter existing, including, but not limited
         to, (i) all raw materials and work in process therefore, finished goods
         thereof,   and  materials  used  or  consumed  in  the  manufacture  or
         production  thereof,  (ii) goods in which the Debtor has an interest in
         mass or a joint or other interest or right of any kind, and (iii) goods
         which  are held for  sale or  lease,  and all  accessions  thereto  and
         products  thereof  (the   "Inventory";   Equipment  and  Inventory  are
         hereinafter referred to collectively as the "Tangible Collateral");

         (c) all  accounts,  rights  arising  under  contracts,  chattel  paper,
         instruments,   rights  under  letters  of  credit,  documents,  general
         intangibles,  payment  intangibles  and other  obligations of any kind,
         whether now owned or hereafter acquired,  whether or not arising out of
         or in  connection  with the sale or lease of goods or the  rendering of
         services,  and  all  rights  now or  hereafter  existing  in and to all
         security  agreements,  leases and other contracts securing or otherwise
         relating  to any of such  accounts,  rights  arising  under  contracts,
         chattel  paper,   instruments,   general   intangibles  or  obligations
         (collectively, the "Intangible Collateral");

         (d) all interests in equities,  debentures,  securities  and negotiable
         instruments  including,  but  limited  to, all shares of capital  stock
         whether voting or non-voting,  preferred or common,  public or private,
         or convertible and including all options, warrants, appreciation rights
         and all other  forms of  ownership  for  example,  but not  limited to,
         limited  partnership  interests,  limited liability company membership,
         real estate investment  trusts and the like and the proceeds  therefrom
         ("Securities");

         (e) all  books  and  records  of the  Debtor  pertaining  to any of the
         Collateral; and

         (f)  all  cash  and all  proceeds  of any of the  foregoing  Collateral
         (including,  without limitation,  proceeds which constitute property of
         the types  described in clauses (a) through (d) of this Section 1) and,
         to the extent not  otherwise  included,  all payments  under  insurance
         (whether  or not the  Secured  Party  is loss  payee  thereof),  or any
         indemnity, warranty or guaranty, payable by reason of loss or damage to
         or otherwise with respect to any of the foregoing Collateral.

3. WARRANTIES AND  REPRESENTATIONS.  Debtor represents and warrants to Lender as
follows:

                                       2

<PAGE>

     3.1 Payment of  Indebtedness.  Debtor will pay the Indebtedness and perform
all  obligations  related to the  Indebtedness  when due,  whether by  maturity,
acceleration or otherwise.

     3.2  Authority.  This  Agreement  is the valid and  binding  obligation  of
Debtor,  enforceable in accordance with its terms.  Debtor is duly organized and
validly  existing and in good  standing  under the laws of the State of Delaware
and  authorized  to  transact  business in all states in which  Debtor  conducts
business, and the execution, delivery and performance of this Agreement has been
duly authorized by all necessary action of Debtor's  governing body and will not
violate Debtor's governing instruments or other agreements.

     3.3 Name;  Address;  Location  of  Collateral.  Debtor's  name and  mailing
address,  chief executive office address, and the location of the Collateral and
all records  concerning the Collateral are accurately set forth on the signature
page of this  Agreement.  Debtor has not  conducted  business in any other name.
Debtor  shall  notify  Lender in advance of any  changes  to name,  address,  or
location of Collateral including the addition of one or more of the foregoing.

     3.4  Title to  Collateral.  Debtor  has good  and  marketable  title to the
Collateral,  free and clear of any liens,  encumbrances  or  security  interests
whatsoever,  other than the  security  interest  granted by this  Agreement  and
existing   liens,   encumbrances   or  security   interests   disclosed  to  and
affirmatively  accepted by Lender in writing.  Lender's security interest in the
Collateral has first  priority,  and Debtor will keep the Collateral free of all
other  liens,  encumbrances  and  security  interests.  Debtor  will  defend the
Collateral  against all claims and  demands of all persons at any time  claiming
any interest in the Collateral. Debtor will immediately mark its records and the
Collateral to clearly indicate the security interest of Lender.

