Exhibit 10.63



                               OPERATING AGREEMENT



                            Dated as of Nov. 14, 1997



                                     between



                                GREENHOST, INC.,
                                    as Owner,



                                       and



                         VILLAGE FARMS OF VIRGINIA, INC.
                                   as Operator




                               Greenhouse Facility
                         Located in Birchwood, Virginia



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                                TABLE OF CONTENTS



ARTICLE I        DEFINITIONS; CONSTRUCTION OF REFERENCES...................   1
Section 1.01     Definitions...............................................   1
Section 1.02     Construction of References................................   9

ARTICLE II       OPERATION OF FACILITY.....................................  10

ARTICLE III      RENT AND SERVICES.........................................  10
Section 3.01     Basic Rent................................................  10
Section 3.02     Supplemental Rent.........................................  10
Section 3.03     Late Payment..............................................  10
Section 3.04     Net Lease; No Setoff; Etc.................................  10
Section 3.05     Hot Water Charges.........................................  10
Section 3.06     Services Provided by, Owner...............................  11

ARTICLE IV       DISCLAIMER OF WARRANTIES..................................  11

ARTICLE V        RESTRICTION ON LIENS......................................  12

ARTICLE VI       OPERATION AND MAINTENANCE, ALTERATIONS
                 MODIFICATIONS AND ADDITIONS...............................  12
Section 6.01     Operation and Maintenance.................................  12
Section 6.02     Repair and Replacement....................................  12
Section 6.03     Alterations Required by Law...............................  13
Section 6.04     Plans and Specifications; Operating Manual................  13
Section 6.05     Operational Alterations...................................  13
Section 6.06     Owner's Option to Pay costs of Alterations................  13
Section 6.07     Reports of Alterations....................................  14
Section 6.08     Title to Parts............................................  14
Section 6.09     Removal of Parts..........................................  15
Section 6.10     Parts Free and Clear of Liens.............................  15
Section 6.11     Permitted Contests........................................  15
Section 6.12     Operating Logs............................................  15
Section 6.13     Return of Facility........................................  16

ARTICLE VII      IDENTIFICATION............................................  16

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ARTICLE VIII     INSURANCE.................................................  17
Section 8.01     Coverage..................................................  17
Section 8.02     Policy Provisions.........................................  18
Section 8.03     Evidence of Insurance.....................................  19
Section 8.04     No Duty of Owner to Verify................................  19

ARTICLE IX       LOSS, DESTRUCTION. CONDEMNATION OR DAMAGE.................  19
Section 9.01     Occurrence of Event of Loss...............................  19
Section 9.02     Repair of Loss or Destruction.............................  20

ARTICLE X        INTEREST CONVEYED TO OPERATOR.............................  20

ARTICLE XI       ASSIGNMENT AND SUBLEASE. LOCATION.........................  20
Section 11.01    Assignment and Sublease...................................  21
Section 11.02    Location..................................................  21
Section 11.03    Mortgaging the Estate of Lessor...........................  22

ARTICLE XII      INSPECTION AND REPORTS....................................  22
Section 12.01    Condition and Operation...................................  22
Section 12.02    Annual Insurance Report...................................  22
Section 12.03    Financial Reports.........................................  23
Section 12.04    Budget Approval...........................................  24
Section 12.05    Liability.................................................  24
Section 12.06    Liens.....................................................  24

ARTICLE XIII     EVENTS OF DEFAULT.........................................  25

ARTICLE XIV      ENFORCEMENT...............................................  26
Section 14.01    Remedies..................................................  26
Section 14.02    Survival of Operator's Obligations........................  27
Section 14.03    Remedies Cumulative.......................................  27

ARTICLE XV       RIGHT TO PERFORM FOR OPERATOR.............................  28

ARTICLE XVI      INDEMNITIES...............................................  28
Section 16.01    General Indemnity.........................................  28
Section 16.02    Fees, Taxes and Other Charges.............................  29
Section 16.03    Survival..................................................  31
Section 16.04    Waiver....................................................  32

ARTICLE XVII     COVENANTS AND REPRESENTATIONS OF OPERATOR.................  32
Section 17.01    Operation of Facility.....................................  32
Section 17.02    Affiliated Transactions...................................  32
Section 17.03    Waiver of Operating or Efficiency Standards...............  33
Section 17.04    Representations and Warranties of Operator................  33

ARTICLE XVIII    MISCELLANEOUS.............................................  33
Section 18.01    Further Assurances........................................  33


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Section 18.02    Quiet Enjoyment...........................................  34
Section 18.03    Notices...................................................  34
Section 18.04    Severability..............................................  34
Section 18.05    Amendment.................................................  34
Section 18.06    Headings..................................................  34
Section 18.07    Counterparts..............................................  34
Section 18.08    Governing Law.............................................  34
Section 18.09    Binding, Effect; Successors and Assigns Survival..........  34
Section 18.10    Divisible Operating Agreement.............................  35
Section 18.11    Effectiveness.............................................  35

ARTICLE XIX      STEAM SALES AGREEMENT, FEE MORTGAGE AND
                 MASTER LEASE..............................................  35
Section 19.01    Subject to Fee Mortgage and Master Lease..................  35
Section 19.02    Cooperation with Lenders..................................  36
Section 19.03    Steam Sales Agreement.....................................  36
Section 19.04    Storm Water Piping, Power Station Piping, Steam Equipment,
                 Steam Interconnection Facilities and Metering Devices.....  38

SCHEDULES

SCHEDULE 1.01(a) Description of Facility
SCHEDULE 1.01(b) Internal Rate of Return
SCHEDULE 3.01    Basic Rent
SCHEDULE 3.02    Supplemental Rent



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<PAGE>

     OPERATING AGREEMENT dated as of __________, 1997 between GREENHOST, INC., a
Delaware  corporation  (the  "Owner"),  and VILLAGE  FARMS OF VIRGINIA,  INC., a
Delaware corporation (the "Operator").

                              W I T N E S S E T H :

     WHEREAS,  the Owner owns a  greenhouse  plant in  Birchwood,  Virginia  and
leases the Site as defined  below) from the Master  Landlord (as defined  below)
under the Master Lease (as defined below) and

     WHEREAS,  the Owner  desires  to lease the Plant  (as  defined  below)  and
sublease the Site (as defined below) to the Operator and the Operator desires to
lease the Plant and  sublease  the Site from the Owner and operate the  Facility
(as defined below), all on the terms and conditions herein contained.

     In consideration of the mutual  agreements  herein contained and other good
and valuable consideration, receipt of which is hereby acknowledged, the parties
hereto, intending to be legally bound hereby. agree as follows:

                                    ARTICLE I

                     DEFINITIONS, CONSTRUCTION OF REFERENCES

     Section 1.01. Definitions.  As used in this Agreement.  the following terms
shall have the following  meanings (such definitions to be equally applicable to
both the singular and plural forms of the terms defined):

     "Address" shall mean:

          (a) with respect to the Owner, P. 0. Box 67, Sealston, Virginia 22547,
     Attn: Chief Executive Officer: and

          (b) with respect to the Operator,  10 Alvin in Court,  East Brunswick,
     New Jersey 08816. ATTN: President;

     or such other address as such party shall give by notice to the other party
hereto.

     "Affiliate"  of  any  Person  shall  mean  any  other  Person  directly  or
indirectly controlling, controlled by or under common control with, such Person.

     "Alterations"  shall  mean,  with  respect  to the  Facility,  alterations.
improvements,  modifications  and additions to the Facility  (but  excluding any
replacement of Parts incorporated in the Facility).

     "APD" shall mean Agro Power Development, Inc. a New York corporation.

     "Basic Rent" shall mean the rent  payable  pursuant to Section 3.01 of this
Agreement.



<PAGE>

     "Basic Rent  Payment  Date"  shall mean the last day of each  March,  June,
September and December  during the term of this  Agreement  and the  Termination
Date, commencing March 31, 1998.

     "Birchwood"  means,  as the context may permit or require,  Birchwood Power
Partners, L.P. its successors and assigns,  individually, and in its capacity as
all or any one or more of Master Landlord, or Lender.

     "Board of  Directors"  with  respect to the  Operator  or the Owner,  means
either the Board of Directors or any duly authorized committee of that Board.

     "Board Resolution" means a copy of a resolution  certified by the Secretary
or an Assistant  Secretary of the Operator or Owner, as the case may be. to have
been duly adopted by its Board of  Directors  and to be in full force and effect
on the date of such certification.

     "Borrower" means Greenhost,  Inc., a Delaware corporation,  in its capacity
as Borrower under the Loan Agreement.

     "Budget" shall have the meaning specified in Section 12.04.

     "Business  Day" shall mean any day other than a  Saturday,  Sunday or other
day on  which  banks  are  authorized  to be  closed  in New  York,  New York or
Charlotte, North Carolina.

     "Capital  Improvements  Costs" shall mean the costs  incurred by, the Owner
pursuant to the General Contractors Agreement.

     "Cash  Flow"  shall  mean for any  Operating  Year (a) the sum of (i) gross
revenues  from the  sale of  Product,  plus  (ii) all  amounts  received  by the
Operator  pursuant  to the  Line  of  Credit  Facility  Agreement,  plus,  (iii)
insurance  proceeds received by the Operator from policies of the type described
in subsection 8.01 (a)(iii) or any other insurance proceeds paid with respect to
the loss or damage to Product,  plus, (iv) revenues received pursuant to Article
XVII plus (v) all other  revenues  and  income  of the  Facility,  minus (b) all
Greenhouse  Expenses paid in the ordinary  course of business (but excluding any
Greenhouse Expenses that are prepaid by the Operator).

     "CERCLA" shall mean the Comprehensive Environmental Response,  Compensation
and Liability Act (42 U.S.C. ss. 9601 et seq.) as presently in effect and as the
same may hereafter be amended, together with any regulations pursuant thereto.

     "Closing Date" shall mean the date this Agreement is executed and delivered
by the parties.

     "Code" shall mean the Internal  Revenue  Code of 1986,  as amended,  or any
comparable successor law.

     "Collateral   Pledge"  means  the  Collateral   Assignment  of  Note,  Loan
Agreement,  and the Deed of Trust,  dated as of May 18, 1994,  from Birchwood to
the Security Agent,  as amended by that certain Amended and Restated  Collateral
Assignment of Greenhouse  Note, Loan Agreement



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<PAGE>

and Mortgage,  dated  November 19, 1996 and as the same may be further  amended,
modified or supplemented from time to time.

     "Deed of Trust" means the Deed of Trust,  Security Agreement and Assignment
of Leases and Rents,  dated as of May 18,  1994,  by and  between  Borrower,  as
Grantor thereunder,  Lawyers Title Insurance Corporation, as Trustee thereunder,
and Lender, as Beneficiary thereunder,  pursuant to which Borrower has granted a
security  interest  in  the  Trust  Property  to  secure  the  repayment  of the
Indebtedness and performance of the Obligations,  as amended by the Amendment to
Deed of Trust,  Security  Agreement and  Assignment  of Leases and Rents.  dated
March 27, 1997, and as the same may be further amended. modified or supplemented
from time to time. and. unless the context otherwise requires, shall include the
Collateral Pledge.

     "Default" means any event or condition which,  with notice or lapse of time
or both, would become an Event of Default.

     "Equipment" shall mean the equipment and other property described in Part I
of Schedule  1.01(a) of this  Agreement  together  with any Parts which may from
time to time be  incorporated  in such  equipment or other property and title to
which shall have vested in the Owner.

     "Effective Date" shall have the meaning specified in Section 18.11.

     "Environmental   Regulations"  means  any  and  all  laws,  rules,  orders,
regulations,  statutes,  ordinances,  codes,  decrees  or  requirements  of  any
Governmental  Authority  exercising  jurisdiction  over the Site, the Greenhouse
Facility (including ownership, construction or operation thereof), the Operator,
or the  Borrower  relating  to  the  environment  or  natural  resources,  or to
emissions,   discharges,   or  releases  or  threatened  releases  of  Hazardous
Substances,  or to protection of the  environment  or natural  resources,  or to
emissions,  discharges, Releases or threatened Releases of Hazardous Substances,
including but not limited to the CERCLA, the Hazardous Materials  Transportation
Act (49 U.S.C. ss. 1801 et seq.), the Resource Conservation and Recovery Act (42
U.S.C. ss.6901 et seq.), the Toxic Substances Control Act (15 U.S.C. ss. 2601 et
seq.),  the Clean  Air Act (42  U.S.C.  ss.  7401 et seq.),  the  Federal  Water
Pollution  Control Act (33 U.S.C. ss. 1251 et seq.), and the Safe Drinking Water
Act (42 U.S.C. ss. 300f et seq.), all as presently in effect and as the same may
hereafter be amended, any regulation pursuant thereto,  and also including,  but
not limited to, any obligations, duties, or requirements arising from or related
to Hazardous Substances under common law.

     "Event of Default" shall have the meaning specified in Article XIII of this
Agreement.

     "Event of Loss" shall mean (a) the actual or constructive total loss of all
or substantially all the Facility, or the condemnation,  confiscation or seizure
of, or requisition of title to, or requisition by any Governmental  Authority of
the use of all or substantially all the Facility,  or (b) the loss,  destruction
or damage of or  condemnation  confiscation or seizure of. or requisition by any
Governmental  Authority  of the use of such portion of the Facility as to render
the Facility unable to operate at  substantially  the same level of operation as
prior to the  occurrence  of such  event,  unless (x) it is  feasible to restore
rebuild or replace the  affected  portion of the Facility and (y) in the opinion
of the  Owner  sufficient  funds  are or will be  available  to the Owner (1) to



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<PAGE>

restore,  rebuild or replace the  affected  portion of the  Facility so that the
Facility will be able to operate at substantially the same level of operation as
prior to the  occurrence  of such event  within  twelve  (12)  months  after the
occurrence  of such  event  and  (ii) to pay all  Rent  until  such  restoration
rebuilding or replacement is completed.

     "Expense"  shall  have  the  meaning,  specified  in  Section  16.01 of the
Operating Agreement.

     "Facility"  shall mean the Owner's rights in and to the Plant, the Site and
the Equipment.

     "Fee  Mortgagee"  shall  have the  meaning  set forth in  Section  11.03(c)
hereof.

     "Fees, Taxes and Other Charges" shall have the meaning specified in Section
16.02 of this Operating Agreement.

     "Financing Parties  Representative" means Credit Suisse, in its capacity as
administrative  agent under the Power Station Loan Agreement (and its successors
thereto).

     "GDP/IPD"  shall  have  the  meaning  specified  in  Section  3.05  of this
Operating Agreement.

     "General  Contractors'  Agreement" shall mean the agreement between APD, as
General contractor,  and the Owner dated as of ____________,  as the same may be
amended,  modified  or  supplemented  from time to time in  accordance  with the
provisions thereof, to provide certain capital improvements to the Facility.

     "Greenhouse  Expenses"  shall  mean the sum  (without  duplication)  of (a)
direct labor costs paid, (b) seed expense paid, (c) packaging  supplies  expense
paid,  (d)  fertilizer  and chemical  expenses  paid,  (e)  biological  control,
including bees, expense paid, (f) freight expense paid, (g) growing,  medium and
supplies  expense paid, (h) carbon dioxide expense paid, (i) utility  (including
hot water,  electricity  and natural gas) expense paid, (j) Management Fee paid,
(k) Basic Rent paid,  (l)  insurance  premiums  and  property  taxes  paid,  (m)
principal  and  interest  paid  with  respect  to the  Line of  Credit  Facility
Agreement and (n) all other cash expenses paid relating, to the operation of the
Facility, to the extent contained in the Budget;  provided,  however, that there
shall be excluded from Greenhouse  Expenses (a) all expenses to be paid from the
Management Fee, (b) all payments with respect to federal, state and local income
taxes, (c) payment of principal, interest and fees with respect all indebtedness
of the  Operator  for non  capital  expenditures  other  than the Line of Credit
Facility Agreement, (d) payment of principal,  interest, lease payments and fees
with respect to the acquisition by the Operator of capital equipment,  except to
the extent  consented  to in advance by the Owner in writing,  and (e)  expenses
paid by the Operator pursuant to Section 16.01.

     "Greenhouse  Facility"  shall  mean the  approximately  38-acre  greenhouse
located on the Site.

     "Governmental Authority" shall mean any nation or government,  any state or
other  political  subdivision  thereof,  and any  entity  exercising  executive,
legislative,  judicial,  regulation or administrative functions of or pertaining
to government.



