<PAGE>

                                                                     EXHIBIT 4.2
                                           
                                    LOAN AGREEMENT
                                           
                                           
                                           
                                           
THIS LOAN AGREEMENT (this "Agreement") dated 12/23/93 is entered into by and
between ARDEN GROUP, INC., a Delaware Corporation ("Borrower"), and UNION BANK, 
a California banking corporation ("Bank"), and sets forth the terms and
conditions upon which Bank will extend to Borrower the credit facilities
outlined below (collectively, the "Credit") in the aggregate principal amount of
Nine Million Dollars ($9,000,000) (the "Credit Commitment").

This Agreement supersedes all prior loan agreements previously entered into
between Borrower and Bank.

1.  DEFINITIONS

    As used herein, capitalized terms shall have the respective meanings set
forth below or set forth in the Section or Subsection defining such terms:

    "AFFILIATE" means, with respect to any Person, (a) each Person that,
directly or indirectly, owns or controls, whether beneficially or as a trustee,
guardian or other fiduciary, five percent (5%) or more of the stock having
ordinary voting power in the election or directors of such Person, (b) each
Person that controls, is controlled by is or under common control with such
Person or any Affiliate of such Person and (c) each of such Person's officers,
directors, joint ventures and partners; provided, however, that in no case shall
Bank be deemed to be an Affiliate of Borrower for purposes of this Agreement. 
For the purpose of  this definition, "control" of a Person means the ability,
directly or indirectly, to direct or cause the direction of its management or
policies, whether through the ownership of voting securities, by contract or
otherwise.

    "BANKING DAY" shall mean a day other than a Saturday, a Sunday, or a day on
which commercial banks in the State of California are authorized or required by
law to close.

    "BANK EXPENSES" shall mean all costs or expenses paid or advanced by Bank 
which are required to be paid by Borrower under this Agreement or any of the 
other Loan Documents; taxes and insurance premiums of every nature and kind 
of Borrower paid  by Bank; appraisal, filing, recording, documentation, 
publication and search fees paid or incurred by Bank to correct any default 
or enforce any provision of this Agreement or any other Loan Document, or in 
gaining possession of, maintaining, handling, preserving, storing, shipping, 
appraising, selling, preparing for sale and/or advertising to sell the 
Collateral, whether or not a sale is consummated;  costs and expenses of suit 
or arbitration proceeding incurred by Bank in enforcing or defending this 
Agreement or any other Loan Document, or any portion thereof, and reasonable 
attorneys' fees and expenses incurred by Bank in advising, structuring, 
drafting, reviewing, amending, terminating, enforcing, defending or 
concerning this Agreement or any other Loan Document, or

                                          50


<PAGE>


any portion thereof, whether or not suit is brought, such attorneys' fees to
include the reasonable estimate of the allocated costs and expenses of in-house
legal counsel and staff.  All Bank Expenses  paid or incurred by Bank shall be
considered to be, and shall become a part of the Credit and be secured by the
Collateral, are payable upon demand, and if not reimbursed, shall immediately
thereafter bear interest, together with all other amounts to be paid by Borrower
pursuant hereto at the Default Rate of Interest (as such term is defined in the
Notes).  Notwithstanding the foregoing Borrower shall not be required to
reimburse Bank for any attorney's fees incurred in connection with the initial
structuring and documentation of this Agreement.

    "BANK'S LENDING OFFICE" shall have the meaning set forth in Section 2.1A
hereof.

    "CREDIT" and "CREDIT COMMITMENT" shall have the meaning set forth in the
introductory paragraph hereof.

    "DEFAULT" shall have the meaning given to that term in Section 8 hereof.

    "EVENT OF DEFAULT" shall mean a "Default".

    "FINANCIAL STATEMENTS" shall mean, with respect to any accounting period of
any Person, statements of income and of changes in financial position of such
Person for such period, and balance sheets of such Person as of the end of such
period, setting forth in each case in comparative form figures for the
corresponding period in the preceding fiscal year or, if such period is a full
fiscal year, corresponding figures from the preceding annual audit, all prepared
in reasonable detail and in accordance with GAAP.  "Financial Statements" shall
include the notes and schedules thereto.

    "GAAP" shall have the meaning set forth in Section 9.1 hereof.

    "GUARANTORS" and "GUARANTOR" shall mean, respectively, (a) Arden-Mayfair,
Gelson's Markets, and Telautograph and (b) any one of such Guarantors.

    "GUARANTIES" shall mean those certain Continuing Guaranties dated as of
____________________________, executed by Guarantors, pursuant to which
Guarantors shall guarantee the payment by Borrower of the Obligations.

    "INDEBTEDNESS" shall mean and include, with respect to any Person, all
items of indebtedness which, in accordance with GAAP, would be included in
determining liabilities as shown on the liability side of the Financial
Statement of such Person as of the date on which indebtedness is to be
determined and shall also include all indebtedness and liabilities or others
assumed or guaranteed by such Person or in respect of which such Person is
secondarily or contingently liable (other than by endorsement or instruments in
course of collection) whether by reason of any agreement to acquire indebtedness
or to supply or advance funds or otherwise.


                                          51


<PAGE>

    "INSOLVENCY PROCEEDING" shall mean and include any proceeding commended by
or against Borrower, or any other Person or entity, under any provision of the
federal Bankruptcy Code, as amended, or under any other applicable federal,
state or foreign bankruptcy, liquidation, conservatorship, insolvency,
reorganization, dissolution, arrangement, composition, readjustment or debt or
similar debtor relief laws from time to time in effect and affecting the rights
of creditors generally, including, but not limited to, assignments for the
benefit of creditors, moratoriums, compositions or extensions with some or all
creditors, or the appointment of a receiver, liquidator, custodian or trustee.

    "LOAN DOCUMENTS" shall mean and include this Agreement, the Revolving Note,
the Guaranties, and all other documents, instruments and agreements delivered to
Bank in connection with this Agreement.

    "LOANS" and "LOAN" shall mean, respectively (a) the loans and extensions of
credit to be made by Bank to Borrower pursuant to Section 2 hereof and (b) any
one such Loans.

    "NOTES" and  "NOTE" shall mean the Revolving Note.

    "NOTICE OF SBLC APPLICATION" shall have the meaning set forth in Section
2.1.1.3 hereof.

    "OBLIGATIONS" shall mean any and all indebtedness, liabilities and
obligations of the Borrower to Bank and to its successors and assigns,
previously, now or hereafter incurred, and howsoever evidenced, whether direct
or indirect, absolute or contingent, joint or several, liquidated or
unliquidated, voluntary or involuntary, due or not due, legal or equitable,
whether incurred before, during or after any Insolvency Proceeding, and whether
recovery thereof is or becomes barred by a statute of limitations or is or
becomes otherwise unenforceable or unallowable as claims in any Insolvency
Proceeding, together with all interest thereupon  (including all interest
accruing during the pendency of an Insolvency Proceeding), and all Bank Expenses
(as defined above).  The Obligations shall include, without limiting the
generality of the foregoing, all indebtedness evidenced by the Loan Documents.

    "PERSON" shall mean any natural person, corporation, partnership, firm,
association, government, governmental agency, court or any other entity.

    "POTENTIAL DEFAULT" shall mean any event, condition, act or occurrence
which with the giving of notice or the passage of time or both would constitute
a Default hereunder.

    "REFERENCE RATE" shall mean the per annum rate publicly announced by Bank
from  time to time at its corporate headquarters as its "reference Rate".  The
Reference Rate is determined by Bank from time to time as a means of pricing
credit extensions to some customers and is neither directly tied to any external
rate of interest or index nor necesarily the lowest rate of interest charged by
Bank at any given time for any particular class of customers or credit
extensions.


                                          52


<PAGE>

    "REVOLVING TERMINATION DATE" "REVOLVING LOAN" "REVOLVING LOANS" "REVOLVING
NOTE" "REVOLVING COMMITMENT" shall have the meaning set forth in Section 2.1
hereof.

    "SBLC" "SBLSs" "SBLC AGREEMENT" "SBLC SUBFACILITY" shall have the meaning
set forth in Section 2.1.1 hereof.

    "SUBSIDIARY" shall mean any corporation, more than fifty percent (50%) of
the outstanding voting stock of which is directly or indirectly owned by
Borrower, or by one or more of its Subsidiaries, or by Borrower and one or more
of its Subsidiaries, and "SUBSIDIARIES" shall mean two or more of such
corporations.

