EXHIBIT 10.87


                      CONSTRUCTION LOAN SECURITY AGREEMENT

                                 by and between

                VILLAGE FARMS INTERNATIONAL FINANCE ASSOCIATION,

                                    as Debtor

                                       and

                                  COBANK, ACB,

                      as Agent for the Construction Lenders




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                                TABLE OF CONTENTS



1. Definitions ...............................................................1

2. Collateral/Grant of Security Interest .....................................4

    2.1 Grant of First Priority Interest .....................................4

    2.2 Grant of Second Priority Security Interest ...........................5

    2.3 Grant of First Priority Security Interest ............................6

3. Secured Obligations .......................................................6

4. Representations and Warranties ............................................6

    4.1 Organization; Power and Authority, etc ...............................6

    4.2 Due Authorization; Power .............................................7

    4.3 Consents; Approvals ..................................................7

    4.4 Title to Collateral ..................................................7

    4.5 Underlying Construction Loans ........................................7

    4.6 Principal Office; Collateral; Books and Records ......................8

5. Covenants of Debtor .......................................................8

    5.1 Title to Collateral ..................................................8

    5.2 Location of Debtor, Collateral and Books and Records .................8

    5.3 Books and Records ....................................................8

    5.4 Inspection of Collateral .............................................8

    5.5 Transfers, Dispositions and Encumbrances .............................9

    5.6 Maintenance and Repair; Taxes; Insurance .............................9

    5.7 Compliance with Laws .................................................9

    5.8 Change in Structure or Name ..........................................9


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    5.9 Underlying Construction Loan Documents ...............................9

    5.10 Possession of Collateral; Further Assurances .......................10

6. Events of Default ........................................................10

7. Rights Upon Default ......................................................10

    7.1 General .............................................................10

    7.2 Right of Secured Party to Take Possession and Dispose
        of Collateral .......................................................10

    7.3 Notice of Disposition of Collateral .................................11

    7.4 Right of Secured Party to Use and Operate Collateral ................11

    7.5 Collection of Accounts ..............................................12

    7.6 Rights of Secured Party With Respect to the Securities Collateral ...13

    7.7 Collection of Underlying Construction Loan Notes ....................14

8. General Provisions .......................................................15

    8.1 Appointment and Rights of Agent .....................................15

    8.2 Amendment, Modification, and Waiver .................................15

    8.3 Costs and Attorneys'Fees ............................................15

    8.4 Revival of Obligations ..............................................16

    8.5 Performance by Secured Party ........................................16

    8.6 Power of Attorney ...................................................16

    8.7 Protection of Collateral ............................................17

    8.8 Additional Rights of Secured Party ..................................17

    8.9 Successors and Assigns ..............................................17

    8.10 Advances ...........................................................17

    8.11 Severability .......................................................17

    8.12 Governing Law ......................................................18


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    8.13 Notices ............................................................18

    8.14 Financing Statement ................................................18

    8.15 Conflict with Construction Loan Agreement ..........................18



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                                    EXHIBITS


Exhibit 4.6       Location of Principal Office and Collateral



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                      CONSTRUCTION LOAN SECURITY AGREEMENT


     THIS CONSTRUCTION LOAN SECURITY AGREEMENT ("Security Agreement") is made as
of the  24th day of June,  1997,  by and  between  VILLAGE  FARMS  INTERNATIONAL
FINANCE  ASSOCIATION,  a Delaware  corporation  ("Debtor") whose address is 1811
Sardis Road North,  Suite 207,  Charlotte,  North Carolina 28270 and COBANK, ACB
("CoBank"),  as Agent  on  behalf  of and for the  benefit  of the  Construction
Lenders (as hereinafter defined),  whose address is 245 N. Waco Street, Wichita,
Kansas  67202  (CoBank  and  all  Successor  Agents  appointed  pursuant  to the
Construction Loan Agreement are referred to herein as "Secured Party").

                                 R E C I T A L S

     A.  The   Construction   Lenders  have  entered  into  a  Credit  Agreement
(Construction  Loan  Funding) of even date herewith with Debtor (as amended from
time  to  time,  the  "Construction  Loan  Agreement")  pursuant  to  which  the
Construction  Lenders  have  agreed (i) to loan  funds to Debtor  ("Construction
Loan"),  under the  terms and  conditions  set  forth in the  Construction  Loan
Agreement, to be used by Debtor only to make loans to third parties ("Underlying
Construction  Loan  Borrowers")  for the purpose of  providing  financing  for a
portion of the costs of the  construction  (including  costs of  acquisition  of
land) by the  Underlying  Construction  Loan  Borrowers  of  facilities  for the
planting,  growing and  harvesting  of  vegetables  and/or  fruits  ("Greenhouse
Facilities"),  and (ii) to issue letters of credit for the benefit of Underlying
Construction Loan Borrowers, up to an aggregate for (i) and (ii) of $30,000,000.

     B. The provisions of the  Construction  Loan Agreement  require that Debtor
execute certain  documents,  including this Security  Agreement,  whereby Debtor
shall  grant  a lien  and  security  interest  to  Secured  Party  in all of its
property, both tangible and intangible, whether now owned or hereafter acquired,
as security for the performance of its obligations  under the Construction  Loan
Agreement and the other Construction Loan Documents (as defined below).

                               A G R E E M E N T S

     In consideration  of the mutual  covenants and agreements  herein contained
and other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, Debtor and Secured Party agree as follows:

     1. Definitions.  Capitalized terms used, but not defined, herein shall have
the meaning given to such terms in the Construction  Loan Agreement,  if defined
therein. In addition, unless otherwise defined herein, each term used herein and
defined in the  Uniform  Commercial  Code as  enacted  in the State of  Colorado
("UCC")  shall have the  meaning  given to such term in the UCC. As used in this
Security Agreement, the following terms shall have the


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meanings set forth below:

     "Collateral"  means the First  Priority  Collateral,  the  Second  Priority
Collateral and the Shared Collateral.

     "Construction   Agent"  means  CoBank  in  its  role  as  Agent  under  the
Construction Loan Agreement and each Successor Agent.

     "Construction  Lenders"  means  CoBank,  in its role as a lender  under the
Construction Loan Agreement,  and any other entity that purchases, now or in the
future, a Syndication Interest in the Construction Loan.