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     "Hazardous  Substances"  shall mean and include those elements or compounds
which  are  contained  in the lists of  hazardous  substances  or wastes  now or
hereafter  adopted by the United  States  Environmental  Protection  Agency (the
"EPA") or the lists of toxic pollutants  designated now or hereafter by Congress
or the EPA or which are defined as  hazardous,  toxic,  pollutant,  contaminant,
infectious or radioactive by CERCLA, by any Environmental Requirement. or by any
so called  federal,  state or local  "Superfund" or "Superlien"  laws, or by any
other Federal,  state or local statute, law, ordinance,  code, rule, regulation,
order or decree  regulating,  relating to, or imposing liability or standards of
conduct  concerning,  any  hazardous,  toxic or  dangerous  waste,  substance or
material,  as  now  or at any  time  hereafter  in  effect,  including,  without
limitation,  the Air Pollution Control Act, Va. Code Ann. ss. 10.1-1300 et seq.,
the Solid Waste  Management  Act, Va. Code Ann.  ss.10.1-1400 et seq., the State
Water Control Law, Va. Code Ann.  ss.2.1-44.2  et seq., or any and all rules and
regulations  now or  hereafter  promulgated  under any or all of the  foregoing,
together with any other  substance  the use,  handling,  generation,  treatment,
storage, disposal,  treatment,  presence or Release of which could result in the
imposition  of  liability,  under  any of  the  aforementioned  laws,  statutes,
ordinances, codes, rules, regulations, orders or decrees.

     "Incorporated  in" shall have the meaning  specified in Section 6.01 of the
Operating Agreement.

     "Indemnitee" shall mean the Owner and the respective  successors,  assigns,
officers, directors, employees and agents of any thereof.

     "Inspecting  Parties" shall have the meaning  specified in Section 12.01 of
this Operating Agreement.

     "Internal  Rate of Return"  shall mean the return to capital  calculated at
the end of each calendar quarter end in accordance with Schedule 1.01(b) hereto.

     "Lender"  means  Birchwood,  in its  capacity  as  Lender  under  the  Loan
Agreement.

     "Lien" shall mean any lien, mortgage,  encumbrance,  pledge, charge, lease,
easement,  servitude,  right of others or security interest of any kind, include
any thereof arising under any conditional sale or other retention agreement.

     "Line of Credit Facility  Agreement" shall mean the Line of Credit Facility
Agreement  between  Village  Farms  International  Finance  Association  and the
Operator, as the same may be amended, modified or supplemented from time to time
in accordance with the provisions thereof.

     "Loan Agreement" means the Loan and Contribution Agreement, dated as of May
18, 1994, between the Owner, as Borrower,  and Birchwood,  as Lender, as amended
by the Greenhouse Restructure Amendment, dated March 27, 1997 and Lender, and as
the same may be further amended, modified or supplemented from time to time.

     "Management Agreement" shall mean the Management,  Operation,  Maintenance.
Marketing and Sales Agreement to be entered into between the Operator and VF, as
it may be amended,  supplemented  or otherwise  modified  with the prior written
consent of the Owner and in effect from time to time,  pursuant to which VF will
provide certain management, operation,



                                       5
<PAGE>

maintenance,  marketing  and sales  services to the Operator,  which  Management
Agreement shall be approved in advance by the Owner in writing.

     "Management  Fee" shall mean the  management fee paid to VF pursuant to the
Management  Agreement for (a) all internal  accounting services of the Operator,
(b)  salary  and  other  benefits  paid  to  the  Operator's  grower  and  sales
representatives, (c) all internal management services performed by principals of
the Operator or VF and (d) all direct  out-of-pocket  expenses (including travel
and living  expenses)  paid in connection  with the  performance of the services
described in clauses (a), (b) and (c).

     "Master  Landlord" means Birchwood (or its successors and assigns),  in its
capacity as Master Landlord under the Master Lease.

     "Master  Landlord's  Facilities"  shall  mean,   collectively,   the  Steam
Interconnection Facilities, the Metering Devices and the Power Station Piping.

     "Master Lease" means that certain Deed of Master Lease, dated as of May 18,
1994,  between the Master  Landlord,  and the Master  Tenant,  as amended by the
Amendment  to Master  Lease  dated March 27, 1997 and as the same may be further
amended, modified or supplemented from time to time.

     "Master Tenant" means the Owner (or its successors and permitted  assigns),
in its capacity as Master Tenant under the Master Lease.

     "Metering Devices" shall mean all necessary meters and associated equipment
to be  utilized  in  measuring  the steam  output of the Power  Station  and for
measuring the condensate return to the Power Station.

     "Nonseverable"  shall  describe  (i) with  respect  to any  Alteration,  an
Alteration which is a "nonseverable  improvement"  within the meaning of Revenue
Procedure 79-48 and (ii) with respect to any part not constituting an Alteration
or part of an  Alteration,  a part  which  cannot be  readily  removed  from the
equipment without causing material damage to the Facility.

     "Notes"  means (i) the  promissory  note  executed  by Owner in the form of
Exhibit  A to the Loan  Agreement,  payable  to the order of  Birchwood,  in the
amount of twenty million seventy nine thousand dollars  ($20,079,000),  (ii) the
term  note  executed  by  Owner in the form of  Exhibit  A to the Term  Loan and
Working,  Capital Agreement payable to the order of Birchwood.  in the amount of
Two Million Five Hundred  Thousand  Dollars  ($2,500,000)  and (iii) the working
capital  note  executed  by Owner in the form of  Exhibit B to the Term Loan and
Working Capital Agreement,  payable to the order of Birchwood,  in the amount of
Three Million Dollars  ($3,000,000),  and any and all renewals,  reinstatements,
rearrangements,  enlargements  or extensions of such notes or of any  promissory
note or notes given therefor.

     "Officer's Certificate" means a certificate signed by a Responsible Officer
of the party required to give such certificate.



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<PAGE>

     "Operating  Manual"  shall mean such  operating  manuals as are  ordinarily
maintained  by the  Operator  with  respect to the Facility and any such manuals
provided by any manufacturer of any component of the Facility.

     "Operating Year" shall mean each period  commencing on January 1 and ending
on December 1 during the term of this Operating Agreement.

     "Operative  Documents" shall mean this Operating  Agreement and the Line of
Credit Facility Agreement.

     "Operator"  shall  mean  Village  Farms  of  Virginia,   Inc.,  a  Delaware
corporation, and its permitted successors and permitted assigns.

     "Overdue Rate" shall mean an interest rate equal to the rate announced from
time to time by First  Union  National  Bank of North  Carolina  as its prime or
reference rate plus two percent (2%) per annum.

     "Owner"  shall  mean  Greenhost,  Inc.  a  Delaware  corporation,  and  its
successors and permitted assigns.

     "Parts" shall have the meaning specified in Section 6.02.

     "Permitted Liens" shall mean (a) the respective rights and interests of the
Owner and the  Operator as provided in the  Operative  Documents,  (b) liens for
taxes  either not yet due or being  contested  in good faith and by  appropriate
proceedings,  so long as such  proceedings  shall not  involve any danger of the
sale,  forfeiture  or loss of any part of the  Facility,  title  thereto  or any
interest  therein and shall not  interfere  with the use or  disposition  of the
Facility  or the  payment  of  Rent,  (c)  materialmen's,  mechanics',  workers,
repairmen's, employees' or other similar Liens arising in the ordinary course of
business for amounts either not yet due or being  contested in good faith and by
appropriate proceedings so long as such proceedings shall not involve any danger
of the sale,  forfeiture or loss of any part of the  Facility,  title thereto or
any interest  therein and shall not interfere with the use or disposition of the
Facility or the payment of Rent,  and (d) Liens  arising,  out of  judgments  or
awards with respect to which at the time an appeal or  proceeding  for review is
being  prosecuted  in good  faith and either  which have been  bonded or for the
payment of which adequate reserves shall have been provided.

     "Person" shall mean individual,  corporation,  partnership,  joint venture,
association,   joint-stock  company,  trust,   unincorporated   organization  or
government or any agency or political subdivision thereof.

     "Plans and Specifications"  shall mean the plans and specifications for the
Plant and the Equipment identified as such. as the same may be revised from time
to time in accordance with the terms of this Agreement.

     "Plant"  shall  mean  those  buildings  and other  properties  specifically
described in Part 2 of Schedule 1.01(a) to the Operating Agreement,  together at
all times with any and all Parts which may from time to time be  incorporated in
the Plant.



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<PAGE>

     "Power Purchase Agreement" means the Power Purchase and Operating Agreement
dated as of July 13, 1990,  between SEI  Birchwood,  Inc., a General  partner of
Lender,  and Virginia  Power, as assigned by SEI Birchwood,  Inc. to Lender,  as
amended, modified or supplemented from time to time.

     "Power  Station" means the electric power  generation  facility  located in
King, George County,  Virginia,  which Birchwood constructed and currently owns,
operates and maintains.

     "Power Station Loan Agreement" means the Loan and  Reimbursement  Agreement
dated as of May 18, 1994, among, Lender, as the borrower thereunder, the "Banks"
and  "Institutions"  from time to time  party  thereto,  and Credit  Suisse,  as
administrative agent for the Banks,  providing for loans and other extensions of
credit to finance  the  construction  and other costs of the Power  Station,  as
amended by that certain Greenhouse Restructure Amendment,  dated March 27, 1997,
and as the same may be further amended.  supplemented or otherwise modified from
time to time.

     "Power Station Piping" shall mean the pump and piping system  necessary for
the return of water from the detention pond on the Site to the Power Station.

     "Product" shall mean tomatoes or any other agricultural product approved in
writing by the Owner.

     "QF  Application"  means  that  certain   Application  of  Birchwood  Power
Partners,  L.P.  Certification of Qualifying  Status as a Cogeneration  Facility
filed with the Federal  Energy  Regulatory  Commission on June 29, 1993, and all
amendments thereto.

     "Release"  means  any  spilling,   leaking,  pumping,  pouring,   emitting,
emptying, discharging,  injecting, escaping, leaching, dumping or disposing into
the environment  including  without  limitation the abandonment or discarding of
barrels, containers or other closed or open receptacles containing any Hazardous
Substances or pollutant or contaminant).

     "Rent" shall mean Basic Rent and Supplemental Rent, collectively.

     "Responsible Officer" shall mean the Chairman or Vice Chairman of the Board
of Directors,  the Chairman or Vice  Chairman of the Executive  Committee of the
Board of Directors, the President, and Vice President (whether or not designated
by a number or a word or words added before or after the title "Vice President",
including an Assistant Vice President),  the Secretary,  an Assistant Secretary,
the  Treasurer,  an  Assistant  Treasurer  or any other  officer  of any of them
customarily  performing functions similar to those performed by any of the above
designated officers.

     "Site" shall mean the land  described in Part 3 of Schedule 1.01 (a) of the
Operating Agreement.

     "Steam  Equipment"  shall mean the  absorption  chiller  and heat  exchange
systems, cooling tower, thermal storage tank, steam and condensate lines and the
other  equipment  required for the conversion of steam into a form usable in the
heating  and  cooling,  of the  Greenhouse  Facility



                                       8
<PAGE>

and the lines  required to deliver the hot and chilled water from such equipment
to the Greenhouse Facility.

     "Steam  Interconnection  Facilities" shall mean the lines and other devices
necessary to  interconnect  the steam and condensate  lines of the Power Station
with the Steam Equipment.

     "Steam  Sales  Agreement"  means the  agreement,  dated as of May 18, 1994,
between Birchwood,  as seller,  and the Owner, as purchaser,  as amended by that
certain Greenhouse Restructure Amendment.  dated March 27, 1997. and as the same
may be further amended, modified or supplemented from time to time.

     "Storm  Water  Piping"  shall  mean the pump and  piping  system  and other
equipment  necessary  for the return of storm water  runoff from the  Greenhouse
Facility to the detention pond on the Site.

     "Supplemental Rent" shall mean the rent payable pursuant to Section 3.02 of
this Agreement.

     "Supplemental  Basic Rent  Payment  Date"  shall mean the last date of each
January,  April,  July and  October  during the term of this  Agreement  and the
Termination Date commencing April 30, 1998.

     "Term" shall mean (a) the period  commencing  on January 1, 1998 and ending
on December  31,  2007 or (b) such  shorter  period as may result  from  earlier
termination of this Operating Agreement as provided herein.

     "Term  Loan and  Working  Capital  Agreement"  shall mean the Term Loan and
Working Capital  Agreement dated as of November 19, 1996 between  Birchwood,  as
Lender, and Owner, as Borrower.

     "Termination Date" shall mean the last day of the Term.

     "Trust  Property"  has the  meaning,  given in  Section  1.1 of the Deed of
Trust.

     "VF" shall mean Village Farms, L.L.C. a Delaware limited liability company.

     "Virginia  Power" means  Virginia  Electric and Power  Company,  a Virginia
corporation, as purchaser of energy and capacity (or its successor and permitted
assigns) under the Power Purchase Agreement.

     "Water  Charge"  shall have the meaning,  specified in Section 3.05 of this
Operating Agreement.

     Section 1.02.Construction of References.  All references in this instrument
to designated  sections and other  subdivisions  are to designated  sections and
other  subdivisions of this  instrument,  and the words  "herein",  "hereof" and
"hereunder" and other words of similar import refer to this Operating, Agreement
as a whole and not to any particular section or other subdivision.

                                       9

<PAGE>

     Except as otherwise  indicated,  all the agreements or  instruments  herein
defined shall mean such  agreements or  instruments as the same may from time to
time be  supplemented  or amended or the terms thereof waived or modified to the
extent permitted by, and in accordance with, the terms thereof.

                                   ARTICLE II

                              OPERATION OF FACILITY

     As of the  later to occur  of (i)  January  1,  1998  and  (ii)  Notice  of
Substantial Completion (as defined in the General Contractor's Agreement) of the
Plant,  subject to all the terms and  conditions  of this  Agreement,  the Owner
shall provide and lease the Facility,  to the Operator,  and the Operator  shall
operate and lease, and hereby,  as of the Effective Date does operate and lease,
the Facility from the Owner for the Term.

                                   ARTICLE III

                               RENT AND SERVICES

     Section 3.01. Basic Rent.  Subject to adjustment as provided below,  during
the Term,  the  Operator  shall pay Basic  Rent to the Owner in  arrears on each
Basic Rent  Payment  Date for the  Facility in an amount equal to the amount set
forth on Schedule 3.01 for such Basic Rent Payment Date (in the case of the last
Basic Rent Payment  Date if such date is other than a Basic Rent  Payment  Date,
such Basic Rent shall be prorated  based on the number of days during  which the
Operator leased the Facility).  Basic Rent shall be increased in accordance with
any agreement  reached in connection  with the payment by the Owner of the costs
of any Alterations in accordance with Section 6.06 hereof

     Section 3.02.  Supplemental  Rent. In addition to Basic Rent,  the Operator
shall pay to the Owner Supplemental Rent in an amount equal to the percentage of
Cash Flow set forth on Schedule 3.02 during the Term. Supplemental Rent shall be
payable  for  each  calendar  quarter  on the  Supplemental  Rent  Payment  Date
immediately following the end of such calendar quarter.

     Section 3.03. Late Payment.  If any Rent or any other amount required to be
paid  hereunder  shall not be paid when due, the Operator shall pay to the Owner
interest  (to the  extent  permitted  by law) on such  overdue  amount  from and
including  the due date  thereof to but  excluding  the date of payment  thereof
(unless such payment  shall be made after 11:00 A.M.  local time,  in which case
such date of payment  shall be included) at the Overdue  Rate. If any Rent shall
be paid on the date when due, but after 11:00 A.M.,  local time, at the place of
payment, interest shall be payable as aforesaid for one day.

     Section 3.04. Net Lease: No Setoff,  Etc. This Operating Agreement is a net
lease and,  notwithstanding any other provision of this Operating Agreement,  it
is intended  that Rent and all other  amounts  payable by Operator  hereunder to
Owner shall be paid without notice, demand,  counterclaim,  setoff, deduction or
defense and without abatement, suspension, deferment, diminution or reduction.

