EXHIBIT 10.90








                    GUARANTY OF AGRO POWER DEVELOPMENT, INC.


                                       to


                              CONSTRUCTION LENDERS,


                                  TERM LENDERS,


                                       and


                             LINE OF CREDIT LENDERS






<PAGE>

                                TABLE OF CONTENTS

R E C I T A L S .............................................................1

A G R E E M E N T S .........................................................2

1. Defined Terms ............................................................3

    1.1 Affiliate ...........................................................3

    1.2 Agent ...............................................................3

    1.3 Closing Date ........................................................3

    1.4 CoBank ..............................................................3

    1.5 CoBank ..............................................................3

    1.6 Compliance Certificate ..............................................3

    1.7 Construction Agent ..................................................3

    1.8 Construction Lender .................................................3

    1.9 Construction Loan Document ..........................................3

    1.10 Current Asset ......................................................4

    1.11 Environmental Laws .................................................4

    1.12 Environmental Regulations ..........................................4

    1.13 Equity .............................................................4

    1.14 Excess Cash Flow ...................................................4

    1.15 Fair Market Value ..................................................4

    1.16 Fort Davis Collateral ..............................................4

    1.17 GAAP ...............................................................5

    1.18 Guarantor Benefit Plan(s) ..........................................5

    1.19 Guarantor Cash Flow ................................................5

    1.20 Guarantor Document .................................................5


                                       i
<PAGE>

    1.21 Guarantor Security Agreement .......................................5

    1.22 Guarantor Security Document ........................................5

    1.23 Hazardous Substances ...............................................5

    1.24 Hedge Agreement ....................................................5

    1.25 Indebtedness .......................................................6

    1.26 Lender Group .......................................................6

    1.27 Line of Credit Agent ...............................................6

    1.28 Line of Credit Documents ...........................................6

    1.29 Line of Credit Lenders .............................................6

    1.30 Loan Agreements ....................................................6

    1.31 Loan Documents .....................................................6

    1.32 Material Adverse Effect ............................................6

    1.33 Net Fixed Investments ..............................................7

    1.34 Net Income .........................................................7

    1.35 Owner Group ........................................................7

    1.36 Person .............................................................7

    1.37 Projections ........................................................7

    1.38 Quarter ............................................................7

    1.39 Senior Long-Term Debt ..............................................7

    1.40 Term Agent .........................................................7

    1.41 Term Lenders .......................................................7

    1.42 Term Loan Documents ................................................7

    1.43 Total Assets .......................................................8

    1.44 Underlying Borrowers ...............................................8


                                       ii
<PAGE>

    1.45 Underlying Construction Loan Borrower ..............................8

    1.46 Underlying Line of Credit Borrower .................................8

    1.47 Underlying Term Loan Borrower ......................................8

    1.48 Village Farms ......................................................8

    1.49 Village Farms Loan Agreement .......................................8

    1.50 Village Farms Revolving Loan .......................................8

    1.51 Village Farms Term Loan ............................................8

2. Guaranty .................................................................8

3. Guaranty of Payment; Waiver of Defenses, Etc .............................9

    3.1 General .............................................................9

    3.2 Waivers .............................................................9

    3.3 Amount of Indebtedness .............................................10

    3.4 Subrogation ........................................................10

    3.5 Subordination of Other Debt ........................................10

    3.6  Liens and Rights of Set-Off .......................................10

4. Recovery of Payment .....................................................11

5. Information Regarding Borrower ..........................................11

6. Security ................................................................11

7. Representations and Warranties ..........................................11

    7.1 Organization, Good Standing, etc ...................................12

    7.2 Corporate Authority, Due Authorization, Consents ...................12

    7.3 Title to Collateral ................................................12

    7.4 Litigation .........................................................12

    7.5 Licenses and Approvals .............................................12


                                       iii
<PAGE>

    7.6 No Violations ......................................................13

    7.7 Binding Agreement ..................................................13

    7.8 Compliance with Laws ...............................................13

    7.9 Principal Place of Business ........................................13

    7.10 Material Agreements ...............................................13

    7.11 Financial Statements; No Material Adverse Change ..................14

    7.12 Payment of Taxes ..................................................14

    7.13 Employee Benefit Plans ............................................14

    7.14 Equity Investments; Capitalization of Guarantor, Borrower
         and the Underlying Borrowers ......................................15

    7.15 Real Property .....................................................15

    7.16 No Contingent Liabilities .........................................15

    7.17 Title Insurance ...................................................16

    7.18 Disclosure ........................................................16

8. Affirmative Covenants of Guarantor ......................................16

    8.1 Books and Records ..................................................16

    8.2 Reports and Notices ................................................16

        8.2.1 Annual Financial Statements ..................................16

        8.2.2 Quarterly Financial Statements ...............................17

        8.2.3 Additional Information .......................................17

        8.2.4 Notice of Default ............................................17

        8.2.5 Notice of Litigation .........................................17

        8.2.6 Notice of Material Adverse Effect ............................17

        8.2.7 Notice of Environmental Litigation ...........................17


                                       iv
<PAGE>

        8.2.8 Governmental and Other Notices ...............................18

        8.2.9 Adverse Action Regarding Required Licenses ...................18

    8.3 Maintenance of Existence and Qualification .........................18

    8.4 Compliance with Legal Requirements and Agreements ..................18

    8.5 Compliance with Environmental Laws .................................18

    8.6 Taxes ..............................................................18

    8.7 Insurance ..........................................................19

    8.8 Title to Assets and Maintenance ....................................20

    8.9 Payment of Liabilities .............................................20

    8.10 Inspection ........................................................20

    8.11 Further Assurances, Real Property Security Interests ..............20

    8.12 Required Licenses .................................................21

    8.13 Equity to Senior Long-Term Debt ...................................21

    8.14 Excess Cash Flow ..................................................21

    8.15 ERISA .............................................................21

9. Negative Covenants of Guarantor .........................................22

    9.1 Borrowings .........................................................22

    9.2 No Other Businesses ................................................22

    9.3 Liens ..............................................................22

    9.4 Sale of Assets .....................................................23

    9.5 Liabilities of Others ..............................................24

    9.6 Mergers; Acquisitions; Etc .........................................24

    9.7 Loans, Advances and Investments ....................................24

    9.8 Change in Owner Group ..............................................25


                                       v
<PAGE>

    9.9 Payment of Dividends; Distributions ................................25

    9.10 Payments on Indebtedness ..........................................26

    9.11 Transactions With Affiliates ......................................26

    9.12 ERISA .............................................................26

    9.13 Change in Fiscal Year .............................................27

10. Indemnification ........................................................27

    10.1 General; Stamp Taxes; Intangibles Tax .............................27

    10.2 Indemnification Relating to Hazardous Substances ..................28

11. Miscellaneous ..........................................................29

    11.1 Loan Documents ....................................................29

    11.2 Additional Guarantors .............................................29

    11.3 No Waiver by Agents or Lender Group ...............................29

    11.4 Assignment ........................................................29

    11.5 Severability ......................................................29

    11.6 Amendments ........................................................30

    11.7 Service of Process and Consent to Jurisdiction ....................30

    11.8 Jury Waiver .......................................................30

    11.9 Notices ...........................................................30

    11.10 Applicable Law ...................................................32

    11.11 Captions .........................................................32

    11.12 Mutual Release ...................................................32



                                       vi
<PAGE>


                                    EXHIBITS


Exhibit 1.6                Compliance Certificate

Exhibit 1.35               Owner Group

Exhibit 1.37               Projections

Exhibit 7.4                Litigation

Exhibit 7.5                Required Licenses and Consents

Exhibit 7.10               Material Agreements

Exhibit 7.14               Equity Investments and Capitalization of Guarantor,
                           Borrower and the Underlying Borrowers

Exhibit 7.15               Interests in Real Property




                                      vii

<PAGE>



31

                    GUARANTY OF AGRO POWER DEVELOPMENT, INC.

     This Guaranty  ("Guaranty")  is made and given as of June 24, 1997, by Agro
Power  Development,  Inc., a New York corporation  ("Guarantor"),  to the Lender
Group (as such term is defined below).

                                 R E C I T A L S

     A. The Construction  Lenders (as defined below), the Construction Agent (as
defined below) and Village Farms International Finance Association  ("Borrower")
have entered into a Credit  Agreement  (Construction  Loan Funding) of even date
herewith  (as amended  from time to time,  the  "Construction  Loan  Agreement")
pursuant  to which the  Construction  Lenders  have  agreed (i) to loan funds to
Borrower  ("Construction  Loan") under the terms and conditions set forth in the
Construction  Loan  Agreement to be used by Borrower only to make loans to third
parties ("Underlying Construction Loans") for the purpose of providing financing
for a portion of the costs of the  construction  (including costs of acquisition
of land) by such third  parties 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  (as  defined  below),  up  to  an  aggregate  for  (i)  and  (ii)  of
$30,000,000.

     B. The Term Lenders (as defined  below),  the Term Agent (as defined below)
and Borrower  have entered into a Credit  Agreement  (Term Loan Funding) of even
date herewith (as amended from time to time, the "Term Loan Agreement") pursuant
to which the Term Lenders have agreed to loan Borrower up to $50,000,000  ("Term
Loan") under the terms and conditions set forth in the Term Loan Agreement to be
either (i) loaned by  Borrower to third  parties  for the  purpose of  providing
permanent take-out financing for Underlying  Construction Loans, or (ii) used by
Borrower to fund Borrower's purchase of existing loans made by third parties for
the  construction  or acquisition of Greenhouse  Facilities (the foregoing loans
made  or  purchased  by  Borrower  pursuant  to (i)  and  (ii)  above  shall  be
collectively referred to herein as the "Underlying Term Loans").

     C. The Line of Credit Lenders (as defined below),  the Line of Credit Agent
(as defined  below) and Borrower have entered into a Credit  Agreement  (Line of
Credit  Facility) of even date herewith (as amended from time to time, the "Line
of Credit  Agreement")  pursuant to which the Line of Credit Lenders have agreed
to  provide  Borrower  with a line of  credit  of  $10,000,000  ("Line of Credit
Loan"),  including  a sublimit  of  $5,000,000  for the  issuance  of letters of
credit, under the terms and conditions set forth in the Line of Credit Agreement
to (i) fund Borrower's purchase of the LOC Loan (as defined in the Village Farms
Loan Agreement) made to Village Farms (as defined below) pursuant to the Village
Farms Loan Agreement (as defined below),  (ii) fund Borrower's loan to Guarantor
to meet Guarantor's  working capital needs  ("Guarantor  Working Capital Loan"),
(iii) fund the  extension by Borrower of lines of credit  (including  provisions
for the issuance of letters of credit) (x) to Underlying Term


<PAGE>

Loan  Borrowers (as defined below) to meet their needs during the planting phase
of each year's  production  cycle and to meet their payment  requirements  under
their  Underlying Term Loans for a maximum of 180 days in any three year period,
and (y) to members of Borrower to meet their needs during the planting  phase of
each year's production cycle, and (iv) provide for the issuance of, and fund any
draws made under, letters of credit issued by the LC Issuing Bank (as defined in
the Line of Credit  Agreement)  for the account of Borrower  to  facilitate  the
purchase and sale by Guarantor and its  subsidiaries  of  vegetables  and fruits
(the loans made or purchased by Borrower  pursuant to (i), (ii),  (iii) and (iv)
above shall be referred to herein as the "Underlying Line of Credit Loans").

