<PAGE>   1
                                                                 EXHIBIT 10.87



                FOURTH AMENDMENT TO LOAN AND SECURITY AGREEMENT

         THIS AGREEMENT, made as of 30th day of September, 1995, by and between
PREFERRED EQUITIES CORPORATION, a Nevada Corporation, having an address of 4310
Paradise Road, Las Vegas, Nevada 89109 (hereinafter referred to as
"Preferred"); and

         COLORADO LAND AND GRAZING CORP., a Colorado Corporation, having an
address of 4310 Paradise Road, Las Vegas, Nevada 89109 (hereinafter referred to
as "CLGC")(Preferred and CLGC are hereinafter collectively referred to as the
"Borrower" and any documents required to be executed by (or prepared for) the
Borrower pursuant to this Agreement shall be executed by (or prepared for) each
Borrower); and

         MEGO FINANCIAL CORPORATION, a New York corporation having an address of
4310 Paradise Road, Las Vegas, Nevada 89109 (hereinafter referred to as
"Guarantor"); and

         DORFINCO CORPORATION, a Delaware Corporation, having an address of 40
Westminster Street, P.O. Box 6687, Providence, Rhode Island 02940-6687
(hereinafter referred to as "Lender")

WITNESSETH:

         WHEREAS, On August 9, 1991, Preferred executed in favor of Lender a
note evidencing a revolving line of credit loan (the "Loan") in the maximum
principal sum of Five Million Dollars ($5,000,000.00) which note was amended by
a First Amendment to Promissory Note dated June 30, 1993, which amendment,
inter alia, increased the maximum amount of the Loan to Seven Million Five
Hundred Thousand Dollars ($7,500,000.00) and by a Second Amendment to
Promissory Note dated August 23, 1994 and by a Third Amendment to Promissory
Note of even date herewith("Note Amendment")(Said note, as amended, being
hereinafter referred to as the "Note"); and

         WHEREAS, the above described Note evidences sums advanced or to be
advanced pursuant to a Loan and Security Agreement dated July 31, 1991, which
agreement was amended by a First Amendment dated January 8, 1992, and by Second
Amendment to Loan and Security Agreement dated June 30, 1993 and by a Third
Amendment to Loan and Security Agreement and Assumption Agreement dated August
23, 1994 which amendment inter alia, added CLGC as a Borrower (the Loan and
Security Agreement, as amended, being hereinafter referred to as the "Loan
Agreement"); and

         WHEREAS, Preferred, through CLGC, its wholly owned subsidiary, is
currently marketing residential lots (the "SPR Lots") in a subdivision known as
South Park Ranches, located in Park County, Colorado (the "SPR Subdivision");
and

<PAGE>   2

         WHEREAS, Preferred and CLGC have requested that Lender modify the
terms of the Loan, upon the terms and provisions hereinafter set forth, in
order to extend the Term and the Revolving Credit Period as well as certain
other provisions.

         NOW THEREFORE, in consideration of the foregoing recitals, and in
further consideration of the mutual covenants contained herein, and intending
to be legally bound hereby, the parties hereto mutually agree as follows:

I.       AMENDMENTS

         1.      Notwithstanding any provision contained in Paragraph 1.1(e) of
the Loan Agreement, or elsewhere in the Loan Agreement or in any other Loan
Document, the parties hereto mutually agree that total unrepaid advances
against Eligible Notes Receivable generated from fee simple sales of SPR Lots
shall at no time exceed Five Million Dollars ($5,000,000.00) in the aggregate.

         2.      The parties hereto mutually agree that Paragraph 1.1(u) of the
Loan Agreement is hereby deleted in its entirety, and in lieu thereof the
following provision is inserted:

                 "1.1 (u) FINAL MATURITY DATE.  June 30, 2000."

         3.      The parties hereto mutually agree that Paragraph 1.1 (ss) of
the Loan Agreement is hereby deleted in its entirety, and in lieu thereof, the
following provision is inserted:

                 "1.1 (ss) REVOLVING CREDIT PERIOD. The period from the Closing
Date to September 30, 1996."