     Section  3.05.  Hot Water  Charges.  The Owner  agrees  to  provide  to the
Operator  during the Term hot water for the  operation of the Facility at a cost
to the  Operator  of  $200,000.00  per annum,  subject to  increase as set forth
below, (the "Water Charge").  The Water Charge shall be



                                       10

<PAGE>

due and payable in equal monthly installments in arrears on the last day of each
month during the Term  (prorated for any partial  ,years or months).  Commencing
January 1, 1999, and annually on each January 1 thereafter  during the Term, the
Water Charge shall be increased in  accordance  with  increases,  if any, in the
Gross Domestic Product/Implicit Price Deflator ("GDP/IPD"),  as published by the
U.S. Department of Labor,  Bureau of Labor Statistics.  The new Water Charge for
each such  period  shall be  calculated  by the Owner by  multiplying  the Water
Charge in effect on the  immediately  preceding  December 1 by a  fraction,  the
numerator  of which shall be the GDP/IPD as first  published  for the  preceding
year and the  denominator  of which shall be the GDP/IPD as first  published for
the second  preceding year (i.e., the new Water Charge for January 1, 1999 shall
equal the Water Charge in effect on December 31, 1998  multiplied by a fraction,
the  numerator of which shall be the GDP/IPD for 1998 (first  published in March
of 1999) and the  denominator  of which  shall be the  GDP/IPD  for 1997  (first
published  in March of  1998)).  Due to the  timing  of the  publication  of the
GDP/IPD,  the new Water Charge for each such period shall be calculated in April
of each such period and applied  retroactively  to be  effective as of the prior
January 1. Upon  calculation  of the new Water  Charge,  the Operator  agrees to
promptly pay the Owner the difference  between the amounts due for Water Charges
for the months of January,  February, and March of each such period based on the
adjusted Water Charge,  and the amounts  actuation,  paid for water based on the
pre-adjusted Water Charge.

     The Owner shall be responsible  for  contracting for any fuel necessary for
providing hot water.

     The Owner shall invoice the Operator for hot water on a monthly basis.  and
such invoices shall be savable within thirty (30) days of invoice.

     Section 3.06.  Services  Provided by Owner. At the request of the Operator.
the  Owner  may at its  option,  provide,  at the  Operator's  expense,  general
maintenance services. The Owner shall charge the Operator an amount equal to its
actual cost in providing  such  services and shall invoice the Operator for such
services monthly as incurred.  Such invoices shall be payable within thirty (30)
days of invoice.

                                   ARTICLE IV

                            DISCLAIMER OF WARRANTIES

     THE FACILITY IS BEING PROVIDED AND LEASED  PURSUANT TO THIS AGREEMENT ON AN
"AS-IS, WHERE-IS" BASIS. THE OWNER HAS NOT MADE NOR SHALL BE DEEMED TO HAVE MADE
ANY  REPRESENTATION  OR  WARRANTY,  EXPRESS OR  IMPLIED AS TO THE TITLE,  VALUE,
MERCHANTABILITY,  COMPLIANCE WITH SPECIFICATIONS,  CONDITION, DESIGN, OPERATION,
ABSENCE  OF LATENT  DEFECTS  OR  FITNESS  FOR USE OF THE  FACILITY  (OR ANY PART
THEREOF),  OR ANY  OTHER  REPRESENTATION  OR  WARRANTY  WHATSOEVER,  EXPRESS  OR
IMPLIED,  WITH RESPECT TO THE FACILITY (OR ANY PART THEREOF).  It is agreed that
except as expressly  provided herein all risks incident to the matters discussed
in the  preceding  sentence,  as  between  the Owner,  on the one hand,  and the
Operator,  on the other,  are to become by the Operator.  The provisions of this
Article IV have been negotiated,  and, except to the extent otherwise  expressly
stated in this Agreement, the foregoing provisions are intended to be a complete
exclusion  and  negation  of any  representations  or  warranties  by the



                                       11

<PAGE>

Owner, express or implied,  with respect to the Facility that may arise pursuant
to any law now or hereafter in effect, or otherwise.

                                    ARTICLE V

                              RESTRICTION ON LIEN'S

     The Operator  shall not directly or  indirectly  create,  incur,  assume or
suffer to exist any Lien on or with respect to the  Facility,  title  thereto or
any interest  therein,  except Permitted Liens. The Operator shall promptly,  at
its own  expense,  take such action as may be  necessary  duly to  discharge  or
eliminate  or bond in a manner  satisfaction  to the  Owner any such Lien if the
same shall arise at any time.  The Operator  further agrees that it shall pay or
cause to be paid on or before the time or times  prescribed by law (after giving
effect to any applicable grace period) any taxes,  assessments,  fees or charges
imposed  on the  Operator  (or any  affiliated  or  related  group of which  the
Operator is a member) under the laws of any jurisdiction that. if unpaid,  might
result in any Lien prohibited by this Operating Agreement.

                                   ARTICLE VI

                     OPERATION AND MAINTENANCE; ALTERATIONS,

                           MODIFICATIONS AND ADDITIONS

     Section 6.01. Operation and Maintenance.  The Operator. at its own expense,
shall at all times  operate.  maintain,  service  and  repair  the  Facility  in
accordance  with  (a)  prudent  commercial  operating   maintenance   practices,
including  all   manufacturers'   warranty   requirements  to  the  extent  such
requirements  are made known to the  Operator,  (b) the then  current  Operating
Manual,  (c) except to the extent Section 6.11 hereof shall apply all applicable
requirements  of law  and  of  any  court  and  of  any  Governmental  Authority
(including without limitation all zoning,  environmental protection,  pollution,
sanitary and safety laws, and all Environmental Requirements) noncompliance with
which would have a material  adverse effect on the  Operator's  right to operate
the Facility,  the Operator's  business or financial  condition or the rights of
the Owner in the  Facility  or would,  in the  opinion of the  Owner,  involve a
material  risk of any of the items  enumerated in Section 6.11 (i) through (iv),
and (d) all  requirements  contained  in permits  and  licenses  relating to the
Facility in effect from time to time during the Term. In  connection  therewith,
the  Operator  shall (i) maintain  the  Facility in stood  operating  condition.
ordinary wear and tear excepted, (ii) cause the Facility to continue to have the
capacity and functional  ability,  to produce Product on a continuing  basis. in
normal commercial  operation,  in a commercially  efficient manner, (iii) comply
with the standards imposed by any insurance  policies in effect at any time with
respect  to the  Facility  or any  part  thereof,  and  (iv)  bear  the  expense
associated  with  changes in  permitting  requirements  relating to the Facility
during the Term.

     Section 6.02.  Repair and  Replacement.  Except after the  occurrence of an
Event of Loss, and except as provided below,  the Operator,  at its own expense,
shall keep the Facility in good operating  condition  (reasonable  wear and tear
excepted),  and  shall  make  all  repairs,  replacements  and  renewals  of all
necessary,   or  useful   appliances,   parts,   instruments,   accessories  and
miscellaneous property of whatever nature (collectively,  the "Parts") necessary
to maintain  the Facility in good  operating  condition.  The Operator  shall be
responsible  for  making  (a)  all  structural  and  nonstructural  repairs  and
replacements  to the  Facility up to thirty  thousand  dollars  ($30,000) in the
aggregate in each Operating Year and (b) all repairs and replacements,  with the



                                       12

<PAGE>

exception of (i) the Greenhouse  structure,  including the  ventilation  system;
(ii) the heating system, including pumps, boilers, expansion vessels and piping;
(iii) the curtain system;  (iv) the CO2 system;  (v) the irrigation  system; and
(vi) the cold storage facility: provided that notwithstanding anything contained
herein to the contrary,  the Operator  shall be  responsible  for all repair and
replacements  relating to normal wear and tear.  The Owner shall be  responsible
for making  all  necessary  structural  and  nonstructural  repairs in excess of
thirty thousand  dollars  ($30,000) in the aggregate in any Operating Year other
than  repairs  and  replacements  of items  referred  to in  clause  (b)  above;
provided,  however, that if such repairs or replacements are necessitated by the
negligent or willful acts of the Operator,  its  employees,  agents or invitees,
then the cost of such repairs or replacements shall be borne by the Operator. In
the ordinary course of maintenance, service, repair or testing, the Operator may
remove any Parts,  but the  Operator  shall  cause such Parts to be  replaced as
promptly as practicable.  All  replacement  Parts shall be free and clear of all
Liens  except  Permitted  Liens  and  shall  be in at  least  as good  operating
condition  as. and shall have a value and  utility at least  equal to, the Parts
replaced, assuming such replaced Parts were in the condition and repair required
to be maintained by the terms hereof.

     Section  6.03.  Alterations  Required  by Law.  The Owner  shall  make such
Alterations  to the  Facility as may be  required  from time to time to meet the
requirements of and be in conformity with all applicable requirements of law, of
any court and of any  Governmental  Authority and the Operator will maintain the
same in proper operating  condition under such laws and requirements.  except to
the extent Section 6.11 hereof shall apply. Upon completion of such Alterations,
the Basic Rent shall be automatically  increased on an annual basis by an amount
sufficient to enable the Owner to recover (over ten (10) years) the cost paid in
connection with the Alterations.

     Section  6.04.  Plans  and  Specifications:  Operating  Manual.  As soon as
practicable  following  the  Effective  Date,  the Owner  shall  provide  to the
Operator the Operating Manual and a set of Plans and Specifications (which shall
in the aggregate  reflect the Facility as of the Effective  Date).  The Operator
shall maintain throughout the Term, and keep on file at the Facility,  a current
Operating  Manual  and a set of Plans  and  Specifications  (which  shall in the
aggregate  reflect all Parts  incorporated  in the Facility and all  Alterations
made  pursuant  to this  Article  VI) with  respect  to the  Facility.  Upon any
expiration  of the Term or the  exercise  of remedies  pursuant to Article  XIII
hereof,  the Operator  shall deliver to the Owner a complete set.  current as of
the  date  of  such  return  or  exercise  of   remedies,   of  such  Plans  and
Specifications  and all work drawings and similar  documents with respect to the
operation of the Facility.  The Plans and  Specifications  shall not be revised,
amended or modified in any manner  which would  adversely  affect the  operating
capacity, cost efficiency, utility, reliability or value of the Facility.

     Section 6.05. Operational  Alterations.  In addition to the foregoing,  the
Operator,  at its own expense (subject to Section 6.06 hereof) may, from time to
time make such Alterations to the Facility as the Operator may deem desirable in
the proper  conduct of its  business,  which  shall be  approved by the Owner in
advance, provided that such Alterations shall not adversely affect the operating
capacity, cost efficiency, utility, reliability or value of the Facility.

     Section 6.06.  Owner's Option to Pay Costs of Alterations.  If requested to
do so by the Operator,  the Owner may at its option pay for any Alteration title
to which will vest or has vested



                                       13

<PAGE>

in the Owner  pursuant  to  Section  6.08  hereof,  subject to  agreement  as to
adjustments in Basic Rent in accordance with Section 3.01 hereof.

     Section  6.07.  Reports  of  Alterations.  On or  before  March  15 of each
calendar year commencing in 1999 and on the date on which the Term shall expire.
the Operator  shall  furnish the Owner with a report  stating the total cost (as
determined in accordance with the Operator's normal accounting practices) of all
Alterations  which are  Nonservable  and which  were not  financed  pursuant  to
Section 6.06 hereof and which are not described in clause (i) or (ii) of Section
4(4).03(c) of Revenue Procedure 75-21 as modified by Revenue Procedure 79-48 and
which were made during, the period from the date of this Operating  Agreement to
the end of the  preceding  calendar year in the case of the first such report or
during the period from the end of the period covered by the last previous report
to one month prior to such report in the case of subsequent  reports and briefly
describing  all such  Alterations.  Each such report shall be  accompanied by an
Officer's  Certificate  stating  that no  Alteration  has been made  that  would
adversely affect the operating capacity, cost efficiency,  utility,  reliability
or  value of the  Facility,  or the  ability  of the  Operator  to  perform  its
obligations hereunder.

     Section 6.08. Title to Parts. Title to each Part (including any Alteration)
incorporated  in the Facility  pursuant to this Article VI shall without further
act vest in the Owner and shall be deemed to  constitute  a part of the Facility
and be subject to this Operating Agreement in the following cases:

          (a) such Part shall be in replacement of or in  substitution  for. and
     not in addition to, any Part  originally  incorporated  in the Equipment or
     any Part title to which  shall have  vested in the Owner  pursuant  to this
     Section 6.08;

          (b) such Part shall be required  to be  incorporated  in the  Facility
     pursuant to the terms of Sections 6.02 and 6.03 hereof,

          (c) such Part shall be Nonseverable; or

          (d) such Part shall be paid for by the Owner.

     If such Part or Parts are  incorporated  in the Facility,  pursuant to this
Article  VI and are not within any of the  categories  set forth in clauses  (a)
through (d) above,  then title to such Part or Parts shall vest in the Operator,
subject to the rights of the Owner provided in Section 6.09 hereof.

     All Parts (other than Parts the title to which is vested in the Operator in
accordance  with the  preceding  sentence) at any time removed from the Facility
shall remain the property of the Owner no matter where located,  until such time
as such Parts  shall be  replaced  by Parts that have been  incorporated  in the
Facility  and that meet the  requirements  for  replacement  Parts  specified in
Section 6.02 hereof.  On or before March 15 of each calendar year  commencing in
1999 and on the date on which the Term shall expire,  the Operator shall furnish
the  Owner  with a report  which  provides  a  breakout  of the  total  cost (as
determined in accordance with the Operator's normal accounting practices) of all
Parts the title to which is vested in the Operator and all parts the title which
is vested in the Owners as provided in this Section 6.08 (other than those Parts
that were paid for by the  Owner) and which were  incorporated  in the  Facility
during the period



                                       14

<PAGE>

from the date of this Operating  Agreement to the end of the preceding  calendar
year in the case of the first such  report or during the period  from the end of
the period covered by the last previous report to one month prior to such report
in the case of subsequent  reports and briefly  describing all such Parts.  Each
such report shall be  accompanied  by an Officer's  Certificate  stating that no
Part has been  incorporated  in the  Facility  that would  adversely  affect the
operating  capacity,  cost  efficiency,  utility,  reliability  or  value of the
Facility or the ability of the  Operator to perform its  obligations  hereunder.
Immediately upon any replacement  Part becoming  incorporated in the Facility as
provided in Section 6.02 hereof,  without  further act, (a) title to the removed
Part shall thereupon vest in such Person as shall be designated by the Operator,
free and clear of all rights of the Owner,  (b) title to such  replacement  Part
shall  thereupon  vest in the Owner and (c) such  replacement  Part shall become
subject to this  Operating  Agreement and be deemed part of the Facility for all
purposes hereof to the same extent as the parts  originally  incorporated in the
Facility.

     Section 6.09.  Removal of Parts. All Parts  incorporated in the Facility to
which the  Operator  (or any other Person other than the Owner) shall have title
pursuant to the  provisions of Section 6.08 hereof may, (a) subject to any night
of the Owner to use such Part as provided herein and (b) so long as such removal
shall be permitted by this  Agreement  and shall not result in any  violation of
any law or  governmental  regulation  and (c) so long as no  Default or Event of
Default  shall have  occurred and be  continuing,  be removed at any time by the
Operator  (or such other  Person) and shall be removed by the  Operator  (or the
Operator  shall cause such other  Person so to remove  such Parts)  prior to the
delivery of the Facility to the Owner in accordance  with the  provisions of the
Operating Agreement, other than upon the termination of this Operating Agreement
pursuant  to Article  XIV  hereof,  and title to such  Parts  shall at all times
remain in the Operator (or such other Person).

     Section 6.10.  Parts Free and Clear of Liens. Any Part title to which shall
vest in the Owner pursuant to Section 6.08 hereof shall be free and clear of all
Liens except Permitted Liens.

     Section 6.11. Permitted Contests.  If, to the extent and for so long as (a)
a test, challenge, appeal or proceeding for review of any applicable requirement
of law or of a Governmental  Authority  relating to the operation or maintenance
of the  Facility  shall  be  prosecuted  in good  faith by the  Operator  or (b)
compliance  with such  requirement  shall  have been  excused or  exempted  by a
nonconforming  use permit,  waiver extension or forbearance,  the Operator shall
not be required to comply with such requirement but only if such test challenge,
appeal,  proceeding  or  noncompliance  shall not,  in the opinion of the Owner,
involve a material  risk of (i)  foreclosure,  sale,  forfeiture  or loss of, or
imposition of any Lien other than a Permitted  Lien on, any part of the Facility
or of impairment  of the  operation of the Facility (ii)  extending the ultimate
imposition of such requirement  beyond the termination of the Term (unless there
shall have been furnished indemnification  satisfactory to the Owner), (iii) any
material  claim  against  the Owner  (unless  there  shall  have been  furnished
indemnification satisfactory to the Owner) or (iv) the nonpayment of Rent.

     Section 6.12.  Operating,  Loss.  The Operator shall keep  maintenance  and
repair  reports in  sufficient  detail to indicate  the nature and date of major
work done.  Such reports shall be kept on file by the Operator at its offices or
at the  Facility  for as  long,  as they  would  be kept by a



                                       15

<PAGE>

prudent owner or operator of the Facility (but in no event less than three years
following  the end of the Term),  and shall be made  available to the Owner upon
reasonable request.

     Section 6.13. Return of Facility.  Upon termination of this Agreement,  the
Operator,  at its own  expense,  shall  return  the  Facility  to the  Owner  by
surrendering  the same into the  possession  of the Owner  free and clear of all
Liens and in the condition required by Section 6.01 hereof.