                     [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]


                                          53


<PAGE>

2.  THE CREDIT
         
    2.1  REVOLVING COMMITMENT 
         
         A.   TERMS.  Subject to the terms and conditions hereof, between the
date of this Agreement and November 25, 1994, (the Revolving Termination Date"),
so long as no Default or Potential Default has occurred and is continuing, Bank
shall extend to Borrower such loans (each a "Revolving Loan" and collectively
the "Revolving Loans") as Borrower may request from time to time in an aggregate
unpaid principal amount not exceeding at any one time NINE MILLION DOLLARS
($9,000,000) (the "Revolving Commitment").  Within the limits of time and amount
set forth in this Section 2.1, Borrower may borrow, repay and reborrow all or
part  of the Revolving Loans in integrals or not less than Fifty Thousand
Dollars ($50,000) upon, in the case of borrowing, giving Bank the notice set
forth below of the amount it intends to borrow.  Borrower authorizes Bank to
make Revolving Loans  based upon telephonic notice or upon such other
instructions as Bank receives from anyone purporting to be an authorized
representative of Borrower, received within the times stipulated in the
revolving Note.  Such notice shall be given to any of Bank's commercial banking
officers at Bank's Long Beach Regional Office ("Bank's Lending Office") and
shall be irrevocable.

    (1)   The unpaid principal of and accrued interest of the Revolving Loans
shall become immediately due and payable in full on the Revolving Termination
Date.

    (2)  Unless otherwise directed by Borrower in the disbursement instructions
for a particular Revolving Loan, Bank will disburse all Revolving Loan proceeds
by crediting Borrower's general depository account number 29020-3056 (or
successor account) at Bank's Lending Office.  Borrower agrees to use the
proceeds of the Revolving Loans only for short term working capital purposes.

    B.   REVOLVING NOTE.  The Revolving Loans shall be evidenced by, bear
interest at the rate(s) provided for in, and be payable or prepayable, as the
case may be, in accordance with the terms of a promissory note in form and
substance satisfactory to, and issued by Borrower in favor of, Bank (the
"Revolving Note").  Borrower's obligations with respect to each Revolving Loan,
the interest rate(s) applicable to such Revolving Loan (and if a fixed rate, the
period for which the fixed rate is applicable), and the date such Revolving Loan
was made and payments thereon received by Bank shall be evidenced by entries
made by Bank in its books and records or on a schedule on the back of or affixed
to the Revolving Note, which entries shall constitute PRIMA FACIE evidence of
the matters noted.   Bank's failure to make such entries, however, shall not
affect, impair or diminish Borrower's obligation to repay the Revolving Loans,
together with interest as provided for in the Revolving Note.

    2.1.1     THE SBLC SUBFACILITY

         2.1.1.1        AVAILABILITY.  As a subfacility of the Revolving Loan
and upon the request of Borrower made at any time and from time to time during
the terms of this Agreement, and so long as no Event of Default or Unmatured
Event of Default has occurred and is


                                          54


<PAGE>

continuing, Bank shall make available to Borrower a line of credit (the "SBLC
Subfacility") not to exceed in aggregate principal amount at any one time
outstanding the sum of  FIVE MILLION DOLLARS ($5,000,000) for the issuance by
Bank of irrevocable standby letters of credit (individually, a "SBLC" and
collectively, the SBLCs").

         2.1.1.2        TERMS FOR ISSUANCES OF SBLCs.  SBLCs shall be issued
for the purpose of  providing credit enhancement to Borrower's ordinary and
usual contractual obligations to third parties.  NO SBLC SHALL EXPIRE BEYOND ONE
YEAR AFTER THE REVOLVING LOAN MATURITY DATE.  Each SBLC issued hereunder shall
reduce, dollar for dollar, the total availability under the Revolving
Commitment.  All SBLCs issued hereunder shall comply with the Bank's policies
and procedures for issuance of SBLCs, shall be issued on such terms and
conditions as are acceptable to Bank, and shall be documented on the Bank's
standard form of SBLC application and reimbursement agreement ("SBLC Agreement")
set forth in EXHIBIT "B" hereto.  The terms and conditions of such SBLC
Agreement shall be supplemental to the terms and conditions hereof, except to
the controlling extent of any inconsistencies, in which case the terms and
conditions of such SBLC Agreement shall prevail.  However, notwithstanding any
inconsistency with the terms of such SBLC Agreement, any SBLC drawing not
reimbursed by Borrower on or before the date such reimbursement is due (unless
financed pursuant to Paragraph 2.1.1.5 below) shall thereafter, at Bank's
option, bear interest at the Default  Rate of Interest as stipulated in the
Revolving Note.

         2.1.1.3        NOTICE OF SBLC APPLICATION.  Borrower may request Bank
to issue a SBLC by an irrevocable written notice ("Notice of SBLC Application")
delivered to the Bank's Lending Office no later than one p.m. at least one (1)
Banking day before the date of the requested SBLC issuance.

         2.1.1.4        FEES.  As a condition precedent to the Bank's issuance
of a SBLC hereunder, Borrower shall pay to Bank, in immediately available funds,
a issuance fee equal to three quarter percentage points (75%), PER ANNUM, of the
face  amount of such requested SBLC.  Borrower shall also pay to Bank, if and
when the same would be payable under the Bank's standard operating procedures,
any amendment, cancellation or other similar fees which may be or become payable
with respect to, and shall reimburse the Bank on demand for all of its
out-of-pocket costs and expenses not otherwise identified in this Subparagraph
incurred in connection with, each SBLC.  All such fees shall be computed and
paid at the Bank's rates therefore prevailing at the time such fees are
incurred.  All SBLC fees may be charged when owed against any of Borrower's
deposit accounts with Bank.

         2.1.1.5        REIMBURSEMENT.  Borrower agrees that on the date the
same becomes due, or on such earlier date as may be required pursuant to other
provisions of this Agreement or of the applicable SBLC Agreement, it will
provide the Bank with funds to meet all disbursements and payments of any kind
and character, together with interest (if any), fees, commissions and charges,
which the Bank has or will pay, become liable for or become entitled under or in
relation to any given SBLC or the draft or drafts drawn thereunder; PROVIDED,
HOWEVER, that prior to the Revolving Loan Maturity Date, to the extent
availability shall exist under the Revolving Commitment and so long as no Event
of Default of Potential Default shall


                                          55


<PAGE>

have occurred and be continuing, Borrower shall have the option to finance all
or any part of the reimbursement obligation arising in connection with any draft
drawn or demand made under a SBLC through a drawing under the Revolving
Commitment.

    2.2  Prepayment of the Credit.  The Credit may be prepaid in whole or in
part only in accordance with the terms of the Note evidencing the part of the
Credit to be prepaid.  Bank's determination as to any amount (in addition to
principal prepaid plus accrued interest thereon as of the date of the
prepayment) which is required as a result of any such prepayment shall be
binding on Borrower.  Principal sums prepaid will be applied to those
installments, if any, scheduled to repay the outstanding principal balance of
that portion of the Credit to be prepaid in inverse order of maturity, but shall
not postpone the due date or change the amount of any subsequent principal
installment unless Bank shall otherwise agree in writing.

    2.3  Interest Calculation Factors.  Any payment required hereunder to be
made on any day which is not a Banking Day shall fall due on the next succeeding
day which is a Banking Day, unless such payment date would fall into another
calendar month, in which case it shall fall due on the next preceding day which
is a Banking Day, and such extension or contraction shall be taken into account
in the computation of any interest, fees or other amounts due.  All interest
calculations under this Agreement shall be based on actual days elapsed over a
360-day year.

    2.4. Credit for Payments.  Bank's receipt of any check or other payment on
the Credit, other than a check drawn on Bank itself, shall not be considered as
a payment received until the check is honored; and Bank may delay the crediting
of such payments according to its schedule of funds availability.  All payments
on the Credit shall be made in United States Dollars.

    2.5  Bank's Right to Charge Account.  Borrower authorizes Bank (irrevocable
until the Credit is paid in full and Bank's commitment to extend Credit
hereunder is terminated) from time to time to charge against any deposit account
maintained by Borrower with Bank amounts due in respect of Borrower's
Obligations under this Agreement which are not secured by real property and
which are not promptly paid when due; provided that Bank shall not have any
obligation to charge past due payments against any such deposit account.

2.6 Intentially Deleted

3.  CONDITIONS PRECEDENT

    3.1  TO INITIAL EXTENSION OF CREDIT.  Before the initial use of the Credit,
Bank must have received all of the following, each of which must be in form and
substance satisfactory to Bank:

         A.   NOTES.  An original, duly executed Revolving Note required
pursuant to Section 2B prior to the initial funding of the part of the Credit
evidenced thereby.

         B.   EVIDENCE OF AUTHORITY.  Evidence that the execution, delivery and
performance by Borrower of this Agreement and the execution, delivery and
performance by


                                          56


<PAGE>

Borrower and any pledgor, guarantor or subordinating creditor or other Person
(who is not an individual) executing Loan Documents required in connection with
the Credit have been duly authorized, together with incumbency certificates for
such Persons.