     D.  Guarantor (i) is or will become a member of Borrower,  (ii) has or will
have  an  approximately  50%  equity  ownership   interest  in  each  Underlying
Construction Loan Borrower and each Underlying Term Loan Borrower, and (iii) has
or will have at least an  approximately  50% equity  ownership  interest  in all
Underlying Line of Credit Borrowers (as defined below) other than Guarantor.

     E.  Guarantor  will  benefit  from the  extensions  of  credit  made by the
Construction  Lenders,  the Term  Lenders  and the  Line of  Credit  Lenders  to
Borrower  by  virtue  of (i) its  membership  interest  in  Borrower,  (ii)  its
approximately  50%  ownership  interest  in  the  Underlying  Construction  Loan
Borrowers  and the  Underlying  Term Loan  Borrowers,  and  (iii) its  ownership
interest of at least 50% in all Underlying  Line of Credit  Borrowers other than
Guarantor.  Guarantor will further benefit from the extensions of credit made by
the Line of Credit  Lenders to  Borrower by virtue of the fact that a portion of
the  proceeds  of the Line of  Credit  Loan  will be used to fund the  Guarantor
Working Capital Loan.

     F. The  Construction  Lenders,  the  Term  Lenders  and the Line of  Credit
Lenders are willing to extend such credit to Borrower pursuant to the provisions
of the  Construction  Loan  Agreement,  Term Loan  Agreement  and Line of Credit
Agreement,  respectively,  upon the  condition,  among  others,  that  Guarantor
execute this Guaranty.

                               A G R E E M E N T S

     NOW,  THEREFORE,  for value  received,  and  intending to be legally  bound
herein,  and to induce the Lender  Group to extend  credit and make  advances to
Borrower  pursuant  to the  terms of the Loan  Agreements  (as  defined  below),
Guarantor covenants and agrees with the Lender Group as follows:


                                       2
<PAGE>

     1. Defined Terms. As used in this Guaranty,  the following terms shall have
the meanings set forth below (and such meaning  shall be equally  applicable  to
both the  singular  and plural  form of the terms  defined,  as the  context may
require):

     1.1 Affiliate: with respect to any Person, any Person that owns or controls
directly or indirectly such Person, any Person that controls or is controlled by
or is under common control with such Person.

     1.2 Agents:  the Construction  Agent, the Term Agent and the Line of Credit
Agent.

     1.3  Closing  Date:  that date on which (a) the  Construction  Lenders  and
Borrower have executed the Construction Loan Documents, (b) the Term Lenders and
Borrower have executed the Term Loan  Documents,  (c) the Line of Credit Lenders
and Borrower  have  executed the Line of Credit  Documents,  (d)  Guarantor  has
executed  this  Guaranty  and  the  Guarantor  Security  Documents,  and (e) the
conditions set forth in Section 11.1 of each of the Construction Loan Agreement,
the Term Loan Agreement and the Line of Credit Agreement have been met.

     1.4 CoBank: CoBank, ACB.

     1.5 CoBank  Equity  Interests:  those equity  interests in CoBank as CoBank
may, under the Construction Loan Agreement, the Term Loan Agreement, or the Line
of  Credit  Agreement,  require  Borrower  to  purchase  from  time  to  time in
accordance  with CoBank's  bylaws and capital plan as applicable to  cooperative
borrowers generally.

     1.6 Compliance Certificate: a certificate of the chief financial officer of
Guarantor  acceptable  to CoBank and in the form attached as Exhibit 1.6 hereto,
setting forth in reasonable detail the data and calculations  showing compliance
with the financial covenant set forth in Section 8.13 hereof.

     1.7 Construction  Agent: CoBank and each successor to CoBank as Agent under
the Construction Loan Agreement.

     1.8 Construction Lenders:  CoBank and any other entity that purchases,  now
or in the future, a syndication interest in the Construction Loan.

     1.9 Construction Loan Documents:  (a) the Construction Loan Agreement,  (b)
any and all promissory  notes now or hereafter  executed by Borrower  payable to
any   Construction   Lender  in  the   aggregate   maximum   principal   sum  of
$30,000,000.00,  (c) the  Construction  Loan  Security  Agreement  of even  date
herewith by and between  Borrower and CoBank,  as Agent on behalf of and for the
benefit of the  Construction  Lenders,  and (d) any and all mortgages,  deeds of
trust, other security agreements,  financing  statements,  and other present and
future  agreements,   documents


                                       3
<PAGE>

and/or instruments  evidencing,  documenting,  securing or otherwise relating to
the Construction Loan, as all of the foregoing may from time to time be amended,
modified, extended, renewed or restated.

     1.10  Current  Assets:  the current  assets of  Guarantor  determined  on a
consolidated basis in accordance with GAAP.

     1.11  Environmental   Laws:  the  Comprehensive   Environmental   Response,
Compensation  and  Liability  Act  of  1980  as  amended,  42  U.S.C.  9601-9657
("CERCLA")  and the Resource  Conservation  and Recovery Act of 1976,  42 U.S.C.
6901-6987 ("RCRA").

     1.12 Environmental  Regulations:  as defined in the definition of Hazardous
Substances.

     1.13 Equity:  all equity of Guarantor,  determined in accordance with GAAP,
plus Minority Interests of Guarantor (as determined in accordance with GAAP).

     1.14 Excess Cash Flow:  all Guarantor  Cash Flow less the amount of all tax
distributions  (or distributions in lieu of tax  distributions)  permitted to be
made by Guarantor under this Guaranty on account of the Guarantor Cash Flow.

     1.15 Fair Market Value:  a valuation as  determined in a written  appraisal
from an MAI certified appraiser.

     1.16 Fort Davis Collateral: all of Guarantor's right, title and interest in
and to the following contracts and agreements,  as amended or otherwise modified
from time to time: (a) Commercial  Greenhouse  Design and Construction  Contract
dated December 7, 1995, by and between Guarantor and Dalsem Kassenbouw B.V.; (b)
Commercial Packing House Design and Construction Contract dated January 8, 1996,
by and  between  Guarantor  and NC  Sturgeon,  Inc.;  and (c)  Grading  and Road
Construction  Contract dated January 5, 1996 by and between  Guarantor and Reece
Albert, Inc.

     1.17 GAAP: generally accepted accounting principles in the United States of
America, applied consistently, as in effect from time to time.

     1.18 Guarantor  Benefit Plan(s):  shall have the meaning given to such term
in Section 7.13 of this Guaranty.

     1.19  Guarantor Cash Flow: all cash received by Guarantor on account of its
equity interests in the Underlying  Borrowers and other investments and business
activities permitted under this Guaranty.

     1.20  Guarantor  Documents:   this  Guaranty  and  the  Guarantor  Security
Documents.


                                       4
<PAGE>

     1.21 Guarantor Security Agreement: the Guarantor Security Agreement of even
date herewith by and between Guarantor and the Agents.

     1.22 Guarantor Security Documents:  the Guarantor Security  Agreement,  the
Trademark Collateral  Assignment and Security Agreement of even date herewith by
and  between  the Agents and  Guarantor,  mortgages,  deeds of trust,  leasehold
assignments and consents, financing statements, pledge agreements,  assignments,
and/or other security  documents executed by Guarantor in favor of the Agents to
secure  Guarantor's  performance of its  obligations  under this Guaranty with a
lien on all assets,  real and  personal,  of  Guarantor,  in form and  substance
acceptable to the Agents.

     1.23  Hazardous  Substances:  dangerous,  toxic  or  hazardous  pollutants,
contaminants,  chemicals,  wastes,  materials  or  substances,  as defined in or
governed by the provisions of any Environmental Laws or any other federal, state
or local law, statute, code, ordinance, regulation, requirement or rule relating
thereto  ("Environmental  Regulations"),  and also including urea  formaldehyde,
polychlorinated biphenyls, asbestos, asbestos-containing materials, nuclear fuel
or waste,  and petroleum  products,  or any other waste,  material,  substances,
pollutant  or  contaminant  which  would  subject  an owner of  property  to any
damages,   penalties  or   liabilities   under  any   applicable   Environmental
Regulations.

     1.24 Hedge Agreement:  the secured interest rate hedging  agreement of even
date herewith executed by and between Borrower and CoBank.

     1.25 Indebtedness: any and all advances, debts, obligations and liabilities
of  Borrower  under  or  pursuant  to the  Loan  Documents,  and  any  renewals,
amendments, extensions or replacements thereof, including without limitation all
principal, interest, loan fees, obligations to purchase CoBank Equity Interests,
and Funding Losses owed under the Loan Agreements and all expenses,  charges and
other amounts payable by Borrower  pursuant to the Loan  Documents,  whether now
existing or hereafter contracted or incurred,  plus interest thereon at the rate
determined pursuant to the applicable Loan Agreement.

     1.26 Lender Group: the Construction  Lenders, the Term Lenders and the Line
of Credit Lenders.

     1.27 Line of Credit  Agent:  CoBank and each  successor  to CoBank as Agent
under the Line of Credit Agreement.

     1.28 Line of Credit Documents:  (a) the Line of Credit  Agreement,  (b) any
and all promissory  notes now or hereafter  executed by Borrower  payable to any
Line of Credit Lender in the aggregate maximum principal sum of  $10,000,000.00,
(c) the Line of Credit  Security  Agreement of even date herewith by and between
Borrower  and  CoBank,  as Agent on behalf of and for the benefit of the Line of
Credit Lenders,  and (d) any and all mortgages,  deeds of trust,  other security
agreements,  financing


                                       5
<PAGE>

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

     1.29 Line of Credit  Lenders:  CoBank and any other entity that  purchases,
now or in the future, a syndication interest in the Line of Credit Loan.

     1.30  Loan  Agreements:  the  Construction  Loan  Agreement,  the Term Loan
Agreement and the Line of Credit Agreement.

     1.31  Loan  Documents:  the  Construction  Loan  Documents,  the Term  Loan
Documents and the Line of Credit Documents.

     1.32  Material  Adverse  Effect:  with respect to a Person,  (a) a material
adverse  effect on the financial  condition,  results of operation,  business or
property of such Person;  (b) a material  adverse  effect on the ability of such
Person to perform its  obligations  under the Loan  Documents  and the Guarantor
Documents  to which it is a party;  or (c) a material  adverse  effect  upon the
ability of Agents and the Lender  Group to  enforce  their  rights and  remedies
against such Person under the Loan Documents or the Guarantor Documents.

     1.33 Net Fixed  Investments:  the amount equal to Total Assets less Current
Assets.

     1.34  Net  Income:   the  net  income  of   Guarantor   determined   on  an
unconsolidated basis in accordance with GAAP.

     1.35 Owner Group:  the owners of Guarantor on the date of this  Guaranty as
set forth on Exhibit 1.35 hereto. ------------

     1.36  Person:  any  individual,  corporation,  limited  liability  company,
association, partnership, trust, organization,  government, governmental agency,
or other entity.

     1.37 Projections: the projections, pro-forma financial statements and other
materials  attached hereto as Exhibit 1.37 with respect to projected  operations
and financial  results of operations of Guarantor,  Borrower and the  Underlying
Borrowers.