                                   ARTICLE VII

                                 IDENTIFICATION

     The Operator shall maintain  throughout the Term in a prominent location at
each entrance to each of the buildings  comprising the Facility at least one (1)
plate or other clear and durable  marking stating "THE EQUIPMENT AND ALL RELATED
EQUIPMENT IN THIS FACILITY IS OWNED BY GREENHOST, INC." in letters not less than
one-half inch in height.  On the Closing Date the Operator shall certify that it
has  compiled  with the  preceding  sentence.  Except as  provided  herein or as
otherwise  directed by the Owner,  the Operator  shall not allow the name of any
Person  other than that of the Operator to be placed on any Part of the Facility
as a designation that might reasonably be interpreted as a claim of ownership or
right to possession or use thereof

                                  ARTICLE VIII
                                    INSURANCE

     Section 8.01. Coverage.

     (a) Subject to subsection 8.01(b), the Operator shall maintain:

          (i) property  damage  insurance with respect to the Facility  insuring
     against  loss or damage in an amount  equal to the "full  insurable  value"
     (which as used herein shall mean the full replacement value,  including the
     costs of debris  removal,  which amount shall be determined  annually) from
     (x) fire and  normal  extended  coverage  perils  customarily  included  in
     policies available with respect to property  comparable to the Facility and
     (y)  flood,   earthquake  and  other  perils  customarily   included  under
     Difference in Conditions policies so available;

          (ii) "boiler and  machinery"  insurance in an amount equal to the full
     insurable  value with  respect to damage (not insured  against  pursuant to
     subsection 8.01(a)(i) above) to the machinery,  plant,  equipment,  storage
     facilities  or  similar  apparatus  included  in the  Facility  from  risks
     normally insured against under boiler and machinery policies.

          (iii)  comprehensive  commercial general liability and property damage
     insurance (including,  but not limited to, coverage for any construction on
     or about the Premises) covering the legal liability of Operator against all
     claims  for any  bodily  injury or death of  persons  and for  damage to or
     destruction  of property  occurring  on, in or about the  Premises  and the
     adjoining streets, sidewalks and passageways and arising, out of the use or
     occupation of the Premises by Operator. Coverages provided by the foregoing
     insurance policy shall include (but not be limited to) all of the coverages
     commonly,  referred to by the  insurance  industry as:  Premises/Operations
     Liability;



                                       16

<PAGE>

     Products/Completed  Operations Liability, Owners and Contractors Protective
     Liability;  Blanket  Contractual  Liability;  Broad  Form  Property  Damage
     Liability,  Personal Injury,  Stop-Gap or Employers'  Contingent  Liability
     Explosion,  Collapse  and  Underground  Liability,   Automobile  Liability,
     including  coverage for Owned,  Non-Owned,  Hired, or Borrowed Vehicles and
     "Mobile  Equipment".   The  foregoing  insurance  shall  apply  as  primary
     insurance, irrespective of any insurance which Owner or Master Landlord may
     carry  and  shall  include  a "Cross  Liability"  clause  (Severability  of
     Interests).  The foregoing  insurance shall have a combined single limit of
     not less than $5,000,000,  with separate  aggregate for product and general
     liability, which policy shall be written on an occurrence basis;

          (iv) (x) workers'  compensation  insurance or occupational  disability
     benefits insurance (in at least the statutory amounts) and such other forms
     of insurance  which the Operator is required by law to maintain or cause to
     be maintained,  covering, loss resulting from injury, sickness,  disability
     or death of the  employees  of the Operator  and (y)  employers'  liability
     insurance in an amount not less than $500,000 single limit.

          (v)  comprehensive  automobile  liability  insurance against claims of
     personal  injury  (including  bodily injury and death) and property  damage
     covering  all  owned,   leased,   non-owned  and  hired   vehicles  with  a
     $1,000,000.00  minimum limit per occurrence for combined  bodily injury and
     property damage liability; and

          (vi) such other insurance with respect to the Facility in such amounts
     and  against  such  insurable  hazards  as is  usually  carried  by Persons
     operating  similar  properties in the same general region,  but any loss of
     the type  customarily  covered by the  policies  described  in  subsections
     8.01(a)(i), (ii) and (iii), whether actually covered in whole or in part by
     such policies,  shall be the responsibility of the Operator and the absence
     of such coverage shall not relieve the Operator from any of its obligations
     under any of the Operative Documents:

          provided,  however, that the amount of insurance coverage specified in
     subsections  8.01 (a)(i) and  (a)(ii)  above with  respect to the  Facility
     shall not in any event be less than the  replacement  cost of the Facility,
     as determined by the Owner, including agreed amount waiving coinsurance.

     All insurance  policies  carried in  accordance  with Section 8.01 shall be
maintained with Florists Mutual  Insurance  Company or any other insurers with a
Best rating of A minus or better and a Best size rating of IX or better  (except
for policies  underwritten  by Lloyds of London and approved  English  companies
acceptable  to the  Owner)  approved  by the  Owner  and not  disqualified  from
insuring risks in Virginia.

     Any insurance  policies  carried in accordance with this Section 8.01 shall
be subject to (i)  exclusions of the sort existing in the insurance  policies in
effect on the Closing Date and (ii) such  deductible  amounts and  retentions as
shall not exceed the following amounts specified with respect to such policies:

          (1) Property Damage      $25,000;



                                       17
<PAGE>

          (2) Boiler and Machinery $25,000; and

          (3) Public Liability     $25,000.

     Notwithstanding anything to the contrary in this Article VIII, the Operator
shall at all times ensure that the  insurance  it maintains  with respect to the
Facility is not less  extensive or inclusive in type or amount of coverage  than
that maintained by it in accordance with its standard corporate minimum practice
with respect to other similar facilities.

          (b) During the Term and unless the Owner gives the Operator sixty (60)
     days prior written notice,  the Owner shall provide the insurance  coverage
     specified in subsection 8.01 (a)(i) and 8.01 (a)(ii) at the Owner's cost.

     Section 8.02.  Policy  Provisions.  Any insurance policy  maintained by the
Operator pursuant to Section 8.01 hereof shall:

          (a) specific Birchwood, Master Landlord, Owner, Lender, Fee Mortgagee,
     Master Landlord's  affiliates,  the Owner and Owner's  affiliates (and such
     others as Master  Landlord or Owner shall from time to time  designate)  as
     additional  insured  (the  "Additional   Insured"),   as  their  respective
     interests may appear:

          (b) specific Fee Mortgagee as mortgagee and loss payee;

          (c)  provide.  except in the case of public  liability  insurance  and
     workers'  compensation  insurance,  that  all loss or  occurrence  shall be
     adjusted with the Operator and Owner, unless an Event of Default shall have
     occurred and be continuing,  in which case such loss or occurrence shall be
     adjusted  with the  Owner,  and  payable  (x) in respect  of  payments  not
     exceeding  $25,000,  provided  no Default  or Event of  Default  shall have
     occurred  or  be  continuing,  to  the  Operator,  and  (y)  in  all  other
     circumstances, to the Owner:

          (d)  include  effective  waivers  by the  insurer  of all  claims  for
     insurance  premiums or  commissions  or (if such  policies  provide for the
     payment thereof)  additional premiums or assessments against any Additional
     Insured;

          (e)  provide  that  in  respect  of the  interests  of the  Additional
     Insured,  such policies  shall not be invalidated by any action or inaction
     of the Operator or any other Person and shall insure the Additional Insured
     regardless   of.  and  any   claims   for  the  losses   shall  be  payable
     notwithstanding:

               (i) the  occupation  or use of the  Facility  for  purposes  more
          hazardous than permitted by the terms of the policy;

               (ii)  any  foreclosure  or other  proceeding  or  notice  of sale
          relating to all or any portion of the Facility; or

               (iii)  any  change  in the  title to or  ownership  of all or any
          portion of the Facility.



                                       18
<PAGE>

          (f) provide that such  insurance  shall be primary  insurance and that
     the  insurers  under such  insurance  policies  shall be liable  under such
     policies  without right of contribution  from any other insurance  coverage
     effected  by or on  behalf  of  any  Additional  Insured  under  any  other
     insurance policies covering a loss that is also covered under the insurance
     policies maintained by the Operator pursuant to this Article VIII and shall
     expressly  provide  that all  provisions  thereof,  except  the  limits  of
     liability  (which  shall be  applicable  to all  insureds  as a group)  and
     liability for premiums (which shall be solely a liability of the Operator),
     shall  operate  in the same  manner  as if  there  were a  separate  policy
     covering each insured.

          (g) provide that any  cancellation  thereof or material adverse change
     therein shall not be effective as to each of the  Additional  insured until
     at least  sixty  (60) days  after  receipt  by such  Additional  Insured of
     written notice thereof,

          (h)  waive  any  right of  subrogation  of the  insurers  against  the
     Additional  Insured,  and waive any right of the  insurers to any setoff or
     counterclaim or any other deduction, whether by attachment or otherwise, in
     respect of any liability of the Additional Insured: and

          (i) subject to Section 8.01 hereof. be reasonably  satisfactory to the
     Owner, Master Landlord and Fee Mortgagee in all other material respects.

     Section 8.03. Evidence of Insurance.  The Operator shall deliver to each of
the Additional Insured at least two (2) days before the Effective Date copies of
all  policies of  insurance  required  hereby  and,  on the date this  Operating
Agreement  is  executed  and on each  December  31  thereafter  during the Term,
certificates  of insurance,  copies of all policies of insurance  evidencing the
provisions  described in Section  8.02(a) hereof  executed by the insurer by its
duly authorized agent, and a certification  from the Operator's  insurance agent
or broker to the effect that all  premiums  required to have been paid have been
paid in full.

     Section 8.04. No Duty of Owner to Verify. No provision of this Article VIII
or any provision of any other  Operative  Document shall impose on the Owner any
duty or obligation to verify the existence or adequacy of the insurance coverage
maintained  by  the  Operator  nor  shall  the  Owner  be  responsible  for  any
representation or warranty made by or on behalf of the Operator to any insurance
company or underwriter.

                                   ARTICLE IX

                    LOSS, DESTRUCTION, CONDEMNATION OR DAMAGE

     Section 9.01. Occurrence of Event of Loss. If an Event of Loss shall occur,
the Operator shall give the Owner prompt  written notice of such  occurrence and
the date  thereof  unless the Owner  agrees in writing  within  thirty (30) days
after such occurrence to restore,  rebuild or replace the Facility in accordance
with the  provisions  contained in the  definition of "Event of Loss," then this
Agreement  shall  terminate   effective  on  the  thirtieth  day  following  the
occurrence  of the  Event of Loss.  Any  payments  (except  for  payments  under
insurance  policies  maintained  by the Operator  other than pursuant to Article
VIII  hereto  received  at any  time by the  Owner or by the  Operator  from any
Governmental Authority or other Person as a result of the occurrence



                                       19
<PAGE>

of an Event of Loss shall be retained by the Owner or promptly paid to the Owner
by the  Operator;  provided,  however,  that so long as no  Default  or Event of
Default  shall have  occurred  and be  continuing,  the  Operator may retain any
proceeds of requisition of use payments made by any  Governmental  Authority and
attributable to the Facility for a period equal to the then current Term.

     Section 9.02. Repair of Loss or Destruction.

          (a) In the event of loss or  destruction  of all or a  portion  of the
     Facility which (x) does not constitute an Event of Loss or (y)  constitutes
     an Event of Loss but the Owner  agrees to  restore,  rebuild or replace the
     Facility,  then the Owner shall give prompt notice thereof to the Operator,
     and the Owner, at its own cost and expense,  shall promptly repair, replace
     and rebuild the Facility, at least to the extent of the value and as nearly
     as practicable to the character of the Facility existing  immediately prior
     to such  occurrence;  provided,  however,  that the Operator  shall pay the
     difference, if any, between the insurance proceeds received by the Owner as
     a result of such loss or destruction and the costs and expenses incurred by
     the Owner in restoring, rebuilding or replacing the Facility if the loss or
     destruction  thereof  resulted  from the  negligent,  willful,  reckless or
     wanton  act or  failure  to act of the  Operator,  its  employees,  agents,
     invitees or independent contractors.

          (b) Except as  provided  in Section  9.01,  this  Agreement  shall not
     terminate  or be  affected  in any manner by reason of the  destruction  or
     damage  in  whole  or in  part  of  the  Facility,  or  by  reason  of  the
     untenantability  of the Facility,  and the Rent reserved in this  Agreement
     and all other charges  payable  hereunder  shall be paid by the Operator in
     accordance  with the terms,  covenants and  conditions  of this  Agreement,
     without abatement, diminution or reduction.

                                    ARTICLE X

                          INTEREST CONVEYED TO OPERATOR

     This  Operating  Agreement  is an agreement of lease and does not convey to
the  Operator any right,  title or interest in or to the  Facility  except as an
Operator.

                                   ARTICLE XI

                        ASSIGNMENT AND SUBLEASE; LOCATION

     Section  11.01.  Assignment  and Sublease.  The Owner shall be permitted to
assign this Agreement and any and all of its right,  title or interest in, to or
under this Agreement, voluntarily or by operation of law, without the consent of
the Operator.  The Operator may not sublease the Facility or any part thereof or
assign any of its rights or interest hereunder without the prior written consent
of the Owner;  provided,  however,  that any such  sublease or assignment by the
written consent of the Owner may, in its discretion, grant its consent (a) shall
not release the  Operator  from any of its  obligations  or  liabilities  of any
nature whatsoever  arising under this Agreement;  (b) shall be expressly subject
to  and  subordinate  to  this  Agreement;   (c)  shall  be  accompanied  by  an
unconditional  guarantee  of the  Operator's  obligations  under  the  Operating



                                       20

<PAGE>

Agreement issued by a party having financial strength satisfactory to the Owner;
and (d) shall not be permitted if a Default or Event of Default has occurred and
is continuing.

     Section 11.02.  Location.  The Operator  shall not remove.  or permit to be
removed,  the Plant or  Equipment  or any part thereof from the Site without the
prior written consent of the Owner, except that the Operator or any other Person
may remove any Part in accordance  with the provisions of Sections 6.02 and 6.09
hereof.

     Section 11.03. Mortgaging the Estate of Lessor.

          (a) Without  limiting,  the  generality  of Section  11.01(a)  hereof,
     Operator  acknowledges  receipt  of a copy of the Deed of Trust and  agrees
     that, to the extent provided  therein,  any notice,  demand or action which
     Owner may give or take  hereunder  may, be given or taken by, Lender or any
     other Fee Mortgagee  with the same force and effect as if given or taken by
     Owner, and that this Operating Agreement is and shall be subordinate to the
     Deed of Trust  and to any other  such  pledge,  conveyance,  deed of trust,
     assignment,  mortgage or ground lease now  existing or  hereafter  executed
     (herein,  a "Fee  Mortgage"),  with no further  instrument of subordination
     being  necessary,  provided Fee Mortgagee may  subordinate the same to this
     Operating  Agreement  by  executing  and  recording  a  written  instrument
     including to that effect.

          (b)  Operator  hereby  agrees that within ten (10) days after  request
     from  Owner,   or  from  any  Fee  Mortgagee,   Operator  shall  execute  a
     subordination,  non-disturbance and attornment  agreement in a commercially
     reasonable from subordinating  this Operating  Agreement to the interest of
     Fee Mortgagee.

          (c) The holder or beneficiary  of any Fee Mortgage is herein  referred
     to as a "Fee Mortgagee". The term "Fee Mortgagee" as used in this Operating
     Agreement  shall  also  include  the "Fee  Mortgagee"  as the term  that is
     defined in the Master Lease.

          (d) Without  limiting the effect of the  preceding  provisions of this
     Article XI.  Operator,  in the event of any  foreclosure or deed in lieu of
     foreclosure or other final  conveyance and transfer of Owner's  interest as
     aforesaid, shall, upon request of the grantee thereof, recognize and attorn
     to the grantee thereof as "landlord" under this Operating Agreement.