         4.      The parties hereto mutually agree that Paragraph 1.1 (vv) of
the Loan Agreement is hereby deleted in its entirety, and in lieu thereof the
following provision is inserted:

                 "1.1 (vv) TERM.  The period commencing on the Closing Date and
                 continuing until June 30, 2000.  The Term includes both the
                 Revolving Credit Period and the period during which no
                 Advances are permitted."

         5.      The parties hereto mutually agree that Paragraph 2.2 of the
Loan Agreement is hereby deleted in its entirety, and in lieu thereof the
following provision is inserted:

                 "2.2  NON-REVOLVING PERIOD.  Notwithstanding anything
                 contained herein to the contrary, no Advances of the Loan will
                 be made after September 30, 1996."





                                       2
<PAGE>   3



         6.      Notwithstanding Section 2.5 of the Loan Agreement, the parties
hereto mutually agree that Borrower shall be allowed to prepay the Loan by an
amount not to exceed Five Million Dollars ($5,000,000.00).  Any such prepayment
must be made not later than October 31, 1995 and must be accompanied by a
pre-payment fee equal to one percent (1.0%) of the Loan amount prepaid.


II.      REAFFIRMATIONS

         1.      Nothing contained herein shall be construed in any manner so
as to affect the validity or prior time lien of any security interest held by
Lender, its successors and assigns, in any Collateral described in the Loan
Agreement.  Borrower acknowledges and agrees that the Note, Loan Agreement,
Custodial Agreement, Lockbox Agreement, Assignment, Environmental
Indemnification Agreement and all other Loan Documents (as modified herein)
shall remain in full force and effect, unimpaired by this Agreement and that
they are valid, binding and enforceable documents, duly executed and delivered
by Borrower, and that Borrower has no offsets or defenses to the enforcement of
the terms and provisions contained therein.

         2.      Borrower, and as applicable, the Guarantor, hereby reaffirm,
restate and incorporate by this reference all of their respective
representations, warranties and covenants as updated hereunder made in the Loan
Agreement (including as amended hereby), as if the same were made as of this
date and with reference to the Loan Agreement as amended hereby.  In addition,
Borrower (and, as applicable, the Guarantor) represents and warrants as
follows:

                 a.  This Fourth Amendment (and the Note Amendment) has been
duly authorized by Borrower and is the legal, valid and binding obligation of
Borrower, enforceable against it in accordance with its terms subject to
applicable bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium or other similar laws affecting creditor's rights and remedies
generally and to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law); and, as
applicable with respect to the Guarantor, this Fourth Amendment is the legal,
valid and binding obligation of the Guarantor, enforceable against it in
accordance with its terms subject to applicable bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium or other similar laws affecting
creditors' rights and remedies generally and to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).

                 b.   The execution, delivery and performance of this Fourth
Amendment and the documents, instruments and materials to be delivered in
connection herewith and the transactions contemplated hereby do not and will
not result in any breach of, or constitute a default under, or result in the
creation of any lien, charge or encumbrance upon the Collateral or the
Subdivisions pursuant to, any provision of law, or any





                                       3
<PAGE>   4



indenture, agreement or instrument to which Borrower or the Guarantor is a
party or by which the Borrower or the Guarantor may be bound or affected except
for liens in favor of Lender and the Deeds of Trust.

                 c.  There are no Defaults or Events of Default pursuant to the
Loan Documents; Lender has fully performed its obligations under the Loan
Documents which Lender is required to perform as of the date hereof, and
neither Borrower nor the Guarantor has any defense, set-offs, claims,
counterclaims or recoupments against Lender or with respect to the Loan.

         3.      Borrower and the Guarantor hereby reaffirm their respective
obligations, agreements and undertakings as set forth in the Loan Documents,
and acknowledge that the Indebtedness, or with respect to the Guarantor, the
guaranteed Obligations defined in the Guaranty, are the valid, legally binding
and enforceable obligations of Borrower, and the Guarantor, respectively.