     1.38 Quarter: the quarters of the calendar year commencing as of January 1,
April 1, July 1 and October 1.

     1.39 Senior  Long-Term  Debt:  Long-term  debt plus the current  portion of
long-term debt, determined in accordance with GAAP.


                                       6
<PAGE>

     1.40 Term  Agent:  CoBank and each  successor  to CoBank as Agent under the
Term Loan Agreement.

     1.41 Term Lenders:  CoBank and any other entity that  purchases,  now or in
the future, a syndication interest in the Term Loan.

     1.42  Term  Loan  Documents:  (a) the Term  Loan  Agreement,  (b) the Hedge
Agreement,  (c)  any and all  promissory  notes  now or  hereafter  executed  by
Borrower  payable to any Term Lender in the aggregate  maximum  principal sum of
$50,000,000.00,  (d) the Term Loan  Security  Agreement of even date herewith by
and between  Borrower  and CoBank,  as Agent on behalf of and for the benefit of
the Term Lenders, and (e) any and all mortgages,  deeds of trust, other security
agreements,  financing  statements,  and other  present  and future  agreements,
documents  and/or  instruments  evidencing,  documenting,  securing or otherwise
relating  to the Term  Loan,  as all of the  foregoing  may from time to time be
amended, modified, extended, renewed or restated.

     1.43 Total Assets:  all assets of Guarantor  determined  on a  consolidated
basis in accordance with GAAP.

     1.44 Underlying Borrowers:  (a) the Underlying Construction Loan Borrowers,
(b) the Underlying  Term Loan  Borrowers,  and (c) the Underlying Line of Credit
Borrowers.

     1.45 Underlying Construction Loan Borrower: shall have the meaning given to
such term in the Construction Loan Agreement.

     1.46 Underlying Line of Credit  Borrower:  (a) the Underlying LOC Borrowers
(as  defined  in the Line of  Credit  Agreement),  and (b) all  subsidiaries  of
Guarantor  with  respect to which the LC Issuing  Bank issues a letter of credit
for the account of Borrower in order to facilitate the purchase and sale by such
subsidiaries of vegetables and fruits.

     1.47  Underlying  Term Loan Borrower:  shall have the meaning given to such
term in the Term Loan Agreement.

     1.48  Village  Farms:  Village  Farms of Texas,  L.P.,  a Delaware  limited
partnership.

     1.49 Village Farms Loan Agreement:  the Loan Agreement dated as of February
14, 1996 by and between  Village Farms,  as borrower,  Farm Credit Bank of Texas
and  Texas  Production   Credit   Association,   as  lenders,   and  CoBank,  as
Administrative Agent.


                                       7
<PAGE>

     1.50 Village Farms  Revolving Loan: the LOC Loan, as defined in the Village
Farms Loan Agreement.

     1.51 Village  Farms Term Loan:  the  Construction  Loan,  as defined in the
Village Farms Loan Agreement.

     Capitalized  terms used,  but not  defined,  herein  shall have the meaning
given to such terms in the Term Loan Agreement, if defined therein.

     2. Guaranty.  Guarantor hereby guarantees absolutely and unconditionally to
the Lender Group,  and their  successors  and assigns,  and any person or entity
acquiring an interest in the  Indebtedness of Borrower,  and becomes surety for:
(a) the due and punctual  payment,  in lawful money of the United States, of all
Indebtedness  of Borrower as and when any of the foregoing  shall become due and
payable  in  accordance   with  the  terms  thereof  at  stated   maturity,   by
acceleration,  or otherwise;  and (b) the full and timely performance of any and
all other  obligations of Borrower to the Lender Group,  whether now existing or
hereafter contracted or incurred,  arising directly or indirectly out of or with
respect to the Loan Documents.  Guarantor shall also pay all costs, expenses and
attorneys'  fees  incurred  by Agents  and the  Lender  Group in its  efforts to
collect the Indebtedness,  foreclose upon or exercise its rights with respect to
any security for the  Indebtedness,  or to enforce this Guaranty,  or to protect
the  rights of Agents  and the  Lender  Group  with  respect  thereto.  The term
"Guaranteed  Obligations" as used in this Guaranty shall mean such Indebtedness,
obligations and liabilities described above in this Article 2.

     3. Guaranty of Payment; Waiver of Defenses, Etc.

     3.1 General. This Guaranty is a guarantee of payment and not of collection,
and  Guarantor  waives any right to require  that any action be brought  against
Borrower or to require  that resort be had at any time to any direct or indirect
security for the Guaranteed  Obligations.  Guarantor's obligations hereunder are
continuing  obligations and are absolute and  unconditional  irrespective of the
genuineness,  validity or enforceability of any instrument or instruments now or
hereafter  evidencing any Guaranteed  Obligation or any part thereof  (including
but  not  limited  to the  Loan  Documents)  or of any  other  agreement  now or
hereafter  entered  into by  Agents or the  Lender  Group,  or any of them,  and
Borrower  pursuant to which any  Guaranteed  Obligation  or any part  thereof is
issued, or of any other circumstance which might otherwise constitute a legal or
equitable discharge of a guarantor or surety.  Guarantor's obligations hereunder
shall continue in full force and effect as long as any Guaranteed  Obligation or
any part thereof  remains  outstanding and unpaid or the Lender Group, or any of
them,  has any  obligation to make  advances to Borrower  pursuant to any of the
Loan Agreements.

     3.2 Waivers. With respect to its obligations under this Guaranty, Guarantor
waives any and all defenses  and  discharges  available to a guarantor,  surety,


                                       8
<PAGE>

endorser or accommodation party, dependent upon its character as such. Guarantor
hereby waives presentment for payment, notice of nonpayment, demand and protest.
Guarantor  agrees  that its  obligations  hereunder  shall  not be  affected  or
impaired in any way by any of the following  acts or things (which Agents or the
Lender  Group may do from time to time  without  notice to  Guarantor):  (a) any
amendment (including,  without limitation,  an amendment increasing the interest
rate),  modification  or  extension  of the Loan  Documents,  or any  waiver  of
compliance  by Borrower  with the terms of any of the  foregoing;  (b) any sale,
pledge,  surrender,   compromise,   settlement,   release,  renewal,  extension,
indulgence,   alteration,   substitution,   exchange,   modification   or  other
disposition of any Guaranteed  Obligation or any  collateral  therefor;  (c) any
acceptance  or  release  of  collateral  for or  guarantors  of  any  Guaranteed
Obligation; (d) any inability,  failure, neglect or omission to obtain, perfect,
enforce or realize upon any collateral for any of the Guaranteed Obligations, or
to exercise any lien upon or right of  appropriation  of any moneys,  credits or
property to the liquidation of any Guaranteed Obligation, or to pursue or obtain
any  deficiency  judgment  against  Borrower  following any  foreclosure  of any
security  interest,  mortgage or deed of trust granted by Borrower to Agents; or
(e) any application of payments or credits upon the Guaranteed Obligations under
the Loan  Agreements.  Neither  Agents nor the Lender  Group shall be  required,
before  exercising  its rights  under  this  Guaranty,  to first  resort for the
payment of any Guaranteed  Obligation to Borrower,  or other Persons or entities
or any collateral,  property, liens or other remedies or rights whatsoever. With
respect to its obligations under this Guaranty, Guarantor agrees not to exercise
any right of contribution,  recourse,  subrogation or reimbursement available to
Guarantor  against Borrower or any other Person or entity or property unless and
until all the Guaranteed  Obligations  have been  indefeasibly  paid in full and
there is no obligation of the Lender Group,  or any of them, to make advances to
Borrower under the Loan  Agreements.  Guarantor  hereby waives any rights it may
have at equity or in law to require Agents or the Lender Group,  or any of them,
to  apply  any  rights  of  marshalling  or  other  equitable  doctrines  in the
circumstances.

     3.3 Amount of Indebtedness. Agents or the Lender Group may, at its or their
sole  option  and  without  any notice to or  consent  of  Guarantor,  allow the
Indebtedness of Borrower to exceed the principal  amount of all promissory notes
executed by  Borrower in  connection  with the  Indebtedness  without in any way
adversely affecting Guarantor's liability hereunder.

     3.4 Subrogation.  After all Guaranteed  Obligations have been  indefeasibly
paid in full and there is no obligation of the Lender Group,  or any of them, to
make advances to Borrower under the Loan  Agreements,  Guarantor  shall have and
may exercise rights of subrogation against Borrower.

     3.5  Subordination  of  Other  Debt.  Any  indebtedness  or  obligation  of
Borrower, or any other claim against or liability of Borrower,  now or hereafter
held by or owed to Guarantor  ("Guarantor's  Claims") is hereby  subordinated by
Guarantor  to


                                       9
<PAGE>

the Indebtedness of Borrower to the Lender Group;  and such Guarantor's  Claims,
if any Agent so requests, shall be collected, enforced and received by Guarantor
as trustee  for the Lender  Group and paid over to Agents for the benefit of the
Lender Group on account of the Indebtedness of Borrower to the Lender Group.

     3.6 Liens and Rights of Set-Off.  In addition to all liens upon,  and right
of set-off against, the property of Guarantor existing under applicable law, the
Lender Group or any member  thereof may,  without  demand or notice of any kind,
and at any time when any amount shall be due and payable hereunder by Guarantor,
appropriate  and apply  toward  the  payment  of such  amount,  in such order of
application  as Agents or the Lender Group may elect,  any  property,  balances,
credits,  deposits,  accounts (including escrow accounts) or moneys of Guarantor
in the  possession or control of any member of the Lender Group for any purpose.
Guarantor  hereby  grants to the Lender  Group a right of set-off  and  security
interest in such  property and funds in the  possession or control of the Lender
Group,  or any of them.  Guarantor  further  expressly  grants to Agents and the
Lender  Group the right,  to be exercised  at the  discretion  of Agents and the
Lender  Group,  to file  one or more  financing  statements  under  the  Uniform
Commercial Code naming Guarantor as debtor and the Lender Group and/or Agents as
secured  party with  respect to such  property  and funds and  Guarantor  hereby
agrees to sign any such statement.

     4.  Recovery of Payment.  If any payment  received by the Lender  Group and
applied to the Guaranteed  Obligations  is  subsequently  set aside,  recovered,
rescinded  or  required  to be  returned  for  any  reason  (including,  without
limitation,  the  bankruptcy,  insolvency or  reorganization  of Borrower),  the
Guaranteed Obligations to which such payment was applied shall, for the purposes
of this Guaranty, be deemed to have continued in existence, notwithstanding such
applications,  and this  Guaranty  shall be  enforceable  as to such  Guaranteed
Obligations as fully as if such applications had never been made.

     5. Information  Regarding  Borrower.  Guarantor assumes full responsibility
for keeping fully informed of the financial  condition of Borrower and all other
circumstances  affecting  Borrower's  ability to pay and perform its  Guaranteed
Obligations  and agrees that  neither the Lender Group nor Agents shall have any
duty to report to  Guarantor  any  information  which the Lender Group or Agents
receive about the financial  condition of Borrower or any circumstances  bearing
on the ability of Borrower to perform its Guaranteed Obligations,  and Guarantor
hereby expressly and unconditionally  waives any defense based on the failure of
the Lender Group or Agents to report such information.