          (e)  Operator  acknowledges  and agrees that no consent or approval of
     Owner shall be effective  unless and until each and every Fee Mortgagee has
     likewise  consented  or approved  the matter  which was the subject of such
     request  for  consent or  approval.  No consent by Master  landlord  or fee
     Mortgagee  to  assignment  of this  Operating  Agreement  or of  Operator's
     interest  under this  Operating  Agreement or in the Facility,  or any part
     thereof,  or to any sublease shall be effective unless and until there have
     been  delivered  to Master  Landlord  and Fee  Mortgagee  an  agreement  in
     recordable  form,  executed  by  Operator  and  the  proposed  assignee  or
     subtenant, as the case may be, wherein and whereby any assignee assumes due
     performance  of this  Operating  Agreement to be done and performed for the
     balance then  remaining in the Term,  and any  subtenant  acknowledges  the
     right of Master  Landlord and Fee  Mortgagee  to continue or terminate



                                       21
<PAGE>

     any sublease, in Master Landlord's sole discretion, upon termination of the
     Master Lease or this  Operating  Agreement,  and such  subtenant  agrees to
     recognize and attorn to Master  Landlord in the event that Master  Landlord
     elects to continue such  sublease.  Until such time as Fee Mortgagee  shall
     notify   Operator   in  writing   to  the   contrary,   Financing   Parties
     Representative  shall  have the right to  exercise  all rights and give all
     consents and approvals of Fee Mortgagee under this Operating Agreement, and
     Operator shall be entitled to rely on any action taken by Financing Parties
     Representative. If Operator shall have received from Master Landlord, Owner
     or a Fee  Mortgagee  written  notice  specifying  the name and address last
     furnished  to  Operator  a copy of each  request  for  Owner's  consent  or
     approval  as well as a copy of each  notice of Owner's  default at the same
     time as and whenever  any such  request for Owner's  consent or approval or
     notice of Owner's  default shall  thereafter be given by Operator to Owner.
     Operator shall give to Financing Parties  Representative  (on behalf of Fee
     Mortgage)  and to Lender a copy of each  request  for  Owner's  consent  or
     approval  as well as a copy of each  notice of owner's  default at the same
     time as and whenever  any such  request for Owner's  consent or approval or
     notice of Owner's  default shall  thereafter be given by Operator to Owner.
     Operator  shall accept  performance  by any Fee  Mortgagee of any covenant,
     condition or agreement on Owner's part to be performed  hereunder  with the
     same force and effect as though performed by Owner.

                                   ARTICLE XII

                             INSPECTION AND REPORTS

     Section  12.01.  Condition  and  Operation.  The Owner  and its  authorized
representatives (the "Inspecting  Parties") may inspect, as its own expense, the
Facility.  After  an  Event of  Default  has  occurred  and is  continuing,  the
Inspecting Parties may also inspect, at their expense,  the books and records of
the Operator  relating to the Facility and make copies and abstracts  therefrom.
The Operator shall furnish to the Inspecting Parties statements  accurate in all
material  respects  regarding the condition and state of repair of the Facility,
all at such  times  and as often  as may be  reasonably  requested.  None of the
Inspecting  Parties shall have any duty to make any such  inspection or inquiry.
To the  extent  permissible,  the  Operator  shall  prepare  and file in  timely
fashion,  or where the Owner  shall be  required  to file,  the  Operator  shall
prepare and deliver to the Owner within a reasonable  time prior to the date for
filing,  any reports with respect to the  condition or operation of the Facility
that shall be required to be filed with any Governmental Authority.

     Section 12.02.  Annual Insurance Report. On or before March 15 of each year
during the Term,  and within ten (10) days after any material  adverse change in
the information set forth in the certificates  provided pursuant to Section 8.03
hereof,  the  Operator  shall  deliver  to the Owner a report  of a  Responsible
Officer  of the  Operator  setting  forth (a) a complete  list of all  insurance
policies  obtained and maintained by the Operator  pursuant to Article VIII, (b)
stating whether such insurance  policies comply with the requirements of Article
VIII and (c) stating whether all premiums then due thereon have been paid.

     Section  12.03.  Financial  Reports.  During the Term,  the Operator  shall
provide to the Owner the following:



                                       22
<PAGE>

          (a) As soon as  available,  and in any event  within  thirty (30) days
     after  the  end of  each  month,  unaudited  financial  statements  for the
     Facility,  including  a  balance  sheet  as at the  end of such  month  and
     statements of income and retained  earnings and of cash flow for such month
     and for the period from the beginning of the Operating Year. There shall be
     included with such financial  statements (i) a certificate of a Responsible
     Officer  stating in effect that,  to the best of his  knowledge and belief,
     such  financial  statements  are true and correct and have been prepared in
     accordance  with generally  accepted  accounting  principles,  consistently
     applied,  subject to changes resulting from year-end adjustments and (ii) a
     certificate  of a Responsible  Officer  setting forth in detail  reasonably
     satisfactory  to the Owner a  calculation  of Cash Flow of the Facility for
     such month and for the Operating Year through the end of such month.

          (b) In  addition,  as soon as  available  and in any event  within one
     hundred twenty (120) days after the end of each Operating  Year,  financial
     statements  for the  Facility,  including a balance  sheet as of the end of
     such Operating Year, and statements of income and retained  earnings and of
     cash flow for such Operating  Year,  prepared in accordance  with generally
     accepted accounting principles  consistently applied and accompanied by the
     audit  opinion  of  a  recognized  firm  of  independent  certified  public
     accountants  acceptable  to the Owner.  There shall be  included  with such
     financial  statements a certificate of a Responsible  Officer setting forth
     in detail  reasonably  satisfactory to the Owner a calculation of Cash Flow
     of the Facility for such Operating  Year. The Owner shall have the right at
     any time to audit the  certificate  of Cash Flow  required  to be  provided
     hereunder. Such audit shall be performed by an independent certified public
     accounting firm selected by the Owner and shall be at the Owner's  expense,
     unless  such audit  results in the upward  adjustment  of Cash Flow for any
     Operating  Year in an amount  equal to two percent (2%) or more of the Cash
     Flow reflected on the certificate provided to the Owner by the Operator, in
     which case the cost of such audit shall be paid by the  Operator  and shall
     not be considered Greenhouse Expenses.  Any payments required to be made as
     a result of any  adjustment  to the Cash Flow shall be made within ten (10)
     Business Days following receipt of the results of the audit.

          (c) The Owner  shall have the right to review the books and records of
     the  Operating  relating to the Facility  for the purpose of verifying  the
     accuracy of the financial statements and calculations of Cash Flow provided
     pursuant to Sections 12.03(a) and (b), and

          (d) On or before  January 31 of each year during the Term  (commencing
     on  January  31,  1999),  a  certificate  of a  Responsible  Officer of the
     Operator  stating  that such  Responsible  Officer has made or caused to be
     made a  review  of  all  transactions  relating  to the  Facility  and  the
     financial  and  operating  condition of the  Operator  for the  immediately
     preceding  Operating  Year and that,  based on such  review,  no Default or
     Event of Default has  occurred  during such year (or, if a Default or Event
     of Default  shall have  occurred,  specifying  the nature  thereof  and the
     action the Operator has taken or prepares to take with respect thereto).



                                       23
<PAGE>

     Section 12.04.  Budget  Approval.  No later than the  forty-five  (45) days
prior to the  commencement  of any Operating Year, the Operator shall present to
the Owner for its approval, which shall not be unreasonably withheld, its budget
for  the  Facility  for  the  following   Operating  Year,  prepared  in  detail
satisfactory  to the Owner (the budget  prepared  pursuant to this Section 12.04
shall be referred to herein as the "Budget").  In the event the Owner  withholds
its approval of any Budget, it shall provide to the Operator a written statement
of specific objections to the Budget. The Budget presented shall be deemed to be
approved with respect to all items except those to which the Owner has objected.
In the event the  Operator  disputes the Owner's  objections,  the Owner and the
Operator shall appoint a mutually agreeable  independent advisor with experience
in the  operation  of  greenhouse  facilities,  which  advisor  shall review the
disputed  amounts  and decide the  appropriate  level of  expenditures  for such
items.  The  decision of such  advisor  shall be binding  upon the Owner and the
Operator and shall become part of the Budget for such Operating Year.

     Section 12.05.  Liability.  The Operator  shall,  promptly after  obtaining
knowledge  thereof,  give prompt  written  notice to the Owner of each  accident
likely to result in material  damages or claims for material damages against the
Operator or any other  Person with  respect to the Facility of $100,000 (if such
claims and damages are insured) or $25,000 (if not  insured),  and  occurring in
whole or in part  (whenever  asserted)  during the Term,  and on  request  shall
furnish to the Owner  information as to the time, place and nature thereof,  the
names and addresses of the parties involved, any Persons injured,  witnesses and
owners of any property damaged and such other information as may be known to it,
and  shall  promptly  upon  request   furnish  the  Owner  with  copies  of  all
correspondence,  papers,  notices  and  documents  whatsoever  received  by  the
Operator in connection therewith.

     Section 12.06.  Liens.  The Operator shall promptly,  and in no event later
than five (5)  Business  Days  after it shall  have  obtained  knowledge  of the
attachment  of any Lien that it shall be  obligated  to  discharge  or eliminate
pursuant to Article V hereof,  notify the Owner of the  attachment  of such Lien
and the full  particulars  thereof  unless the same  shall have been  removed or
discharged by the Operator.

                                  ARTICLE XIII

                                EVENTS OF DEFAULT

     The following events shall  constitute  Events of Default (whether any such
event  shall  be  voluntary  or  involuntary  or come  about or be  effected  by
operation of law or pursuant to or in compliance  with any  judgment,  decree or
order  of any  court  or any  order,  rule  or  regulation  of any  Governmental
Authority):

          (a) the  Operator  shall fail to make any  payment of Rent within five
     (5) days after the same shall have become due; or

          (b) the  Operator  shall fail to make any payment of any other  amount
     payable  hereunder  within ten (10) days after  notice of such failure from
     the Owner; or



                                       24

<PAGE>

          (c) the  Operator  shall  fail to perform  or  observe  any  covenant,
     condition or agreement to be performed or observed by it under Article VIII
     or Article XI hereof within five (5) days after notice of such failure from
     the Owner; or

          (d) the  Operator  shall  fail to perform  or  observe  any  covenant,
     condition  of  agreement  (not  included in clause (a),  (b) or (c) of this
     Article  XIII) to be  performed  or observed by it  hereunder  or under any
     other Operative  Document and such failure shall continue  unremedied for a
     period of thirty (30) days after written notice thereof from the Owner; or

          (e) the filing of the Operator or APD of any petition for  dissolution
     or liquidation of the Operator or APD or the  commencement  by the Operator
     or APD of a voluntary case under any applicable  bankruptcy,  insolvency or
     other similar law now or hereafter in effect,  or the Operator or APD shall
     have consented to the entry of an order for relief in an  involuntary  case
     under any such law, or the failure of the Operator or APD  generally to pay
     its debts as such debts  become due (within  the meaning of the  Bankruptcy
     Reform Act of 1978,  as  amended),  or the  failure by the  Operator or APD
     promptly to satisfy or discharge any  execution,  garnishment or attachment
     of such consequence as will impair its ability to carry out its obligations
     under this  Agreement,  or the  appointment  of or taking  possession  by a
     receiver, custodian or trustee (or other similar official) for the Operator
     or APD or any substantial part of its property,  or a general assignment by
     the Operator or APD for the benefit of its  creditors,  or the entry by the
     Operator or APD into an agreement of composition with its creditors, or the
     Operator or APD shall have taken any corporate action in furtherance of any
     of  the  foregoing;  or  the  filing  against  the  Operator  or  APD of an
     involuntary  petition in  bankruptcy  which  results in an order for relief
     being  entered  or,  notwithstanding  that an order for relief has not been
     entered,  the petition is not dismissed within  forty-five (45) days of the
     date of the filing of the petition, or the filing under any law relating to
     bankruptcy,  insolvency  or relief of debtors of any  petition  against the
     Operator or APD for reorganization,  composition,  extension or arrangement
     with  creditors  which either (i) results in a finding or  adjudication  of
     insolvency  of the  Operator  or  APD  or  (ii)  is  not  dismissed  within
     forty-five (45) days of the date of the filing of such petition; or

          (f) any  representation  or warranty by the Operator in any  Operative
     Document or in any certificate or document delivered pursuant thereto shall
     have been materially false when made; or

          (g) the  occurrence  of an Event of  Default  under the Line of Credit
     Facility Agreement.

                                   ARTICLE XIV

                                   ENFORCEMENT

     Section 14.01. Remedies. Upon the occurrence of any Event of Default and at
any time  thereafter so long as the same shall be continuing,  the Owner may, at
its option, by notice to the Operator, declare this Operating Agreement to be in
default,  and at any  time  thereafter  the  Owner  may  do one or  more  of the
following as the Owner in its sole discretion shall determine:



                                       25

<PAGE>

          (a) the Owner may,  by notice to the  Operator,  rescind or  terminate
     this Operating Agreement;

          (b) the Owner may (i) demand that the Operator, and the Operator shall
     upon the written demand of the Owner,  return the Facility  promptly to the
     Owner in the manner and condition  required by, and otherwise in accordance
     with all of the  provisions  of,  Article VI hereof as if the Facility were
     being  returned  at the end of the Term,  and the Owner shall not be liable
     for the  reimbursement of the Operator for any costs and expenses  incurred
     by the Operator in connection therewith,  (ii) enter upon the Site and take
     immediate  possession of (to the exclusion of the Operator) the Facility or
     remove the Plant or Equipment or both, by summary proceedings or otherwise,
     all without  liability  to the  Operator  for or by reason of such entry or
     taking of  possession,  whether for the  restoration  of damage to property
     caused  by such  taking or  otherwise  and (iii)  offer  employment  to the
     Operator's employees;

          (c) the Owner may sell all or any part of the Equipment and its rights
     to the  Plant  and the Site at public  or  private  sale,  as the Owner may
     determine,  free and clear of any rights of the  Operator  and  without any
     duty to account to the Operator  with respect to such action or inaction or
     any proceeds with respect thereto;

          (d) the Owner may lease to others all or any part of the  Facility  as
     the  Owner in its sole  discretion  may  determine,  free and  clear of any
     rights of the Operator and without any duty to account to the Operator with
     respect to such action or for any  proceeds  with respect to such action or
     inaction, except that the Operator's obligation to pay Rent with respect to
     the Facility  for periods  commencing  after the  Operator  shall have been
     deprived of use of the  Facility  pursuant to this  paragraph  (d) shall be
     reduced by the net proceeds,  if any,  actually  received by the Owner from
     leasing the  Facility to any Person  other than the  Operator  for the same
     periods or any portion thereof;

          (e) the Owner may demand that the Operator  assign to the Owner (or to
     a third party  designated  by the Owner to operate the Facility) all of the
     Operator's  rights  under any  agreement  or  contact  entered  into by the
     Operator in  connection  with the  operation  of the  Facility,  including,
     without  limitation,  the  Management  Agreement,  and the  Operator  shall
     execute and deliver to the Owner (or such third party) such  assignments or
     other  instruments  as the  Owner  may  reasonably  request  in  connection
     therewith; and

          (f) the  Owner may  exercise  any  other  right or remedy  that may be
     available to it under applicable law or proceed by appropriate court action
     to enforce the terms hereof or to recover damages for the breach hereof.

     Section 14.02.  Survival of Operator's  Obligations.  Except as provided in
subsection 14.01(d) above, no termination of this Operating Agreement,  in whole
or in part, or repossession of all or any portion of the Facility or exercise of
any remedy under  Section 14.01 hereof shall,  except as  specifically  provided
therein,  relieve  the  Operator  of  any  of its  liabilities  and  obligations
hereunder.  In  addition,  the  Operator  shall be liable,  except as  otherwise
provided  above,  for any and all unpaid Rent due  hereunder  before,  during or
after the exercise of any of



                                       26

<PAGE>

the foregoing  remedies,  including all  reasonable  legal fees and expenses and
other costs and expenses  incurred by the Owner by reason of the  occurrence  of
any Event of  Default or the  exercise  of the  Owner's  remedies  with  respect
thereto,  and including all costs and expenses  incurred in connection  with the
return of the Facility in the manner and condition required by, and otherwise in
accordance  with the  provisions  or, Article VI hereof as if such Facility were
being returned at the end of the Term.

     Section 14.03. Remedies Cumulative. To the extent permitted by, and subject
to the mandatory  requirements of,  applicable law, each and every right,  power
and remedy herein specifically given to the Owner or otherwise in this Operating
Agreement  shall be  cumulative  and shall be in addition to every other  right,
power and remedy herein  specifically  given or no or hereafter existing at law,
in equity or by  statute,  and each and every  right,  power and remedy  whether
specifically  herein given or otherwise  existing may be exercised  from time to
time and as often and in such order as may be deemed expedient by the Owner, and
the  exercise or the  beginning of the exercise of any power or remedy shall not
be  construed  to be a waiver  of the  right  to  exercise  at the same  time or
thereafter any right,  power or remedy. No delay or omission by the Owner in the
exercise  of any right,  power or remedy or in the  pursuit of any remedy  shall
impair any such  right,  power or remedy or be  construed  to be a waiver of any
default on the part of the Operator or to be an acquiescence therein. No express
or implied  waiver by the Owner of any Event of Default  shall in any way be, or
be construed to be, a waiver of any future or subsequent Event of Default.