     "Construction  Loan Documents" means the Construction  Loan Agreement,  any
and all  promissory  notes now or  hereafter  executed by Debtor  payable to the
Construction  Lenders in the aggregate maximum principal sum of  $30,000,000.00,
this Security  Agreement  and any and all other  present and future  agreements,
documents  and/or  instruments  evidencing,  documenting,  securing or otherwise
relating  to the  Construction  Loan,  all as the same may from  time to time be
amended, modified, extended, renewed or restated.

     "Hedge Agreement" means the secured interest rate hedging agreement of even
date herewith executed by and between Debtor and CoBank.

     "Intercreditor  Agreement" means the  Intercreditor  Agreement of even date
herewith by and between the Construction  Lenders, the Term Lenders, the Line of
Credit Lenders, the Construction Agent, the Term Agent, the Line of Credit Agent
and Debtor.

     "Line of Credit  Agent" means CoBank in its role as Agent under the Line of
Credit  Agreement  and each  Successor  Agent (as  defined in the Line of Credit
Agreement).

     "Line of Credit  Agreement"  means  the  Credit  Agreement  (Line of Credit
Facility) of even date  herewith by and between  CoBank for its own benefit as a
lender  and as Agent for the  benefit  of the  present  and  future  syndication
parties as named or defined  therein,  and  Debtor,  wherein  the Line of Credit
Lenders have agreed to make available to Debtor a line of credit facility in the
principal amount of up to $10,000,000 for the purpose of enabling Debtor to make
line of credit loans to eligible  third parties to use for the purposes  therein
specified  and to issue  letters  of credit  for the  account  of Debtor for the
purposes therein specified.

     "Line of Credit  Lenders"  means  CoBank in its role as a lender  under the
Line of Credit  Agreement  and any other  entity that  purchases,  now or in the
future, a Syndication  Interest (as defined in the Line of Credit  Agreement) in
the Line of Credit Loan.


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     "Line of Credit Loan" means the line of credit  facility made  available to
Debtor pursuant to the Line of Credit Agreement.

     "Line of Credit Loan Documents"  means the Line of Credit Agreement and any
and all other  present  and  future  agreements,  documents  and/or  instruments
evidencing,  documenting,  securing or  otherwise  relating to any or all of the
Line of Credit Loan, all as the same may from time to time be amended, modified,
extended, renewed or restated.

     "Term  Agent"  means  CoBank  in its role as  Agent  under  the  Term  Loan
Agreement and each Successor Agent (as defined in the Term Loan Agreement).

     "Term  Lenders"  means CoBank,  in its role as a lender under the Term Loan
Agreement,  and  any  other  entity  that  purchases,  now or in the  future,  a
Syndication Interest (as defined in the Term Loan Agreement) in the Term Loan.

     "Term Loan" means the credit  facility made available to Debtor pursuant to
the Term Loan Agreement.

     "Term Loan Agreement" means the Credit Agreement (Term Loan Funding of even
date herewith by and between CoBank for its own benefit as a lender and as Agent
for the  benefit  of the  present  and  future  syndication  parties as named or
defined  therein,  and Debtor,  wherein the Term  Lenders have agreed to lend to
Debtor an  aggregate  principal  amount up to  $50,000,000  for the  purpose  of
enabling  Debtor to make term  loans to  eligible  third  parties to use for the
purposes therein specified.

     "Term Loan Documents"  means the Term Loan  Agreement,  the Hedge Agreement
and  any  and  all  other  present  and  future  agreements,   documents  and/or
instruments  evidencing,  documenting,  securing or otherwise relating to any or
all of the  Term  Loan,  all as the  same  may  from  time to  time be  amended,
modified, extended, renewed or restated.

     "Underlying  Construction  Loan  Collateral"  means all of Debtor's  assets
relating to the Underlying Construction Loans, including without limitation, all
promissory  notes,  loan  agreements,   security  agreements,  deeds  of  trust,
mortgages,  guaranties, financing statements and other documents, agreements and
instruments  executed in connection with the Underlying  Construction  Loans and
all collateral security therefor.

     "Underlying  Line  of  Credit  Collateral"  means  all of  Debtor's  assets
relating to the Underlying Line of Credit Loans,  including without  limitation,
all  promissory  notes,  loan  agreements,  security  agreements,  reimbursement
agreements,  deeds of trust,  mortgages,  guaranties,  financing  statements and
other  documents,  agreements and  instruments  executed in connection  with the
Underlying Line of Credit Loans and all collateral security therefor.


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<PAGE>

     "Underlying Line of Credit Loans" shall mean "Underlying  Loans" as defined
in the Line of Credit Agreement and the reimbursement obligations owed to Debtor
in connection  with the issuance of Letters of Credit (as defined in the Line of
Credit Agreement) pursuant to the Line of Credit Agreement.

     "Underlying  Term Loans"  shall have the meaning  given to such term in the
Term Loan Agreement.

     "Underlying Term Loan Collateral"  means all of Debtor's assets relating to
the Underlying Term Loans, including without limitation,  promissory notes, loan
agreements,   security  agreements,  deeds  of  trust,  mortgages,   guaranties,
financing statements and other documents, agreements and instruments executed in
connection with the Underlying Term Loans and all collateral security therefor.

     2. Collateral/Grant of Security Interest.

     2.1. Grant of First Priority  Interest.  Debtor,  for  consideration and to
secure  the  Secured  Obligations  (as  defined  below),  hereby  grants a first
priority security interest to Secured Party in the Underlying  Construction Loan
Collateral,  tangible and intangible,  wherever located and whether now owned or
hereafter acquired, together with all additions, substitutions, products thereof
and proceeds therefrom or arising out of the rights reflected  therein,  and all
renewals,  amendments,  substitutions,  and  replacements  of all  or  any  part
thereof, including without limitation the following property (collectively,  the
"First Priority Collateral"):

     (a) all  promissory  notes made by Underlying  Construction  Loan Borrowers
payable to Debtor to evidence the  obligations of such  Underlying  Construction
Loan Borrowers to Debtor under their respective  Underlying  Construction  Loans
(collectively, "Underlying Construction Loan Notes");

     (b) all of Debtor's  rights under (i) all loan  agreements  executed by and
between Debtor and an Underlying  Construction  Loan Borrower in connection with
an Underlying  Construction Loan  (collectively,  "Underlying  Construction Loan
Agreements"), (ii) all mortgages, deeds of trust, security agreements, financing
statements,  leasehold  assignments  and  consents,  assignments  and any  other
documents  and  agreements  executed  as  security  for  the  obligations  of an
Underlying  Construction  Loan  Borrower  to Debtor  (collectively,  "Underlying
Construction Security Documents"), and (iii) any other instruments, documents or
agreements  executed  and  delivered  in  connection  with,  or  to  secure  the
obligations  of an Underlying  Construction  Loan Borrower  under its Underlying
Construction Loan Agreement (collectively, with its Underlying Construction Loan
Note,  Underlying   Construction  Loan  Agreement  and  Underlying  Construction
Security Documents, "Underlying Construction Loan Documents");