     6.  Security.  As security for the payment and  performance  of Guarantor's
obligations  under this Guaranty,  Guarantor shall grant to Agents (on behalf of
the Lender  Group) and  maintain for Agents (on behalf of the Lender  Group),  a
first lien and security interest in all of its assets and properties,  both real
and  personal,  tangible or  intangible,  whether now owned or held or hereafter
acquired (the "Guarantor


                                       10
<PAGE>

Collateral"),  except such lien and security  interest  granted to Agents may be
junior to any Lien to the extent permitted by Section 9.3 hereof.  Guarantor has
executed and  delivered to Agents the Guarantor  Security  Documents as required
under this Guaranty to evidence the security interest of Agents in the Guarantor
Collateral,  and the terms,  provisions and conditions of the Guarantor Security
Documents  are hereby  incorporated  in this  Guaranty  and made a part  hereof.
Guarantor shall also execute such further security agreements,  mortgages, deeds
of trust,  financing  statements,  assignments  or other  documents as any Agent
shall request,  in form and substance as such Agent shall specify, to establish,
confirm, perfect or provide notice of Agents' security interest in the Guarantor
Collateral.

     7.  Representations  and Warranties.  Guarantor  represents,  covenants and
warrants to Agents and the Lender Group that:

     7.1 Organization, Good Standing, etc. Guarantor is duly organized, existing
and in good standing under the laws of the State of New York.  Guarantor has the
power to own its properties and to carry on its business as now being conducted.
Guarantor  is duly  qualified  to do  business  and is in good  standing in each
jurisdiction in which the  transaction of its business makes such  qualification
necessary.

     7.2 Corporate Authority,  Due Authorization,  Consents.  Guarantor has full
power and authority to execute,  deliver and perform its  obligations  under the
Guarantor  Documents,  and the Guarantor  Documents  have been duly  authorized.
Guarantor  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 this Guaranty and the other Guarantor Documents.

     7.3 Title to Collateral.  Guarantor has good and marketable title to all of
the Guarantor Collateral, free and clear of all liens, pledges, restrictions and
encumbrances except those permitted by Section 9.3 hereof.

     7.4 Litigation.  Except as set forth in Exhibit 7.4 attached hereto,  there
are no pending legal or governmental  actions,  proceedings or investigations to
which  Guarantor  is a party or to which any  property of  Guarantor  is subject
which might result in any Material  Adverse Effect on Guarantor and, to the best
of  Guarantor's  knowledge,  no such actions or  proceedings  are  threatened or
contemplated by governmental authorities or any other Person.

     7.5 Licenses and Approvals.  Guarantor has ownership of, or license to use,
or  has  been  issued,   all  trademarks,   patents,   copyrights,   franchises,
certificates,  approvals, permits, authorities, agreements, and licenses used or
necessary to permit it to own its  properties  and to conduct its  business,  in
substantially  the  manner as  presently  conducted  and as  contemplated  to be
conducted  (collectively,  the  foregoing  shall  be  referred  to as  "Required
Licenses").  Exhibit 7.5 lists all Required Licenses presently in existence with
respect to  Guarantor.  Each Required  License is in full force


                                       11
<PAGE>

and effect,  and there is no outstanding  notice of  cancellation or termination
or, to  Guarantor's  knowledge,  any threatened  cancellation  or termination in
connection  therewith,  nor has an event  occurred  with respect to any Required
License  which,  with the  giving of notice or  passage  of time or both,  could
result in the revocation or  termination  thereof or otherwise in any impairment
of Guarantor's rights with respect thereto, which impairment could reasonably be
expected to have a Material Adverse Effect on Guarantor. No consent, permission,
authorization,  order, or license of any governmental  authority is necessary in
connection  with the  execution,  delivery,  performance,  or enforcement of the
Guarantor Documents, except such as have been obtained and are in full force and
effect and as are described on Exhibit 7.5.

     7.6 No Violations. The execution,  delivery and performance by Guarantor of
the  Guarantor  Documents  will not: (a) violate any  provision  of  Guarantor's
articles of incorporation  or bylaws,  or any law, rule,  regulation,  judgment,
order or ruling of any court or governmental agency; (b) violate, conflict with,
result in a breach of,  constitute a default under, or with the giving of notice
or the expiration of time or both, constitute a default under, any existing real
estate  mortgage,   indenture,   lease,  security  agreement,   contract,  note,
instrument  or any  other  agreements  or  documents  binding  on  Guarantor  or
affecting its property;  or (c) violate,  conflict with,  result in a breach of,
constitute a default  under,  or result in the loss of, or restriction of rights
under,  any Required  License or any order,  law,  rule, or regulation  under or
pursuant to which any Required  License was issued or is maintained  ("Licensing
Laws").

     7.7 Binding  Agreement.  The Guarantor  Documents are, or when executed and
delivered,  will be, the  legal,  valid and  binding  obligation  of  Guarantor,
enforceable  in  accordance  with their terms,  subject only to  limitations  on
enforceability  imposed by applicable  bankruptcy,  insolvency,  reorganization,
moratorium, or similar laws affecting creditors' rights generally and by general
principles of equity.

     7.8  Compliance  with Laws.  Guarantor  is in  compliance  in all  material
respects  with  all  federal,   state,  and  local  laws,  rules,   regulations,
ordinances,  codes and orders,  including  without  limitation all Environmental
Laws, all Environmental Regulations, and all Licensing Laws.

     7.9 Principal Place of Business.  Guarantor's  place of business,  or chief
executive  office if it has more than one place of  business,  is  located at 10
Alvin Court, East Brunswick, NJ 08816.

     7.10  Material   Agreements.   All  agreements,   excluding  the  Guarantor
Documents,  of  Guarantor,  the  termination  or  breach of which  would  have a
Material  Adverse  Effect  ("Material  Agreements")  are listed on Exhibit  7.10
hereto and neither Guarantor nor, to Guarantor's  knowledge,  any other party to
any Material Agreement, is in default thereunder,  and no facts exist which with
the giving of notice or the passage of time, or both,  would  constitute  such a
default.  Guarantor  will  provide a true,  correct


                                       12
<PAGE>

and complete copy of each Material  Agreement and all amendments  thereto to any
Agent upon its request.

     7.11 Financial Statements; No Material Adverse Change.

     (a) The  audited  financial  statements  as of  December  31,  1996 and the
company-prepared  financial statements as of March 31, 1997 previously furnished
to CoBank for Agents and the Lender Group by Guarantor  were prepared based upon
Guarantor's  books and records and fairly  present in all material  respects the
financial condition, assets and liabilities of Guarantor as of the dates covered
thereby and the financial  results for the periods  covered thereby of Guarantor
and the  results of  operations  for the  periods  then  ended,  in each case in
conformity with GAAP.

     (b) To Guarantor's  knowledge:  (i) the Projections submitted to CoBank for
Agents and the Lender  Group  fairly  presented  in all  material  respects  the
projected operations,  financial condition, assets and liabilities of Guarantor,
Borrower and any Underlying  Borrower covered in the Projections as of the dates
covered thereby;  (ii) no undisclosed facts existed at the time of submission of
the Projections to CoBank which,  if taken into account,  would have resulted in
any material change in any of the Projections;  and (iii) the Projections  were,
at the time of submission,  based upon reasonable estimates and assumptions, all
of which were fair in light of then-current conditions, prepared on the basis of
the  assumptions  stated  therein,  and  reflected a reasonable  estimate of the
results of operations and other information  projected  therein.  To Guarantor's
knowledge,  as of the  date  hereof:  (A)  there  have  been no  changes  in the
estimates and assumptions used in preparing the Projections which, if taken into
account, would, in the aggregate,  materially adversely affect such Projections,
and such estimates and assumptions are fair in light of the current  conditions;
(B) no undisclosed  facts exist on the date hereof which, if taken into account,
would, in the aggregate,  materially  adversely affect the Projections;  and (C)
the Projections  reflect a reasonable  estimate of the results of operations and
other  information  projected  therein.  Since March 31, 1997, there has been no
material  adverse  change in the  financial  condition,  results of  operations,
business or prospects of Guarantor,  or, to Guarantor's  knowledge,  Borrower or
any Underlying Borrower.

     7.12 Payment of Taxes.  Guarantor has filed all required federal, state and
local tax returns  and has paid all taxes as shown on such  returns as they have
become  due.  Guarantor  has  paid  when due all  other  taxes,  assessments  or
impositions levied or assessed against it or its businesses or properties.

     7.13 Employee  Benefit  Plans.  Guarantor  does not  presently  maintain or
participate in, and has not in the past  maintained or  participated  in, and is
not obligated to contribute to, any of the following (each a "Guarantor  Benefit
Plan" and  collectively  "Guarantor  Benefit  Plans"):  (a) any funded "employee
welfare  benefit  plan," as that term is defined in Section 3(1) of the Employee
Retirement  Income  Security  Act of  1974,  as  amended,  and  the  regulations
thereunder ("ERISA"); (b) any


                                       13
<PAGE>

"multiemployer  plans," as defined in Section 3(37) of ERISA;  (c) any "employee
pension  benefit  plan" as defined in Section 3(2) of ERISA;  (d) any  "employee
benefit  plan",  as such term is  defined  in  Section  3(3) of  ERISA;  (e) any
"multiple  employer  plan"  within the  meaning of Section  413 of the  Internal
Revenue Code of 1986, as amended from time to time  ("Code");  (f) any "multiple
employer welfare  arrangement" within the meaning of Section 3(40) of ERISA; (g)
a "voluntary employees'  beneficiary  association" within the meaning of Section
501(a)(9)  of the Code;  (h) a "welfare  benefit  fund"  within  the  meaning of
Section 419 of the Code;  or (i) any  employee  welfare  benefit plan within the
meaning of Section 3(1) of ERISA for the benefit of retired or former employees.

     7.14 Equity  Investments;  Capitalization  of  Guarantor,  Borrower and the
Underlying  Borrowers.  The  authorized and issued capital stock or other equity
interests of Guarantor, Borrower and all existing Underlying Borrowers is as set
forth on Exhibit 7.14 attached hereto ("Authorized  Stock"). All such shares and
other  equity  interests  have been duly and  validly  authorized  and issued in
accordance,  in all material  respects,  with all  applicable  federal and state
laws, including  securities laws, and are fully paid and non-assessable.  Except
as set forth on Exhibit  7.14,  there are no  outstanding  warrants,  options or
other  rights to purchase  or acquire  any shares of the capital  stock or other
equity  interests  of  Guarantor,  Borrower  or any of the  existing  Underlying
Borrowers nor any outstanding securities convertible into such shares, warrants,
options,  nor  any  rights  to  acquire  any  such  convertible  securities.  To
Guarantor's  knowledge,  the Authorized Stock is held of record and beneficially
by  the  Persons,  and in the  amounts,  identified  on  Exhibit  7.14.  Neither
Guarantor  nor  Borrower  nor any of the  Underlying  Borrowers  owns any equity
interest in any entity other than as set forth on Exhibit 7.14. Except for liens
granted to Agents in connection with the  Construction  Loan, the Term Loan, the
Line of Credit Loan and/or this Guaranty, Guarantor, Borrower and the Underlying
Borrowers own the stock and other equity  interests set forth on Exhibit 7.14 as
being so  owned,  in each  case  free  and  clear of any  lien,  encumbrance  or
restriction on transfer  (other than  restrictions  generally  applicable  under
securities laws).