     3.5 Nature of  Collateral.  All of the  Collateral is held by Debtor solely
for business purposes, and none of the Collateral constitutes consumer goods. No
part of the Collateral  consists of equipment used in farming operations or farm
products or accounts or general intangibles arising from or relating to the sale
of farm products by a farmer. The Collateral was acquired in the ordinary course
of business of Debtor.  There are no setoffs,  counterclaims or defenses against
the Collateral.

     3.6 Financing Statements.  No other financing statement covering all or any
part of the  Collateral  is on file in any public  office.  Debtor will  execute
financing  statement(s)  in form  acceptable  to Lender and will pay the cost of
filing  financing  statement(s) in all public offices  wherever filing is deemed
desirable  by  Lender.  A carbon,  photographic  or other  reproduction  of this
Agreement  shall be  sufficient  as a  financing  statement  under the  Delaware
Uniform Commercial Code ("UCC") and may be filed by Lender in any filing office.
This  Agreement  shall be  terminated  only by Lender's  filing of a termination
statement in accordance  with the applicable  provisions of the UCC. Debtor will
do all other things, execute all documents,  and pay all related costs necessary
or  requested  by Lender to  establish,  verify or  continue  the  validity  and
priority of Lender's security interest.

                                       3

<PAGE>

4. COVENANTS. Debtor covenants and agrees as follows:

     4.1 Payment of Taxes.  Debtor  shall pay when due and before any  interest,
collection fees or penalties accrue, all taxes, expenses,  assessments, liens or
other  charges  which may now or  hereafter  be levied or  assessed  against the
Collateral. Debtor shall furnish proof of payment upon request of Lender.

     4.2 Insurance.

     4.2.1 Debtor shall keep the tangible  Collateral insured for the benefit of
Lender  against  fire and other  hazards and risks,  including,  without  limit,
vandalism and malicious mischief, as Lender may require and shall provide public
liability and product liability  insurance and any other insurance as Lender may
reasonably  require from time to time. All insurance  shall be in amounts and in
forms and with companies  satisfactory to Lender. Debtor shall deliver to Lender
the policies  evidencing the required insurance with premiums fully paid for one
year in  advance,  and with loss payee  clauses  making  all  losses  payable to
Lender.  Renewals of the required  insurance  (together with evidence of premium
prepayment  for one (1) year in advance)  shall be  delivered to Lender at least
thirty (30) days before the  expiration of any existing  policies.  All policies
and  renewals  shall  provide  that they may not be canceled or amended  without
giving  Lender  thirty  (30)  days'  prior  written  notice of  cancellation  or
amendment.

     4.3 Maintenance of Collateral.  Debtor will maintain the Collateral in good
condition  and repair,  and will  replace  any  damaged or obsolete  Collateral.
Debtor  shall not use,  or suffer or permit the use of, the  Collateral  for any
unlawful  purpose,  and  shall  use,  operate  and  control  the  Collateral  in
compliance with all applicable law and regulation,  including without limitation
those  governing  protection  of the  environment  and the use and  disposal  of
hazardous substances,  and shall not cause, permit or suffer the presence,  use,
storage, disposal, or release on or in any place where the Collateral is located
any toxic or  hazardous  substance  as  defined  in any  federal  or state  law,
regulation  or rule  relating  to health,  safety or  environmental  protection.
Debtor will  promptly  inform  Lender of any loss or  diminution in value of the
Collateral.  Debtor  shall  make  or  permit  no  modification,   compromise  or
substitution  for the  Collateral  without the prior written  consent of Lender,
provided that in the ordinary course of business Debtor may (1) grant any person
obligated on any of the Collateral any credits, refunds and adjustments to which
they may be lawfully  entitled,  and  (2) repair and replace  Equipment.  Debtor
shall  maintain its place of  incorporation  in Delaware and shall  maintain the
location where it keeps its  Intangible  Collateral at the location shown on the
signature page.