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     (c) all assets and properties  acquired by Debtor through  foreclosure,  or
deed in lieu of foreclosure,  on collateral for an Underlying Construction Loan,
including without limitation the following:

     (i) all of an Underlying  Construction  Loan  Borrower's  right,  title and
interest in and to all permits, licenses,  franchises,  certificates,  plans and
specifications,  studies, contract rights (but not obligations),  claims against
third parties,  judgments,  awards, building materials, rights for utilities and
other rights and privileges  obtained in connection with its Greenhouse Facility
and the real property on which its  Greenhouse  Facility is built  ("Property"),
and  all  equipment,  fixtures,  and  other  personal  property  of any  kind or
character,  now or later  located on or about its  Property  and its  Greenhouse
Facility or used in connection with the  construction or operation  thereof,  or
stored off its  Property for future  incorporation  on or about its Property and
its Greenhouse  Facility,  together with all accessories  thereto,  replacements
thereof and substitutions therefor;

     (ii) all seed,  fertilizer and other supplies,  and all crops now or in the
future  planted  or  growing  on  an  Underlying  Construction  Loan  Borrower's
Property,  all crops harvested now or in the future on its Property  ("Produce")
and all other farm products,  and the products and cash and non-cash proceeds of
such  crops,  including  general  intangibles,  instruments,  and  Paid  In Kind
certificates  and any  governmental  subsidies,  rebates or other  payments with
respect to farming or related  operations of such Underlying  Construction  Loan
Borrower on its Property or otherwise under any governmental programs;

     (iii) all of the rents, bonuses,  royalties,  revenues,  income,  proceeds,
damages,  profits and other benefits and income paid or payable to an Underlying
Construction  Loan  Borrower  from its  Property  and the  improvements  located
thereon, the Leases (as defined below), or from the use, possession,  operation,
or sale of its Property and the improvements located thereon,  including without
limitation any insurance or condemnation proceeds; and

     (iv) any and all leases, subleases,  assignments,  licenses, concessions or
other  agreements  (written  or  oral,  now or later in  effect)  which  grant a
possessory  interest  in and to,  or the  right  to use,  all or any  part of an
Underlying  Construction Loan Borrower's  Property and the improvements  located
thereon  ("Leases"),  and  any and  all  security  and  other  deposits  made in
connection  with the Leases and all  guaranties of those leases,  including also
any oil, gas and mineral leases,  and any bonuses,  royalties,  and other income
from Leases.

     2.2. Grant of Second Priority Security Interest.  Debtor, for consideration
and to secure the Secured Obligations,  hereby grants a second priority security
interest to Secured Party in (a) the Underlying Term Loan  Collateral,  wherever
located  and  whether  now  owned  or  hereafter  acquired,  together  with  all
additions, substitutions, products thereof and proceeds therefrom or arising out
of the rights reflected therein,  and all renewals,  amendments,  substitutions,
and  replacements  of all


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or any part  thereof,  to be shared  pari  passu  with the Line of Credit  Agent
pursuant to the terms and provisions of the Intercreditor Agreement, and (b) the
Underlying Line of Credit Collateral,  wherever located and whether now owned or
hereafter acquired, together with all additions, substitutions, products thereof
and proceeds therefrom or arising out of the rights reflected  therein,  and all
renewals,  amendments,  substitutions,  and  replacements  of all  or  any  part
thereof,  to be shared pari passu with the Term Agent  pursuant to the terms and
provisions  of the  Intercreditor  Agreement  (all  of the  foregoing  shall  be
collectively referred to herein as the "Second Priority Collateral").

     2.3. Grant of First Priority Security  Interest.  Debtor, for consideration
and to secure the Secured  Obligations,  hereby grants a first priority security
interest  to Secured  Party to be shared  pari passu with the Term Agent and the
Line of Credit Agent pursuant to the terms and  provisions of the  Intercreditor
Agreement in all assets and  properties of Debtor other than the First  Priority
Collateral and the Second Priority Collateral, tangible and intangible, wherever
located  and  whether  now  owned  or  hereafter  acquired,  together  with  all
additions, substitutions, products thereof and proceeds therefrom or arising out
of the rights reflected therein,  and all renewals,  amendments,  substitutions,
and replacements of all or any part thereof,  including  without  limitation the
following  property to the extent that it is not included in the First  Priority
Collateral  or  the  Second  Priority  Collateral  (collectively,   the  "Shared
Collateral"):

     all  fixtures;  furniture;  furnishings,   accounts;  inventory  (including
     without  limitation,   returned  or  repossessed  goods);   chattel  paper;
     instruments,  drafts; letters of credit; money; utility and other deposits,
     documents;  equipment; tools; machinery; goods; motor vehicles;  investment
     property;  general intangibles  (including without  limitation,  litigation
     rights  and  resulting  judgments,  goodwill,  patents,  tradenames,  trade
     secrets,   trademarks  and  other  intellectual   property,   tax  refunds,
     miscellaneous rights to payment,  entitlements,  uncertificated securities,
     margin accounts,  computer  programs,  invoices,  books,  records and other
     information relating to or arising out of Debtor's business).

     3. Secured  Obligations.  The security  interests  granted to Secured Party
under this Security  Agreement  shall secure the payment and  performance of the
obligations  to, and covenants and agreements of Debtor made for the benefit of,
the  Construction  Lenders  under  the  Construction  Loan  Documents  ("Secured
Obligations").

     4.  Representations  and  Warranties.  Debtor  represents  and  warrants to
Secured Party as follows:

     4.1. Organization;  Power and Authority,  etc. Debtor is duly organized and
validly  existing  under  the laws of the  State  of  Delaware.  Debtor  has all


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necessary  power and authority to own its property,  to carry on its business as
now owned and  operated by it, and to make the  Underlying  Construction  Loans.
Debtor  is  duly  qualified  to do  business  and  is in  good  standing  in all
jurisdictions  in which the  failure  to be so  qualified  would have a Material
Adverse Effect.

     4.2. Due Authorization;  Power. The execution,  delivery and performance by
Debtor of this Security  Agreement and the other Construction Loan Documents are
within  the  powers of Debtor  and have been duly  authorized  by all  necessary
action on the part of Debtor.