III.     CLOSING CONDITIONS AND ADDITIONAL TERMS

         1.      The obligation of Lender to enter into this Fourth Amendment
and, in addition to all of the other conditions precedent set forth in the Loan
Agreement or the other Loan Documents, to fund any further Advance pursuant to
the terms hereof, shall be subject to the satisfaction of each of the following
conditions precedent by no later than the Expiration Date defined in the Fourth
Amendment Commitment Letter.

                 a.       Simultaneously with the execution hereof, Borrower
shall pay to Lender any unpaid portion of the commitment fee referred to in
Paragraph IV of the Commitment Letter from Lender to Preferred issued July 28,
1995 and accepted by Preferred on July 31, 1995 ("Fourth Amendment Commitment
Letter").

                 b.       Borrower shall pay Lender Two Thousand Five Hundred
Dollars ($2,500) toward attorney's fees and costs incurred by Lender in
connection with the preparation of this Fourth Amendment and related
documentation in accordance with the provisions of Paragraph VI of the Fourth
Amendment Commitment Letter.

                 c.  Lender shall have received from Borrower the original
executed Note Amendment, and a fully executed original or executed counterpart
originals of this Fourth Amendment.

                 d.  Lender shall have received from Lionel Sawyer & Collins,
counsel for the Borrower and Mego Financial Corp., a New York corporation
("Guarantor"), or other counsel reasonably acceptable to Lender, closing
opinions in form and substance reasonably acceptable to Lender, dated as of the
Fourth Amendment Closing Date.

                 e.  Except for information contained in certificates provided
pursuant to Article III(1)(h) hereof, the representations and warranties
contained in the Loan





                                       4
<PAGE>   5



Agreement and in this Fourth Amendment, and in the certifications and closing
documents delivered in connection herewith, shall be true and correct in all
material respects, and all covenants and agreements to have been complied with
performed by Borrower (or Guarantor), shall have been fully complied with and
performed to the satisfaction of Lender.

                 f.  Neither Borrower nor Guarantor shall have taken any action
or permitted any condition to exist which would have been prohibited by any
provision of the Fourth Amendment Commitment Letter or the Loan Documents.

                 g.  No Default or Event of Default shall exist immediately
prior to the closing hereof, or after giving effect to such closing, or
immediately after the making of any Advance requested in connection with such
closing.

                 h.  Lender shall have received a certificate or certificates
in form and substance satisfactory to it, dated as of the Fourth Amendment
closing date and signed by the president or other authorized officer of the
Borrower, certifying that the conditions specified in this Fourth Amendment
have been fulfilled, and "bringing down" the representations and warranties
contained in the Loan Agreement.

                 i.  Borrower shall deliver to Lender, and Lender shall have
approved, by no later than the Fourth Amendment closing date:

                          i.  A certificate of current good standing for the
         Borrower, together with copies of any amendments to the certificate of
         incorporation or bylaws of the Borrower, certified to be true, correct
         and complete by the Borrower, its secretary or assistant secretary, or
         the Nevada or Colorado Secretary of State, as applicable;

                          ii.  Evidence satisfactory to Lender that all taxes
         and assessments, including without limitation, those specified in
         Section 4.1 (q) of the Loan Agreement, owed by or for which Borrower
         is responsible for collection have been paid or will be paid prior to
         delinquency;

                          iii.  A certificate of secretary or assistant
         secretary of Borrower certifying the adoption by the Board of
         Directors thereof of a resolution authorizing specified officers of
         Borrower to enter and execute this Fourth Amendment, the Note
         Amendment and all other documents, certificates and instruments to be
         executed and delivered in connection with the Fourth Amendment
         closing, and to consummate the transactions contemplated hereunder;