                                   ARTICLE XV

                          RIGHT TO PERFORM FOR OPERATOR

     If the Operator  shall fail to perform or comply with any of its agreements
contained herein,  the Owner may perform or comply with such agreement,  and the
amount of such payment and the amount of the  expenses of the Owner  incurred in
connection  with such  payment or the  performance  of or  compliance  with such
agreement,  as the case may be,  together with  interest  thereon at the Overdue
Rate, shall be payable by the Operator upon demand.

                                   ARTICLE XVI

                                   INDEMNITIES

     Section 16.01. General Indemnity.

          (a) Payment of Expenses by Operator. The Operator shall pay, and shall
     indemnify and hold harmless each Indemnitee  from and against,  any and all
     liabilities,  obligations,  losses,  damages,  penalties,  claims, actions,
     suits,  costs,  expenses  and  disbursements,   including  legal  fees  and
     expenses,  of  whatsoever  kind and nature  (collectively,  "Expenses"  and
     individually,  an "Expense"),  imposed on, incurred by or asserted  against
     any Indemnitee (whether because of an action or omission by such Indemnitee
     or otherwise),  in any way relating to or arising out of the occupation and
     operation of the Facility by the  Operator and the  production  and sale of
     the Product.

          (b) Exceptions.  The indemnities  contained in Section 16.01(a) hereof
     with regard to any  particular  Indemnitee  shall not extend to any Expense
     (i)  resulting  from the



                                       27
<PAGE>

     willful  misconduct  or gross  negligence  of such  Indemnitee  (other than
     willful misconduct or gross negligence imputed to such Indemnitee solely by
     reason of its interest in the  Facility),  (ii)  resulting  solely from the
     breach by such  Indemnitee  of any of its  representations,  warranties  or
     covenants  in any of the  Operative  Documents,  (iii)  unless  an Event of
     Default shall have occurred and be continuing and Owner shall be exercising
     remedies with respect  thereto,  to the extent such Expense shall relate to
     acts or events not  attributable to the Operator that occur after the Term,
     (iv) so long as no Event of Default shall have occurred and be  continuing,
     to  the  extent   attributable  solely  to  the  disposition  or  attempted
     disposition of the Facility or any interest in any thereof, by or on behalf
     of any  Indemnitee,  other  than a transfer  of the  Facility  pursuant  to
     Article  XIV  hereof  or  as  required  by  any  Operative  Documents,  (v)
     constituting  Fees,  Taxes  or  Other  Charges  or (vi)  which  constitutes
     internal, overhead expenses of the Indemnitee.

          (c) Notice.  If any party  entitled to  indemnity  under this  Section
     16.01 or the Operator  shall have received  written notice of any liability
     indemnified  against under this Section 16.01,  it shall give prompt notice
     thereof to the Operator,  or the party entitled to be  indemnified,  as the
     case may be,  but the  failure  to give such  notice  shall not  affect any
     obligation  under this  Section  16.01.  In case of action,  including  any
     investigatory  proceeding,  shall be brought  against,  or  commenced  with
     respect to, any  indemnitee in respect of which the Operator is required to
     indemnify such Indemnitee pursuant to the provisions of this Section 16.01,
     the Operator shall have the right to assume the defense thereof,  including
     the employment of counsel  reasonably  satisfactory  to such Indemnitee and
     the payment of all expenses.  In the event the Operator assumes the defense
     of any such action,  any Indemnitee shall have the right to employ separate
     counsel in such action and participate  therein,  but the fees and expenses
     of such counsel shall be at the expense of such Indemnitee,  unless (i) the
     employment  of  such  counsel  has  been  specifically  authorized  by  the
     Operator, or (ii) the named parties to such action (including any impleaded
     parties)  include both such Indemnitee and the Operator and  representation
     of  such  Indemnitee  and  the  Operator  by  the  same  counsel  would  be
     inappropriate  under  applicable  standards of professional  conduct due to
     actual or potential conflicting interests between them or (iii) the counsel
     employed by the Operator and  satisfactory  to such  Indemnitee has advised
     such Indemnitee,  in writing,  that such counsel's  representation  of such
     Indemnitee  would  be  likely  to  involve  such  counsel  in  representing
     differing  interests  which could  adversely  affect either the judgment or
     loyalty of such counsel to such  Indemnitee,  whether it be a  conflicting,
     inconsistent,  diverse or other  interest (in which case the Operator shall
     not have the right to assume the  defense of such  action on behalf of such
     Indemnitee;  it being understood,  however, that the Operator shall not, in
     connection with any one such action, or separate but substantially  similar
     or related actions in the same jurisdiction arising out of the same general
     allegations  or  circumstances,  be  liable  for the  reasonable  fees  and
     expenses  of more than one  separate  firm of  attorneys,  and of any local
     counsel  retained by such firm,  at any one time for each such  Indemnitee,
     which firm shall be designated in writing by such Indemnitee). The Operator
     shall not be liable for any settlement of any such action effected  without
     its consent, but if settled with the consent of the Operator or if there by
     a final judgment,  beyond further review or appeal, in any such action, the
     Operator  agrees to indemnify  and hold  harmless any  Indemnitee  from and
     against any loss or liability by reason of such settlement or judgment.



                                       28

<PAGE>

          (d)  Payment.  The  Operator  covenants  and agrees to pay all amounts
     required  to be paid under  this  Section  16.01 on demand by the  relevant
     Indemnitee.

     Section 16.02. Fees, Taxes and Other Charges.

          (a) Payment by Operator.

               (i) The Operator  hereby agrees to pay and assume  liability for,
          and on written  demand to indemnify,  protect,  defend,  save and hold
          harmless each Indemnitee from and against, any and all governmental or
          quasi-governmental  fees  (including  without  limitation  license and
          registration   fees),   taxes  (including   without  limitation  gross
          receipts, franchise, sales, use, property, real or person, tangible or
          intangible),  interest  equalization  and  stamp  taxes,  assessments,
          levies,  imposts,  duties,  charges  or  withholdings  of  any  nature
          whatsoever,  together  with any and all  penalties,  fines or interest
          thereon  ("Fees,   Taxes  and  Other  Charges")  imposed  against  any
          Indemnitee, the Operator or the Facility or any portion thereof by any
          Federal, state or local governmental or taxing authority in the United
          States of America or by any foreign  government or any  subdivision or
          taxing authority  thereof,  upon or with respect to the occupation and
          operation of the Facility by the Operator and the  production and sale
          of the Product.

               (ii)  Notwithstanding  anything to the  contrary set forth above,
          the provisions of this Section 16.02 shall not apply to:

                    (A) Fees,  Taxes and Other  Charges on, or measured in whole
               or in part by (y) the net income or gross income of an Indemnitee
               or (z) the franchise,  capital, conduct of business, net worth or
               tax preference of an Indemnitee;

                    (B) Fees,  Taxes and Other  Charges to the extent on, levied
               on, or  measured  by,  any fees or  compensation  received  by an
               Indemnitee  for  services   rendered  in  connection   with  this
               Agreement;

                    (C) Fees,  Taxes and Other  Charges  which  result  from any
               Indemnitee engaged in activities not related to this Agreement;

                    (D) So long as no  Event  of  Default  has  occurred  and is
               continuing,  Fees,  Taxes or other Charges imposed as a result of
               the voluntary sale, transfer,  assignment or other disposition of
               any  interest  in  the  Facility  by  an   Indemnitee,   if  such
               disposition  shall  not  be  pursuant  to or in  connection  with
               Article XIV hereof;

                    (E) Fees, Taxes or Other Charges imposed solely with respect
               to any  period  after  the Term  unless an Event of  Default  has
               occurred  and is  continuing  and the Owner  shall be  exercising
               remedies with respect thereto;



                                       29

<PAGE>

                    (F) Fees,  Taxes or Other  Charges  imposed as the result of
               any  transfer or  disposition  of any interest in the Facility by
               any Indemnitee resulting from bankruptcy or other proceedings for
               the relief of debtors  (voluntary  or  involuntary)  in which the
               transferor is the debtor; or

                    (G) Fees, Taxes and Other Charges imposed solely as a result
               of the willful misconduct or gross negligence of the Indemnitee.

               (iii) In case any  report or return is  required  to be made with
          respect to any obligations of the Operator under this Section 16.02 or
          arising out of this Section 16.02,  the Operator  shall, to the extent
          permitted  by law,  either  make such  report or return in such manner
          (including  the making  thereof in the Owner's  name) as will show the
          ownership of the Equipment in the Owner and send a copy of such report
          or return to the Owner, or shall notify the Owner of such  requirement
          and make such report or return in such  manner as shall be  reasonably
          satisfactory  to the  Owner.  Each  Indemnitee  agrees  that  it  will
          promptly  forward  to the  Operator  any  notice,  bill or any  advice
          received by it concerning  any such Fees,  Taxes and Other Charges and
          will, at Operator's expense, use its best efforts and take such lawful
          and reasonable  steps as may be proposed by the Operator in writing to
          minimize any of the same for which the Operator is  responsible  under
          this Section 16.02.

               (iv) The amount which the Operator shall be required to pay to or
          for the account of any Indemnitee with respect to any Fees,  Taxes and
          Other Charges which are subject to indemnification  under this Section
          16.02 shall be an amount  sufficient to restore the  Indemnitee to the
          same position the Indemnitee  would have been in had such Fees,  Taxes
          and Other Charges not been incurred or imposed.  If the payment by the
          Operator  under this  Section  16.02 of an amount  equal to such Fees,
          Taxes and Other  Charges  would be more or less than the amount  which
          would be required to make such Indemnitee whole as a result of any tax
          effect to an Indemnitee in connection  with such payment of such Fees,
          Taxes  and  Other  Charges,  including,  without  limitation  (A)  the
          inclusion of any payment to be made by the Operator under this Section
          16.02 in the  taxable  income  of any  Indemnitee  in one year and the
          deduction of the Fees,  Taxes and Other  Charges with respect to which
          such payment is made from the taxable  income of such  Indemnitee in a
          different year, (B) the nondeductibility of such Fees, Taxes and Other
          Charges  from  the  taxable  income  of  such  Indemnitee  or (C)  the
          anticipated  realization by such Indemnitee in a different year of tax
          benefits  resulting  from the  transaction  giving  rise to such Fees,
          Taxes and Other Charges, the amount of the indemnity to be paid by the
          Operator  shall be  adjusted  to an amount  which  (after  taking into
          account all tax effects on such  Indemnitee,  any loss of use of money
          resulting  from  differences  in timing  between the inclusion of such
          indemnity in the taxable income of such Indemnitee and the anticipated
          realization  by such  Indemnitee  of tax benefits  resulting  from the
          transaction  to which such  indemnity is related and the present value
          of  any  anticipated  future  tax  benefits  to be  realized  by  such
          Indemnitee as a result of deducting such Fees, Taxes and Other Charges
          or as a  result  of the  transaction



                                       30

<PAGE>

          giving rise thereto) will be sufficient to place the Indemnitee in the
          same position such Indemnitee  would have been in had such Fees, Taxes
          and Other  Charges not been  imposed.  All  computations  for purposes
          hereof  shall be based on tax  rates  in  effect  on the date  payment
          pursuant to this Section  16.02 is made.  Computations  involving  the
          loss of use of money or  calculations  of present value shall be based
          on the Overdue Rate as adjusted for applicable  income tax effects and
          compounded  monthly on the Basic Rent Payment Dates.  Each  Indemnitee
          shall in good faith use  reasonable  efforts to seek and claim all tax
          benefits available with respect to items referred to herein.

               (b) Refunds. If any Indemnitee shall obtain a refund or credit of
          all or any part of any Fees,  Taxes and Other  Charges,  payment of or
          indemnity  for which shall have been made by the Operator  pursuant to
          this Section  16.02,  such  Indemnitee  shall,  unless a Default or an
          Event of Default shall have occurred and be  continuing,  promptly pay
          to the Operator (i) the amount of such refund or credit (together with
          any interest  paid to such  Indemnitee  with respect to such refund or
          credit) plus (ii) an amount equal to all tax benefits realized by such
          Indemnitee as the result of the payment of the amounts  referred to in
          clause (i) above and this clause (ii).

     Section 16.03. Survival. The obligations of the Operator under this Article
XVI shall survive the  termination  of this Agreement and are expressly made for
the  benefit  of and  shall be  enforceable  by any  Indemnitee,  separately  or
together,  without declaring this Agreement to be in default and notwithstanding
any  assignment  by the Owner of this  Operating  Agreement or any of its rights
hereunder.  The extension of applicable statutes of limitations by an Indemnitee
or  the  Operator  shall  not  affect  the  survival  of the  Operator's  or any
Indemnitee's  obligations,  as the case may be,  under  this  Article  XVI.  The
obligations of the  Indemnitees  shall survive the termination of this Operating
Agreement.  All  payments  required to be paid  pursuant to Article XVI shall be
made directly to, or as otherwise requested by, the Indemnitee entitled thereof,
upon written demand by such  Indemnitee.  All such written demands shall specify
the  amounts  payable and the facts upon which the right to  indemnification  is
based.

     Section  16.04.  Waiver.  The  Operator  hereby  waives all tort claims and
causes of action in tort it may have at any time against any  Indemnitee  in any
way  relating  to or  arising  from or  alleged  to relate to or arise  from any
Operative  Document,  except  with  regard  to  circumstances   constituting  an
exception to the Operator's obligation to indemnify pursuant to Section 16.01(b)
hereof.

                                  ARTICLE XVII

                    COVENANTS AND REPRESENTATIONS OF OPERATOR

     Section 17.01.  Operation of Facility.  During the Term, the Operator shall
use its best efforts to operate the  Facility  (including  the sowing,  growing,
harvesting and packaging of the Product) at its fullest  productive  capacity as
would a  prudent  commercial  greenhouse  operator  under  the  same or  similar
circumstances  and to market the Product with  substantially the same effort and
on the same terms as used for product produced at other  facilities  operated by
the  Operator  or its  Affiliates.  The  Operator  hereby  agrees to give prompt
written  notice to the Owner if at any time the Operator  becomes aware that the
Facility is not being operated at its



                                       31
<PAGE>

fullest  productive  capacity.  The Operator further agrees that it will not use
the Facility for any purpose other than the  production of tomatoes or, with the
Owner's consent, any other agricultural product.

     Section 17.02. Affiliated Transactions.

          (a) In the event the Operator uses the Facility to pack, store, grade,
     separate or distribute Product grown in greenhouses other than the Facility
     owned,  leased,  operated  or managed by the  Operator,  then the  Operator
     agrees to charge such  greenhouses a fee per pound that is satisfactory to,
     and approved in advanced by, the Owner plus an amount equal to at least the
     Operator's cost for boxes and packing materials.  Without the prior written
     consent of the  Owner,  the  Operator  shall not use the  Facility  for any
     product other than the Product.

          (b) In the event the Operator  purchases  any  equipment,  supplies or
     other items from any Affiliate,  such  purchases  shall be on terms no less
     favorable than those available for unaffiliated parties.

          (c) The  Operator  shall  provide  to the Owner on a monthly  basis in
     detail  satisfactory  to the  Owner a list of all  Product  handled  by the
     Facility  for  greenhouses  pursuant to  subsection  17.02(a) and all items
     purchased  from  Affiliates  and the  purchase  price  thereof  pursuant to
     subsection 17.02(b).

         Section 17.03.  Waiver of Operating or Efficiency  Standards.  Operator
shall  use its  reasonable  best  efforts  to  assist  Owner  in  obtaining  and
maintaining  all  necessary  permits  and  approvals  for the  operation  of the
greenhouse and shall fully cooperate with Birchwood in the event Birchwood seeks
a waiver of the  operating or efficiency  standards for a "Qualifying  Facility"
under  the  Federal  Power Act or the  Federal  Energy  Regulatory  Commission's
regulations, as any of the foregoing may be now or hereafter amended.

     Section 17.04.  Representations and Warranties of Operator. Operator hereby
warrants and represents to Owner, Master Landlord, and each Fee Mortgagee that:

          (a) Operator has not entered into any contract or agreement with other
     Persons   regarding  the  provision  of  thermal  supply  relating  to  the
     Greenhouse  Facility,  and Operator will not,  without the consent of Owner
     and Master Landlord,  enter into any successor or additional  contracts for
     thermal energy or steam supply to the Greenhouse Facility.

          (b) There is not pending or threatened  against Operator or any of its
     Affiliates, and Operator knows of no facts or circumstances that might give
     rise to, any civil, criminal or administrative action, suit, demand, claim,
     hearing, notice or demand letter, notice of violation,  environmental lien,
     investigation,   or  proceeding   relating  in  any  way  to  Environmental
     Requirements.