         C.   ARTICLES OF INCORPORATION.  A copy of the articles of
incorporation of Borrower (if a corporation), and of any corporate guarantor,
pledgor or subordinating creditor, certified as true, current, complete and
correct by the secretary of such corporation(s).

         D.   FICTITIOUS BUSINESS NAMES.  Copies of any and all filings or
registrations regarding fictitious business names, dba's, trade styles or other
names under which Borrower may be doing business or holding title to real or
personal property.

         E.   CERTIFICATES OF GOOD STANDING.  If Borrower is a corporation, a
certificate showing that Borrower is in good standing under the laws of the
state of its incorporation and certificates indicating that Borrower has
qualified to transact business and is in good standing in any other state in
which it conducts business and is required to be so qualified.

         F.   GUARANTIES.  The Guaranties, duly executed by Guarantors.  Each
Guaranty shall be in a form acceptable to Bank and in an amount equal to Nine
Million Dollars ($9,000,000).

         G.   BORROWER'S FINANCIAL STATEMENT.  A copy of Borrower's (audited)
Financial Statement for the fiscal year ended January 3, 1993.

         H.   OTHER DOCUMENTS.  The Loan documents and such additional
original, duly executed documentation which Bank shall reasonably consider
necessary or desirable in connection with the Credit.

         I.   NO ADVERSE CHANGE.  If required by Bank, evidence that since the
submission to Bank of Borrower's most recent Financial Statement and the
Financial Statement of each Guarantor, there has been no adverse change in the
financial or business condition or operations of  Borrower OR OF ANY GUARANTOR
sufficient to materially impair Borrower's ability to pay its Obligations to
Bank OR ANY GUARANTOR'S ABILITY TO HONOR ITS GUARANTY.

    3.2  TO ALL SUBSEQUENT EXTENSIONS OF CREDIT.  Before Bank is obligated to
permit use of the Credit subsequent to the initial use, each of the following
shall be true and correct:

         A.   REPRESENTATIONS AND WARRANTIES.  The representations and
warranties contained in this Agreement shall be true, complete and accurate as
of the date made (or deemed made in the case of each request for any utilization
of the Credit hereunder).

         B.   NO DEFAULT.  No Default or Potential Default shall have occurred
and be continuing, or shall exist after giving effect to such request for use of
the Credit.


                                          57


<PAGE>

         C.   LOAN DOCUMENTS.  Each of the Loan Documents shall remain
unrevoked and otherwise in full force and effect.

4.  REPRESENTATIONS AND WARRANTIES

    4.1  GENERAL REPRESENTATIONS.  Borrower represents and warrants that, and
each request for use of the Credit shall be deemed Borrower's representation and
warranty made on the date of such request that:

         A.   DUE INCORPORATION, QUALIFICATION, ETC.  Borrower and each of its
Subsidiaries (i) are corporations duly organized, validly existing and in good
standing under the laws of their respective states of incorporation; (ii) have
the power and authority to own their property and carry on their businesses as
now being conducted; and (iii) are duly qualified and in good standing as
foreign corporations in each jurisdiction where the failure to qualify would
have a material adverse effect on their condition or operations (financial or
otherwise).

         B.   AUTHORITY.  The execution, delivery and performance by Borrower
of this Agreement and the other Loan Documents are within the corporate power of
Borrower, have been duly authorized by all necessary corporate action, do not
require any registration with, consent or approval of , license or permit from,
or notice to any Person, do not contravene any law, rule or regulation, any
order, writ, decree or judgment of any Person, or Borrower's articles of
incorporation or bylaws, do not violate or constitute a default under any
mortgage, indenture, lease, contract or other agreement or instrument binding
upon Borrower or any Subsidiary, and will not result in or require the creation
of any lien on the property, assets or revenue of Borrower or any Subsidiary
(except such liens as may be created in favor of Bank pursuant to this
Agreement).

         C.   ENFORCEABILITY.  This Agreement and the other Loan Documents
executed by Borrower when executed  will constitute legal, valid and binding
obligations of Borrower, enforceable against it in accordance with their terms
except, in each case, as limited by bankruptcy, insolvency or other laws of
general application relating to or affecting the enforcement of creditors'
rights and general principles of equity.

         D.   COMPLIANCE WITH LAWS, OTHER AGREEMENTS, ETC..  Neither Borrower
nor any Subsidiary is in violation or default with respect to any applicable
laws, rules, or regulations which materially affect the operations or condition
(financial or otherwise) of Borrower nor are they, or any of them, in violation
of or in default with respect to any order, writ, decree or judgment of any
Person or in violation of or default under (nor is there any waiver in effect
which, if not in effect, would result in a violation or default) any mortgage,
indenture, lease, contract or other agreement or instrument binding upon
Borrower or any Subsidiary, where such violation or default might have a
material adverse effect on the operations or condition (financial or otherwise)
of Borrower.

         E.   LITIGATION.  Except as set forth (with estimates of the dollar
amounts involved) in a schedule previously furnished by Borrower to Bank, no
litigation (including,


                                          58


<PAGE>

without limitation, derivative actions), arbitration proceedings or governmental
proceedings are pending, or, to the knowledge of Borrower, threatened against
Borrower or any Subsidiary which would, if adversely determined, have a material
adverse effect on the operations or condition (financial or otherwise) of
Borrower, or otherwise result in liability in excess of $750,000, whether
singularly or in the aggregate, excluding any ordinary course tort claims within
Borrower's insurance limits (including self insured retentions).

         F.   TITLE.  Borrower and each Subsidiary have good and marketable fee
title to the assets and properties reflected in the Financial Statements (except
those assets and properties disposed of in the ordinary course of business since
the date of such Financial Statements) and all assets and properties acquired by
it since such date (except those dispose of in the ordinary course of business).
Such assets and properties are subject to no mortgage, pledge, encumbrance, lien
or charge of any kind, other than in favor of Bank.

         G.   FINANCIAL STATEMENTS.  The audited Financial Statement of
Borrower as at January 3, 1993, and any subsequent Financial Statements which
have been furnished to Bank, have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis and  accurately
present the financial condition of Borrower as at their respective dates and the
results of operations for the fiscal year period or portion thereof then ended. 
Since the date of  the most recent Financial Statement furnished to Bank, there
has been no material adverse change in the operations or condition (financial or
otherwise) of Borrower.

         H.   SUBSIDIARIES.  Exhibit A hereto is a complete and accurate list
of all Subsidiaries, showing as of the date of this Agreement as to each such
Subsidiary the jurisdiction of its incorporation and the proportionate ownership
by Borrower, whether direct or indirect, of its voting stock.  Except as therein
set forth, Borrower directly or indirectly owns, free and clear of all liens,
charges and encumbrances, all the outstanding shares of each such Subsidiary,
and all shares are validly issued, fully paid and nonassessable.

         I.   ERISA.  Each pension, profit-sharing or other employee benefit
plan maintained by Borrower and each Subsidiary (individually, a "Plan") is in
material compliance with the Employee Retirement Income Security Act ("ERISA"),
the Internal Revenue code, and all applicable rules and regulations promulgated
thereunder, and  Borrower has filed or caused to be filed all material reports
required to be filed by ERISA.
    
         J.   OTHER REGULATIONS.  Neither Borrower nor any Subsidiary is
subject to regulation under the Investment Company Act of 1940, the Public
Utility Holding Company Act of 1935, the Federal Power Act, the Interstate
Commerce Act, any state public utilities code or to any Federal or state statute
or regulation limiting its ability to incur Indebtedness.

         K.   PATENT AND OTHER RIGHTS.  Borrower and each Subsidiary possess or
have the right to use all patents, licenses, trademarks, trade names, trade
secrets, service marks, copyrights and all rights with respect thereto, which
are required to conduct their businesses as now conducted, without known
conflict with the rights of others which would materially affect such
businesses.


                                          59


<PAGE>

         L.   TAXES.  Borrower has filed or caused to be filed all tax returns
which are required to be filed by it and each Subsidiary pursuant to the laws,
regulations and orders of each Person with taxing power over Borrower and such
subsidiary and the assets thereof.  Borrower and each Subsidiary have paid, or
made provision for the payment of, all taxes, assessments, fees and other
governmental charges which have or may have become due pursuant to said returns,
or otherwise, or pursuant to any assessment received by Borrower or such
Subsidiary, except such taxes, if any, as are being contested in good faith and
as to which adequate reserves (determined in accordance with GAAP) have been
provided.  Federal income tax returns of Borrower have been audited by and
settled with the Internal Revenue Service or the statute of limitations has
expired for all years to and including fiscal year ended January 3, 1993, and
the results of such settlement are properly reflected in the Financial Statement
referred to hereinabove.

         M.   MARGIN STOCK.  Borrower is not engaged in the business of
extending credit for the purpose of, and no part of the Credit will be used for,
purchasing or carrying margin stock within the meaning of Federal Reserve Board
Regulation U, or to extend credit to others for the purpose of purchasing or
carrying any margin stock.