                          iv.  A certificate of the secretary or assistant
         secretary of the Borrower certifying the incumbency of, and verifying
         the authenticity of the signatures of, the officers of Borrower
         authorized to sign this Fourth Amendment, the Note Amendment and the
         other documents, instruments and materials to be executed and
         delivered in connection herewith;





                                       5
<PAGE>   6



                          v.  A certificate of the secretary or assistant
         secretary of Guarantor certifying the adoption by the Board of
         Directors thereof of a resolution authorizing specified officers of
         the Guarantor to enter and execute this Fourth Amendment and all other
         documents, certificates and instruments to be executed and delivered
         in connection with the Fourth Amendment closing, and to consummate the
         transactions contemplated hereunder;

                          vi.  A certificate of the secretary or assistant
         secretary of the Guarantor certifying the incumbency of, and verifying
         the authenticity of signatures of, the officers of the Guarantor
         authorized to sign this Fourth Amendment and the other documents,
         instruments and materials to be executed and delivered in connection
         herewith;

                          vii.  To the extent any of the same have not
         previously been delivered to Lender, true, correct and complete copies
         of any amendments since the Closing Date, to any of  the Lot Sale
         Documents (as defined in Section 4.1 [o] of the Loan Agreement),
         together with such copies of any Lot Sale Documents, or required
         governmental permits or licenses obtained, subsequent to the Closing
         Date and not previously delivered to Lender; and

                          viii.  Such updated litigation and UCC searches as
         Lender may require.

                 j.  All actions taken in connection with the execution or
delivery of this Fourth Amendment, all documents, certificates, instruments and
materials relating hereto, shall be reasonably satisfactory to Lender and its
counsel.  Lender and its counsel shall have received copies of such documents
and papers as Lender or such counsel may reasonably request in connection
herewith all in form and substance satisfactory to Lender and its counsel.

                 k.  Borrower shall have paid all fees and expenses required to
be paid prior to or at the closing pursuant to this Fourth Amendment.

IV.      GUARANTOR'S OBLIGATIONS

         1.      The Guarantor:

                 a.  has reviewed the Fourth Amendment Commitment Letter and
this Fourth Amendment with counsel of it's choice, and accepts and consents to
the terms of this Fourth Amendment and the transactions provided for herein;

                 b.  acknowledges and agrees that it receives material benefit
and valuable consideration as a result of the transactions provided for herein
or contemplated hereunder;





                                       6
<PAGE>   7



                 c.  ratifies and reaffirms the Guaranty, and all of the terms
provisions, agreements, conditions and undertakings contained in the Guaranty
or any of the Loan Documents (as applicable to the Guarantor), all of which
remain unmodified except as modified herein and in full force and effect;

                 d.  acknowledges and confirms its continuing obligations under
the Guaranty and agrees to be bound by the terms thereof, and that it has been
since July 31, 1991 and remains liable with respect to the guaranteed
Obligations as defined and provided in the Guaranty;

                 e.  acknowledges and agrees that the guaranteed Obligations
encompass and apply to all Advances, including Advances from and after the
Fourth Amendment closing date, and to all Obligations, including Obligations
arising pursuant to this Fourth Amendment;

                 f.  is fully aware of the financial and other conditions of
the Borrower and the SPR Subdivision, and is executing and delivering this
Fourth Amendment based solely upon its own independent investigation and not
upon any representation or statement of Lender;

                 g.  except for information contained in certificates provided
pursuant to IV(1)(i) hereof reaffirms, restates and incorporates by this
reference all of the representations, warranties and covenants made in the
Guaranty as if the same were made as of this date;

                 h. acknowledges that its agreements, consents and
acknowledgments contained herein, and the provisions of the Guaranty (which are
reaffirmed by Guarantor), are a material inducement to Lender to enter into
this Fourth Amendment, and that, but for the Guaranty, and the Guarantor's
agreements as set forth herein, Lender would decline to enter into this Fourth
Amendment; and

                 i.  shall deliver to Lender a certificate or certificates in
form and substance satisfactory to it, dated as of the Fourth Amendment Closing
Date and signed by the president or other authorized officer of the Guarantor,
certifying that the conditions specified in this Fourth Amendment have been
fulfilled, and "bringing down" the representations and warranties contained in
the Guaranty.