     7.15 Real Property. Except as shown on Exhibit 7.15, Guarantor does not now
own any title or any other interest in real property ("Real Estate  Interests"),
including without  limitation any fee interest,  leasehold  interest or fixture.
Guarantor  has good and  marketable  title to all  real  property  interests  of
Guarantor listed on Exhibit 7.15 hereto. Guarantor agrees to revise Exhibit 7.15
from time to time in the event  Guarantor  acquires any  additional  Real Estate
Interests in the future so that such Exhibit remains accurate and complete.

     7.16 No  Contingent  Liabilities.  Except for the  Guaranteed  Obligations,
Guarantor:  (a) does  not  have  any  direct  or  contingent  liability  for any
obligation of any Person; and (b) has no obligation to make a loan or advance to
any


                                       14
<PAGE>

Person or to own,  purchase or acquire any stock,  obligations or securities of,
or any other interests in, or to make any capital contribution to, any Person.

     7.17 Title  Insurance.  Guarantor has delivered to Agents:  (a) mortgagees'
title insurance commitments ("Title Commitments")  acceptable to Agents from one
or more insurers acceptable to Agents (the "Title Insurers") committing to issue
one or more title  policies  (ALTA Loan  Policy  Form)  (the  "Title  Policies")
insuring  the liens in favor of Agents (on  behalf of the Lender  Group) on each
parcel of real property of Guarantor having a Fair Market Value of $25,000.00 or
more as a  first  priority  lien on such  real  property  and (i)  deleting  the
standard  printed  exceptions,  (ii) containing only such exceptions to title as
are acceptable to Agents, and (iii) containing such other endorsements as Agents
may require;  and (b) either a Title  Commitment  or, at Guarantor's  option,  a
written  ownership and encumbrance  report of current date indicating that there
are no prior  liens on each  parcel of such real  property  having a Fair Market
Value of less than $25,000.00.  In addition,  in the case of the parcels of real
property covered by a Title Commitment which have an estimated fair market value
of  $25,000.00 or more,  Guarantor  has caused the Title  Insurers to deliver to
Agents a written  confirmation  acceptable to Agents  confirming  that the Title
Insurers are irrevocably committed to issue the Title Policies.

     7.18 Disclosure.  The  representations  and warranties of this Article 7 do
not contain any untrue  statement of a material fact or omit to state a material
fact necessary to make such representations not misleading.

     8.  Affirmative  Covenants  of  Guarantor.  From and after the date of this
Guaranty and until the Guaranteed  Obligations are indefeasibly paid in full and
the Lender Group has no  obligation  to make any advances to Borrower  under the
Loan  Agreements,  Guarantor  agrees  that it will  observe  and comply with the
following covenants:

     8.1 Books and  Records.  Guarantor  shall at all times keep proper books of
record and account,  in which correct and complete  entries shall be made of all
its dealings, in accordance with GAAP.

     8.2 Reports and Notices.  Guarantor  shall  provide to Agents the following
reports, information and notices:

     8.2.1 Annual Financial  Statements.  As soon as available,  but in no event
later than one hundred and twenty (120) days after the end of any fiscal year of
Guarantor  occurring  during the term  hereof  annual  financial  statements  of
Guarantor,  on a consolidated and  consolidating  basis,  prepared in accordance
with GAAP  consistently  applied  which  shall:  (a) be audited  by  independent
certified  public  accountants   selected  by  Guarantor  which  are  reasonably
acceptable  to  Agents;  (b) be  accompanied  by a  report  of such  accountants
containing an opinion  reasonably  acceptable to Agents; (c) be accompanied by a
Compliance Certificate;  (d) be prepared in reasonable detail and in


                                       15
<PAGE>

comparative  form;  and (e)  include a balance  sheet,  an income  statement,  a
statement of cash flows, a statement of stockholders'  equity, and all notes and
schedules relating thereto.

     8.2.2 Quarterly Financial Statements.  As soon as available but in no event
more than sixty (60) days after the end of each  Quarter in  Guarantor's  fiscal
year the  following  financial  statements,  prepared  in  accordance  with GAAP
consistently  applied:  (a) a  balance  sheet,  (b) an income  statement,  (c) a
statement  of cash flows,  (d) a statement  of  stockholders'  equity,  for such
Quarter and for the year to date,  and (e) such other  quarterly  statements  as
Agents may reasonably request,  which quarterly  statements requested under this
clause (e) shall include any and all notes and schedules thereto. Such quarterly
financial  statements  required  pursuant  to this  Subsection  8.2.2  shall  be
accompanied by a Compliance Certificate.

     8.2.3 Additional Information.  With reasonable promptness,  such additional
financial information or documentation as Agents may reasonably request.

     8.2.4  Notice of Default.  As soon as the  existence  of any default in the
observance  or  performance  of any of the  covenants  in this  Article  8 or in
Article 9 hereof  becomes  known to any officer of  Guarantor,  Guarantor  shall
promptly  give  Agents  written  notice of such  default,  the nature and status
thereof,  and the  action  being  taken or  proposed  to be taken  with  respect
thereto.

     8.2.5 Notice of  Litigation.  Guarantor  shall  promptly  notify  Agents in
writing of all litigation in which  Guarantor or Borrower is a party,  and which
either:  (a) involves an amount of $100,000 or more,  singly or in the aggregate
at any time, or (b) could reasonably be expected to result in a Material Adverse
Effect with respect to Borrower or Guarantor.

     8.2.6 Notice of Material Adverse Effect.  Promptly after Guarantor  obtains
knowledge thereof,  notice of any matter which has resulted or would result in a
Material Adverse Effect on Borrower or Guarantor.

     8.2.7 Notice of Environmental  Litigation.  Without limiting the provisions
of  Subsection  8.2.5  of this  Guaranty,  promptly  after  Guarantor's  receipt
thereof,   notice  of  the  receipt  of  all  pleadings,   orders,   complaints,
indictments,  or other  communication  alleging  a  condition  that may  require
Guarantor to undertake or to  contribute  to a cleanup or other  response  under
Environmental Regulations, or which seeks penalties, damages, injunctive relief,
or  criminal  sanctions  related to alleged  violations  of such laws,  or which
claims  personal  injury  or  property  damage  to any  person  as a  result  of
environmental  factors or conditions or which,  if adversely  determined,  could
have a Material Adverse Effect on Guarantor.


                                       16
<PAGE>

     8.2.8  Governmental and Other Notices.  Promptly after Guarantor's  receipt
thereof,  copies  of any  notices  or  other  communications  received  from any
governmental  authority,  with respect to any matter or proceeding the effect of
which  could  reasonably  be  expected  to have a  Material  Adverse  Effect  on
Guarantor.

     8.2.9 Adverse Action Regarding  Required  Licenses.  In the event Guarantor
learns that any petition, action, investigation, notice of violation or apparent
liability, notice of forfeiture, order to show cause, complaint or proceeding is
pending,  or,  to the  best of  Guarantor's  knowledge,  threatened,  to seek to
revoke,  cancel,  suspend,  modify,  or  limit  any  of the  Required  Licenses,
Guarantor  shall provide  CoBank with prompt  written  notice  thereof and shall
take, or cause to be taken,  all  reasonable  measures to contest such action in
good faith.

     8.3  Maintenance of Existence and  Qualification.  Guarantor shall maintain
its corporate  existence in good standing under the laws of New York.  Guarantor
will qualify and remain qualified as a foreign  corporation in each jurisdiction
in which such  qualification  is necessary or desirable in view of its business,
operations and properties.

     8.4 Compliance  with Legal  Requirements  and  Agreements.  Guarantor shall
comply:  (a) in all material  respects  with all laws,  rules,  regulations  and
orders  applicable  to Guarantor or its business;  and (b) with all  agreements,
indentures,  mortgages, and other instruments to which it is a party or by which
it or any of its  property  is bound;  provided,  however,  that the  failure of
Guarantor to comply with this  sentence in any instance  shall not  constitute a
breach of this Section unless such failure would have a Material  Adverse Effect
on Guarantor.

     8.5 Compliance with Environmental  Laws. Without limiting the provisions of
Section 8.4 of this Guaranty,  Guarantor  shall comply in all material  respects
with, and take all reasonable steps necessary to cause all persons  occupying or
present on any  properties  owned or leased by  Guarantor  to comply  with,  all
Environmental  Regulations,  the  failure  to comply  with  which  would  have a
Material Adverse Effect on Guarantor.

     8.6  Taxes.   Guarantor  shall  cause  to  be  paid  when  due  all  taxes,
assessments,  and other governmental charges upon it, its income, its sales, its
properties,  and federal and state taxes withheld from its employees'  earnings,
unless such taxes, assessments, or other governmental charges shall be contested
in good faith by appropriate  actions or legal  proceedings  and Guarantor shall
establish adequate reserves therefor in accordance with GAAP.

     8.7 Insurance. Guarantor shall keep the Guarantor Collateral insured at all
times by an  insurance  carrier or carriers  approved by Agents  which have an A
rating by the current BEST Key Rating Guide (provided that Florists Mutual Group
will be deemed an approved insurance carrier so long as its BEST Key Rating does
not fall


                                       17
<PAGE>

below its rating as of the Closing Date), against all risks covered by a special
form policy (and  including  flood,  earthquake  and windstorm  coverage) in the
amount  of the full  replacement  cost of the  Guarantor  Collateral  as well as
liability,  worker's compensation,  business interruption,  boiler and machinery
and such other insurance as Agents may reasonably  require,  in amounts and with
deductibles or maximum payouts  customarily carried by entities in similar lines
of business. Guarantor shall also maintain fidelity coverage (including employee
dishonesty)  on such  officers and employees and in such amounts as Agents shall
specify, or in the absence of any such specification,  as customarily carried by
corporations  engaged in comparable  businesses  and comparably  situated.  Such
insurance  policies shall contain such  reasonable  endorsements as Agents shall
from time to time  require and all  liability  policies  shall name Agents as an
additional  insured as its interests  may appear.  All such  insurance  policies
shall be endorsed with a mortgagee's or loss payable clause, as appropriate,  in
favor of Agents. The policy or policies  evidencing all insurance referred to in
this Section and receipts for the payment of premiums thereon or certificates of
such insurance  satisfactory to Agents shall be delivered to and held by Agents.
All such  insurance  policies  shall contain a provision  requiring at least ten
(10)  days'  notice to  Agents  prior to any  cancellation  for  non-payment  of
premiums and at least forty-five (45) days' notice to Agents of cancellation for
any other reason or of modification or non-renewal.  Guarantor shall give Agents
satisfactory  evidence of renewal of all such  policies  with  premiums  paid at
least thirty (30) days before  expiration.  Guarantor agrees to pay all premiums
on such insurance as they become due, and will not permit any condition to exist
on or with respect to the Guarantor  Collateral  which would wholly or partially
invalidate any insurance thereon.  Effective upon any default hereunder,  all of
Guarantor's  right,  title  and  interest  in and to all such  policies  and any
unearned  premiums paid thereon are hereby assigned to Agents who shall have the
right,  but not the  obligation,  to  assign  the same to any  purchaser  of the
Guarantor  Collateral  at any  foreclosure  sale.  Guarantor  shall give  prompt
written notice to the insurance carrier and Agents of any loss. Guarantor hereby
authorizes  and  empowers  Agents,   at  Agents'  option  and  in  Agents'  sole
discretion,   to,  upon  the   occurrence  of  a  default   hereunder,   act  as
attorney-in-fact  for Guarantor to make proof of loss, to adjust and  compromise
any claim under insurance  policies,  to collect and receive insurance proceeds,
and to deduct  therefrom  Agents'  expenses  incurred in the  collection of such
proceeds,  and all insurance policies of Guarantor shall provide that Agents may
act as Guarantor's attorney-in-fact for such purposes.