         N.   LABOR RELATIONS.  Borrower is not a party to a collective
bargaining agreement or similar agreement, and Borrower is in compliance in all
material respects with all applicable state and federal laws respecting
employment and employment practices, terms and conditions of employment, wages
and hours and other laws related to employment of its employees, and there are
no arrears in the payment of wages, withholding or social security taxes,
unemployment insurance premiums or other similar obligations of Borrower or for
which Borrower may be responsible other than in the ordinary course of business.
There is no strike, work stoppage or labor dispute with any union or group of
employees pending or overtly threatened involving Borrower that would have a
material adverse effect on its business, operations or condition (financial or
otherwise).

         O.   OTHER CREDITORS.  Except for trade payables arising in the
ordinary course of Borrower's business and except as disclosed in the Financial
Statement, Borrower does not have (i) any obligation or liability (including,
without limitation, pending litigation) which would materially and adversely
affect its business operations or the Collateral, (ii) any Indebtedness other
than the Credit, a $3,000,000 Line of Credit with City National Bank and a
$1,200,000 Standby Letter of Credit Line with Sanwa Bank or (iii) any obligation
under any guaranty of any obligations of any other Person.

         P.   COMPLIANCE WITH ZONING ORDINANCES AND ENVIRONMENTAL LAWS. 
Borrower and Borrower's business premises presently comply with, and will in the
future comply fully with, all applicable laws, and all permits and approvals
issued thereunder, affecting Borrower's business and business premises, the
operation of Borrower's business and business premises and the intended
occupancy, use and enjoyment of Borrower's business


                                          60


<PAGE>

premises, including, but not limited to, all applicable subdivisions laws,
licenses and permits, building codes, zoning ordinances, environmental
protection laws, flood disaster laws, and all laws pertaining to industrial
hygiene and the environmental conditions on, under or about Borrower's business
premises, including but not limited to, soil and groundwater condition. 
Borrower does not presently, and will not in the future, use, store,
manufacture, generate, transport to or from, or dispose of any toxic substances
hazardous materials, hazardous waste, radioactive materials, flammable
explosives or related materials on or in connection with Borrower's business
premises or the business of Borrower on its business premises, except such
materials as are presently used and as are ordinarily and customarily used in
the operation of:  retail supermarkets, and then only in material compliance
with all applicable laws and permits.  Borrower does not presently, and will not
in the future, permit any lessee or sublessee on its business premises to use,
store, manufacture, generate, transport to or from, or dispose of any toxic
substances, hazardous materials,  hazardous waste, radioactive material,
flammable explosives or related materials on or in connection with Borrower's
business premises or the business of such lessee or sublessee on Borrower's
business premises, except such materials as are presently used and as are
ordinarily and customarily used in the operation of:  retail supermarkets, and
then only in full and complete compliance with all applicable laws and permits. 
(The terms "toxic substances," "hazardous materials" and hazardous waste" shall
include, but not be limited to, such substances, materials and waste which are
or become regulated under applicable laws or which are classified as hazardous
or toxic under applicable laws).  Borrower shall not seek, make or consent to
any change in the zoning, conditions of use, or any other applicable land use
permits, approvals or regulations pertaining to Borrower's business premises, or
any portion thereof, which would constitute a violation of the representations
and warranties herein contained, or would change the nature of the use or
occupancy of Borrower's business premises.

         Q.   NO DEFAULT.  There has not occurred and does not exist any
Default or Potential Default; nor would a Default or Potential Default exist
after giving effect to any request by Borrower for use of the Credit.

         R.   NO CONVICTIONS.  None of the officers and/or directors of
Borrower has ever been convicted of a felony or other crime involving fraud or
moral turpitude.

         S.   FULL DISCLOSURE.  There is no fact, occurrence or circumstance
which Borrower has not disclosed in writing to Bank which has, or could
reasonably be expected have, a material adverse effect on Borrower's ability to
perform under this Agreement or to pay any of its Obligations when due.

    4.2  SURVIVAL OF REPRESENTATIONS AND WARRANTIES.   All representations and
warranties contained in this Agreement and the other Loan Documents shall
survive the termination of this Agreement and Bank may rely thereon
notwithstanding any information possessed by Bank or any investigation made by
Bank or on behalf of Bank.  Borrower acknowledges that its warranties in this
Agreement are material and are automatically deemed repeated with each request
for Credit hereunder, and shall be cumulative and in addition to any and all
other warranties of  Borrower at any time made to Bank. 


                                          61


<PAGE>

5.  AFFIRMATIVE COVENANTS

    Until the Credit and all other sums payable under this Agreement and the
other Loan documents required by Bank in connection herewith have been paid in
full, and Bank shall have no obligation to permit further use of the Credit,
Borrower agrees to:

    5.1  CURRENT RATIO.  At all times maintain a ratio of Current Assets to
Current Liabilities of at least 1.0 to 1.0.  "Current Assets" means cash and
other assets reasonably expected to be realized by Borrower in cash, within one
year OR DURING THE OPERATING CYCLE OF THE BUSINESS OF BORROWER, WHICHEVER IS
LONGER.  "Current Liabilities" means Indebtedness of Borrower INCLUDING
OBLIGATIONS HEREUNDER the liquidation of which is reasonably expected to require
the use of existing resources classified as Current Assets, or the creation of
other Current Liabilities.

    5.2  TANGIBLE NET WORTH.  At all times maintain Tangible Net Worth of at
least Forty Seven Million Five Hundred Thousand Dollars ($47, 500,000). 
"Tangible Net Worth" means Borrower's net worth increased by Debt subordinated
to Bank (in a manner Bank has approved in writing) and decreased by the
following:  patents, licenses, trademarks, goodwill, other intangible assets,
organizational expenses, security deposits, prepaid costs and expenses, and
moneys due from officers, directors and/or shareholders.

    5.3  DEBT TO NET WORTH.  At all times maintain a ration of total
Indebtedness to Tangible Net Worth of not more than 1.75 to 1.0.

    5.4  PROFITABILITY.  At every six month period maintain a positive
operating profit and net profit.

    5.5  NOTICE.  Give prompt written notice to Bank within not more than five
days after the event of:

         (A)  Each litigation or other supervised proceeding affecting
         Borrower, any Subsidiary or any Guarantor, where the amount involved
         (singularly or in the aggregate) is Seven Hundred  Fifty Thousand
         Dollars ($750,000) or more, excluding any ordinary course tort claims
         within Borrower's insurance limits (including self insured
         retentions);
         
         (B)  Any material dispute, claim or other action which may exist
         between Borrower or any Subsidiary and any governmental regulatory
         body, environmental agency or law enforcement authority;
         
         (C)  Any Default or Potential Default;


                                          62


<PAGE>
         
         (D)  Any other matter which has resulted or might result in  a
         material adverse change in Borrower's, any Subsidiary's or any
         Guarantor's financial condition or assets;
         
         (E)  Any change in Borrower's name (including the adoption of a  new
         fictitious name) or principal place of business, or in the location of
         any Collateral.
         
    5.6  QUARTERLY FINANCIAL STATEMENT.  Furnish to Bank, within 60 days after
the close of each of its fiscal quarters, its Consolidated Financial Statement
as of the close of such fiscal quarter prepared in accordance with GAAP and
certified by Borrower's chief financial officer.

    5.7  ANNUAL FINANCIAL STATEMENT.  Furnish to Bank, within 120 days after
the close of each fiscal year, a copy of its Consolidated Financial Statement
for such fiscal year prepared on an audited basis in accordance with GAAP, by an
independent certified public accountant selected by Borrower and reasonably
satisfactory to Bank.

    5.8  NO DEFAULT CERTIFICATE.  Furnish to bank, simultaneously with the
delivery of the Financial Statement required above, a certificate of Borrower's
president or chief financial officer certifying that Borrower has performed and
observed each covenant contained in this Agreement and in the other Loan
Documents to be performed by it, and that no Default or Potential Default has
occurred.  In the event that such certification cannot be made, then Borrower's
president or chief financial officer shall deliver to Bank a report setting
forth the details of such Default or Potential Default and the action which
Borrower is taking or proposes to take with respect thereto, and also containing
a brief summary from the chief financial officer of the business and financial
condition of Borrower.

    5.9  OTHER REPORTS.  Furnish to Bank,  upon its request, copies of such
other Financial Statements and reports of Borrower and any Subsidiary as Bank
nay deem desirable, including, without limitation, any audit reports submitted
to Borrower by its independent accountants, any proxy statements, financial
statements and reports as Borrower sends to its shareholders or partners, as the
case may be, and any reports filed with the Securities and Exchange Commission,
the Internal Revenue Service, or any other local, state or Federal government
office.