     4.4 Stock and Equity  Covenants.  Because  Lender  believes  that Debtor is
essentially a holding company, Debtor further covenants:

     4.4.1  Debtor  agrees  to  pledge  its   Securities  to  Lender  until  the
Indebtedness is fully paid with Lender to be a secured creditor under applicable
laws of the United States and Ontario;

                                       4

<PAGE>

     4.4.2  Debtor  shall  not sell,  transfer,  redeem,  hypothecate,  deliver,
encumber,   assign,  dispose,  or  abandon  ("Disposition")  its  Securities  or
Collateral without thirty (30) days advance written notice to Lender;

     4.4.3  Debtor  shall  not  distribute  proceeds  from  any  Disposition  of
Securities without the prior written consent of Lender, it being understood that
Debtor  accepts all proceeds as the  Lender's  agent in trust for the Lender and
Debtor will not  commingle  the  proceeds  with its other  Collateral  and shall
instead deliver said proceeds to the Lender upon Debtor's  receipt or thereafter
if an Event of Default has occurred.

     4.4.4 Debtor shall not engage in any financing activity with respect to any
of its subsidiaries or divisions  without the advance written notice and consent
of the Lender.

     4.5 Leased Facilities. If the Collateral is located at a facility leased by
Debtor,  Debtor  will  obtain  from the  lessor a consent to the  granting  of a
security  interest in the  Collateral  and a  disclaimer  of any interest of the
lessor in the Collateral. The consent and disclaimer shall be in form acceptable
to Lender.  Debtor  will pay all rents and  perform  other  obligations  for any
leased facilities.

     4.6 Redelivered  Collateral.  If Lender redelivers any of the Collateral in
Lender's  possession  to Debtor or Debtor's  designee for the purpose of (1) the
ultimate sale or exchange thereof,  (2) presentation,  collection,  renewal,  or
registration of transfer thereof, or (3) loading,  unloading, storing, shipping,
transshipping,   manufacturing,   processing  or  otherwise   dealing  therewith
preliminary  to sale or  exchange,  such  redelivery  shall be in trust  for the
benefit  of Lender  and shall not  constitute  a release  of  Lender's  security
interest   therein  or  in  the  proceeds  or  products  thereof  unless  Lender
specifically  so agrees in  writing.  If Debtor  requests  any such  redelivery,
Debtor will  deliver with such request a duly  executed  financing  statement in
form and substance  satisfactory  to Lender.  Any proceeds of Collateral  coming
into  Debtor's  possession as a result of any such  redelivery  shall be held in
trust for Lender  and  forthwith  delivered  to Lender  for  application  on the
Indebtedness.  Lender  may (if,  in its sole  discretion,  it  elects  to do so)
deliver  the  Collateral  or any  part of the  Collateral  to  Debtor,  and such
delivery  by  Lender  shall  discharge  Lender  from  any and all  liability  or
responsibility for such Collateral.

     4.7  Prohibition  on Transfer or  Modification.  Debtor shall not transfer,
sell, assign,  lease or modify the Collateral or any interest therein,  any part
thereof, or any substantial portion of Debtor's other assets or property without
the  prior  written  consent  of  Lender,  except  for  sales of  Inventory  and
replacements  of  Equipment  and  supplies  in the  ordinary  course of Debtor's
business.

     4.8 Prohibition on Change of Name,  Organization or Location.  Debtor shall
not  conduct  Debtor's  business  under any name  other  than as appears in this
Agreement nor change or reorganize  the type of Debtor's  business  entity,  nor
change the location of any of the Collateral  without the prior written  consent
of Lender.

                                       5

<PAGE>

     4.9 Right of Setoff.  Debtor  grants Lender the right,  exercisable  at any
time, whether or not Debtor is then in default,  to set off or apply against the
Indebtedness  any account or deposit with Lender in which Debtor has an interest
or against any other amounts which may be in the possession of Lender and to the
credit of Debtor. 4.10 Examination of Records and Collateral.  Debtor shall keep
full and  accurate  records of  Debtor's  business,  including,  without  limit,
records  related to the  Collateral,  and such  records  shall be open to audit,
inspection  and  duplication  by Lender at all times.  Lender may enter upon any
property  owned by or in the  possession  of Debtor to examine  and  inspect the
Collateral. Debtor shall promptly provide Lender with any information concerning
the Collateral as Lender may request at any time.

