Exhibit 10.12

                       SECOND AMENDMENT TO LOAN AGREEMENT

         THIS SECOND AMENDMENT ("Amendment") made as of this 29th day of August,
1998 among GRISTEDE'S SLOAN'S, INC., a Delaware corporation having its principal
place of  business  at 823  Eleventh  Avenue,  New  York,  New York  10019  (the
"Borrower"),  each of the  Subsidiaries  of the  Borrower  listed on  Schedule I
annexed to the Agreement (as hereinafter defined)  (individually,  a "Guarantor"
and  collectively,   the   "Guarantors")   (the  Borrower  and  the  Guarantors,
collectively,  the "Credit Parties"), EUROPEAN AMERICAN BANK, a New York banking
organization,  having an office at 335 Madison Avenue,  New York, New York 10017
("EAB"  or a  "Bank")  ISRAEL  DISCOUNT  BANK OF NEW  YORK,  a New York  banking
organization,  having an office at 511 Fifth  Avenue,  New York,  New York 10017
("Israel  Discount"  or a  "Bank"),  KEYBANK  NATIONAL  ASSOCIATION,  a national
banking association,  having an office at 1377 Motor Parkway, Islandia, New York
11768 ("Key" or a "Bank") and BANK LEUMI USA (formerly known as Bank Leumi Trust
Company of New York),  a New York trust  company,  having an office at 562 Fifth
Avenue,  New York,  New York 10036  ("Leumi" or a "Bank") and EUROPEAN  AMERICAN
BANK, as agent for the Banks (the "Agent").

                              W I T N E S S E T H :

         WHEREAS,  the Credit Parties, the Banks and the Agent have entered into
a Loan Agreement dated as of the 7th day of November, 1997, which Loan Agreement
has heretofore been amended pursuant to that certain First Amendment dated April
30, 1998 (as so amended, the "Agreement"); and

         WHEREAS,  the Banks have made loans to the  Borrower  as  evidenced  by
certain notes of the Borrower and specifying interest to be paid thereon; and

         WHEREAS, the Credit Parties have requested that the Agent and the Banks
amend  certain of the  financial  covenants  contained  in  Section  5.03 of the
Agreement; and

         WHEREAS,  the Agent and the Banks have  agreed to amend  certain of the
financial  covenants contained in Section 5.03 of the Agreement on the terms and
conditions contained herein.

         NOW, THEREFORE, in consideration of Ten ($10.00) Dollars and other good
and  valuable  consideration,  the receipt and  sufficiency  of which are hereby
acknowledged,  the Credit  Parties,  the Banks and the Agent do hereby  agree as
follows:

         1.       DEFINED TERMS.  As used in this Amendment,  capitalized terms,
unless otherwise defined, shall have the meanings set forth in the Agreement.

         2.       REPRESENTATIONS AND WARRANTIES.  As an inducement for the Bank
to enter into this  Amendment,  the Credit  Parties each  represent  and warrant
as follows:


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         A.       That  with  respect  to  the  Agreement and the Loan Documents
executed in connection therewith and herewith:

                           (i)  There  are  no   defenses   or  offsets  to  the
                  Borrower's or any Guarantor's  obligations under the Agreement
                  as amended  hereby,  the Notes or any of the Loan Documents or
                  any other  agreements  in favor of the Bank referred to in the
                  Agreement,  and if any such  defenses or offsets exist without
                  the knowledge of the Borrower or any  Guarantor,  the same are
                  hereby waived.

                           (ii) All of the  representations  and warranties made
                  by the Borrower and any  Guarantor in the Agreement as amended
                  hereby are true and  correct in all  material  respects  as if
                  made on the date hereof, except for those made with respect to
                  a particular date, which such  representations  and warranties
                  are  restated as of the date of this  Amendment to be true and
                  correct in all material respects as of such date; and provided
                  further that the  representations  and warranties set forth in
                  Section  4.01(f) of the Agreement  shall relate to the audited
                  consolidated  financial  statements  of the  Borrower  and its
                  Consolidated  Subsidiaries  for the fiscal year ended November
                  30,  1997 and the  internally  prepared  consolidated  balance
                  sheet of the Borrower and its  Consolidated  Subsidiaries  for
                  the fiscal quarter ended August 30, 1998.

                           (iii) The outstanding  aggregate principal balance of
                  the Loans as  evidenced by the Notes is  $21,836,074.67  as of
                  October 1, 1998 and interest has been paid through  October 1,
                  1998.

         3.  AMENDMENTS.  The  following  amendments  are  hereby  made  to  the
Agreement:

                  (a)  The  definition  of   Consolidated   Tangible  Net  Worth
contained  in the  Agreement  is hereby  deleted in its entirety and replaced as
follows:

                  "Consolidated Tangible Net Worth" means, as to any Person, the
                  excess of (i) (a) such  Person's  Consolidated  Total  Assets,
                  less all  intangible  assets  properly  classified  as such in
                  accordance  with  GAAP,  including,  but  without  limitation,
                  patents, patent rights,  trademarks,  trade names, franchises,
                  copyrights,  licenses,  permits  and  goodwill,  plus (b) such
                  Person's  Consolidated   Subordinated  Debt,  over  (ii)  such
                  Person's Consolidated Total Liabilities."