    5.10 PAYMENT OF OBLIGATIONS.  Pay and discharge when due all Indebtedness,
and all liens, charges, taxes, assessments, governmental charges or levies, and
any other lawful charges which, if unpaid, could become a lien upon any property
of Borrower, except such liens or taxes as may be contested in good faith and by
appropriate proceedings in such manner as not to cause any materially adverse 
effect upon Borrower's financial condition or the loss of any right or
redemption from any sale of its assets, and with respect to which Borrower
maintains reserves in conformity with GAAP.


                                          63


<PAGE>

The foregoing shall apply to each Subsidiary, and Borrower shall so ensure
compliance by each thereof.

    5.11 COMPLIANCE WITH LAWS, ETC.  At all times comply with, or cause to be
complied with, all laws, statutes, rules, regulations, orders and directions of
any governmental authority having jurisdiction over Borrower or its assets.  The
foregoing shall apply to each Subsidiary, and Borrower shall so ensure
compliance by each thereof.

    5.12 MAINTENANCE OF PHYSICAL ASSETS AND FRANCHISES.  Maintain and preserve
all its rights, privileges and franchises now enjoyed; conduct its business in
an orderly, efficient and customary manner; keep all its properties, equipment
and facilities in good working order and condition, and from time to time make
all needed repairs, renewals or replacements so that the efficiency of its
properties shall be fully maintained and preserved and if Borrower is a
corporation or partnership, maintain its existence as such.  The foregoing shall
apply to each Subsidiary, and Borrower shall so ensure compliance by each
thereof.

    5.13 INSURANCE.

         (a)  Keep, at its expense, all of its insurable property insured by
responsible insurance companies approved by Bank at the appraised values of such
property against fire and such other hazards and risks, and with such loss
deductible amounts, as are customarily carried by businesses with similar
properties in Borrower's line of business; and maintain adequate public
liability, business interruption and worker's compensation insurance with
responsible insurance carriers as is maintained by such businesses.

    5.14 RECORDS AND AUDITS.  Maintain complete, true and correct books,
accounts and records and prepare all Financial Statements required hereunder in
accordance with GAAP, and in compliance with the regulations of any governmental
regulatory body having jurisdiction over Borrower or its business and permit
employees or agents of Bank at any reasonable time to inspect Borrower's
properties, and to examine or audit Borrower's books, accounts and records and
make copies, extracts and memoranda thereof, and reimburse Bank for the
reasonable costs thereof.  The foregoing shall apply to each Subsidiary, and
Borrower shall so ensure compliance by each thereof.

    5.15 ERISA.  Borrower will, and will cause each Subsidiary to (a) comply
with the minimum funding requirements of ERISA for each Plan, (b) file all
material reports with respect to each Plan required to be filed by ERISA, the
Internal Revenue Code and all applicable rules and regulations promulgated
thereunder, and (c) otherwise maintain each Plan in material compliance with
ERISA, the Internal Revenue Code, and such rules and regulations.

    5.16 REPORTS FROM GUARANTORS.  Cause each Guarantor to deliver to Bank, at
the time required to be filed with the Internal Revenue Service, (a) a complete
and correct


                                          64


<PAGE>

copy of such Guarantor's federal and state income tax returns and (b) a copy of
such Guarantor's Financial Statement as at the end of the fiscal year covered by
such returns.

    5.17 FURTHER ASSURANCES.  Promptly upon demand by Bank, at Borrower's sole
expense, take such further action and execute and delivery such additional
agreements and instruments and other documents in connection with this Agreement
as Bank reasonably considers necessary for carrying out the intention of
facilitating the performance of the terms of this Agreement and the other Loan
Documents, or for assuring the validity of any security interest provided for
therein and promptly supply Bank with such other information concerning its
affairs as Bank may request from time to time.

    5.18 COMPLIANCE WITH FICTITIOUS NAME STATUTES.  At all times remain in
compliance, and cause each Subsidiary to remain in compliance, with the
requirements of California fictitious name statutes.

6.  NEGATIVE COVENANTS

    Until the Credit and all other sums payable under this Agreement and the
other Loan Documents required by Bank in connection herewith have been paid in
full, and Bank shall have no obligation to permit further use of the Credit
hereunder, Borrower agrees NOT to:

    6.1  LOANS/ADVANCES/GUARANTIES.  Except as herein provided, or in the
ordinary course of business as currently conducted, make any loans or advances,
become a guarantor or surety, pledge its credit or properties in any manner, or
otherwise extend credit or become directly or contingently liable for the
obligations of another, except for the endorsement of negotiable instrument for
deposits or collection in the ordinary and normal course of Borrower's business.

    6.2  OTHER INDEBTEDNESS.  Sell or discount any of its accounts or notes
receivable or other evidence of Indebtedness owed to it except to Bank; borrow
any money, incur, assume or permit to exist, directly or indirectly, any
liabilities for borrowed money, or prepay any existing Indebtedness owing to any
Person, except (a) Obligations to Bank, (b) obligations currently shown on
Borrower's Financial Statement referred to in Section 4.1 (G), (c) trade debt 
incurred in the ordinary course of business, (d) a $3,000,000 Line of Credit
with City National Bank and a $1,200,000 Standby Letter of Credit Line with
Sanwa Bank, and (e) pursuant to written agreements made with and  approved by
Bank.

    6.3  CORPORATE NAME, LOCATION AND STRUCTURE.  Without giving Bank thirty
(30) days' prior written notice, (a) change its name, taxpayer identification
number, identity or business structure or add any new fictitious name or (b)
relocate its chief executive office or principal place of business; with Bank's
prior written consent, make


                                          65


<PAGE>

any change in its financial structure or in any of its business operations which
would adversely affect its ability to repay its obligations.

    6.4  DISPOSAL OR RELOCATION OF ASSETS.  Other than in the ordinary course
of Borrower's business, sell, assign, lease or otherwise dispose of , move,
relocate or transfer, whether by sale or otherwise, any of Borrower's assets.

    6.5  LIQUIDATION OR MERGER.  Without Bank's prior written consent,
liquidate, dissolve, enter into any consolidation, merger, reorganization,
recapitalization, partnership or other combination; or convey, sell or lease all
or any part of its assets or stock; or purchase or lease all or any part of the
assets or stock of another.

    6.6  NONRELATED BUSINESS ACTIVITIES.  Enter into any material contract,
lease, indenture or other agreement except in the ordinary course of its
business as presently conducted; or engage in any business activity or operation
substantially different from or unrelated to present business activities and
operations; or make any substantial change in the character or manner of conduct
of its business.

    6.7  ACCOUNTING METHODS.  Without thirty (30) days' prior written notice to
Bank, (a) modify its methods of accounting or (b) enter into, modify or
terminate any agreement presently existing, or at any time hereafter entered
into with any third party accounting firm or service bureau for the preparation
or storage of Borrower's accounting records without said accounting firm or
service bureau agreeing to provide Bank with information regarding the
Collateral or Borrower's financial condition.
    
    6.8  TRANSACTIONS WITH AFFILIATES.  Directly or indirectly, enter into or
permit to exist any transaction (including, without limitation, the purchase,
sale, lease or exchange of any property or the rendering of any service) with
any holder of five percent (5%) or more of any class of equity securities of
Borrower or with any Affiliate of Borrower on terms that are less favorable to
Borrower or its Affiliates, as the case may be, than those terms which might be
obtained at the time from third parties, or  otherwise not obtained through good
faith negotiation on an arm's length basis.

7.  EVENTS OF DEFAULT

    The occurrence of any of the following events (each a "Default") shall
permit Bank, at its option, to exercise all rights available to it under this
Agreement and the other Loan Documents and under applicable law, including
without limitation to the right to (i) terminate any obligation of Bank to make
further Credit available hereunder; and (ii) declare all sums of interest and
principal outstanding under this Agreement and of each other Obligation of
Borrower to Bank immediately due and payable, without notice of default,
presentment or demand for payment, protest or notice of nonpayment of dishonor,
or other notices or demands of any kind or character, all of which Borrower
hereby waives. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN, BANK
SHALL HAVE NO DUTY TO EXTEND ANY


                                          66


<PAGE>

CREDIT TO BORROWER DURING ANY CURE PERIOD WHICH MAY BE PROVIDED FOR HEREUNDER.