     4.3. Consents;  Approvals. Debtor has obtained all consents or approvals of
any Person  which are  necessary  for, or are  required  as a condition  of, the
execution,  delivery and  performance of, and the enforcement of Secured Party's
rights and remedies under, this Security Agreement.

     4.4.  Title to  Collateral.  Debtor  is the true  and  lawful  owner of all
existing  Underlying  Construction Loans, has full power and authority to pledge
and grant a  security  interest  in the  Underlying  Construction  Loans and the
Underlying  Construction  Loan  Documents,  and has not  granted  any  right  or
interest  in  any  existing  or  future  Underlying  Construction  Loans  or the
Underlying  Construction  Loan  Documents  to any  person or entity  other  than
Secured Party,  except for the second priority  security interest granted to the
Term Agent and the Line of Credit  Agent under the Term Loan  Documents  and the
Line of Credit Documents,  respectively. Except as otherwise permitted hereunder
or under  the  Construction  Loan  Agreement  and  subject  to the  terms of the
Intercreditor  Agreement,  Debtor has good title to the  Collateral  free of all
adverse  claims,  interests,  liens,  or  encumbrances  and has full  power  and
authority  to sell,  transfer,  pledge,  and grant to  Secured  Party a security
interest in, the Collateral.

     4.5.  Underlying   Construction  Loans.  With  respect  to  the  Underlying
Construction Loans:

     (a) no default or event which with notice  and/or the passage of time would
become a default under any of the Underlying Construction Loan Documents for any
Underlying Construction Loan has occurred and is continuing;

     (b) the proceeds of each existing  Underlying  Construction Loan have been,
and the proceeds of each future  Underlying  Construction Loan will be, used for
the  purposes  permitted  under  Sections 3.1 and 3.2 of the  Construction  Loan
Agreement;

     (c)  with  respect  to all  existing  Underlying  Construction  Loans,  the
Underlying  Construction  Loan  Documents  have  been duly  executed  by the all
parties  thereto and constitute the legal,  valid and binding  obligation of all
parties  thereto,  enforceable  in accordance  with their terms,  subject to the
effects of  bankruptcy,  insolvency,  and similar laws  affecting  the rights of
creditors generally or the availability

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of equitable remedies,  and are free from any right of set-off,  counterclaim or
other claim or defense;

     (d)  each  existing  Underlying   Construction  Loan  is,  and  all  future
Underlying  Construction  Loans will be,  secured  by a first lien and  security
interest in favor of Debtor in all assets of the  Underlying  Construction  Loan
Borrower,  free and clear of all other liens, security interests,  restrictions,
adverse  claims or  defenses,  except  where the  Underlying  Construction  Loan
Documents approved by Secured Party specifically state otherwise;

     (e) to  Debtor's  knowledge  and  belief,  there  is no  misstatement  of a
material fact, nor an omission to state a material fact, in any of the financial
statements,  projections, budgets or other information furnished by or on behalf
of any  existing  Underlying  Construction  Loan  Borrower,  nor,  has  anything
occurred  subsequent to the  furnishing of such  information  which would have a
material  adverse  effect on the results of operation,  business,  property,  or
prospects of any existing Underlying Construction Loan Borrower.

     4.6. Principal Office;  Collateral;  Books and Records. The principal place
of  business  and,  if Debtor  has more than one  place of  business,  the chief
executive  office  ("Principal  Office")  of  Debtor  and the  locations  of all
Collateral,  other than Collateral in the possession of the Construction  Agent,
the Term Agent or the Line of Credit Agent,  and Debtor's  books and records are
listed on Exhibit 4.6 attached hereto.

     5. Covenants of Debtor. Debtor covenants to Secured Party that:

     5.1. Title to Collateral.  Except as otherwise permitted hereunder or under
the Construction Loan Agreement, Debtor shall not create or permit the existence
of any adverse claims,  interests,  liens, or other encumbrances  against any of
the Collateral.  Debtor shall (a) provide prompt written notice to Secured Party
of any future adverse claims,  interests,  liens,  or  encumbrances  against any
Collateral,  (b)  promptly  obtain a release or  discharge  of any such  claims,
interests,  liens, or other  encumbrances and (c) diligently defend Debtor's and
Secured Party's interests in the Collateral.

     5.2. Location of Debtor,  Collateral and Books and Records. Debtor will not
change any place of business,  its chief executive  office,  the location of any
Collateral  or the  location  of its books and records  without  giving at least
thirty (30) days' prior written notice to Secured Party and  furnishing  Secured
Party with such  documents as Secured Party may reasonably  request  pursuant to
Section 5.10 hereof prior to taking any such action.

     5.3.  Books and  Records.  Debtor  shall  keep  proper  books of record and
account in which  complete  and correct  entries will be made of all of Debtor's
dealings in accordance with GAAP.


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<PAGE>

     5.4. Inspection of Collateral.  Upon Secured Party's request,  Debtor shall
allow Secured Party,  the Construction  Lenders or persons  designated by any of
them,  during  normal  business  hours or at such other times as the parties may
agree, to: (a) examine the Collateral,  wherever  located,  (b) examine and make
extracts or copies from  Debtor's  books and records;  and (c) discuss  Debtor's
affairs,  finances,  operations,  and  accounts  with its  respective  officers,
directors, employees, and independent certified public accountants.

     5.5.  Transfers,   Dispositions  and  Encumbrances.   Except  as  otherwise
permitted  hereunder or under the Construction  Loan Agreement,  (a) Debtor will
not offer to sell, sell,  transfer or otherwise dispose of any of the Collateral
or any interest  therein,  and (b) Debtor will not create,  incur,  or permit to
exist any mortgage, lien, charge,  encumbrance,  or security interest whatsoever
with respect to the Collateral.