     4.11 Further  Actions.  Promptly  upon the request of Lender,  Debtor shall
execute,  acknowledge  and  deliver  any and  all  further  documents,  security
agreements,  financing statements and assurances, and do or cause to be done all
further  acts as Lender  may  require to confirm  and  protect  the lien of this
Agreement or otherwise to accomplish the purposes of this Agreement.

5. RECEIVABLES. Debtor covenants and agrees as follows:

     5.1  Collection.  Debtor shall  continue to collect and enforce all present
and future payments due to Debtor pursuant to the accounts, leases or any of the
other Collateral (collectively,  the "Receivables") until Lender notifies Debtor
and  the  obligors  under  the  Receivables  of  Lender's  interest  under  this
Agreement,  after  which time  Debtor  shall hold any  proceeds  collected  with
respect to the Receivables in trust for Lender and shall cooperate and assist in
collection and  enforcement of the  Receivables.  Debtor shall not commingle the
proceeds and shall turn the proceeds over to Lender immediately upon receipt.

     5.2 Updates.  Debtor shall,  immediately upon request from Lender,  provide
Lender with an updated  list of the  Receivables,  stating the current  name and
address of each obligor,  the balance due, the amount of any setoffs,  defenses,
contras or  counterclaims,  whether  Debtor's  performance is complete,  and any
other comments  required by Lender.  Each update list shall be Debtor's warranty
that (i) the  Receivables are valid and  enforceable and owing,  subject only to
reported  offsets,  (ii) if  evidenced  by  a  note,  chattel  paper,  or  other
instrument  or  document,  it has been  endorsed  and  delivered  to Lender,  or
(iii) Debtor does not know of any death, dissolution,  liquidation,  insolvency,
bankruptcy, appointment of receiver, or similar action by or against any obligor
of the Receivables.

     5.3 Notice to Obligors. Lender may notify obligors under the Receivables of
the existence of this Agreement,  and Lender may instruct the obligors under the
Receivables to make future  payments to Lender  (whether before or after default
by Debtor).

     5.4 Actions of Lender.  Debtor agrees that Lender shall be entitled, in its
own name (or in the name of Debtor,  or by receiver,  or  otherwise)  but at the
sole expense of Debtor, to collect,  demand,  receive, sue for or compromise any

                                       6

<PAGE>

and all of the Receivables, to give good and sufficient releases, to endorse any
checks,  drafts or other  orders for the  payment of money  payable to Debtor in
payment of the Receivables  and, in Lender's  discretion,  to file any claims or
take any other  action or  proceeding  which Lender  deems  advisable.  Upon the
occurrence of an Event of Default,  to establish a United States Post Office Box
in the name of Debtor but under the exclusive  custody and control of Lender, to
direct  all  obligors  on any  Receivable(s)  or  other  intangible  to make all
payments  due and to become due  thereon to the United  States  Post  Office Box
established by Lender in the name of Debtor or to make said payments directly to
Lender,  to direct the Postmaster of the United States Post Office to forward to
Lender all mail  addressed to Debtor or to hold all mail  addressed to Debtor at
the Post Office until an officer or employee of Lender shall request  possession
of same,  to open  and  dispose  of all  mail,  howsoever  received  by  Lender,
addressed  to Debtor,  and to endorse  any item  howsoever  received  by Lender,
representing any payment on or other proceeds or products of the Collateral.

     5.5 No Duty.  Debtor  acknowledges  and  agrees  that  Lender  shall not be
required  or  obligated  to make any,  demand or to make any  inquiry  as to the
nature or  sufficiency  of any payment  received  by Lender with  respect to the
Receivables  or to present to file any claim or take any other action to collect
or enforce the payment of any amounts with respect to the  Receivables  assigned
to Lender.