    7.1  PRINCIPAL AND INTEREST PAYMENT.  Borrower shall default in the due and
punctual payment of the principal of, or interest on the Credit; or

    7.2  MATURING OBLIGATIONS.  Borrower shall default in the due and punctual
payment of any Obligations otherwise owed to Bank (whether of principal,
interest, fees, taxes, reimbursement of Bank Expenses or otherwise); or

    7.3  DEFAULT UNDER OTHER AGREEMENTS.  Borrower shall take or fail to take
any action in contravention of the terms of any Loan Document or any other
agreement, document or instrument at any time executed by Borrower which permits
the holder to accelerate any Indebtedness of Borrower; or

    7.4  DEFAULT BY ANY GUARANTOR.   Any Guarantor of Borrower's Obligations to
Bank shall take or fail to take action in contravention of the terms of any
agreement, document or instrument executed, or to be executed by such Guarantor
and concerning a financial obligation of such Guarantor, and such default  shall
not have been cured within any applicable period of grace provided in such
agreement or instrument (provided that during any such grace period there shall
have been no acceleration of payment pursuant to such default); or 

    7.5  INTENTIONALLY DELETED.

    7.6  ADVERSE REGULATORY ACTION.  Any governmental regulatory authority or
environmental protection agency shall take or institute action which, in the
reasonable opinion of Bank, may materially and adversely affect Borrower's
condition, operations or ability to repay the Obligations; or

    7.7  BREACH OF ANY REPRESENTATION OR WARRANTY.  Any representation or
warranty made by Borrower in any Loan Document, or in any other instrument,
certificate, report or financial or other statement heretofore or hereafter
furnished by Borrower or its officers or any Guarantor shall prove to be in any
material respect untrue, incorrect, false, incomplete or misleading; or shall be
withdrawn; or

    7.8  VIOLATION OF COVENANTS.  Borrower shall fail or neglect to perform,
keep or observe any term, provision, condition, covenant, agreement, warranty or
representation contained in any of the Loan Documents; or 

    7.9  INSOLVENCY.  Borrower or any Guarantor shall fail, be unable or be
unwilling to pay its debts generally as they come due; or there shall be filed
by Borrower or any Guarantor any petition under the bankruptcy, reorganization,
arrangement, insolvency or other debtor's relief laws, or there shall be filed
against Borrower or any Guarantor any such petition, and such filing shall not
be dismissed within ninety (90)


                                          67


<PAGE>

days thereafter, or a receiver, trustee or liquidator shall be appointed for all
or a substantial part of Borrower's or any Guarantor's assets; or Borrower or
any Guarantor shall make a general assignment for the benefit of creditors; the
foregoing shall also apply to any Subsidiary; or 

    7.10 ATTACHMENTS AND JUDGMENTS.  Any final judgment or order for the
payment or money against Borrower or any Guarantor for an amount in excess of
$100,000 shall be awarded by any court of competent jurisdiction, which shall
not be either discharged, vacated or stayed within a period of thirty (30) days
from its entry; or any notice of  lien, levy or assessment, or any writ,
judgment, attachment, execution or other like process in an amount in excess of
$100,000 shall be issued or levied against any of Borrower's or any Guarantor's
property or assets, and such writ, judgment, attachment, execution or process
shall not be released, discharged, dismissed, bonded against or satisfied within
twenty (20) days thereafter; the foregoing shall also apply to any Subsidiary;
or 

    7.11 SEIZURE OF PROPERTY.  All, or such as in the opinion of Bank
constitutes a substantial portion, of the property of Borrower or and Subsidiary
shall be condemned, seized or appropriated; or 

    7.12 SUSPENSION OF BUSINESS.  Borrower or any Subsidiary shall suspend its
business; or 

    7.13 PENDING ACTION.  Any action shall be pending against Borrower or any
Guarantor (other than an action fully covered by insurance) which, if adversely
determined, would substantially impair the ability of Borrower to perform any or
all of its Obligations hereunder or under any of the other Loan Documents, or
the ability of any Guarantor to perform its obligations under its Guaranty,
unless Borrower's or such Guarantor's counsel, as the case may be, furnishes to
Bank its opinion to the satisfaction of Bank and Bank's counsel that, in its
judgment, the action is essentially without merit; the foregoing shall also
apply to any Subsidiary; or 

    7.14 REVOCATION OF GUARANTY/SUBORDINATION AGREEMENT.  Any Guaranty or the
Subordinating Agreement shall be breached or become ineffective, or any
Guarantor or Subordinating Creditor shall revoke, disavow or attempt to
terminate such Guaranty or Subordination Agreement, or any Guarantor (if an
individual) shall die; or 

    7.15 SALARIES AND WAGES.  Borrower shall fail to pay salaries or wages when
due, or fail to make timely payment or deposit of all F.I.C.A. payments and
other withholding taxes required of it by applicable laws; or 

    7.16 MATERIAL ADVERSE CHANGE.  Any other event or condition having a
material adverse effect on Borrower's, any Subsidiary's or any Guarantor's
financial condition shall occur, such that Bank reasonably believes that the
prospect of payment or


                                          68


<PAGE>

performance by Borrower under this Agreement or any other Loan Document is
materially and adversely impaired.

8.  INTERPRETATION

    8.1  ACCOUNTING TERMS.  All accounting terms not specifically defined
herein shall be construed in accordance with generally accepted accounting
principles ("GAAP") and interpretations of the American Institute of Certified
Public Accountants or its successors, consistently applied, as in effect from
time to time, including, without limitation, applicable statements, bulletins
and interpretations issued by the Financial Accounting Standards Board and
bulletins, opinions, interpretations and statements issued  by the American
Institute of Certified Public Accountants or its committees.

    8.2  CONSTRUCTION.  Neither this Agreement nor any uncertainty or ambiguity
herein shall be construed or resolved against Bank or Borrower, whether under
any rule of construction or otherwise.  On the contrary, this Agreement has been
reviewed by all parties and shall be construed and interpreted according to the
ordinary meanings of the words used so as to fairly accomplish the purposes and
intentions of the parties hereto.  Unless the context of this Agreement clearly
requires otherwise, references to the plural include the singular, the singular
includes the plural, the part includes the whole, "including" is not limiting,
and "or" has the inclusive meaning represented by the phrase "and/or."  The
words "hereof," "herein," "hereby," "hereunder," and similar terms in this
Agreement refer to this Agreement as a whole and not to any particular provision
of the Agreement.  Article, Section, Subsection, exhibit and schedule references
are to this Agreement unless otherwise specified.

    8.3  CAPTIONS.  Paragraph headings, numbers and underscoring have been set
forth herein for convenience only, do not define or limit the provisions hereof,
and have no significance whatsoever.  The order in which the  paragraphs appear
in the Agreement has no significance whatsoever.

    8.4  APPLICABLE LAW.  The Credit and all Loan Documents required hereunder
shall be deemed to have been made in the State of California, and the validity
of each thereof and its construction, interpretation and enforcement shall be
determined under, governed by and construed in accordance with the laws of the
State of  California (without reference to choice of law).  Borrower consents to
service of process by any means authorized by California or Federal Law.  In any
action brought under any or arising out of this Agreement, which is not
submitted to arbitration as provided and limited in Section 9.16 below, Borrower
hereby submits to the exclusive jurisdiction of any competent Federal or State
court within the State of California; provided, however, that any suit seeking
enforcement against any Collateral or other property may be brought, at the
Bank's option, in the courts or other jurisdiction where such  Collateral or
other property may be found.


                                          69


<PAGE>

9.  MISCELLANEOUS

    9.1  NONWAIVER.  Bank's failure to exercise, or delay in exercising, any
right, remedy, power or privilege hereunder shall not operate as a waiver
thereof; nor shall any single or partial exercise by Bank of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege, and no waiver
whatever shall be valid unless in writing signed by Bank and then only to the
extent specifically set forth in such writing.

    9.2  INUREMENT.  This Agreement shall bind and inure to the benefit of the
parties hereto and their respective successors and assigns; provided, however,
that Borrower shall not assign the Credit or any of its rights, duties or
obligations hereunder or under any other Loan Document without Bank's prior
written consent and any prohibited assignment shall be absolutely void.  No
consent to an assignment shall release Borrower or any Guarantor from their
obligations to Bank.  This Agreement shall not benefit or create any right or
cause of action in or on behalf of any Person other than the parties hereto.

    9.3  BANK'S ASSIGNMENT/PARTICIPATIONS.  Bank may at any time, without
Borrower's consent, sell, assign, grant participations in or otherwise transfer
to any other Person or Persons (each, a "Participant") all or part of the
Obligations of Borrower outstanding under this Agreement and the other Loan
Documents evidencing such Obligations, and may deliver such Loan Documents to,
and may exchange financial information about the Borrower with, such
Participant.  Borrower hereby acknowledges and agrees that any such disposition
will give rise to a direct obligation of Borrower to such Participant.  Borrower
hereby authorizes Bank and each Participant, upon the occurrence of a Default
hereunder, to proceed directly by right of setoff, banker's lien or otherwise,
against any assets of Borrower which may at the time of such default be under
Bank's or such Participant's control.