     5.6.  Maintenance  and  Repair;  Taxes;  Insurance.  Debtor  will  keep the
Collateral  in good  order and  repair  and  adequately  insured at all times in
accordance with the provisions of the Construction  Loan Agreement.  Debtor will
pay  promptly  all taxes and other  governmental  charges  with  respect  to the
Collateral when due and payable except as otherwise permitted hereunder or under
the Construction Loan Agreement.  Secured Party or the Construction  Lenders, at
their option, may (a) discharge (i) any taxes or other governmental charges that
Debtor is  required to pay but fails to pay,  unless such taxes or  governmental
charges are being contested in good faith by appropriate actions or proceedings;
provided that such reserves or other appropriate provisions, if any, as shall be
required  by GAAP,  shall  have been made for such  taxes or other  governmental
charges, and (ii) liens, security interests,  or other encumbrances to which any
Collateral is at any time subject that are not permitted  hereunder or under the
Construction  Loan  Agreement,  and (b) upon the  failure  of  Debtor  to do so,
purchase  insurance  on  any  insurable  Collateral  and  pay  for  the  repair,
maintenance,  or preservation  thereof,  and Debtor agrees to reimburse  Secured
Party  and the  Construction  Lenders  on demand  for any  payment  or  expenses
incurred  by  any of  them  pursuant  to the  foregoing  authorization  and  any
unreimbursed   amounts  shall   constitute   amounts  owing  under  the  Secured
Obligations for all purposes under this Security Agreement.

     5.7. Compliance with Laws. Debtor shall not use the Collateral in violation
of any applicable statutes, regulations or ordinances where such violation would
have a Material Adverse Effect.

     5.8.  Change in  Structure  or Name.  Debtor  shall not,  without the prior
written consent of Secured Party, change its name or business structure.

     5.9.  Underlying  Construction  Loan Documents.  Debtor shall take all such
actions as are necessary to maintain the Underlying  Construction Loan Documents
in full force and effect. Without the consent of Secured Party, Debtor shall not
amend, supplement,  grant consents, or otherwise modify or waive compliance with
any provision of any Underlying Construction Loan Document.


                                       9
<PAGE>


Each  Underlying  Construction  Loan shall be secured by a first lien on all the
assets of the Underlying Construction Loan Borrower, except where the Underlying
Construction  Loan Documents for such Underlying  Construction  Loan approved by
Secured Party specifically state otherwise.

     5.10.  Possession  of  Collateral;  Further  Assurances.  Debtor  shall (a)
deliver promptly to Secured Party,  with such endorsement as Secured Party shall
require,  all  instruments  and documents  comprising part of the First Priority
Collateral or the Shared Collateral,  now owned or hereafter acquired,  of which
possession  is required in order to perfect the  security  interests  of Secured
Party granted herein, (b) upon demand,  execute, assign and endorse all proxies,
applications,  acceptances, stock powers, chattel paper, documents,  instruments
and other  evidences of payment or writings  constituting  or relating to any of
the Collateral,  and (c) execute from time to time financing  statements and any
other  documents in form and content  satisfactory  to Secured Party and perform
such other acts,  including  without  limitation the notation of Secured Party's
interest  on the face of all  chattel  paper,  as Secured  Party may  reasonably
request to  perfect,  maintain  and  continue a valid  security  interest in the
Collateral,  and  Debtor  will  pay all  costs  associated  with the  filing  or
recordation of any such documents.

     6.  Events of  Default.  Debtor  shall be in default  under  this  Security
Agreement upon the occurrence of an Event of Default under the Construction Loan
Agreement ("Event of Default").

     7. Rights Upon Default.

     7.1.  General.  Upon the  occurrence of an Event of Default and at any time
thereafter  (unless  such Event of Default has been waived in writing by Secured
Party),  Secured Party may declare the Secured  Obligations  immediately due and
payable, and Secured Party shall, subject to the provisions of the Intercreditor
Agreement,  have all the rights and remedies of a secured  party under Article 9
of the UCC or other  applicable law and all the rights provided  herein,  in the
Construction Loan Agreement,  or in any other instruments and documents executed
and delivered in connection  with, or to secure the obligations of Debtor under,
the Construction Loan Agreement,  all of which rights and remedies shall, to the
full extent permitted by law, be cumulative.

     7.2.  Right of Secured Party to Take  Possession and Dispose of Collateral.
Upon the  occurrence  of an  Event  of  Default,  subject  to and to the  extent
permitted  by the  provisions  of the  UCC  or  other  applicable  law  and  the
Intercreditor Agreement, unless such Event of Default has been waived in writing
by Secured Party, Secured Party shall have the right to:

     (a) take  possession of the Collateral and enter upon the premises on which
the  Collateral  or any part thereof may be situated  and remove the  Collateral

                                       10

<PAGE>

from those premises and thereafter to hold, store, and/or use, operate,  manage,
and control the Collateral;

     (b) require Debtor to deliver the Collateral to Secured Party at a place to
be designated  by Secured Party which is reasonably  convenient to both parties;
and

     (c) sell, lease or otherwise dispose of any or all of the Collateral in its
then present condition or following any commercially  reasonable  preparation or
processing  thereof,  whether by public or private sale,  for cash, on credit or
otherwise, with or without representations or warranties, and upon such terms as
may be  acceptable  to  Secured  Party,  and  Secured  Party  may  purchase  the
Collateral at any public sale.

     7.3.  Notice  of  Disposition  of  Collateral.  Unless  the  Collateral  is
perishable or threatens to decline speedily in value or is of a type customarily
sold on a  recognized  market,  Secured  Party will give notice to Debtor of any
sale or other  disposition by Secured Party with respect to any Collateral which
is subject to Article 9 of the UCC at the address for Debtor specified above, or
such other address as may from time to time be shown on Secured Party's records,
at least five (5) Business  Days prior to such action.  Any such notice shall be
deemed to meet any  requirement  hereunder or under an applicable law (including
without  limitation the UCC) that  reasonable  notification be given of the time
and place of such sale or other disposition. Debtor consents and agrees that, in
addition to the other  rights and  remedies  provided  to Secured  Party in this
Article 7, Secured Party may, in lieu of, or prior to, selling the Collateral at
public or private  sale,  retain any payments  received on account of any of the
Collateral  and apply the same to amounts  owing under the  Secured  Obligations
until such time as the Secured Obligations have been paid in full.