          (c)  Neither  this  Operating  Agreement  nor  any  other  instrument,
     document,   agreement,   financial  statement,   financial  projections  or
     certificate  furnished  to Owner or  Master  Landlord  by or on  behalf  of
     Operator or any  affiliate of Operator in connection



                                       32

<PAGE>

     herewith  contains an untrue statement of a material fact or omits to state
     any material fact necessary to make the statements therein, in light of the
     circumstances  under which they were made, not misleading or omits to state
     any fact which may in the  future  have a  material  adverse  effect on the
     financial condition or business prospects of Operator.

                                  ARTICLE XVIII

                                  MISCELLANEOUS

     Section 18.01.  Further Assurances.  The Operator shall cause the Operative
Documents and any amendments  and  supplements to any of them (together with any
other instruments,  financing statements,  continuation  statements,  records or
papers  necessary  in  connection  therewith)  to be recorded  and/or  filed and
rerecorded  and/or refiled in each jurisdiction as and to the extent required by
law in order to, and shall  take such other  actions as may from time to time be
necessary  to,  establish,  perfect and  maintain the Owner's  right,  title and
interest  in and to the  Facility,  not  subject to any Liens  except  Permitted
Liens. The Operator will promptly and duly execute and deliver to the Owner such
documents and assurances and take such further action as the Owner may from time
to time reasonably request in order to carry out more effectively the intent and
purpose of the  Operative  Documents and to establish and protect the rights and
remedies  created or intended to be created in favor of the Owner, to establish,
perfect  and  maintain  the  Owner's  right,  title and  interest  in and to the
Facility,  including without limitation if requested by the Owner at the expense
of the  Operator,  the  recording  or  filing  of  counterparts  or  appropriate
memoranda of the Operative  Documents,  or of such financing statements or other
documents  with  respect  thereto as the Owner may from time to time  reasonably
request,  and the Owner  agrees  promptly  to execute  and  deliver  such of the
foregoing  financing  statements or other documents as may require  execution by
the Owner.

     Section  18.02.  Quiet  Enjoyment.  The  Owner  covenants  that it will not
interfere in the Operator's quiet enjoyment of the Facility hereunder during the
Term, so long as (a) the Operator is in compliance  with each term and condition
hereof and (b) no Event of Default has occurred or is continuing.

     Section 18.03. Notices.  Unless otherwise specifically provided herein, all
notices,  consents,  directions,  approvals,  instructions,  requests  and other
communications  required  or  permitted  by the terms  hereof to be given to any
Person shall be in writing and any such notice shall become  effective three (3)
Business Days after being  deposited in the mails,  certified or registered with
appropriate  postage prepaid for first-class mail or, if delivered by hand or in
the form of a telex or  telegram,  when  received,  and shall be directed to the
Address of such Person.

     Section 18.04. Severability.  Any provision of this Agreement that shall be
prohibited or unenforceable in any  jurisdiction,  as to such  jurisdiction,  be
ineffective  to the  extent  of such  prohibition  or  unenforceability  without
invalidating  the  remaining  provisions  hereof  and any  such  prohibition  or
unenforceability   in  any   jurisdiction   shall  not   invalidate   or  render
unenforceable such provision in any other jurisdiction.  To the extent permitted
by applicable  law, the Operator hereby waives any provision of law that renders
any provision hereof prohibited or unenforceable in any respect.



                                       33

<PAGE>

     Section  18.05.  Amendment.  Neither  this  Agreement  nor any of the terms
hereof may be terminated, amended, supplemented,  waived or modified orally, but
only  by an  instrument  in  writing  signed  by the  party  against  which  the
enforcement of the termination,  amendment,  supplement,  waiver or modification
shall be sought.

     Section 18.06.  Headings. The Table of Contents and headings of the various
Articles and Sections of this  Agreement are for  convenience  of reference only
and shall not modify, define or limit any of the terms or provisions hereof.

     Section 18.07. Counterparts.  This Agreement may be executed by the parties
hereto in separate  counterparts,  each of which when so executed and  delivered
shall be an original,  but all such counterparts  shall together  constitute but
one and the same instrument.

     Section  18.08.  Governing  Law. This  Agreement has been delivered in, and
shall in all respects be governed by, and construed in accordance with, the laws
of  the  Commonwealth  of  Virginia  applicable  to  agreements  made  and to be
performed  entirely  within such State,  including all matters of  construction,
validity and performance.

     Section 18.09. Binding Effect; Successors and Assigns;  Survival. The terms
and  provisions of this  Agreement,  and the respective  rights and  obligations
hereunder of the Owner and the Operator,  shall be binding upon their respective
successors and assigns (including,  in the case of the Owner, any Person to whom
the Owner may transfer all or any  portions of the  Facility),  and inure to the
benefit of their respective permitted successors and assigns. The obligations of
the  Operator  under  this  Agreement  shall  survive  the  termination  of this
Agreement.

     Section 18.10.  Divisible Operating  Agreement.  It is the intention of the
parties hereto that this Agreement  shall  constitute the lease of both personal
property and real property and, to such extent, shall be deemed divisible. It is
the  intention  and  understanding  of the  parties  hereto  that the  Equipment
constitutes  personal  property  and all the  Site  and  Plant  constitute  real
property for all purposes of this  Operating  Agreement and the other  documents
referred to herein and for all purposes of bankruptcy laws of the United States;
provided,  however,  that nothing herein shall affect the rights and obligations
of Owner or Operator  under Section 18.01 hereof,  it being  understood  that no
filing, refiling,  recording,  re-recording,  registration or re-registration in
any office for the  filing,  recording  or  registration  of  interests  in real
property shall constitute or be deemed to constitute evidence or an admission by
Owner or Operator that the Equipment is real property.

     Section 18.11.  Effectiveness.  This Agreement shall become  effective upon
the date (the "Effective Date") the last of the following events occurs:

               (a) the Closing Date;

               (b) the receipt of any necessary  consent of the Owner's  lenders
          under the Owner's financing documents; and

               (c) upon  Notice of  Substantial  Completion  (as  defined in the
          General Contractor's Agreement) of the Plant.



                                       34

<PAGE>

                                   ARTICLE XIX

                       STEAM SALES AGREEMENT, FEE MORTGAGE

                                AND MASTER LEASE

     Section  19.01.  Subject to Fee Mortgage and Master Lease.  This  Operating
Agreement is subject and  subordinate  to the Fee Mortgage and Master Lease.  As
used in this Section 19.01, "Applicable Documents" shall mean, collectively, the
Master Lease, Fee Mortgage and Steam Sales  Agreement.  Operator shall not do or
permit to be done anything which would constitute a default under all or any one
or more  of the  Applicable  Documents  or  cause  all or any one or more of the
Applicable Documents to be terminated or forfeited; in the event Operator causes
or permits what Owner  reasonably  deems to be a default under all or any one or
more of the Applicable Documents, in addition to all other remedies available to
Owner, Owner shall be entitled to enter the Site,  without  Operator's  consent,
and cure said default  whereupon all expenses incurred by Owner thereby shall be
additional rent due and payable upon demand. Operator shall duly comply with all
obligations and undertakings of Master Tenant under the Master Lease with regard
to those  obligations  and  undertakings  related  to the Site,  except  for the
payment  of  "Annual  Rent"  due  Master   Landlord   under  the  Master  Lease.
Notwithstanding  anything  herein  contained  to  the  contrary,  the  services,
reimbursements,  indemnities,  repairs,  restoration  and  maintenance  to which
Operator is entitled  hereunder shall in no event exceed those to which Owner is
entitled  under the Master Lease and the Steam Sales  Agreement and for all such
services,  reimbursements,  indemnities,  repairs,  restoration  and maintenance
Operator will look to the appropriate party under the Master Lease and the Steam
Sales  Agreement,  whichever is applicable,  and no default of Owner shall occur
under  this  Operating  Agreement  on account  of any  failure  to provide  such
services,  reimbursements,  indemnities,  repairs,  restoration and maintenance.
Owner shall cooperate with Operator in enforcing such obligations.  Operator and
Owner  shall  execute  and  deliver  to  Master   Landlord  and  Fee  Mortgagee,
contemporaneously  with this  Operating  Agreement,  an agreement in  recordable
form, wherein and whereby Operator acknowledges the right of Master Landlord and
Fee  Mortgagee  to continue or terminate  this  Operating  Agreement,  in Master
Landlord's sole  discretion,  upon termination of the Master Lease, and Operator
agrees to  recognize  and attorn to Master  Landlord  in the event  that  Master
Landlord elects to continue this Operating Agreement.

     Section  19.02.   Cooperation  with  Lenders.   Operator  shall  reasonable
cooperate  with Owner and Master  Landlord and their  respective  financiers and
equity investors  (including but not limited to Fee Mortgagee) from time to time
in connection with Master Landlord's  financing,  development and/or refinancing
of the Power Station and the Greenhouse Facility, including, without limitation,
the furnishings of such  information,  the giving of such  certificates  and the
furnishing  of such  opinions of counsel and other  matters as Master  Landlord,
Owner,  and their  respective  financiers  and equity  investors may  reasonably
request.  Operator  shall  provide such  reasonable  corporate  information  and
approvals to the entity(s) providing the funding for the Power Station as may be
required to have the Power Station financed or refinanced on a "project finance"
or nonrecourse  financing basis where the lending  equity's  principal source of
payment is the revenues  from the Power  Station and will execute  amendments to
this Operating  Agreement which do not materially  affect the Operator's  rights
and obligations hereunder.


                                       35

<PAGE>

     Section 19.03. Steam Sales Agreement.

     (a) Operator  agrees to accept and use the thermal  energy  produced by the
Power Station which is delivered to the Steam Interconnection Points. Owner will
make  available to Operator  such steam,  if any, as is provided by Birchwood to
Owner  under the Steam  Sales  Agreement.  Operator  shall  accept and use steam
necessary to meet the  requirements  set forth in the QF Application,  a copy of
which has been  provided to  Operator.  Owner  shall  notify  Birchwood  to give
Operator  notice  prior to  delivery  of any steam to the Steam  Interconnection
Points.  Title to and full  responsibility  for all steam generated by the Power
Station  will pass to Operator  upon its  delivery at the Steam  Interconnection
Points to Owner,  and neither Owner nor Birchwood shall have any  responsibility
for such steam thereafter.

     (b)  Without   limiting  the   generality   of  the   foregoing,   Operator
unconditionally  agrees that Operator will accept delivery of and use sufficient
steam based on per hour basis form Owner for  heating  and  cooling  purposes to
allow  Birchwood  to maintain the status of the Power  Station as a  "Qualifying
Facility"  within the meaning of the Public Utility  Regulatory  Policies Act of
1978, as now or hereafter  amended,  on an annual basis,  as described in the QF
Application.  If Operator  fails to accept such minimum  requirements,  then, in
addition to Owner's  rights  hereunder  and as may be allowed by law,  Birchwood
shall have the right, without Operator's approval,  to sell steam from the Power
Station to any other  person or entity to the extent  required to maintain  such
status,  and such  failure  shall be  deemed  an Event of  Default  by  Operator
hereunder. Operator shall not use alternative means of providing such heating or
cooling  unless,  and then  only to the  extent  that,  either  (i) steam is not
delivered  as  contemplated  in Section  19.03(a)  hereof,  or (ii)  Operator is
accepting  and using all the steam  provided by  Birchwood.  Operator  shall not
resell any thermal energy which it receives pursuant to this Operating Agreement
without the express written consent of Master Landlord.

     (c) Operator  agrees to provide  Master  Landlord at the Power  Station all
storm water runoff from the Greenhouse  Facility for use with the Power Station,
without additional cost to Owner or Master Landlord, by means of the Storm Water
Piping in a manner to be specified by Master Landlord. Operator shall not use or
divert any storm water runoff without the consent of Master Landlord.

     (d) Without  limiting any right or remedy  which Owner or  Birchwood  might
have at law or in equity as a result of such breach, Operator agrees that breach
by Operator of any covenant  contained in Sections  19.03(a),  (b) or (c) hereof
will cause  irreparable  injury to Birchwood and to Owner and that Birchwood and
Owner  have no  adequate  remedy at law in  respect  of such  breach  and,  as a
consequence,  Operator agrees that the covenants contained in Sections 19.03(a),
(b) or (c) hereof shall be  specifically  enforceable by Birchwood and by Owner,
and by either of them,  against  Operator and Operator  waives and agrees not to
assert any defense against an action for specific  performance of such covenants
except for a defense that such covenants have not been breached.



                                       36

<PAGE>

     (e) Owner shall direct  Birchwood to give  Operator  notice  simultaneously
with notice to Owner under the Steam Sales Agreement of any scheduled outages or
scheduled shutdown periods significantly affecting the steam delivery components
of the Power  Station.  Notification  of such shutdowns may be made by telephone
and confirmed by written notice.

     (f)  Operator  shall give Owner and  Birchwood  two (2) weeks notice of any
scheduled  activities that will cause  Operator's  steam  requirements  from the
Power Station to cease for a period of more than  twenty-four  (24 ) hours,  but
such  notice  shall not reduce or affect  Operator's  obligations  hereunder  to
accept steam.  Notification  of such  activities  shall be made by telephone and
confirmed by written notice.

     (g) Condensate  shall be returned by Operator to the Steam  Interconnection
Points,  and shall be of a  quality  suitable  for use with the  Power  Station.
Condensate return may be monitored by Birchwood.

     (h) As used in this Section 19.03,  "Force Majeure" means causes beyond the
reasonable  control of and without the fault or negligence of the party claiming
Force Majeure,  including without  limitation  sabotage,  strikes,  acts of God,
accidents,  appropriation or diversion of steam, steam equipment or materials or
commodities by rule or order of any governmental  authority having  jurisdiction
thereof, and necessity of temporary  interruption on account of system operating
conditions, including disruptions in the transportation,  receipt or delivery of
necessary  materials  and  equipment  or in  Virginia  Power's  ability  to take
electrical  output from the Power  Station.  Economic  hardship  shall not be an
event of Force Majeure.

     (i) If Operator or Owner is rendered  wholly or party unable to perform its
obligations under this Section 19.03 because of Force Majeure,  that party shall
be executed  from whatever  performance  is affected by the Force Majeure to the
extent so affected,  and only to the extent such performance is excused pursuant
to the provisions of Section 22.2 of the Steam Sales Agreement.

     (j) Neither Operator nor Owner nor Birchwood shall be liable or responsible
for any loss,  damage,  injury or expense (including  consequential  damages and
costs of replacement of steam) resulting from or arising out of any delay in the
performance  of, or the inability to perform,  any duty or  obligation  under or
pursuant to or  identified  in this Section  19.03 in an event of Force  Majeure
applicable to it, in accordance  with and subject to the limitation set forth in
Section  19.03(i).  The party  suffering an event of Force Majeure shall use its
best  efforts  to  remedy  as soon  as  possible  the  cause(s)  preventing  the
performance of this Operating Agreement.

     Section 19.04. Storm Water Piping,  Power Station Piping,  Steam Equipment,
Steam Interconnection Facilities and Metering Devices. Master Landlord owns and,
pursuant  to  the  Steam  Sales  Agreement,  shall  maintain  Master  Landlord's
Facilities.  An authorized  representative  of Birchwood  will read the Metering
Devices at the end of each calendar month.  Owner will designate Operator as the
recipient of a notice from  Birchwood  of the amounts of steam  delivered to the
Steam Interconnection Points during such calendar month. Owner owns


                                       37

<PAGE>

the Steam Equipment together with all equipment for the distribution  within the
Greenhouse  Facility of the heating and cooling provided by the Steam Equipment.
Operator, at Operator's sole cost, shall operate and maintain (except for Master
Landlord's maintenance obligations with respect to the Steam Equipment under the
Steam Sales  Agreement)  the Steam  Equipment,  shall  operate and  maintain all
equipment  required for the distribution  within the Greenhouse  Facility of the
heating and cooling  provided by the Steam  Equipment,  and shall  purchase  and
install  all  equipment  required  for the  distribution  within the  Greenhouse
Facility of the heating and cooling  provided by the Steam  Equipment  after the
date hereof.  The  Improvements are designed to facilitate the collection in the
Storm Water Piping of storm water runoff from the Improvements for use by Master
Landlord at the Power  Station.  Owner and Master  Landlord shall be entitled to
use all storm water runoff without compensation to Operator,  and Operator shall
not use or divert any storm water  runoff  without  the consent of Owner,  which
consent may be granted or withheld in the sole discretion of Owner.

     IN WITNESS WHEREOF, the undersigned have caused this Operating Agreement to
be duly executed and delivered and their corporate seals to be hereunto  affixed
and attested by their  respective  officers  thereunto duly authorized as of the
day and year first above written.

Attest:                                          GREENHOST, INC.