    9.4  CUMULATIVE REMEDIES.  Bank's rights, remedies, powers and privileges
under this Agreement and the other Loan Documents required hereunder shall be
cumulative.  Bank shall have all other rights, remedies, power and privileges
not inconsistent herewith as provided by law or in equity.  No single or partial
exercise by Bank of one such right, remedy, power or privilege shall be deemed
an election.  Bank may exercise all such remedies in any order of priority.

    9.5  AMENDMENTS.  This Agreement may be amended only in writing signed by
the parties hereto.

    9.6  SEVERABILITY.  Each provision of this Agreement shall be severable
from every other provision of this Agreement for the purpose of determining the
legal enforceability of any specific provision.


                                          70


<PAGE>

    9.7  DOCUMENTATION.  All loans made by Bank under the Credit shall be
evidenced by Bank's standard forms of documentation and the terms and conditions
of this Agreement are supplemental to such documentation.  However, in the event
of any conflict between the terms of any of such documents and this Agreement,
the terms of such documents shall prevail.

    9.8  MULTIPLE BORROWERS.  If two or more Borrowers sign this Agreement,
each will be individually obligated to repay the Bank in full, and all Borrowers
will be obligated together.

    9.9  APPLICATION OF PAYMENTS.   Borrower waives the right to direct the
application of any and all payments at any time or times hereafter received by
Bank on account of the Credit or of any other Obligation owed by Borrower to
Bank, and Borrower agrees that Bank may apply an reapply such payments in any
manner as Bank may deem advisable.

    9.10 SETOFF.  Borrower hereby acknowledges and specifically grants Bank a
security interest in, banker's lien upon, and right to setoff respecting any and
all deposit or other accounts maintained by Borrower with Bank, whether held in
a general or special account or deposited for safekeeping or otherwise, and
regardless of how such account may be titled, and any other property of Borrower
held in the possession or custody of Bank or its agents with the exception of
any employee payroll accounts of Borrower held by Bank.  Borrower further
acknowledges that the exercise of setoff, if any, shall require, and only be
deemed to occur upon, the affirmative action of Bank.

    9.11 WAIVERS BY BORROWER.  Borrower waives demand, notice, protest, notice
of acceptance of this Agreement, notice of loans made, credit extended,
collateral received, delivered or repossessed or other action taken in reliance
hereon, and all other demands and notices of any description.  With respect to
both Obligations and Collateral, Borrower assents to any extension or
postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of Collateral, to the addition or release of
any Person primarily or secondarily liable, to the acceptance of partial
payments thereon and the settlement, compromising or adjusting of any thereof,
all in such manner and at such time or times as Bank may deem advisable. 
Borrower waives the right to assert any confidential relationship it may have or
develop with any accounting firm or service bureau in connection with any
information requested by Bank pursuant to or in accordance with this Agreement,
and agrees that Bank may contact directly any such accounting firm or service
bureau in order to obtain such information.

    9.12 NOTICES.  Any notice or other communication provided for or allowed
hereunder shall be considered to have been validly given if delivered
personally, and evidenced by a receipt signed by an authorized agent or
addressee, or 72 hours after being deposited in the United States mail,
registered or certified, postage prepaid, return receipt requested, or 48 hours
after being sent  by Federal Express or other courier service, or, in the case
of telecopied notice, when telecopied, receipt acknowledged, and addressed as


                                          71


<PAGE>

provided below.  Addresses to which notices or demands are to be given may be
changed from time to time by notice served as provided herein.

    9.13 COUNTERPARTS.  This Agreement may be executed in as many counterparts
as may be deemed necessary or convenient, and by the different parties hereto on
separate counterparts each of which, when so executed, shall be deemed an
original but all such counterparts shall constitute but one and the same
agreement.  This Agreement shall become effective upon the receipt by Bank and
Borrower of executed counterparts signed by each of them.

    9.14 ENTIRE AGREEMENT.  Except for Loan Documents specifically referenced
herein, this Agreement constitutes the entire agreement of the parties hereto
respecting the subject matter contained herein, and supersedes any prior or
contemporaneous oral or written agreements, understandings, representations,
warranties, negotiations, which are merged into this Agreement.

    9.15 ACKNOWLEDGMENTS.    Borrower hereby acknowledges that (a) it has been
advised by counsel of its own choosing, or has had the opportunity to consult
with counsel of its own choosing, in the negotiation, execution and delivery of
this Agreement and the other Loan Documents to which it is a party, (b) it has
made an independent and voluntary decision to enter into this Agreement and the
other Loan Documents to which it is a party, without reliance on any other
representation, warranty, covenant or undertaking by Bank, (c) it fully
understands and is fully satisfied with each and every term of this Agreement
and the other Loan Documents to which it is a party, (d) there are no
representations, warranties, covenants, undertakings or agreements by the
parties hereto as to this Agreement or the other Loan Documents except as
specifically provided herein and therein, (e) Bank has no fiduciary obligation
to Borrower with respect to any of the Loan Documents or the transactions
contemplated thereby, (f) the relationship between Bank and Borrower pursuant to
this Agreement and the other Loan Documents is and shall be solely that of
creditor and debtor, respectively, (g) Bank is not and shall not be construed to
be a partner, joint venturer, alter ego, trustee, fiduciary, manager,
controlling person, or other business associate or participant of any kind of
Borrower or any Guarantor, or any other Person, and (h) by entering into this
Agreement, Bank shall not be deemed responsible to perform nor participate in
acts, omissions or decisions of Borrower or any Guarantor.

    9.16 DISPUTE RESOLUTION.

         (a)  MANDATORY ARBITRATION.  Any controversy or claim between or among
the parties hereto arising out of or relating to (i) this Agreement or the other
Loan Documents ("Subject Documents"), (ii) any negotiations, correspondence or
communications, whether or not incorporated or integrated into the Subject
Documents, relating to the Subject Documents or any indebtedness evidenced
thereby. or (iii) the administration or management of the Subject Documents or
the Credit, and with respect to (i), (ii) and (iii) also including any such
controversy or claim based on or arising out of


                                          72


<PAGE>

an alleged tort, shall be determined by arbitration in accordance with Title 9
of the U.S. Code and the Commercial Arbitration Rules of the American
Arbitration Association (the "AAA") and the provisions of this Agreement;
PROVIDED, HOWEVER, that unless Bank and all parties to the Subject Documents
consent to such submission, this Section shall not apply to the extent that (i)
such claim or controversy involves enforcement of any Subject Documents with
respect to obligations which are incurred primarily for personal, family or
household use; or (ii) and Subject Documents or any other obligations to Bank
described in or covered by any of the Subject Documents are secured by real
property.   All statutes of limitation and waivers which would otherwise be
applicable shall apply to any arbitration proceeding.  Judgment upon the award
rendered may be entered in any court having jurisdiction.

         (b)  JUDICIAL REFERENCE.   If the controversy or claim is not
submitted to arbitration as provided and limited in subparagraph (a), but
becomes the subject of a judicial action, then the parties hereby consent to the
jurisdiction of the Superior Court for the County of Los Angeles or the Federal
District Court for the Central District of California.  IN CONNECTION WITH SUCH
JUDICIAL ACTION, THE PARTIES HEREBY EXPRESSLY, DELIBERATELY AND INTENTIONALLY
WAIVE ANY RIGHT THEN MAY OTHERWISE HAVE TO TRIAL BY JURY OF SUCH CLAIM OR
CONTROVERSY, UNLESS SUCH CLAIM OR CONTROVERSY INVOLVES THE ENFORCEMENT OF ANY
SUBJECT DOCUMENT WITH RESPECT TO OBLIGATIONS WHICH ARE INCURRED PRIMARILY FOR
PERSONAL, FAMILY OR HOUSEHOLD USE.  In addition, any party may elect to have all
decisions of fact and law determined by a referee in accordance with applicable
state law.  If such an election is made, the parties shall designate to the
court a referee or referees selected under the auspices of the AAA in the same
manner as arbitrators are selected in AAA-sponsored proceedings.  The referee or
presiding referee of the panel shall be an experienced attorney actively engaged
in the practice of either commercial finance law or the collection of commercial
loans, or shall be retired judge.  Judgment upon the award rendered shall be
entered in the court in which such proceeding was commenced.

         (c)  PROVISIONAL REMEDIES, SELF-HELP, AND FORECLOSURE.  No provision
of, or the exercise of any rights shall limit the right of any party to exercise
self help remedies such as setoff, to foreclose against any real or personal
property collateral, or to obtain provisional or ancillary remedies, such as
injunctive relief or the appointment of a receiver from a court having
jurisdiction before, during, or after the pendency of any arbitration.  At
Bank's option, foreclosure under a deed of trust or mortgage may be accomplished
either by exercise or power of sale under the deed of trust or mortgage, or by
judicial foreclosure.  The institution and maintenance of an action for judicial
relief or pursuit of provisional or ancillary remedies or exercise or self help
remedies shall not constitute a waiver of the right of any party, including the
plaintiff, to submit the controversy or claim to arbitration.  The parties agree
that the submission of any controversy or claim to arbitration under
subparagraph (a), or the a referee under subparagraph (b), above, the granting
or entry of any award in connection with such


                                          73


<PAGE>

submission or the exercise of any provisional or self help remedy, including
foreclosure of collateral, under this subparagraph (c) shall not be deemed to be
an "Action" under California code of Civil Procedure, Section 726, or any other
similar law or regulation.