V.       MISCELLANEOUS

                 a.  This Fourth Amendment is entered into for the benefit of
the parties hereto, and is binding on the respective heirs, successors or
assigns; provided that Borrower may not transfer or assign any of its rights or
obligations under this Fourth Amendment without the prior written consent of
Lender.  Guarantor is a party to this





                                       7
<PAGE>   8



Fourth Amendment solely for the purposes of affirming its obligations in
accordance with Article IV hereof.

                 b.  This Fourth Amendment may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.  This Fourth Amendment shall become
effective upon Lender's receipt of one or more counterparts hereof timely
executed by Borrower, the Guarantor and Lender.  This Fourth Amendment may not
be amended or modified, and no term or provision hereof may be waived, except
by written instrument signed by the parties hereto.

                 c.  Section headings have been inserted in this Fourth
Amendment as a matter of convenience of reference only; such headings are not
part of this Fourth Amendment and shall not be used in the interpretation of
this Fourth Amendment.

                 d.  TO THE FULLEST EXTENT NOT PROHIBITED BY APPLICABLE LAW
WHICH CANNOT BE WAIVED, EACH OF BORROWER, THE GUARANTOR AND LENDER HEREBY
KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND IRREVOCABLY WAIVE ANY AND ALL RIGHT
TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND OR CLARIFY
ANY RIGHT, POWER, REMEDY OR DEFENSE ARISING OUT OF OR RELATED TO THIS FOURTH
AMENDMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREIN OR
THEREIN, WHETHER SOUNDING IN TORT OR CONTRACT OF OTHERWISE, OR WITH RESPECT TO
ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR
WRITTEN) OR ACTIONS OF ANY PARTY; AND EACH AGREES THAT ANY SUCH ACTION OR
PROCEEDING SHALL BE TRIED BEFORE A JUDGE AND NOT BEFORE A JURY.  EACH OF
BORROWER, THE GUARANTOR AND LENDER FURTHER WAIVES ANY RIGHT TO SEEK TO
CONSOLIDATE ANY SUCH LITIGATION IN WHICH A JURY TRIAL HAS BEEN WAIVED WITH ANY
OTHER LITIGATION IN WHICH A JURY TRIAL CANNOT OR HAS NOT BEEN WAIVED UNLESS
SUCH FAILURE TO CONSOLIDATE WOULD RESULT IN INABILITY TO ENFORCE A CLAIM.
FURTHER, BORROWER AND THE GUARANTOR HEREBY CERTIFY THAT NO REPRESENTATIVE OR
AGENT OF LENDER, NOR LENDER'S COUNSEL, HAS REPRESENTED EXPRESSLY OR OTHERWISE,
THAT LENDER WOULD NOT, IN THE EVENT OF SUCH LITIGATION, SEEK TO ENFORCE THIS
WAIVER OF RIGHT TO JURY TRIAL PROVISION.  BORROWER AND THE GUARANTOR
ACKNOWLEDGE THAT THE PROVISIONS OF THIS SECTION ARE A MATERIAL INDUCEMENT TO
LENDER'S ACCEPTANCE OF THIS FOURTH AMENDMENT AND THE OTHER LOAN DOCUMENTS.

                 e.  This Agreement and all other Loan Documents shall be
governed by the laws of the State of Nevada in all respects, including matters
of construction, performance and enforcement, except to the extent that the
procedural laws of the State of





                                       8
<PAGE>   9



Colorado govern the enforcement of any remedy against Collateral or property
located in the State of Colorado, and excluding principles governing conflicts
of laws.

                 f.  Capitalized terms used herein which are not otherwise
defined shall have the meaning ascribed in the Note and/or the Loan Agreement.

                 g.  Whenever possible, the terms of this Agreement and the
terms of all prior amendments shall be read together, but to the extent of any
irreconcilable conflict, the terms of this Fourth Amendment shall govern.