                  (b) Section  5.03(c) of the Agreement is hereby deleted in its
entirety and replaced as follows:


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                  "(c)     Leverage Ratio.  The Borrower and the Guarantors will
                  at  all  times  maintain  a  Leverage   Ratio,  to  be  tested
                  quarterly, of not greater than the following:

                           Period                             Leverage Ratio
                  ------------------------------              --------------
                  From the date of the Agreement              3.00 to 1.00
                  until August 30, 1998

                  From August 31, 1998 until                  2.50 to 1.00
                  May 29, 1999

                  From May 30, 1999 until                     2.25 to 1.00
                  May 27, 2000

                  From May 28, 2000 and                       2.00 to 1.00
                  thereafter."


                  (c)    Section 5.03(d) of the Agreement is  hereby  deleted in
its entirety and replaced as follows:

                  "(d) FUNDED DEBT-TO-EBITDA-RATIO.  The Borrower and Guarantors
                  will maintain at all times on a  consolidated  basis, a Funded
                  Debt to EBITDA Ratio, to be tested  quarterly,  of not greater
                  than the following:

                         Period                      Funded Debt to BBITDA Ratio
                  ------------------------           ---------------------------
                  From  November  29, 1998                    2.50 to 1.00
                  until August 28, 1999 
                  
                  From August 29, 1999                        2.25 to 1.00 
                  until August 26, 2000 
                  
                  From August 27, 2000                        2.00 to 1.00 
                  and thereafter."  
                  
                  
                  (d)    Section 5.03(e)  of the  Agreement is hereby deleted in
its  entirety  and replaced as follows:

                  "(e)  FIXED CHANGE COVERAGE RATIO. The Borrower and Guarantors
                  will maintain at all times (other than for the fiscal  quarter
                  ending August 30,  1998),  beginning  with the fiscal  quarter
                  ending May 31, 1998, on a consolidated  basis, a minimum Fixed
                  Charge Coverage Ratio of not less than 1.25 to 1.0, such ratio
                  to be tested  quarterly.  The  Borrower  and  Guarantors  will
                  maintain  at all  times on a  consolidated  basis  during  the
                  fiscal  quarter ending August 30, 1998, a minimum Fixed Charge
                  Coverage Ratio of not less than 1.10 to 1.0."

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         4.   EFFECTIVNESS.  This  Amendment  shall  become  effective  upon the
occurrence of the following  events and the receipt and  satisfactory  review by
the Agent and its counsel of the following documents:

              (a)   The Agent  and each Bank shall have received this Amendment,
duly executed by the Borrower and each Guarantor.  

              (b)   The  Agent  shall  have  received  copies  of  any  and  all
modifications of the documentation  referred to in Section 3.01 of the Agreement
which could result in a Material Adverse Change.

              (c)   The Agent shall have been paid,  on behalf of the Banks,  an
amendment fee in the amount of $10,000.00.

         5.   GOVERNING LAW. This Amendment  shall be governed by, and construed
in  accordance  with,  the laws of the State of New York. 

         6.   COUNTERPARTS.  This  Amendment  may be  executed  in any number of
counterparts and by different parties hereto in separate  counterparts,  each of
which when so executed  shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.  

         7.   RATIFICATION.  Except as hereby  amended,  the  Agreement  and all
other Loan Documents executed in connection therewith shall remain in full force
and effect in accordance with their originally stated terms and conditions.  The
Agreement  and all other Loan  Documents  executed in connection  therewith,  as
amended hereby,  are in all respects ratified and confirmed.  

         8.   WAIVER OF JURY TRIAL. The Borrower, each Guarantor, the Agent and
the Banks  waive all rights to trial by jury on any cause of action  directly or
indirectly involving the terms, covenants or conditions of this Amendment or any
Loan Document. 

                  REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

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              IN  WITNESS  WHEREOF,   the  parties  hereto  have  executed  this
Amendment as of the year and date first above written.

EUROPEAN AMERICAN BANK, as Agent
By:   /s/ George L. Stirling
    -----------------------------
     George L. Stirling 
     Vice President


EUROPEAN AMERICAN BANK

By:   /s/ George L. Stirling
    -----------------------------
     George L. Stirling 
     Vice President


ISRAEL DISCOUNT BANK OF NEW YORK
By:   /s/ Scott Fishbein
    -----------------------------
Name:  Scott Fishbein
Title: Vice President

By:   /s/ Lisa Baum
    -----------------------------
Name:  Lisa Baum
Title: Senior Vice President


KEYBANK NATIONAL ASSOCIATION
By:   /s/ Joseph Burns
    -----------------------------
Name:   Joseph Burns
Title:  Vice President


BANK LEUMI USA
By:   /s/ Richard Silverstein
    -----------------------------
Name:   Richard Silverstein
Title:  First Vice President

By:   /s/ Joseph Koenigsberg
    -----------------------------
Name:   Joseph Koenigsberg
Title:  Vice President


GRISTEDE'S SLOAN'S, INC.
By:   /s/ John Catsimatidis 
    -----------------------------
     John Catsimatidis 
     Chief Executive officer 


CITY PRODUCE OPERATING CORP.
By:   /s/ John Catsimatidis 
    -----------------------------
     John Catsimatidis 
     President

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GRISTEDE'S OPERATING CORP
By:   /s/ John Catsimatidis 
    -----------------------------
     John Catsimatidis  
     President


NAMDOR INC.
By:   /s/ John Catsimatidis 
    -----------------------------
     John Catsimatidis  
     President


RAS OPERATING CORP.
By:   /s/ John Catsimatidis  
    -----------------------------
     John Catsimatidis  
     President


SAC OPERATING CORP.
By:   /s/ John Catsimatidis  
    -----------------------------
     John Catsimatidis  
     President


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