6.  REIMBURSEMENT  OF  EXPENSES.  Debtor  shall  be  responsible  for and  shall
reimburse Lender for all costs and expenses, including attorneys' fees, incurred
by Lender in drafting and enforcing  the rights of Lender under this  Agreement.
All  costs and  expenses  shall be  included  in the  Indebtedness  and shall be
immediately due and payable together with interest at the maximum rate in effect
under the Promissory Note and the Loan Documents.  Such costs and expenses shall
include,  without  limitation,  costs or  expenses  incurred  by  Lender  in any
bankruptcy,   reorganization,   insolvency  or  other  similar  proceeding.  Any
reference in this Agreement to attorneys' fees shall mean fees,  charges,  costs
and expenses of both in house and outside counsel and paralegals, whether or not
a suit or  proceeding  is  instituted,  and whether  incurred at the trial court
level, on appeal, in a bankruptcy,  administrative or probate  proceeding,  in a
workout,  in consultation with counsel,  or otherwise.  All costs,  expenses and
fees of any nature for which  Debtor is  obligated  to  reimburse  or  indemnify
Lender are part of the  Indebtedness  secured by this  Agreement and are payable
upon demand,  unless expressly provided otherwise,  with interest at the highest
rate charged by Lender on any of the Indebtedness (but not to exceed the maximum
rate permitted by law).

7.  RIGHTS AND  OBLIGATIONS  OF LENDER.  In the event that  Debtor  fails to pay
taxes,  maintain  insurance or perform any other  obligation  arising under this
Agreement,  Lender  may pay or perform  such  obligation(s)  for the  account of
Debtor and the same shall be added to the  Indebtedness and shall be immediately
due and payable  together with interest at the highest rate charged by Lender on
any of the  Indebtedness  (but not to exceed the maximum rate permitted by law).
Lender  shall not be liable for any loss to the  Collateral  nor shall such loss
reduce the amount of the  Indebtedness.  Lender will use reasonable  care in the
custody and  preservation of any Collateral in Lender's  possession,  but Lender
has no duty to preserve rights against prior parties.

                                       7

<PAGE>

8. INDEMNIFICATION. Debtor shall indemnify, defend and save Lender harmless from
all claims,  liabilities,  obligations,  damages,  fines,  costs,  and expenses,
including  attorneys'  fees,  incurred  by Lender  and causes of action or other
rights  asserted  against  Lender and  relating  to this  Agreement  or Debtor's
obligations  hereunder and/or the Collateral,  its ownership,  use,  collection,
disposition or compliance with applicable law.

9. EVENTS OF DEFAULT AND REMEDIES.

     9.1 Events of Default.  Any of the following  events shall, for purposes of
this Agreement, constitute an "Event of Default":

     9.1.1 Failure by Debtor or any  co-obligor to pay any payment of principal,
interest,  bonus amount or Reserve or any other amount owing on the Indebtedness
when due, whether by maturity, acceleration or otherwise.

     9.1.2 Any failure by Debtor,  any co-obligor or any guarantor of all or any
part of the  Indebtedness  to comply with, or breach by Debtor,  any co-obligor,
any guarantor or any subordinator of any of the terms, provisions, warranties or
covenants of this Agreement or any of the Loan Documents (as defined in the Loan
Agreement) after the lapse of any period such agreements of documents afford for
remedy of the breach.  Notwithstanding  any  provision to the  contrary,  in the
event of a non-monetary or non-financial default, Debtor shall have a reasonable
time but not longer than  thirty  (30) days from the date of Lender's  notice to
cure such  default if such  default is curable,  otherwise  no cure period shall
apply.

     9.1.3   Termination,   cancellation,   or   disclaimer   of   liability  or
enforceability  of any guaranty or  subordination  agreement given in connection
with any of the Indebtedness.

     9.1.4  Institution of remedial  proceedings or other exercise of rights and
remedies by the holder of any security interest or other lien against any of the
Collateral.

     9.1.5 The  insolvency  of Debtor,  any  co-obligor  or any guarantor or the
admission in writing of Debtor's,  any co-obligor's or any guarantor's inability
to pay debts as they mature.

     9.1.6 Any statement,  representation or information made or furnished by or
on behalf of Debtor, any co-obligor,  any guarantor or subordinator to Lender in
connection  with or to induce  Lender to provide any of the  Indebtedness  shall
prove to be false or materially misleading when made or furnished.