     8.8 Title to Assets and  Maintenance.  Guarantor  shall defend and maintain
title to the Guarantor  Collateral.  Guarantor shall keep its assets,  both real
and personal,  in good order and condition consistent with industry practice and
shall make all necessary  repairs,  replacements  and  improvements  so that its
business may be properly and advantageously conducted.

     8.9 Payment of Liabilities. Guarantor shall pay all liabilities (including,
without limitation,  (a) any indebtedness for borrowed money or for the


                                       18
<PAGE>

deferred  purchase  price of property or  services,  (b) any  obligations  under
leases which have or should have been  characterized as capitalized  leases,  as
determined in accordance with GAAP, or (c) any contingent  liabilities,  such as
guaranties,  for the obligations of others relating to indebtedness for borrowed
money or for the deferred  purchase price of property or services or relating to
obligations  under  leases  which  have or  should  have been  characterized  as
capitalized  leases,  as determined in accordance  with GAAP) as they become due
beyond any  period of grace  under the  instrument  creating  such  liabilities,
unless (with the exception of such obligations or liabilities owed to the Lender
Group)  they  are  contested  in good  faith  by  appropriate  actions  or legal
proceedings,  such contesting will not result in a Material  Adverse Effect with
respect to Guarantor,  and Guarantor  establishes  adequate reserves therefor in
accordance with GAAP.

     8.10 Inspection.  Guarantor shall permit Agents,  the Lender Group or their
agents,  during normal  business hours or at such other times as the parties may
agree, to examine  Guarantor's  properties,  books, and records,  and to discuss
Guarantor's  affairs,  finances,  operations,  and accounts with its  respective
officers, directors, employees, and independent certified public accountants.

     8.11 Further Assurances, Real Property Security Interests. Guarantor shall,
as may be required from time to time by Agents, provide such documents as may be
necessary or desirable  in the  judgment of Agents to confirm  Agents'  security
interest  in the  Guarantor  Collateral.  Promptly  after the  purchase or other
acquisition  of any fee  interest  in real  estate  having a cost or Fair Market
Value of $25,000.00 or more,  Guarantor shall provide Agents with written notice
of such  acquisition and shall grant to Agents a first deed of trust or mortgage
on such real estate (subject to liens permitted by Section 9.3 hereof and to the
Intercreditor  Agreement),  such  deed of  trust or  mortgage  to be in form and
substance  as  specified  by Agents.  In  connection  with the  delivery  of any
mortgage or deed of trust,  Guarantor shall, where required under the guidelines
set forth in Section 7.17 of this  Guaranty,  deliver to Agents,  at Guarantor's
sole cost, a mortgagee's  title policy,  in form and substance  satisfactory  to
Agents,  and in such amount as Agents shall specify but in no event greater than
the value of the real estate.  In connection with entering into, as lessee,  any
lease of an interest  in real  property  which lease calls for a rental  payment
equal to or in excess of $25,000.00 per annum, Guarantor shall deliver to Agents
a collateral  assignment of Guarantor's rights under such lease and a consent of
the  lessor  under such lease to such  collateral  assignment,  each in form and
substance  satisfactory  to Agents  together  with such  estoppels  of lessor as
Agents shall specify.

     8.12  Required  Licenses .  Guarantor  shall duly and  lawfully  obtain and
maintain in full force and effect all Required Licenses.


                                       19
<PAGE>

     8.13  Equity  to Senior  Long-Term  Debt.  Guarantor  shall  maintain  on a
Quarterly  basis, a ratio of Equity to Senior  Long-Term  Debt,  calculated on a
consolidated basis, of not less than 25%.

     8.14 Excess Cash Flow.  Upon the occurrence of an Event of Default (as such
term is  defined  in each of the Loan  Agreements)  under  any  Loan  Agreement,
Guarantor  shall pay, or shall cause the payors  thereof to pay, the Excess Cash
Flow directly to each of the Construction  Agent, the Term Agent and the Line of
Credit  Agent pro rata on the  basis of the  amount of  principal  and  interest
outstanding  under the  Construction  Loan, the Term Loan and the Line of Credit
Loan, respectively.

     8.15 ERISA. In the event Guarantor adopts , maintains, or becomes obligated
to  make  payments  under,  any  Guarantor  Benefit  Plan in the  future  (which
Guarantor may not do without the prior written consent of the Agents), Guarantor
shall:  (a) cause each such  Guarantor  Benefit  Plan to comply in all  material
respects  with the Code and ERISA,  including  but not limited to preparing  and
delivering each material report,  statement or other document  required by ERISA
and the Code  within the period  specified  therein and  conforming  in form and
substance to the provisions  thereof;  (b) cause any Guarantor Benefit Plan that
is intended to satisfy the requirements of Section 401(a) of the Code to satisfy
such  requirements   including,   but  not  limited  to  obtaining  a  favorable
determination  letter with respect to each such Guarantor  Benefit Plan; and (c)
prepare and deliver and administer  each Guarantor  Benefit Plan in all material
respects in accordance with the terms of such plan and with ERISA, the Code, and
any other  applicable  law,  except to the extent any failure to comply with the
preceding  clauses (a), (b) or (c) would not have a Material  Adverse  Effect on
Guarantor. Guarantor shall take any actions necessary to terminate its status as
a  participating  employer in any  employee  benefit plan (within the meaning of
Section 3(3) of ERISA)  sponsored by an other  entity.  Within ten (10) Business
Days after  receiving  such notice,  Guarantor  shall  furnish to Agents and the
Lender  Group any notice  received  by  Guarantor  relating to an  assertion  of
withdrawal  liability  imposed  by any  Multiemployer  Plan  upon  Guarantor  or
Guarantor's  controlled  group  prior to the  Closing  Date,  or relating to any
violation of the  provisions of the Code or ERISA  asserted by the Department of
Labor,  the  Pension  Benefit  Guaranty  Corporation  or the  Department  of the
Treasury  with respect to any  Guarantor  Benefit Plan that could  reasonably be
expected to have a Material Adverse Effect on Guarantor.

     9.  Negative  Covenants  of  Guarantor.  From  and  after  the date of this
Guaranty and until the Guaranteed  Obligations are indefeasibly paid in full and
the Lender Group does not have any  obligation  to make any advances to Borrower
under the Loan Agreements, Guarantor agrees that it will observe and comply with
the following covenants for the benefit of the Lender Group:

     9.1  Borrowings.  Guarantor  shall not create,  incur,  assume or permit to
exist:  (a) any  indebtedness  for borrowed  money or for the deferred  purchase
price  of  property  or  services;  (b)  any  contingent  liabilities,  such  as
guarantees;  or (c) any


                                       20
<PAGE>

obligations under leases which have or should have been characterized as capital
leases,  as  determined in accordance  with GAAP,  except for: (i)  indebtedness
owing to Borrower under the documents  evidencing the Guarantor  Working Capital
Loan,  (ii)  indebtedness  which does not exceed in the  aggregate the principal
amount of $500,000.00 as to which the scheduled  principal and interest payments
do not exceed $100,000.000 in any twelve month period, (iii) leases of equipment
used in the ordinary course of Guarantor's  business,  provided that the greater
of the book or fair market value of the assets  leased does not exceed  $250,000
in the aggregate and the annual  scheduled  lease payments do not exceed $75,000
in the aggregate, (iv) contingent liabilities to the Lender Group arising out of
this Guaranty;  and (v) the indebtedness  owed to Cogentrix  Delaware  Holdings,
Inc.  ("Cogentrix")  pursuant to the loan, in the original  principal  amount of
$1,375,000,  made by Cogentrix to Guarantor  pursuant to the Promissory Note and
Security Agreement dated March 10, 1997 executed by Guarantor,  Village Farms of
Delaware,  L.L.C and Village Farms, L.L.C. for the benefit of Cogentrix ("Pocono
Loan").

     9.2 No Other  Businesses.  Guarantor  shall not  transact  or engage in any
business  other  than:  (a)  the  acquisition,  construction,  development,  and
marketing of Greenhouse  Facilities and their  vegetable  and/or fruit products,
and (b)  agricultural  biotech business  activities  related to vegetable and/or
fruit production and preservation.

     9.3 Liens.  Guarantor will not create, incur, assume or suffer to exist any
mortgage, pledge, lien, charge or other encumbrance on, or any security interest
in, any of the Guarantor Collateral, except:

     (a) the security interests,  mortgages, pledges, liens, or other charges or
encumbrances  resulting from the Guarantor  Security Documents and the documents
granting  and  perfecting  the  security   interest  in  favor  of  Borrower  in
Guarantor's accounts and inventory as security for the Guarantor Working Capital
Loan;

     (b)  liens  for taxes or other  governmental  charges  which are not due or
remain  payable  without  penalty,  or 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;

     (c)  deposits  or pledges to secure  workmen's  compensation,  unemployment
insurance,  old  age  benefits  or  other  social  security  obligations  or  in
connection with or to secure the performance of bids,  tenders,  trade contracts
or leases or to secure statutory  obligations or surety or appeal bonds or other
pledges or deposits of like nature and all in the ordinary course of business;


                                       21
<PAGE>

     (d)  mechanics',  carriers',  workmen's,  repairmen's  or other  like liens
arising in the ordinary course of business in respect of obligations not yet due
or which are being contested in good faith and by appropriate proceedings;

     (e) easements, rights-of-way, zoning restrictions and other similar matters
incidental to the ownership of property which do not in the aggregate materially
detract from the value of such property or assets or materially impair their use
in the operation of the business of Guarantor;

     (f) liens securing purchase money  indebtedness;  provided,  that: (i) such
property acquired is used in the ordinary course of Guarantor's  business,  (ii)
such  security  interests  shall attach only to the property so  purchased,  and
(iii) the amount of the purchase money  financing so secured does not exceed the
amount permitted under Section 9.1;

     (g) the liens and security  interests  granted to CoBank, as Administrative
Agent on behalf of and for the  benefit of Farm  Credit  Bank of Texas and Texas
Production  Credit  Association in the Fort Davis Collateral as security for the
obligations  of Village Farms to Farm Credit Bank of Texas and Texas  Production
Credit Association under the Village Farms Loan Agreement;

     (h) the liens and  security  interests  granted  to  Cogentrix  in all cash
distributions or other payments received,  directly or indirectly,  by Guarantor
from Pocono Village Farms, L.P., a Delaware limited partnership and all proceeds
thereof, as security for the Pocono Loan.