     7.4.  Right of Secured  Party to Use and  Operate  Collateral.  Upon taking
possession of the  Collateral,  Secured  Party may, from time to time,  make all
repairs,  replacements,  alterations,  additions, and improvements to and of the
Collateral that Secured Party deems proper.  Debtor agrees to reimburse  Secured
Party on demand for any  expenses  incurred  by Secured  Party  pursuant  to the
foregoing  authorization and any unreimbursed  amounts shall constitute  amounts
owing  under the  Secured  Obligations  for all  purposes  under  this  Security
Agreement.  In any such  case,  subject to and to the  extent  permitted  by the
provisions of the  Intercreditor  Agreement,  the UCC, or other  applicable law,
Secured Party shall have the right to operate, manage and control the Collateral
and to carry on  Debtor's  business  and to  exercise  all  rights and powers of
Debtor in respect to the Collateral as Secured Party shall deem best,  including
the right to enter into any  agreements  with respect to the  Collateral  or any
part  thereof,  that Secured Party sees fit; and Secured Party shall be entitled
to collect and receive all rents, issues,  profits,  fees,  revenues,  and other
income of the Collateral and every part thereof.  Such rents,  issues,  profits,
fees, revenues, and other income shall be applied to pay the expenses of holding
and operating the Collateral  and of conducting the business  thereof and of all
maintenance,  repairs, replacements,  alterations,  additions, and improvements,
and to make all  payments  which  Secured  Party may be required or may


                                       11
<PAGE>

elect to make, if any, for taxes, assessments, insurance, and other charges upon
the  Collateral or any part thereof,  and all other payments which Secured Party
may be required  or  authorized  to make under any  provision  of this  Security
Agreement (including reasonable attorneys' fees and expenses).  The remainder of
such rents, issues,  profits,  fees, revenues, and other income shall be applied
to the payment of the Secured  Obligations  in such order of priority as Secured
Party shall  determine in accordance  with the  provisions of the  Intercreditor
Agreement  and,  unless  otherwise  provided  by law or by a court of  competent
jurisdiction,  any surplus from the sale of the Collateral  shall be returned to
Debtor.  Without  limiting the generality of the  foregoing,  but subject to the
provisions of the Intercreditor Agreement, Secured Party shall have the right to
apply  for and  have a  receiver  appointed  ex-parte  by a court  of  competent
jurisdiction  in any  action  taken by Secured  Party to enforce  its rights and
remedies hereunder in order to manage,  protect, and preserve the Collateral and
continue the operation of the business of Debtor and to collect all revenues and
profits  thereof and apply them to the payment of all expenses and other charges
of such  receivership,  including the  compensation of the receiver,  and to the
payment of the  Secured  Obligations  as  described  above until a sale or other
disposition of the Collateral shall be finally made and consummated.

     7.5.  Collection of Accounts.  Upon the occurrence of any Event of Default,
unless  such Event of  Default  has been  waived in  writing  by Secured  Party,
Secured Party shall,  subject to the provisions of the Intercreditor  Agreement,
have the right at any time and from time to time,  without notice, to (a) notify
account  debtors that accounts have been assigned to Secured  Party;  (b) advise
account debtors of Secured  Party's  security  interest and/or instruct  account
debtors to make payments  directly to Secured Party; (c) charge to any escrow or
other  account  of  Debtor  with  Secured  Party or any  Construction  Lender or
controlled by any of them,  any item of payment  received by Secured Party which
is dishonored by the drawee or maker  thereof;  (d) endorse all items of payment
made payable to Debtor which may come into the possession of Secured Party;  (e)
collect all accounts in Secured  Party's name or Debtor's  name and take control
of any cash or non-cash  proceeds of accounts and of any returned or repossessed
goods;  (f) compromise,  extend or renew the amount owing on any account or deal
with any account as Secured Party may deem  advisable;  and (g) make  exchanges,
substitutions  or  surrenders  of  collateral  for any account.  Once any or all
account debtors have been notified,  whether by Debtor or Secured Party, to make
payment directly to Secured Party,  all amounts and proceeds  received by Debtor
in  respect  of such  accounts  shall be  received  in trust for the  benefit of
Secured  Party,  shall be  segregated  from other funds of Debtor,  and shall be
immediately  paid over to Secured  Party in the same form as so  received.  Such
actions and the application of any such amounts to the Secured Obligations shall
not be deemed to constitute retention in satisfaction of the Secured Obligations
under  Section  4-9-505 of the UCC and any  comparable  provision of the Uniform
Commercial Code as enacted in any other state where the Collateral is located.


                                       12
<PAGE>

     7.6.  Rights of Secured  Party With Respect to the  Securities  Collateral.
Upon the  occurrence  of any Event of Default,  unless such Event of Default has
been waived in writing by Secured Party:

     (a) Secured Party,  in its discretion,  and without notice to Debtor,  may,
subject to the provisions of the Intercreditor  Agreement,  take any one or more
of the  following  actions  without  liability  except to account  for  property
actually  received by it: (i) transfer to or register in its name or the name of
its  nominee  any stock  certificates  or  evidence  of other  equity  interests
included in the Collateral ("Securities Collateral"), with or without indication
of the security  interest herein  created,  and whether or not so transferred or
registered,  receive the income,  dividends and other distributions  thereon and
hold them as additional  Collateral or apply them to the Secured  Obligations in
any order of priority;  (ii)  exercise or cause to be  exercised  all voting and
corporate powers with respect to any of the Securities  Collateral so registered
or  transferred,  including  (1) all  rights  to call  or  require  shareholders
meetings  and to  remove  or  elect  directors,  and (2)  all  rights  of  proxy
appointments, conversion, exchange, subscription or any other rights, privileges
or options  pertaining to such Securities  Collateral,  as if the absolute owner
thereof; (iii) exchange any of the Securities Collateral for other property upon
a reorganization, recapitalization,  reclassification or other readjustment and,
in  connection  therewith,  deposit any of the  Securities  Collateral  with any
depository upon such terms as Secured Party may determine;  and (iv) in its name
or in the name of Debtor,  demand,  sue for,  collect  or  receive  any money or
property at any time payable or  receivable on account of or in exchange for any
of the Securities Collateral,  and Secured Party further shall have the right at
any time to sign and  endorse  the name of Debtor  upon any  stock  certificate,
stock  power,  check,  draft,  money order,  or any other  documents of title or
evidences of payment with respect to the Securities  Collateral,  in the name of
Debtor,  it being the intention of Debtor to grant to Secured Party the right to
sell any portion or all of the Securities Collateral and the proceeds therefrom,
upon the occurrence of an Event of Default hereunder.