     9.1.7  Institution  of  bankruptcy,  reorganization,  insolvency  or  other
similar proceedings by or against Debtor, any co-obligor or any guarantor or the
appointment of a receiver,  custodian or trustee for the Debtor,  any co-obligor
or any guarantor or any substantial portion of its assets.

                                       8

<PAGE>

     9.1.8 Any loss, theft, substantial damage or destruction to the Collateral,
unless insured as required by this Agreement or other document;  or the entry of
any judgment in an amount greater than  Twenty-Five  Thousand and 00/100 Dollars
($25,000.00) against Debtor, any co-obligor,  or any guarantor,  or the issuance
or filing of any judgment,  attachment, levy, garnishment or the commencement of
any related  proceeding  or judicial  process upon or in respect to Debtor,  any
co-obligor  or any guarantor or the  Collateral  unless such action is stayed by
payment or an appropriate court order within 21 days after filing.

     9.1.9 Sale or other disposition by Debtor,  any co-obligor or any guarantor
of any substantial  portion of assets or property,  or equity, or a distribution
to shareholders outside the ordinary course of business, or death,  dissolution,
merger, consolidation, termination of existence, insolvency, business failure or
assignment  for the benefit of creditors of or by Debtor,  any co-obligor or any
guarantor.

     9.1.10 If there is any failure by Debtor,  any  co-obligor or any guarantor
to pay when due any  indebtedness,  or in the  observance or  performance of any
term, covenant or condition in any document evidencing,  securing or relating to
such indebtedness.

     9.1.11  There  is a  substantial  change  in the  existing  or  prospective
financial condition of Debtor, any co-obligor,  any guarantor or the Collateral,
which  Lender in good faith  determines  to be  materially  adverse  that is not
corrected or resolved to the Lender's satisfaction within thirty (30) days after
notice of the change to Debtor.

     9.1.12  Lender in good faith deems  itself  insecure  provided  that Lender
notifies  Debtor of the related  event(s) or  condition(s)  and Debtor  fails to
correct or resolve the same to Lender's  reasonable  satisfaction  within thirty
(30) days afterwards.

     9.2  Remedies.  Upon the  occurrence  of any  Event of  Default  which  has
occurred and is continuing, Lender shall have the right to do the following:

     9.2.1 Declare all or part of the Indebtedness immediately due and payable.

     9.2.2  Institute  legal  proceedings  to  foreclose  the lien and  security
interest  granted  by  this  Agreement,  to  recover  judgment  for  all  of the
Indebtedness  then due and owing, and to collect it out of any of the Collateral
or the proceeds of its sale.

     9.2.3  Institute  legal  proceedings  for the sale,  under the  judgment or
decree of any court of competent jurisdiction, of any or all of the Collateral.

     9.2.4  Personally or by agents,  attorneys,  or  appointment of a receiver,
enter upon any premises where any Collateral is located,  and take possession of
any of it and all related records and/or render any of it unusable;  and without
being responsible for its loss or damage, hold, operate, sell, lease, or dispose
of,  all or any of the  Collateral  at one or  more  public  or  private  sales,
leasings or other dispositions,  at places and times and on terms and conditions

                                       9

<PAGE>

as Lender may deem fit, without any previous demand or advertisement; and except
as provided in this Agreement, and to the extent permitted by law, Debtor waives
all notice of sale, lease or other  disposition,  and  advertisement,  and other
notice or demand,  any right or equity of  redemption,  and any  obligation of a
prospective  purchaser  or lessee to  inquire as to the power and  authority  of
Lender  to sell,  lease or  otherwise  dispose  of the  Collateral  or as to the
application  by  Lender  of the  proceeds  of sale  or  otherwise,  which  would
otherwise be required by, or available to Debtor under, applicable law.

     9.2.5 Take  possession of the Collateral (and any other property then in or
on the Collateral) and all related records,  with or without demand, and with or
without  process of law;  sell and  dispose of the  Collateral  in any amount or
order and to distribute the proceeds according to law. Any statutory requirement
for notice  shall be met if Lender shall send notice to Debtor at least five (5)
days prior to the date of sale,  disposition or other applicable  event.  Debtor
shall  be  liable  for  any  deficiency   remaining  after  disposition  of  the
Collateral.