         IN WITNESS WHEREOF, and intending to be legally bound hereby, the
parties hereto have set their hands and seals the day and year first above
written.


ATTEST:                                    BORROWER:
                                           PREFERRED EQUITIES CORPORATION

_____________________________              By:_________________________________

                                           COLORADO LAND AND GRAZING
                                           CORP.

_____________________________              By:_________________________________

                                           GUARANTOR:
                                           MEGO FINANCIAL CORP.


_____________________________              By:_________________________________

                                           LENDER:
                                           DORFINCO CORPORATION

_____________________________              By:_________________________________


The address of the within named Lender is:
40 Westminster Street
P.O. Box 6687
Providence, Rhode Island 02940-6687


_____________________________    
on behalf of Lender





                                       9
<PAGE>   10


                            CORPORATE ACKNOWLEDGMENT
                            ------------------------


STATE OF ____________:
COUNTY OF __________:

         ON THIS, the ___ day of ___________, 1995 before me, a Notary Public
in and for the State and County aforesaid, the undersigned officer, personally
appeared _________________, who acknowledged himself to be the
_____________________ of PREFERRED EQUITIES CORPORATION, being authorized to do
so, executed the foregoing instrument for the purposes therein contained by
signing the name of the corporation by himself/herself as such officer.

         IN WITNESS WHEREOF, I hereunto set my hand and official seal.

                                             ___________________________________
                                             Notary Public

My commission expires:



                            CORPORATE ACKNOWLEDGMENT
                            ------------------------

STATE OF ____________:
COUNTY OF __________:

         ON THIS, the ___ day of ___________, 1995 before me, a Notary Public
in and for the State and County aforesaid, the undersigned officer, personally
appeared _________________, who acknowledged himself to be the
_____________________ of COLORADO LAND AND GRAZING CORP., being authorized to
do so, executed the foregoing instrument for the purposes therein contained by
signing the name of the corporation by himself/herself as such officer.

         IN WITNESS WHEREOF, I hereunto set my hand and official seal.

                                             ___________________________________
                                             Notary Public

My commission expires:





                                       10
<PAGE>   11


                            CORPORATE ACKNOWLEDGMENT
                            ------------------------

STATE OF ____________:
COUNTY OF __________:

         ON THIS, the ___ day of ___________, 1995 before me, a Notary Public
in and for the State and County aforesaid, the undersigned officer, personally
appeared _________________, who acknowledged himself to be the
_____________________ of MEGO FINANCIAL CORPORATION, being authorized to do so,
executed the foregoing instrument for the purposes therein contained by signing
the name of the corporation by himself/herself as such officer.

         IN WITNESS WHEREOF, I hereunto set my hand and official seal.

                                             ___________________________________
                                             Notary Public

My commission expires:


                            CORPORATE ACKNOWLEDGMENT
                            ------------------------

STATE OF ____________:
COUNTY OF __________:

         ON THIS, the ___ day of ___________, 1995 before me, a Notary Public
in and for the State and County aforesaid, the undersigned officer, personally
appeared _________________, who acknowledged himself to be the
_____________________ of DORFINCO CORPORATION, being authorized to do so,
executed the foregoing instrument for the purposes therein contained by signing
the name of the corporation by himself/herself as such officer.

         IN WITNESS WHEREOF, I hereunto set my hand and official seal.

                                             ___________________________________
                                             Notary Public

My commission expires:




PG001





                                       11
<PAGE>   12
                       THIRD AMENDMENT TO PROMISSORY NOTE
                       ----------------------------------

         THIS THIRD AMENDMENT TO PROMISSORY NOTE, made as September 30, 1995,
by and between PREFERRED EQUITIES CORPORATION, a Nevada Corporation, having an
address of 4310 Paradise Road, Las Vegas, Nevada 89109 (hereinafter referred to
as "Preferred"), and

COLORADO LAND AND GRAZING CORP., a Colorado Corporation, having an address of
4310 Paradise Road, Las Vegas, Nevada 89109 (hereinafter referred to as
"CLGC"), and

DORFINCO CORPORATION, a Delaware Corporation, having an address of 40
Westminster Street, P.O. Box 6687, Providence, Rhode Island 02940-
6687(hereinafter referred to as "Lender").