     9.4 Sale of  Assets.  Guarantor  will not sell,  convey,  assign,  lease or
otherwise transfer or dispose of, voluntarily, by operation of law or otherwise,
any of the  Guarantor  Collateral,  except that:  (a)  Guarantor  may dispose of
equipment  which is  obsolete or no longer  used or useful by  Guarantor  in its
business so long as (i) no Event of Default has occurred and is continuing, (ii)
the transfer is made in an arms length transaction,  and (iii) such sales do not
involve equipment having an aggregate book value or fair market value, whichever
is greater,  in excess of $200,000.00 for all such equipment  disposed of in any
transaction and  $500,000.00 for all such equipment  disposed of in any calendar
year;  and (b) Guarantor may dispose of worn-out  equipment so long as (i) if an
Event of Default has  occurred and is  continuing,  any proceeds are paid to the
Lender Group, on a pro rata basis, and (ii) such sales do not involve  equipment
having an  aggregate  fair market  value in excess of  $100,000.00  for all such
equipment disposed of in any calendar year.

     9.5 Liabilities of Others. Guarantor shall not assume, guaranty, endorse or
otherwise  become  directly  or  contingently  liable  in  connection  with  any
obligation of any other Person other than pursuant to this Guaranty.


                                       22
<PAGE>

     9.6 Mergers; Acquisitions; Etc. Guarantor shall not:

     (a) merge or consolidate  with any entity,  or acquire all or substantially
all  of  the  assets  of  any  person  or  entity,   except   that,   where  the
post-transaction pro-forma submitted by Guarantor to Agents and the Lender Group
(i) uses reasonable  assumptions  satisfactory to Agents, (ii) demonstrates that
gross  revenues less cash expenses is no less than the amount of gross  revenues
less  cash  expenses  immediately  prior  to the  consummation  of  the  merger,
consolidation or acquisition,  as applicable,  (iii) demonstrates that the ratio
of Equity to Net Fixed  Investments is no less than such ratio immediately prior
to the consummation of the merger,  consolidation  or acquisition,  and (iv) the
consummation of the merger,  consolidation or acquisition,  as applicable,  will
not result in the breach by Guarantor of any covenant under this Guaranty or the
other   Guarantor   Documents,   then  Guarantor  may  consummate  such  merger,
consolidation  or  acquisition  upon the prior  written  consent of Agents which
consent shall not be unreasonably withheld;

     (b) form or  create  any new  subsidiary  or  Affiliate  without  the prior
written  consent of Agents,  which consent shall not be  unreasonably  withheld;
provided,  however,  that,  prior  to  making  the  initial  capital  or  equity
contribution  by Guarantor to any such  subsidiary or Affiliate,  Guarantor must
obtain the written  consent of the Agents,  which  consent shall be given in the
sole  discretion of the Agents,  and the ability of Guarantor to make capital or
equity  contributions  after the initial such contribution  shall be governed by
Section 9.7 hereof; or

     (c)  commence  operations  under any other name,  organization,  or entity,
including any joint venture.

     9.7 Loans,  Advances and Investments.  Guarantor will not make or permit to
remain  outstanding  any loan or advance  to, or own,  purchase  or acquire  any
stock,  obligations  or  securities  of, or any other  interest  in, or make any
capital  contribution to, any Person,  except that Guarantor may own,  purchase,
extend or acquire (as applicable):

     (a)  commercial  paper  maturing not in excess of one year from the date of
acquisition and rated P1 by Moody's Investors Service,  Inc. or A1 by Standard &
Poor's Corporation on the date of acquisition;

     (b)  certificates of deposit in North American  commercial banks rated C or
better by  Keefe,  Bruyette  & Woods,  Inc.  or 3 or better by Cates  Consulting
Analysts, maturing not in excess of one year from the date of acquisition;

     (c) obligations of the United States government or any agency thereof,  the
obligations of which are guaranteed by the United States  government,  maturing,
in each case, not in excess of one year from the date of acquisition;


                                       23
<PAGE>

     (d) repurchase  agreements of any bank or trust company  incorporated under
the laws of the United  States of America or any state thereof and fully secured
by a pledge of obligations issued or fully and unconditionally guaranteed by the
United States government;

     (e) investments in Village Farms; and

     (f) upon the prior  written  consent of Agents,  investments  in Underlying
Borrowers,  potential  Underlying  Borrowers or the  subsidiaries and Affiliates
formed pursuant to Section 9.6(b).

     9.8 Change in Owner Group.  Guarantor shall not permit or suffer to exist a
change in the Owner  Group  which  results in the Owner  Group  owning less than
fifty percent (50%) of Guarantor.

     9.9 Payment of Dividends;  Distributions.  Guarantor shall not, directly or
indirectly,  declare or pay any  dividends on account of any shares of any class
of its capital  stock now or  hereafter  outstanding,  or set aside or otherwise
deposit  or  invest  any sums for such  purpose,  or  redeem,  retire,  defease,
purchase or otherwise  acquire any shares of any class of its capital  stock (or
set aside or  otherwise  deposit  or invest any sums for such  purpose)  for any
consideration other than common stock or apply or set apart any sum, or make any
other distribution (by reduction or capital or otherwise) in respect of any such
shares  or  agree  to do any of the  foregoing;  provided  that,  for so long as
Guarantor is not a taxable entity under the Internal Revenue Code, Guarantor may
pay cash  dividends  to its  shareholders,  after the end of each fiscal year of
Guarantor  based on the ratio of Equity to Net Fixed  Investments for the fiscal
year of Guarantor most recently completed, in the following amounts:

     (a) with  respect to any  fiscal  year of  Guarantor  in which the ratio of
Equity to Net Fixed Investments,  calculated on a consolidated  basis, equals or
exceeds fifty percent (50%), one hundred percent (100%) of Net Income;

     (b) with  respect to any  fiscal  year of  Guarantor  in which the ratio of
Equity to Net Fixed Investments,  calculated on a consolidated  basis, equals or
exceeds forty percent  (40%) but is less than fifty  percent  (50%),  sixty-five
percent (65%) of Net Income;

     (c) with  respect to any  fiscal  year of  Guarantor  in which the ratio of
Equity to Net Fixed Investments,  calculated on a consolidated  basis, equals or
exceeds thirty  percent (30%) but is less than forty percent  (40%),  fifty-five
percent (55%) of Net Income; and


                                       24
<PAGE>

     (d) with  respect to any  fiscal  year of  Guarantor  in which the ratio of
Equity to Net Fixed  Investments,  calculated on a consolidated  basis,  is less
than thirty percent (30%), forty-five percent (45%) of Net Income.

     9.10  Payments  on  Indebtedness.  Guarantor  shall not make any  principal
payment on any  indebtedness  except  indebtedness  owing to Borrower  under the
Guarantor Working Capital Loan and indebtedness  owing to the Lender Group under
the Guarantor Documents and, so long as no Event of Default or Potential Default
under any Loan Agreement shall exist,  indebtedness  permitted by Section 9.1 of
this Guaranty.

     9.11 Transactions With Affiliates.  Guarantor shall not purchase,  acquire,
or sell any equipment,  other personal property,  real property or services from
or to any Affiliate,  except in the ordinary course of Guarantor's  business and
upon fair and  reasonable  terms no less  favorable  than would be  obtained  by
Guarantor in a comparable arm's-length transaction with an unrelated Person.

     9.12 ERISA. Guarantor shall not: (a) adopt, maintain or become obligated to
contribute  to any Guarantor  Benefit Plan without the prior written  consent of
the Agents;  (b) engage in or permit any  transaction  which  could  result in a
"prohibited transaction" (as such term is defined in Section 406 of ERISA) or in
the imposition of an excise tax pursuant to Section 4975 of the Code; (c) engage
in or permit any  transaction or other event which could result in a "reportable
event" as such  term is  defined  in  Section  4043 of ERISA  for any  Guarantor
Benefit Plan that is an "employee  pension  benefit  plan" as defined in Section
3(2) of ERISA that is intended to satisfy the  requirements of Section 401(a) of
the Code (each a "Guarantor  Pension Plan");  (d) fail to make full payment when
due of all amounts which,  under the  provisions of any Guarantor  Benefit Plan,
Guarantor is required to pay as contributions  thereto;  (e) permit to exist any
"accumulated  funding  deficiency"  (as such term is defined  in Section  302 of
ERISA) in excess of  $25,000.00,  whether  or not  waived,  with  respect to any
Guarantor  Pension  Plan;  (f) fail to make any  payments to any  "multiemployer
plan" that  Guarantor  may be required to make under any  agreement  relating to
such  "multiemployer  plan" or any law pertaining  thereto; or (g) terminate any
Guarantor  Pension Plan in a manner which could  result in the  imposition  of a
lien on any property of Guarantor  pursuant to Section 4068 of ERISA.  Guarantor
shall not terminate any Guarantor  Pension Plan so as to result in any liability
to the Pension Benefit Guaranty Corporation.  As used in this Section, all terms
enclosed  in  quotation  marks  shall  have the  meanings  set  forth in  ERISA.
Guarantor's  failure  to comply  with any of the  foregoing  provisions  of this
Section shall not constitute a breach of this Guaranty unless such failure has a
Material Adverse Effect on Guarantor.

     9.13 Change in Fiscal Year. Guarantor shall not change its fiscal year from
a year ending on December 31.


                                       25
<PAGE>

     10. Indemnification.

     10.1 General;  Stamp Taxes;  Intangibles Tax. Guarantor agrees to indemnify
and hold Agents,  the Lender  Group and their  directors,  officers,  employees,
agents,  professional  advisers  and  representatives   ("Indemnified  Parties")
harmless  from and  against any and all claims,  damages,  losses,  liabilities,
costs or expenses whatsoever which they or any other Indemnified Party may incur
(or which may be claimed  against  any such  Indemnified  Party by any  Person),
including  attorneys' fees incurred by any Indemnified Party,  arising out of or
resulting from: (a) the material inaccuracy of any representation or warranty of
Borrower or Guarantor in this Guaranty or the other Guarantor  Documents or Loan
Documents;  (b) the  material  failure of  Borrower or  Guarantor  to perform or
comply with any  covenant or  obligation  of  Borrower or  Guarantor  under this
Guaranty or the other Guarantor Documents or Loan Documents; or (c) the exercise
by Agents or the Lender Group of any right or remedy set forth in this  Guaranty
or the other Guarantor Documents or the Loan Documents,  provided that Guarantor
shall have no  obligation  to indemnify any  Indemnified  Party against  claims,
damages,  losses,  liabilities,  costs or expenses to the extent that a court of
competent  jurisdiction  renders a final  non-appealable  determination that the
foregoing are solely the result of the willful misconduct or gross negligence of
such Indemnified Party. In addition,  Guarantor agrees to indemnify and hold the
Indemnified  Parties  harmless  from and against  any and all  claims,  damages,
losses,  liabilities,  costs or expenses  whatsoever  which Agents or the Lender
Group or any other  Indemnified Party may incur (or which may be claimed against
any such Indemnified Party by any Person), including attorneys' fees incurred by
any  Indemnified  Party,  arising out of or  resulting  from the  imposition  or
nonpayment  by  Guarantor  or  Borrower  of any stamp tax,  intangibles  tax, or
similar tax,  including any amounts  owing by virtue of the  assertion  that the
property  valuation  used to calculate any such tax was  understated.  Guarantor
shall  have the right to assume  the  defense of any claim as would give rise to
Guarantor's  indemnification  obligation  under  this  Section  with  counsel of
Guarantor's  choosing so long as such defense is being  diligently  and properly
conducted and Guarantor shall establish to the Indemnified Party's  satisfaction
that the amount of such claims are not, and will not be,  material in comparison
to the liquid and unrestricted  assets of Guarantor  available to respond to any
award which may be granted on account of such claim.  So long as the  conditions
of the preceding  sentence are met, the Indemnified  Party shall have no further
right to reimbursement of attorneys' fees incurred thereafter. The obligation to
indemnify  set forth in this  Section  shall  survive  the  termination  of this
Guaranty.