     9.2.6 Notify all persons  obligated under any of the Collateral to make all
payments to Lender and demand,  collect,  sue for, receive,  receipt for, settle
and  compromise,  extend or  postpone  the time for  payment  of,  forbear  from
enforcing, and otherwise do all things Debtor could do in connection therewith.

     9.2.7  Exercise any one or more of the rights and remedies under the UCC or
at law or equity to enforce the payment of the Indebtedness.

     9.3 Remedies Generally.

     9.3.1 At any sale  pursuant to this  Agreement,  physical  or  constructive
possession of the Collateral is not required and any purchaser may  conclusively
rely on the recitals in any evidence of conveyance and shall have not obligation
to  see  to the  application  of the  purchase  money.  Any  sale  of any of the
Collateral  under this  Agreement  shall be a perpetual bar against  Debtor with
respect to that Collateral.

     9.3.2 Debtor agrees, upon request of Lender, to assemble the Collateral and
all  related  records  and make it  available  to Lender  at any place  which is
reasonably  convenient for Lender. Debtor grants Lender permission to enter upon
any premises owned or occupied by Debtor for the purpose of taking possession of
the Collateral.  Debtor agrees to notify all persons  obligated under any of the
Collateral to make all payments to Lender.

     9.3.3 All remedies  provided for under this Agreement shall be available to
the extent not prohibited by law. Each remedy shall be cumulative and additional
to any  other  remedy of Lender  at law,  in equity or by  statute.  No delay or
omission to exercise  any right or power  accruing  upon any default or Event of
Default  shall  impair  any such  right or power or shall be  construed  to be a
waiver of, or acquiescence in, any such default or Event of Default.

     9.4  Application  of  Proceeds.  Any  proceeds  received by Lender from the
exercise of its remedies shall be applied as follows:

                                       10

<PAGE>

     9.4.1 First, to pay all costs and expenses incidental to disposition of the
Collateral,  including,  without limit,  reasonable  attorneys  fees, any taxes,
assessments,  liens and encumbrances prior to the lien of this Agreement.  9.4.2
Second, to the payment of the Indebtedness in the following order:  (i) Lender's
expenses made to perform Debtor's  obligations,  (ii) late  charges and interest
accrued  and  unpaid,  (iii) any  prepayment  premiums  and any  bonus  amounts,
(iv) unpaid fees and other charges, and (v) the outstanding principal balance.

     9.4.3 Third, any surplus  remaining shall be paid to Debtor or to whosoever
may be lawfully entitled.

10. MISCELLANEOUS.

     10.1 Governing Law. This Agreement shall be construed according to the laws
of the State of Michigan.

     10.2  Successors and Assigns.  Lender shall have the right to assign any of
the Indebtedness and deliver all or any part of the Collateral  without Debtor's
consent.  This  Agreement  shall be binding upon the  successors  and assigns of
Debtor  including,  without  limit,  any  debtor in  possession  or  trustee  in
bankruptcy  for  Debtor,  and the rights  and  privileges  of Lender  under this
Agreement  shall inure to the benefit of its successors and assigns.  This shall
not be deemed a consent by Lender to a  conveyance  by Debtor of all or any part
of the Collateral or of any ownership interest in Debtor.

     10.3 Notices.  Notice from one party to another relating to this Agreement,
if  required,   shall  be  deemed  effective  if  made  in  writing   (including
telecommunications)  and  delivered  to the  recipient's  address or  telecopier
number set forth by any of the following  means:  hand  delivery,  registered or
certified mail, postage prepaid, express mail or other overnight courier service
or telecopy,  telex or other wire  transmission  with  request for  assurance of
receipt in a manner typical with respect to  communications of that type. Notice
made in accordance with these provisions shall be deemed delivered on receipt if
delivered by hand or wire transmission,  on the third business day after mailing
if mailed by  registered  or certified  mail,  or on the next business day after
mailing or deposit with the postal  service or an overnight  courier  service if
delivered  by express  mail or  overnight  courier to the  following  address or
number:

         If to Secured Party:

         Caithness Financial Services Limited
         141 Adelaide Street West, Suite 500
         Toronto, ON
         Canada M5H 3L5
         Attn:    William Smethurst
         Facsimile No.: 416-363-0456

                                       11

<PAGE>

         If to Debtor:

         Loretta Food Group, Inc.
         2405 Lucknow Drive
         Mississauga, ON
         Canada L5S 1H9
         Attn:    Al Burgio
         Facsimile No.: (905) 678-0733


     10.3.1  Entire  Agreement;  Waivers;  Amendments.  This  Agreement  and any
agreement to which it refers state all rights and obligations of the parties and
supersede  all other  agreements  (oral or written) with respect to the security
interests  granted by this  Agreement.  Any  waiver by Lender of any  default or
Event of  Default  shall be in writing  and shall be  limited to the  particular
default waived and shall not be deemed to waive any other default. Any amendment
of this Agreement  shall be in writing and shall require the signature of Debtor
and Lender.

     10.4  Partial  Invalidity.   The  invalidity  or  unenforceability  of  any
provision of this Agreement shall not affect the validity or  enforceability  of
the remaining provisions of this Agreement.

     10.5 Inspections. Any inspection, audit, appraisal or examination by Lender
or its agents of the Collateral or of information or documents pertaining to the
Collateral is for the sole purpose of protecting  Lender's  interests under this
Agreement and is not for the benefit or protection of Debtor or any third party.

     10.6 Joint and Several Liability. In the event that more than one person or
entity executes this  Agreement,  the obligations of each person or entity shall
be joint and several and may be enforced  against any one or more of them in any
order without releasing any of the others.

     10.7  Automatic   Reinstatement.   Notwithstanding  any  prior  revocation,
termination, surrender or discharge of this Agreement, the effectiveness of this
Agreement shall automatically continue or be reinstated,  as the case may be, in
the event that any payment  received or credit given by Lender in respect of the
Indebtedness is returned, disgorged or rescinded as a preference,  impermissible
setoff, fraudulent conveyance,  diversion of trust funds, or otherwise under any
applicable state or federal law,  including,  without limit,  laws pertaining to
bankruptcy or insolvency,  in which case this Agreement  shall be enforceable as
if the returned,  disgorged or rescinded payment or credit had not been received
or given,  whether or not Lender  relied upon this  payment or credit or changed
its  position  as  a  consequence  of  it.  In  the  event  of  continuation  or
reinstatement of this Agreement,  Debtor agrees upon demand by Lender to execute
and deliver to Lender those documents which Lender determines are appropriate to
further  evidence (in the public  records or  otherwise)  this  continuation  or
reinstatement,  although  the failure of Debtor to do so shall not affect in any

                                       12

<PAGE>

way the reinstatement or continuation. If Debtor does not execute and deliver to
Lender  such  documents  upon  demand,  Lender  and each  officer  of  Lender is
irrevocably  appointed (which  appointment is coupled with an interest) the true
and lawful attorney of Debtor (with full power of  substitution)  to execute and
deliver such documents in the name and on behalf of Debtor.


     10.8 WAIVER OF JURY TRIAL.  DEBTOR AND LENDER ACKNOWLEDGE THAT THE RIGHT TO
TRIAL BY JURY IS A  CONSTITUTIONAL  ONE, BUT THAT IT MAY BE WAIVED.  EACH PARTY,
AFTER  CONSULTING  (OR HAVING HAD THE  OPPORTUNITY  TO CONSULT)  WITH COUNSEL OF
THEIR CHOICE,  KNOWINGLY AND VOLUNTARILY,  AND FOR THEIR MUTUAL BENEFIT,  WAIVES
ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION  REGARDING THE PERFORMANCE
OR ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS AGREEMENT OR THE INDEBTEDNESS.

                                       13

<PAGE>


     This  Security  Agreement  is dated and  effective  on the date first above
written.

                                                     DEBTOR:
                                                     LORETTA FOOD GROUP, INC.,
                                                     a Delaware corporation
                                                     By:
                                                       -----------------------
                                                              Al Burgio
                                                     Its:     President

Location of the Collateral and all records:
2405 Lucknow Drive
Mississauga, ON
Canada L5S 1H9


                                       14