WITNESSETH:

         WHEREAS, On August 9, 1991, Preferred executed in favor of Lender a
note evidencing a revolving line of credit loan (the "Loan") in the maximum
principal sum of Five Million Dollars ($5,000,000.00) which note was amended by
a First Amendment to Promissory Note dated June 30, 1993, which amendment,
inter alia, increased the maximum amount of the Loan to Seven Million Five
Hundred Thousand Dollars ($7,500,000.00) which note was further amended by a
Second Amendment to Promissory Note dated August 23, 1994 (Said note, as
amended, being hereinafter referred to as the "Note"); and

         WHEREAS, the above described Note evidences sums advanced or to be
advanced pursuant to a Loan and Security Agreement dated July 31, 1991, which
Agreement was amended by a First Amendment dated January 8, 1992, and by Second
Amendment to Loan and Security Agreement dated June 30, 1993, and by a Third
Amendment to Loan and Security Agreement and Assumption Agreement (the "Third
Amendment") dated August 23, 1994, which amendment, inter alia, added CLGC as a
Borrower and by a Fourth Amendment to Loan and Security Agreement of even date
herewith (the "Fourth Amendment") (the Loan and Security Agreement, as amended,
being hereinafter referred to as the "Loan Agreement"); and

         WHEREAS, Preferred and CLGC have requested that Lender modify the
terms of the Loan, upon the terms and provisions hereinafter set forth, in
order to extend the Term and the Revolving Credit Period as well as other
certain provisions; and

         NOW THEREFORE, in consideration of the foregoing recitals, and in
further consideration of the mutual covenants contained herein, and intending
to be legally bound hereby, the parties hereto mutually agree as follows:





<PAGE>   13



         1.  The foregoing recitals are hereby incorporated herein by reference
             thereto.

         2.  The parties hereto mutually agree that Paragraph 3(a) of the Note
is hereby deleted in its entirety, and in lieu thereof the following provision
is inserted:

                 "(a)  Monthly Interest Payments.  Commencing on September 1,
                 1991 and continuing on the first (1st) day of each and every
                 month thereafter through and including June 1, 2000, all
                 interest accrued at the Basic Interest Rate shall be due and
                 payable monthly in arrears."

         3.  The parties hereto mutually agree that paragraph 3(c) of the Note
is hereby deleted in its entirety, and in lieu thereof the following provision
is inserted:

                 "(c)  Repayment on Maturity.  On June 30, 2000, (THE "FINAL
                 MATURITY DATE"), or on such earlier date as the Note becomes
                 due and payable, whether by acceleration or otherwise, the
                 entire outstanding principal balance hereof, together with
                 accrued but unpaid interest thereon and all other sums owing
                 to Holder hereunder or under the Loan Documents, shall be due
                 and payable in full."

         4.  Notwithstanding Section 8(a) of the Note the parties may prepay an
amount up to Five Million Dollars ($5,000,000.00) accompanied by a prepayment
premium equal to 1% of the amount prepaid in accordance with the provisions of
the Loan Agreement.

         5.  Nothing contained herein shall be construed in any manner so as to
affect the validity or prior time lien of any security interest held by Lender,
its successors and assigns, in any Collateral described in the Loan Agreement.
Borrower acknowledges and agrees that the Note is a valid, binding and
enforceable document, duly executed and delivered by Borrower, and that
Borrower has no offsets or defenses to the enforcement of the terms and
provisions contained therein.

         6.  Simultaneously with the execution hereof, Lender shall make a
notation on the original Note indicating the existence of this Third Amendment.