     (b) If Secured Party in good faith believes that the Securities Act of 1933
("Act") or any other state or federal law  prohibits or restricts  the customary
manner of sale or  distribution  of any of the  Securities  Collateral,  Secured
Party may, subject to the provisions of the Intercreditor  Agreement,  sell such
Securities  Collateral  privately  or in any other  manner  deemed  advisable by
Secured  Party at such price or prices as Secured  Party  determines in its sole
discretion. Debtor recognizes that such prohibition or restriction may cause the
Securities  Collateral to have less value than it otherwise would have and that,
consequently,  such sale or  disposition  by Secured Party may result in a lower
sales price than if the sale were  otherwise  held.  Secured  Party may sell the
Securities  Collateral  in one or more  sales or  parcels,  for cash,  credit or
future delivery, and with or without the use of a stockbroker,  as Secured Party
may deem  advisable.  Secured  Party may be the  purchaser  of any or all of the
Securities Collateral. In the event that Secured Party elects to sell all or any
part of the  Securities  Collateral in a public sale,  Debtor shall use its best
efforts to register and qualify the  Securities

                                       13
<PAGE>

Collateral,  or the  applicable  part  thereof,  under  the Act  and  all  state
securities laws, and all expenses thereof shall be payable by Debtor, including,
but not limited to, all costs of registration or qualification of any Securities
Collateral  under the Act and any state  securities  laws,  and the sale of such
Securities Collateral,  including, but not limited to, brokers' or underwriters'
commissions, fees or discounts, accounting and legal fees and disbursements, and
expenses of transfer and sale.

     (c)  Notwithstanding  any  provision  herein to the  contrary,  CoBank  may
transfer,  dispose or liquidate  Debtor's CoBank Equity  Interests in accordance
with its usual  procedures and in accordance with its bylaws and capital plan as
applicable to cooperative borrowers generally.

     7.7. Collection of Underlying  Construction Loan Notes. Upon the occurrence
of any Event of Default, unless such Event of Default has been waived in writing
by  Secured  Party,  Secured  Party  may,  subject  to  the  provisions  of  the
Intercreditor  Agreement,  (a) notify and require each  Underlying  Construction
Loan Borrower to make all payments  owing on the  Underlying  Construction  Loan
Notes directly to Secured Party, (b) endorse all items of payment,  with respect
to amounts  owing under  Underlying  Construction  Loan Notes,  made  payable to
Debtor which may come into the possession of Secured Party;  (c) collect amounts
owing under the Underlying  Construction  Loan Notes in Secured  Party's name or
Debtor's  name;  (d)  compromise,  extend  or  renew  the  amount  owing  on any
Underlying  Construction  Loan or deal with any Underlying  Construction Loan as
Secured  Party  may  deem  advisable;  (e)  make  exchanges,   substitutions  or
surrenders of collateral for any Underlying  Construction  Loan, and (f) declare
the Underlying  Construction  Loans  immediately  due and payable,  exercise all
rights of Debtor under the Underlying  Construction Loan Documents and foreclose
on all collateral for the Underlying  Construction  Loans in accordance with the
rights of Debtor under the Underlying  Construction Loan Documents.  Once any or
all Underlying Construction Loan Borrowers have been notified, whether by Debtor
or Secured Party,  to make payment  directly to Secured  Party,  all amounts and
proceeds  received by Debtor in respect of such  Underlying  Construction  Loans
shall be received in trust for the benefit of Secured Party, shall be segregated
from other funds of Debtor,  and shall be immediately paid over to Secured Party
in the same  form as so  received.  Debtor  agrees  that by taking  such  action
Secured Party will be deemed to have acted in a commercially  reasonable  manner
and that such action by Secured Party will not be deemed to constitute retention
of the  Underlying  Construction  Loan  Notes  in  satisfaction  of the  Secured
Obligations under Section 4-9-505 of the UCC and any comparable provision of the
Uniform  Commercial  Code as  enacted  in the state  where  Debtor is located or
otherwise.

     8. General Provisions.

     8.1.  Appointment and Rights of Agent.  Debtor  acknowledges,  agrees,  and
consents (a) to the appointment by the  Construction  Lenders of CoBank as Agent
under  the   Construction   Loan   Agreement   ("Agent")  for  the  purposes  of
administering certain aspects of the Construction Loan, (b) that CoBank as Agent
is acting for the

                                       14
<PAGE>

benefit of the Construction Lenders hereunder,  and (c) that in the event that a
Successor  Agent is appointed  for CoBank in its capacity as Agent in accordance
with the provisions of the Construction Loan Agreement and written  notification
thereof  is  provided  to  Debtor by  CoBank,  any  Construction  Lender or such
Successor  Agent,  such  Successor  Agent shall be entitled to exercise  all the
rights  of  Secured  Party  hereunder,  and that  Debtor  will  perform  all its
obligations  hereunder with respect to such rights as it may be directed by such
Successor Agent.

     8.2. Amendment, Modification, and Waiver. Without the prior written consent
of  Secured  Party and  Debtor,  no  amendment,  modification,  or waiver of, or
consent to any  departure  by Debtor  from,  any  provision  hereunder  shall be
effective.  Any  such  amendment,  modification,  waiver,  or  consent  shall be
effective only in the specific  instance and for the specific  purpose for which
given.  No waiver by Secured Party of any default  shall be effective  unless in
writing,  and any such waiver shall not operate as a waiver of any other default
or the same default on a future  occasion.  The taking of the security  interest
created by this  Security  Agreement  shall not be deemed to waive or impair any
other  security  interest  Secured  Party may have or hereafter  acquire for the
payment of the Secured Obligations,  nor shall the taking of any such additional
security interest waive or impair this Security Agreement; but Secured Party may
resort  to any  security  it may  have in the  order  it may  deem  proper,  and
notwithstanding any collateral  security,  Secured Party shall retain its rights
of setoff against  Debtor.  No delay or omission on the part of Secured Party in
exercising any right hereunder shall operate as a waiver of such right or of any
other right hereunder.

     8.3. Costs and Attorneys'  Fees.  Debtor will, upon demand,  pay to Secured
Party and the Construction Lenders the amount of any and all expenses, including
the reasonable attorneys' fees and expenses of counsel for Secured Party and the
Construction  Lenders and of any experts and agent,  which Secured Party and the
Construction Lenders may incur in connection with (a) the administration of this
Security Agreement upon the occurrence of an Event of Default,  unless and until
such Event of Default  has been  waived in  writing  by Secured  Party;  (b) the
collection,  retaking,  storage,  custody,  preservation,  use or operation  of,
preparing for sale, selling or other disposition and delivery,  collection from,
or  other  realization  upon,  any  of  the  Collateral;  (c)  the  exercise  or
enforcement of any of the rights of Secured Party hereunder;  or (d) the failure
by Debtor to perform or observe any of the provisions hereof.