     10.2 Indemnification Relating to Hazardous Substances.  Guarantor shall not
locate,  produce,  treat,  transport,  incorporate,  discharge,  emit,  release,
deposit or dispose of any Hazardous  Substance in, upon, under, over or from any
property owned or held by Guarantor, except in accordance with all Environmental
Regulations;  Guarantor shall not permit any Hazardous  Substance to be located,
produced, treated,  transported,  incorporated,  discharged,  emitted, released,
deposited,  disposed of or to


                                       26
<PAGE>

escape in, upon,  under,  over or from any property  owned or held by Guarantor,
except in accordance  with all  Environmental  Regulations;  and Guarantor shall
comply with all Environmental Regulations which are applicable to such property.
If an  Agent  reasonably  believes  that an  Environmental  Regulation  has been
violated by Guarantor's activities upon property owned or held by Guarantor, and
if such Agent so  requests,  Guarantor  shall  have  prepared  an  environmental
review,  audit,  assessment and/or report relating to the subject  property,  at
Guarantor's sole cost and expense, by an engineer or other environmental  expert
acceptable to Agents. If, however, the environmental review,  audit,  assessment
and/or report reveals that no Environmental  Regulation has been violated,  such
Agent shall  reimburse  Guarantor for the costs and expenses of such engineer or
other environmental  expert in completing such audit or report.  Guarantor shall
indemnify the Indemnified  Parties against,  and shall reimburse the Indemnified
Parties for, any and all claims,  demands,  judgments,  penalties,  liabilities,
costs, damages and expenses,  including court costs and attorneys' fees incurred
by the  Indemnified  Parties  (prior to trial,  at trial and on  appeal)  in any
action against or involving the Indemnified  Parties,  resulting from any breach
of the foregoing covenants, or from the discovery of any Hazardous Substance in,
upon,  under or over, or emanating from,  such property,  it being the intent of
Guarantor and the Indemnified Parties that the Indemnified Parties shall have no
liability  or  responsibility   for  damage  or  injury  to  human  health,  the
environmental or natural  resources caused by, for abatement and/or clean-up of,
or otherwise with respect to, Hazardous  Substances by virtue of the interest of
Agents,  or the Lender  Group,  or any of them,  in the property  created by any
documents securing the Guaranteed  Obligations or as the result of Agents or the
Lender Group,  or any of them,  exercising  any of their rights or remedies with
respect  thereto,  including  but not limited to becoming  the owner  thereof by
foreclosure  or conveyance in lieu of  foreclosure.  The foregoing  covenants of
this  Section  shall be  deemed  continuing  covenants  for the  benefit  of the
Indemnified  Parties, and any successors and assigns of the Indemnified Parties,
including  but not limited to the holder of any  certificate  of  purchase,  any
transferee  of the title of Agents or the Lender  Group,  or any of them, or any
subsequent owner of the property,  and shall survive the satisfaction or release
of any lien, any  foreclosure of any lien and/or any acquisition of title to the
property or any part thereof by Agents or the Lender  Group,  or any of them, or
anyone claiming by, through or under Agents or the Lender Group, or any of them,
or Guarantor by deed in lieu of foreclosure or otherwise. Any amounts covered by
the foregoing  indemnification shall bear interest from the date incurred at the
Default Interest Rate,  shall be payable on demand,  and shall be secured by the
Guarantor Security Documents.  The indemnification and covenants of this Section
shall survive the termination of this Guaranty and other covenants.


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<PAGE>

     11. Miscellaneous.

     11.1  Loan  Documents.   Guarantor  has  received  and  reviewed  the  Loan
Agreements and the other Loan Documents and acknowledges,  agrees,  and consents
to the terms and conditions set forth therein.

     11.2  Additional  Guarantors.  This Guaranty  shall be binding on Guarantor
whether or not any other guarantors execute any guarantees of the Indebtedness.

     11.3 No Waiver by Agents or Lender Group.  No delay or failure by Agents or
the Lender Group to exercise any right or remedy  against  Borrower or Guarantor
will be  construed  as a waiver of that right or remedy.  All remedies of Agents
and the Lender Group against Borrower and Guarantor are cumulative.

     11.4 Assignment. Guarantor may not assign this Guaranty without the written
consent of Agents.  Subject to the  foregoing,  the  provisions of this Guaranty
shall be binding upon  Guarantor,  its  successors  and assigns.  Agents and the
Lender Group may, without notice to or consent from Guarantor, assign all or any
part  of the  Indebtedness  or any  security  therefor.  In the  event  of  such
assignment,  each and every  immediate and  successive  assignee,  transferee or
holder of all or any part of the  Indebtedness  shall  have the right to enforce
this  Guaranty,  by legal action or otherwise,  for its benefit,  as fully as if
such  assignee,  transferee or holder were named herein and  specifically  given
such  rights and power.  Notwithstanding  such sale,  assignment,  or  transfer,
Agents  and the Lender  Group  shall have an  unimpaired  right to enforce  this
Guaranty for their own benefit as to any portion of the  Indebtedness  not sold,
transferred  or assigned,  or which the Lender Group may have  reacquired  after
such sale, transfer or assignment.

     11.5 Severability.  The invalidity or  unenforceability  of any one or more
provisions  of this  Guaranty  will  not  affect  any  other  provision  of this
Guaranty.  In the case of such  invalidity  or  unenforceability,  this Guaranty
shall be construed as if the invalid or  unenforceable  provisions  had not been
included herein.

     11.6  Amendments.  This  Guaranty  may not be amended  without  the written
consent of Agents and Guarantor. Guarantor agrees that it shall reimburse Agents
and the Lender  Group for all fees and expenses  incurred in  retaining  outside
legal counsel in connection  with any amendment or modification to this Guaranty
requested by the Guarantor.

     11.7  Service of Process  and  Consent to  Jurisdiction.  Guarantor  hereby
agrees  that any  litigation  with  respect to this  Guaranty  or to enforce any
judgment  obtained  against  Guarantor  for breach of this Guaranty or the other
Guarantor Documents may be brought in the courts of the State of Colorado and in
the United  States  District  Court for the District of Colorado (if  applicable
subject matter


                                       28
<PAGE>

jurisdictional requirements are present), as Agents may elect; and, by execution
and  delivery  of  this  Guaranty,   Guarantor   irrevocably   submits  to  such
jurisdiction.  With respect to litigation  concerning this Guaranty or the other
Guarantor  Documents  within  the  jurisdiction  of the  courts  of the State of
Colorado or the United  States  District  Court for the  District  of  Colorado,
Guarantor hereby irrevocably  appoints The Corporation  Company,  1675 Broadway,
Denver,  Colorado  80202, as the agent of Guarantor to receive for and on behalf
of Guarantor, service of process, which service may be made by mailing a copy of
any summons or other legal process to Guarantor in care of such agent. Guarantor
agrees  that  Guarantor  shall  maintain a duly  appointed  agent for service of
summons and other legal  process as long as Guarantor  remains  obligated  under
this  Guaranty and shall keep Agents and the Lender Group  advised in writing of
the  identity  and  location of such agent.  The receipt by such agent and/or by
Guarantor of such summons or other legal process in any such litigation shall be
deemed  personal  service and  acceptance  by Guarantor for all purposes of such
litigation.

     11.8 Jury Waiver.  IT IS MUTUALLY AGREED BY AND BETWEEN AGENTS,  THE LENDER
GROUP  AND  GUARANTOR  THAT  THEY  EACH  WAIVE  TRIAL  BY  JURY  IN ANY  ACTION,
PROCEEDING,  OR COUNTERCLAIM  BROUGHT ON ANY MATTER WHATSOEVER ARISING OUT OF OR
IN ANY WAY CONNECTED WITH THIS GUARANTY.

     11.9 Notices. All notices, requests and demands required or permitted under
the  terms of this  Guaranty  to be  given  by  Agents  or the  Lender  Group to
Guarantor  and given by  Guarantor to Agents or the Lender Group and all notices
relating to this Guaranty shall be in writing,  and, if intended for one or more
members of the Lender Group,  shall be given to the respective  Agent or Agents,
and shall be deemed to have been  given or made:  (a) if  delivered  personally,
immediately upon delivery; (b) if by telex, telegram or facsimile  transmission,
immediately upon sending and upon confirmation of receipt;  (c) if by nationally
recognized  overnight  courier  service  with  instructions  to deliver the next
Business  Day, one (1) Business Day after  sending;  and (d) if by United States
Mail, certified mail, return receipt requested, five (5) days after mailing. All
notices  shall be  addressed  as  follows  unless  either  the  Lender  Group or
Guarantor has given written notice designating a different address in accordance
with the procedures set forth in this Section 11.9:

If to the Construction Agent:

                           CoBank, ACB
                           245 North Waco Street
                           Wichita, Kansas 67202
                           Attention:
                           FAX: (316) 290-2006
                           Attention:  Mr. Greg Somerhalder


                                       29
<PAGE>

If to the Term Agent:

                           CoBank, ACB
                           245 North Waco Street
                           Wichita, Kansas 67202
                           Attention:
                           FAX: (316) 290-2006
                           Attention:  Mr. Greg Somerhalder

If to the Line of Credit Agent:

                           CoBank, ACB
                           245 North Waco Street
                           Wichita, Kansas 67202
                           FAX: (316) 290-2006
                           Attention:  Mr. Greg Somerhalder

If to Guarantor:

                           Agro Power Development, Inc.
                           10 Alvin Court
                           East Brunswick, New Jersey 08816
                           FAX:     (908) 254-1710
                           Attention:  Treasurer

with a copy to:

                           Agro Power Development, Inc.
                           1811 Sardis Road, Suite 207
                           Charlotte, NC 28270
                           FAX: (908) 254-1710
                           Attention:  Chief Financial Officer

     11.10  Applicable  Law.  To the extent not  governed by federal  law,  this
Guaranty shall be governed by and  interpreted  in accordance  with the internal
laws of the State of Colorado, without giving effect to any otherwise applicable
rules concerning conflicts of law.

     11.11 Captions.  The captions or headings in this Guaranty and any table of
contents hereof are for convenience only and in no way define, limit or describe
the scope or intent of any provision of this Guaranty.

     11.12 Mutual Release.  Upon full  indefeasible  payment and satisfaction of
the Guaranteed Obligations and the other obligations contained in this Guaranty,


                                       30
<PAGE>

Guarantor,  Agents and the Lender Group shall,  except as provided in Article 10
hereof, thereupon automatically each be fully, finally, and forever released and
discharged from any further claim,  liability,  or obligation in connection with
the Guaranteed Obligations.

     Guarantor  has  executed  this  Guaranty as of the day and year first above
written.


                                   GUARANTOR:

                                   AGRO POWER DEVELOPMENT, INC.


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



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