         7.  The execution of this Third Amendment shall serve as additional
evidence of the obligation of  Borrower (as that term was modified by the Third
Amendment to include CLGC) to repay the sum of Seven Million Five Hundred
Thousand Dollars ($7,500,000.00) to Lender in accordance with the terms,
covenants, provisions and conditions contained in the Note, as modified herein,
which terms, covenants, provisions and conditions are incorporated herein by
reference thereto.

         8.  Except as specifically set forth herein, all terms and provisions
set forth in the Note shall remain in full force and effect, unimpaired by this
Third Amendment.





                                       2
<PAGE>   14




         9.  This Third Amendment shall be governed by the laws of the State of
Nevada in all respects, including matters of construction, performance and
enforcement, excluding principles governing conflicts of laws.

         10.  Capitalized terms used herein which are not otherwise defined
shall have the meaning ascribed in the Note and/or the Loan Agreement.

         11.  Wherever possible, the terms of this Agreement and the terms of
all prior amendments shall be read together, but to the extent of any
irreconcilable conflict, the terms of the Agreement shall govern.

         IN WITNESS WHEREOF, and intending to be legally bound hereby, the
parties hereto have set their hands and seals the day and year first above
written.




ATTEST:                                    BORROWER:

                                           PREFERRED EQUITIES CORPORATION

                                           By:
----------------------------------              --------------------------------
Title:                                     Title:
       ---------------------------                 -----------------------------

                                           COLORADO LAND AND GRAZING CORP.


                                           By:
----------------------------------              --------------------------------
Title:                                     Title:
       ---------------------------                 -----------------------------

                                           DORFINCO CORPORATION
                                           By:
----------------------------------              --------------------------------
                                           Title:
                                                  ------------------------------


pg0003





                                       3
<PAGE>   15



                            CORPORATE ACKNOWLEDGMENT


STATE OF _________________________        )
                                          )    SS:
COUNTY OF        _________________        )


         ON THIS, the ____________ day of  _________________, 1995 before me, a
Notary Public in and for the Sate and county aforesaid, the undersigned
officer, personally appeared ___________________, who acknowledged himself to
be the _______________________________________, of PREFERRED EQUITIES
CORPORATION, being authorized to do so, executed the foregoing instrument for
the purposes therein contained by signing the name of the corporation by
himself/herself as such officer.

         IN WITNESS WHEREOF, I hereunto set my hand and official seal.

                                           ____________________________________
                                           Notary Public

MY COMMISSION EXPIRES:











                                       4
<PAGE>   16




                            CORPORATE ACKNOWLEDGMENT


STATE OF _________________________        )
                                          )    SS:
COUNTY OF        _________________        )


         ON THIS, the ____________ day of  _________________, 1995 before me, a
Notary Public in and for the Sate and county aforesaid, the undersigned
officer, personally appeared ___________________, who acknowledged himself to
be the _______________________________________, of COLORADO LAND AND GRAZING
CORP., being authorized to do so, executed the foregoing instrument for the
purposes therein contained by signing the name of the corporation by
himself/herself as such officer.

         IN WITNESS WHEREOF, I hereunto set my hand and official seal.

                                               ________________________________
                                                Notary Public


MY COMMISSION EXPIRES:









                                       5
<PAGE>   17




                            CORPORATE ACKNOWLEDGMENT


STATE OF _________________________        )
                                          )    SS:
COUNTY OF        _________________        )


         ON THIS, the ____________ day of  _________________, 1995 before me, a
Notary Public in and for the Sate and county aforesaid, the undersigned
officer, personally appeared ___________________, who acknowledged himself to
be the _______________________________________, of DORFINCO CORPORATION, being
authorized to do so, executed the foregoing instrument for the purposes therein
contained by signing the name of the corporation by himself/herself as such
officer.

         IN WITNESS WHEREOF, I hereunto set my hand and official seal.

                                              _________________________________
                                              Notary Public

MY COMMISSION EXPIRES:










pg0003







                                       6