     8.4. Revival of Obligations.  To the extent Debtor or any third party makes
a payment or payments to Secured  Party or Secured  Party  enforces its security
interest or exercises  any right of setoff,  and such payment or payments or the
proceeds  thereof are  subsequently  invalidated,  declared to be  fraudulent or
preferential, set aside, and/or required to be repaid to a trustee, receiver, or
any other  party  under any  bankruptcy,  insolvency  or other law or in equity,
then,  to the  extent of such  recovery,  the  Secured  Obligations  or any part
thereof  originally  intended to be satisfied  shall be

                                       15
<PAGE>

revived and  continued  in full force and effect as if such  payment or payments
had not been made, or such enforcement or setoff had not occurred.

     8.5.  Performance by Secured  Party.  In the event Debtor shall at any time
fail to pay or perform  punctually  any of its  obligations  hereunder,  Secured
Party may, at its option and without  notice to or demand upon  Debtor,  without
obligation  and  without  waiving  or  diminishing  any of its  other  rights or
remedies hereunder, fully perform or discharge any of such duties. All costs and
expenses  incurred  by Secured  Party in  connection  therewith,  together  with
interest thereon at the Default Interest Rate set forth in the Construction Loan
Agreement,  shall become part of the Secured  Obligations  and be paid by Debtor
upon demand.

     8.6.  Power  of  Attorney.  Secured  Party  is  hereby  appointed  Debtor's
attorney-in-fact, with full power of substitution, at Secured Party's option and
Debtor's  expense,  to do all acts and things which Secured Party may reasonably
deem necessary to perfect and continue to perfect the security  interest created
by this Security Agreement, to protect its interest in the Collateral, and, upon
the occurrence of an Event of Default  hereunder (unless and until such Event of
Default has been waived in writing by Secured Party),  to protect or enforce and
collect  on the  Collateral  subject  to  the  provisions  of the  Intercreditor
Agreement, including without limitation:

     (a) to obtain and adjust the insurance required to be maintained hereunder;

     (b) to ask, demand, collect, sue for, recover, compromise, receive and give
receipts for moneys due and to become due under the Underlying Construction Loan
Documents;

     (c) to  receive,  endorse,  and  collect  any drafts or other  instruments,
documents and chattel paper, in connection with (a) above;

     (d) to file any  claims or take any  action or  institute  any  proceedings
which Secured Party may deem necessary or desirable for the collection of any of
the  Collateral  or  otherwise  to enforce the rights of the Secured  Party with
respect to any of the Collateral; and

     (e)  to  collect  the   Underlying   Construction   Loans  and   Underlying
Construction  Loan Notes and to enforce  all rights and  remedies  available  to
Debtor under the Underlying Construction Loan Documents and to endorse all items
of payment on the Underlying Construction Loans made payable to Debtor which may
come into the possession of Secured Party.

The power vested in Secured Party as Debtor's  attorney-in-fact is, and shall be
deemed to be, coupled with an interest and cannot be revoked.

                                       16
<PAGE>

     8.7. Protection of Collateral.  Secured Party shall not be required to take
any steps  necessary to preserve  any rights in the  Collateral.  Secured  Party
shall further be under no duty to exercise or to withhold the exercise of any of
the rights,  powers,  privileges and options expressly or implicitly  granted to
Secured  Party in this  Security  Agreement,  and  Secured  Party  shall  not be
responsible  for any  failure to  exercise  such  rights nor for its delay in so
doing.  Secured  Party  shall be deemed  to have  exercised  reasonable  care as
custodian of the  Collateral if it takes such action to protect and preserve the
Collateral as Debtor shall request,  but failure to honor any such request shall
not be deemed to be a failure by Secured Party to exercise  reasonable care. The
care which Secured Party gives to the  safekeeping  of its property of like kind
shall  constitute  reasonable  care of the  Collateral  when in Secured  Party's
possession.

     8.8. Additional Rights of Secured Party.  Secured Party, in its discretion,
and without notice to Debtor,  may take any one or more of the following actions
without  liability except to account for property  actually  received by it: (a)
after the  occurrence  of an Event of Default,  unless such Event of Default has
been waived in writing by Secured Party, renew,  extend, or otherwise change the
terms and  conditions  of any of the  Collateral;  (b) take or release any other
collateral as security for any of the Collateral or the Secured Obligations; and
(c) add or release any guarantor,  endorser, surety or other party to any of the
Collateral or Secured Obligations.

     8.9. Successors and Assigns.  This Security Agreement shall be binding upon
and  inure to the  benefit  of Debtor  and  Secured  Party and their  respective
successors and assigns, except that Debtor may not assign or transfer its rights
or obligations hereunder without the prior written consent of Secured Party.

     8.10. Advances. Nothing herein contained shall be construed to obligate the
Construction  Lenders  to make any  loans or  advances  to  Debtor  and the sole
purpose of this  Security  Agreement is to provide  collateral  security for the
Secured Obligations.

     8.11.  Severability.  Should any  provision of this  Security  Agreement be
deemed  unlawful or  unenforceable,  said provision  shall be deemed several and
apart from all other  provisions  of this  Security  Agreement and all remaining
provisions of this Security Agreement shall be fully enforceable.

     8.12.  Governing  Law.  This  Security  Agreement  shall be governed by and
interpreted in accordance  with the laws of the State of Colorado  except to the
extent that the validity or perfection of the security  interest  hereunder,  or
remedies hereunder in respect of any particular collateral,  are governed by the
laws of a jurisdiction other than the State of Colorado.

     8.13. Notices.  Notices by any party hereto to any other party hereto shall
be given as provided in the Construction Loan Agreement.

                                       17
<PAGE>

     8.14. Financing Statement. A copy, including a photocopy,  of this Security
Agreement may be filed as a financing statement. Debtor authorizes Secured Party
to file financing statements without Debtor's signature where permitted by law.

     8.15. Conflict with Construction Loan Agreement. In the event of a conflict
between the terms of this Security  Agreement and those of the Construction Loan
Agreement, the provisions of the Construction Loan Agreement shall control.

     This Security Agreement is executed as of the date first above written.


                                     DEBTOR:
                                     VILLAGE FARMS INTERNATIONAL
                                     FINANCE   ASSOCIATION,    a
                                     cooperative     corporation
                                     formed  under  the  laws of
                                     the state of Delaware

                                     By:___________________________________
                                     Name: J. Kevin Cobb
                                     Title:  Vice President

                                     SECURED PARTY:
                                     COBANK, ACB, as Agent on behalf of and for
                                     the benefit of the Construction Lenders

                                     By:________________________________
                                     Name:    Greg Somerhalder
                                     Title:   Vice President




                                       18