____________________________________         By:________________________________
                         , Secretary             Name: Steve Gillis
                                                 Title: CFO
[Corporate Seal]

Attest:                                          VILLAGE FARMS OF VIRGINIA, INC.


____________________________________         By:________________________________
                         , Secretary             Name: J. Kevin Cobb
                                                 Title: Vice president
[Corporate Seal]

               Unconditional Guarantee of Payment and Performance

     APD is an Affiliate of the Operator and is under common  ownership with the
Operator.  To induce the Owner to enter  into this  Operating  Agreement  and in
consideration  for the  benefits  to be  derived  by APD from  the  transactions
contemplated  hereby,  APD  unconditionally  guarantees the payment when due and
timely  performance of any and all  obligations of Operator under this Operating
Agreement; provided, however, that APD's liability under this provision shall be
limited to a maximum  aggregate  amount of  $2,000,000.00  during the Term. Upon
default by the  Operator in making  payment  hereunder  or any other  failure to
perform its  obligations  hereunder,  APD shall make such  payment or cause such
obligation to be performed  (subject to the limitation of liability set forth in
the preceding sentence),  promptly upon the demand of the Owner. Notwithstanding
the foregoing,  in the event the Operator, for whatever reason, ceases to occupy
and/or operate the  Greenhouse  Facility,  Owner agrees to use its  commercially
reasonable  efforts,  but  shall  not  be  obligated,   to  find  a  replacement
tenant/operator



                                       38

<PAGE>

for the Greenhouse  Facility.  Any replacement  rent received by the Owner shall
mitigate APD's liability under this Guarantee.  APD agrees that the Owner and/or
the Operator may from time to time extend or renew  provisions of this Operating
Agreement for any period and may grant any releases,  compromises or indulgences
with respect thereto  (including,  but not limited to, the failure or refusal to
exercise one or more of the right or remedies provided  herein),  without notice
to or consent of APD, and without affecting the liability of APD hereunder.

                                                 AGRO POWER DEVELOPMENT, INC.


                                                 By:____________________________
                                                    Name: Michael A. DeGiglio
                                                    Title: President




                                       39

<PAGE>

                                                                SCHEDULE 1.01(a)
                                                          TO OPERATING AGREEMENT

                             Description of Facility

PART 1:  Description of Equipment

         The Equipment described on Annex A hereto.

PART 2:  Description of Plant

         The greenhouse plant including  fixtures  containing  approximately 38
acres and the headhouse building located on the Site described in Part 3.

PART 3:  Description of Site

         The property described on Annex B hereto.



                                       40

<PAGE>

                                                                      ANNEX A to
                                                                Schedule 1.01(a)

                            Description of Equipment

o    All existing Greenhost office equipment,  furniture, fixtures and computers
     (including radios and phone systems).

o    3 Caterpillar GP 18 forklifts

o    13 Electric Golf Carts

o    EZ Go PC956 Personnel Carrier

o    Security System and hardware

o    John Deere 5300 4WD 50 HP Tractor with blade, mower and tiller

o    7 Trash Dumpsters

o    Motorized sweeper

o    All existing Greenhouse safety and maintenance equipment (excluding scissor
     lifts), tools and spare parts.





                                       41

<PAGE>

                               Description of Site

TRACT ONE:

All those  certain  pieces,  or  parcels  of land  lying  and  being in  Potomac
Magisterial  District,  King George County,  Virginia,  and being  designated as
Parcel "C" on plat of survey entitled  "ALTA/ACSM Survey of the Land of Adrian &
Ethel S. Gilbert and A Portion of the Land of Frank B. & Laura S. Taylor",  made
by Springfield  Engineering  Corporation,  P.C. , dated  February 7, 1991,  last
revised February 3, 1994, and being more particularly described as follows:

PARCEL "C":

BEGINNING at a point in the southerly  line of State Route # 665 (30' wide) said
point also being the  northeasterly  line of the land now or  formerly  Jack and
Nancy Reed,  and running thence with said line of State Route #665 the following
courses and distances:  N.80(0) 50' 09" E. 376.78 feet to a point;  with the arc
of a curve to the left whose radius is 503.62 feet,  and whose chord bearing and
chord are N.  62(0) 26' 24" E. and 317.88  feet,  respectively,  a  distance  of
323.41 feet to a point;  with the arc of another  curve to the left whose radius
is 2,426.45  feet, and whose chord bearing and chord are N. 39(0) 42' 43" E. and
366.45 feet,  respectively,  a distance of 366.80 feet to a point;  N. 35(0) 22'
52" E. 524.45 feet to a point; with the arc of a curve to the right whose radius
is 4,934.53  feet, and whose chord bearing and chord are N. 37(0) 45' 47" E. and
410.16 feet,  respectively,  a distance of 410.28 feet to a point;  N. 40(0) 08'
42" E.  257.85  feet to a point;  and with the arc of a curve to the left  whose
radius is 1,043.00  feet, and whose chord bearing and chord are N. 38(0) 12' 23"
E. and 70.57  feet,  respectively,  a  distance  of 70.58 feet to a point in the
westerly line of the land of the Solite Corporation; thence leaving said line of
State  Route  #665 and  running  with the  said  line of the land of the  Solite
Corporation,  the following  courses and  distances;  S. 11(0) 13' 48" W. 218.27
feet to a point;  with the arc of a curve to the left  whose  radius  is  408.06
feet,  and whose chord  bearing and chord are S. 09(0) 49' 34" and 293.20  feet,
respectively,  a distance  of 299.1 feet to a point;  S. 30(0) 52' 52" E. 494.72
feet to a point; S. 30(0) 04' 38" E. 555.68 feet to a point;  thence leaving the
easterly line of the land of Solite Corporation S. 68(0) 14' 39" W. 2124.04 feet
to a point;  thence N. 21(0) 20' 39" W. 733.81 feet to a point marking the point
and place of beginning, containing 42.31913 acres.

BEING a portion of the same property conveyed to Birchwood Power Partners, L.P.,
by deed from Curtis A.  Gilbert and Ethel S.  Gilbert,  husband and wife,  dated
February 11, 1994,  recorded  February 11, 1994, in the Clerk's Office,  Circuit
Court, King George County, Virginia, in Deed Book 259, page 627.

TRACT TWO:

ALL that  tract or parcel of land  lying  and being in the  Potomac  magisterial
District, King George County, Virginia, and being more particularly described as
follows:

TO FIND THE POINT OF  BEGINNING,  COMMENCE at the point of  intersection  of the
centerline  of State  Route No. 3 with the  centerline  of State  Route No. 665;
running  thence along the  centerline of State Route No. 665 a distance of 2,027
feet, more or less, to a point;  continuing thence along the centerline of State
Route No. 665 a distance of 1,030,.68  feet to an iron pin set;

                                       42

<PAGE>

thence  leaving  the  centerline  of State  Route No.  665;  thence  leaving the
centerline  of State  Route NO.  665 and  running  South 9 degrees 09 minutes 51
seconds East a distance of 15.00 feet to a point on the southerly  line of State
Route No. 665,  the  northeasterly  corner of the land now or formerly  Jack and
Nancy Reed;  thence  leaving the southerly  line of State Route No. 665 with the
easterly  line of Jack and Nancy Reed South 21 degrees 20 minutes 39 second East
a distance of 733.81 feet to a point, which point is the northwesterly corner of
the land of Frank B. and Laura S. Taylor  which  marked the POINT OF  BEGINNING;
FROM SAID  POINT OF  BEGINNING  AS THUS  ESTABLISHED,  running  thence  with the
southerly  line of land now or formerly  Curtis A. and Ethel S. Gilbert North 68
degrees 14 minutes 39 seconds  East,  2,124.04  feet to a point in the  westerly
line of the land of Frank B. Taylor (Deed Book 138,  page 516);  thence with the
said line of Taylor  and  continued  with the  westerly  line of the land now or
formerly C. T. Graves South 28 degrees 45 minutes 02 seconds East, 1,637.25 feet
to a point; thence leaving the said line of C. T. Graves and running through the
land of Frank B. and Laura S. Taylor South 72 degrees 31 minutes 12 seconds West
2,340,.35 feet to a point in the aforesaid easterly line of Jack and Nancy Reed;
thence  with the said line of Jack and Nancy Reed North 21 degrees 20 minutes 39
seconds West 1,450.61 feet to the point of beginning, containing 78.50000 acres,
being a portion of the land of Frank B. and Laura S. Taylor  (Deed Book 81, page
413)  and  being  more  particularly  shown  on a plat  of  survey  prepared  by
Springfield  Engineering  Corporation,   P.C.,  engineers,  planners,  surveyors
landscape architects, dated August 23, 1993, and revised September 10, 1993, and
entitled "Plat of a Portion of the Land of Frank B. & Laura S. Taylor, Deed Book
81, page 413, Potomac Magisterial District, King George County, Virginia.

BEING the same property  conveyed to Birchwood Power Partners,  L.P., a Delaware
Limited partnership,  by deed from Frank B. Taylor and Laura Smart Taylor, dated
March 18, 1994,  recorded March 18, 1994, in the Clerk's Office,  Circuit Court,
King George County, Virginia, in Deed Book 261, page 161.





                                       43

<PAGE>

                                  Schedule A-1

                       Access and Utility Easement Parcel

A 100 foot,  perpetual  easement for vehicular  access to and from Tract One and
Tract Two for the installation,  repair, replacement,  maintenance and operation
of such gas, water, telephone, power, steam, and other utility lines and related
equipment   as  Birchwood   Power   Partners,   L.P.  or  Dominion   Growers  of
Fredericksburg,  Inc.,  deems necessary or appropriate to serve their respective
properties and any  improvements  now or hereafter  located thereon (the "Access
and Utility  Easement") at the location  designated as the "100'  Ingress-Egress
and Utility Easement" on that plat of survey entitled "Plat Showing A Portion of
the Property of Frank B. Taylor & Laura S. Taylor, Potomac Magisterial District,
King George County,  Virginia, dated March 10, 1994, revised April 29, 1994, and
prepared by Andy L. Collis and being more particularly described in that certain
Access and Utility  Easement  among Frank S. Taylor  (sic) and Laura S.  Taylor,
Dominion  Growers of  Fredericksburg,  Inc. and Birchwood Power Partners,  L.P.,
dated as of April 21, 1994, recorded May 4, 1994, in Deed Book 262, page 765.





                                       44

<PAGE>

                                  Schedule A-2

               Stormwater and Surface Water Runoff Easement Parcel

A PERPETUAL  EASEMENT OVER, UNDER, UPON AND ACROSS the below described  property
for the purposes of the discharge of  stormwater  and other surface water runoff
as more  particularly  set out in that certain  easement  agreement  dated as of
April 22, 1994 between  Dominion Growers of  Fredericksburg,  Inc. and Birchwood
Power Partners,  L.P. recorded May 4, 1994, in the Clerk's Office of the Circuit
Court of King  George,  Virginia,  in Deed Book 262,  page 781,  as amended  and
restated by that certain amended and restated easement agreement dated as of May
18, 1994, between Dominion Growers of  Fredericksburg,  Inc. and Birchwood Power
Partners,  L.P.,  recorded  May 25, 1994,  in the Clerk's  Office of the circuit
Court of King George, Virginia, in Deed Book 263, page 491:

ALL that  tract or parcel of land  lying  and being in the  Potomac  Magisterial
District, King George County, Virginia,  containing 21.6610 acres, more or less,
and further described on a plat of survey made by Andy L. Collis, Land Surveyor,
dated March 10, 1994, and recorded among the land records of King George County,
Virginia, in Deed Book 261, at page 169.





                                       45

<PAGE>

                                   Schedule A

                                Land Description

         All  that  tract or  parcel  of land  lying  and  being in the  Potomac
Magisterial District,  King George County,  Virginia,  containing 21.6610 acres,
more or less, and further  described on a plat of survey made by Andy L. Collis,
Land Surveyor, dated March 10, 1994, and recorded among the land records of King
George County, Virginia in Deed Book 261, page 169.





                                       46

<PAGE>

                                   Schedule A

                                Land Description

         All that  tract or parcel of land  located in the  Potomac  Magisterial
District,  King George  County,  Virginia,  containing an area of 13.7155 acres,
more or less, and as shown on a plat of survey by Andy L. Collis, Land Surveyor,
dated January 3, 1995, and recorded in Plat Book 15, Page 268.





                                       47

<PAGE>

                                   Schedule A

         All that  tract of  parcel  of land,  lying  and  being in the  Potomac
Magisterial District, King George County,  Virginia,  containing 1.343 acres, as
shown on a plat of survey made by Andy L. Collis,  Surveyor,  dated  October 31,
1994,  and recorded in the Potomac  Magisterial  District in Deed Book 271, Page
879.





                                       48

<PAGE>

Schedule A-3

At  Greenhost  request,  Village  Farms of  Virginia,  Inc.  agrees to release a
portion of undeveloped  property located north of the Greenhouse and west of the
point where the steam line crosses state route 665.

Greenhost will be responsible  for the cost  associated with the release of this
property including surveys.

Greenhost will restrict the use of this property from vegetable growing.





                                       49

<PAGE>

                                                                SCHEDULE 1.01(b)
                                                          TO OPERATING AGREEMENT

                     Calculation of Internal Rate of Return

Internal Rate of Return Calculation

The  calculation of the Internal Rate of Return in connection  with  determining
the  Owner's  Supplemental  Rent will be based upon the cash  outflows  (Capital
Improvements Costs and Base Rent Discount) and cash inflows  (Supplemental Rent)
of the Owner. The Internal Rate of Return shall be computed utilizing  Microsoft
Excel  software  version  5.0.  The  Internal  Rate of Return  shall be computed
utilizing the @XIRR function in Excel.  For purposes of calculating the Internal
Rate of Return,  the cash inflows and cash  outflows to the Owner shall  consist
solely of the following:

Capital Improvement Costs

All  Capital  Improvement  Costs made by the Owner will be  reflected  as a cash
outflow  as of the date such  costs  were paid  under the  General  Contractor's
Agreement.

In addition,  for purposes of calculating the Internal Rate of Return, the Owner
will be  credited  with a cash  outflow of  $100,000  to  reflect  the base rent
discount on each March 31,  June 30,  September  30 and  December 31 through the
term of the lease commencing March 31, 1998.

Supplemental Rent

The  amount to be  reflected  as a cash  inflow to the  Owner  for  purposes  of
calculating the Internal Rate of Return will be equal to the  Supplemental  Rent
received  by the Owner as of the date such  payment  was  received  by the Owner
subject to an adjustment  to reduce such cash received by 38.9%.  As an example,
if the Owner  receives  $1  million on January  1,  1999,  such  amount  will be
reflected  as a cash inflow of  $611,000  as of January 1, 1999 for  purposes of
calculating the Internal Rate of Return.





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<PAGE>

                                                                   SCHEDULE 3.01
                                                          TO OPERATING AGREEMENT

                             SCHEDULE OF BASIC RENT

March 31, 1998              *                   March 31, 2003            *
June 30, 1998               *                   June 30, 2003             *
September 30, 1998          *                   September 30, 2003        *
December 31, 1998           *                   December 31, 2003         *

March 31, 1999              *                   March 31, 2004            *
June 30, 1999               *                   June 30, 2004             *
September 30, 1999          *                   September 30, 2004        *
December 31, 1999           *                   December 31, 2004         *

March 31, 2000              *                   March 31, 2005            *
June 30, 2000               *                   June 30, 2005             *
September 30, 2000          *                   September 30, 2005        *
December 31, 2000           *                   December 31, 2005         *

March 31, 2001              *                   March 31, 2006            *
June 30, 2001               *                   June 30, 2006             *
September 30, 2001          *                   September 30, 2006        *
December 31, 2001           *                   December 31, 2006         *

March 31, 2002              *                   March 31, 2007            *
June 30, 2002               *                   June 30, 2007             *
September 30, 2002          *                   September 30, 2007        *
December 31, 2002           *                   December 31, 2007         *




*Information omitted and subject to request for confidential treatment





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<PAGE>

                                                                   SCHEDULE 3.02
                                                          TO OPERATING AGREEMENT

                          SCHEDULE OF SUPPLEMENTAL RENT

Supplemental Rent shall be payable to the Owner on each Supplemental  Basic Rent
Payment Date in an amount equal to the percentage (Supplemental Rent Percentage)
of cash flow for the calendar  quarter  preceding  the  Supplemental  Basic Rent
Payment Date. The Supplemental Rent Percentage is defined as follows:

o    Supplemental Rent Percentage shall equal *% as long as the Owner's Internal
     Rate of Return shall be less than or equal to *%.

o    Subsequent to the date that the Owner's Internal Rate of Return exceeds *%,
     the Supplemental Rent Percentage shall equal *% through the end of the Term
     of the Operating Agreement.





*Information omitted and subject to request for confidential treatment





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