         (d)  MISCELLANEOUS.  Any arbitration question arising under this
Section 9.16 shall be governed in accordance with Title 9 of the U.S. Code.  The
provisions of this Section 9.16 shall survive any termination, amendment, or
expiration of the Subject Documents, unless the Bank and other parties otherwise
expressly agree in writing.  In the event of an dispute governed hereby, the
party the arbitrator or referee determines is the prevailing party shall be
entitled to have the other party or parties pay the expenses of the prevailing
party, but subject to the award of the arbitrator or referee each party shall
bear its own arbitrators' or referee's fees.  In this regard the arbitrator or
referee shall have the power to award recovery to such prevailing party of all
costs and fees (including attorneys' fees and a reasonable allocation for the
costs of Bank's in-house counsel), administrative fees, arbitrators' or
referee's fees, and court costs, all as determined by the arbitrator hereunder
shall be conducted in Los Angeles.  In any arbitration or other proceeding held
pursuant to this section, all oral or written communications between or among
the parties hereto shall be deemed privileged for all purposes as if the parties
had proceeded judicially.


                     [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
                            (Next page is signature page)


                                          74


<PAGE>

WITNESS the due execution hereof on the date set forth hereinabove.

BORROWER:

ARDEN GROUP, INC.:


By:
    ----------------------------
       Ernest T. Klinger
Title:         Vice President     
       -----------------------

Address where notices to Borrower are to be sent:

ARDEN GROUP, INC.
2020 South Central Avenue
Compton, California 90220
Attention:   Ernest T. Klinger
             Chief Financial Officer
Telecopier:    (310) 631-0950         
           ----------------------

BANK:

UNION BANK, 
a California banking corporation

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


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

Address where notices to Bank are to be sent:

Long Beach Regional Office #290
400 Oceangate Blvd.
Long Beach, California 90802
Attention:   Gina Sweetman
             Vice President

Attention:         
            ----------------------     

            ----------------------     
Telecopier:        (    )                             
            ----------------------     


                                          75


<PAGE>
                                   SECOND AMENDMENT
                                  TO LOAN AGREEMENT
                                           
                                            
    THIS SECOND AMENDMENT TO LOAN AGREEMENT  (this "Second Amendment") dated as
of December 20, 1995, is made and entered into by and between ARDEN GROUP, INC.
a Delaware corporation ("Borrower"), and UNION BANK, a California banking
corporation ("Bank").


                                      RECITALS:
                                           
A.  Borrower and Bank are parties to that certain Loan Agreement dated December
23, 1993, as amended by that certain First Amendment dated as of October 31,
1994 (as so amended, the "Agreement"), pursuant to which Bank agreed to extend
the credit facilities to Borrower outlined therein in the aggregate principal
amount at any one time outstanding not to exceed Nine Million Dollars
($9,000,000).

B.  Borrower has requested that Bank agree (i) to extend the Revolving
Termination Date from November 25, 1995 (with effect from and after that date)
to November 29, 1996, (ii) to make available to Borrower a non-revolving line of
credit providing for term loans in the aggregate principal amount not to exceed
Ten Million Dollars ($10,000,000) and (iii) to amend the Agreement in certain
other respects.

C.  Bank is willing to so amend the Agreement, but subject to the terms and
conditions of this Second amendment.


                                      AGREEMENT:
                                           
        In consideration of the above recitals and of the mutual covenants and
conditions contained herein, Borrower and Bank agree as follows:

1.  DEFINED TERMS.  Initially capitalized terms used herein which are not
otherwise defined shall have the meanings assigned thereto in the Agreement.

2.  AMENDMENTS TO SECTION 1 OF THE AGREEMENT.

    (a)  The introductory paragraph of the Agreement is hereby amended by
substituting the amount of "Nineteen Million Dollars ($19,000,000)" for the
amount "Nine Million Dollars ($9,000,000)" appearing in the seventh line
thereof.


                                          76


<PAGE>

    (b)  The definition of "BANK EXPENSES" appearing in Section 1 of the
Agreement is hereby amended by (i) deleting the words ", or in gaining
possession of, maintaining, handling, preserving, storing, shipping, appraising,
selling, preparing for sale and/or advertising to sell the Collateral, whether
or not a sale is consummated" appearing in the seventh through eleventh lines
thereof and (ii) deleting the words "and be secured by the Collateral" in the
twenty-first and twenty-second lines thereof.

    (c)  The definition of "DEFAULT" appearing in Section 1 of the Agreement is
hereby amended by substituting the reference "Section 7" for the reference
"Section 8" appearing therein.

    (d)  Section 1 of the Agreement is hereby amended by adding the new terms
"EQUIPMENT LOAN COMMITMENT TERMINATION DATE", "EQUIPMENT LOAN", "EQUIPMENT
LOANS", "EQUIPMENT NOTE", "EQUIPMENT NOTES" and "EQUIPMENT LOAN COMMITMENT"
thereto in the appropriate alphabetical order, which new terms shall be defined
as follows:

    " 'EQUIPMENT LOAN COMMITMENT TERMINATION DATE',  'EQUIPMENT LOAN',  
'EQUIPMENT LOANS',  'EQUIPMENT NOTE',  'EQUIPMENT NOTES' and  'EQUIPMENT LOAN 
COMMITMENT' shall have the meanings set forth in Section 2A.1 hereof."

    (e)  The definitions of "GUARANTIES" and "GUARANTY" appearing in Section 
1 of the Agreement are hereby amended to read in full as follows:

    " 'GUARANTIES' and  'GUARANTY' shall mean, respectively, (a) those 
certain Continuing Guaranties dated as of the Second Amendment Effective 
Date, executed by Guarantors, pursuant to which Guarantors shall guarantee 
the payment by Borrower of the Obligations and (b) any one of such 
Guaranties."

    (f)  The definition of "LOAN DOCUMENTS" appearing in Section 1 of the 
Agreement is hereby amended to read in full as follows:

    " 'LOAN DOCUMENTS' shall mean and include this Agreement, the Notes, the 
Guaranties, and all other documents, instruments and agreements delivered to 
Bank in connection with this Agreement."

    (g)  The definitions of "NOTES" and "NOTES" appearing in Section 1 of the
Agreement are hereby amended to read in full as follows:

    "'NOTES' and  'NOTE' shall mean, respectively, (a) the Revolving Note and 
the Equipment Notes and (b) any one of such Notes."

    (h)  Section 1 of the Agreement is hereby amended by adding the new terms
"SECOND AMENDMENT" and "SECOND AMENDMENT EFFECTIVE DATE" thereto in the
appropriate alphabetical order, which new terms shall be defined as follows:


                                          77


<PAGE>

    " 'SECOND AMENDMENT' shall mean that certain Second Amendment to this
Agreement, dated as of December 20, 1995, by and between Borrower and Bank."

    " 'SECOND AMENDMENT EFFECTIVE DATE' shall mean the date by which each of the
conditions precedent set forth in Section 9 of the Fourth amendment has been
satisfied."

3.  AMENDMENTS TO SECTION 2 OF THE AGREEMENT.

    (a)  Section 2.1A of the Agreement is hereby amended by substituting the
date "November 29, 1996" for the date "November 30, 1995" appearing in the
second line thereof.

    (b)  Section 2.1A of the Agreement is hereby further amended by
substituting the words "Commercial Portfolio Administration" for the words "Long
Beach Regional Office" appearing in the nineteenth line thereof.

    (c)  Section 2.1.1.1 of the Agreement is hereby amended by substituting the
word "Potential" for the word "Unmatured" in the fourth line thereof.

    (d)  Section 2 of the Agreement is hereby amended by adding a new Section
2A.1 after Section 2.1 thereof, which new Section 2A.1 shall read in full as
follows:

    "2A.1  EQUIPMENT LOAN COMMITMENT"

         A.  TERMS.  Subject to the terms and conditions hereof, between the 
Second Amendment Effective Date and November 29, 1996 (the 'Equipment Loan 
Commitment Termination Date'), so long as no Default or Potential Default has 
occurred and is continuing, Bank shall extend to Borrower such loans (each, 
an  'Equipment Loan' and collectively, the 'Equipment Loans') as Borrower may 
request from time to time in an aggregate principal amount not exceeding Ten 
Million Dollars ($10,000,000) (the 'Equipment Loan Commitment').  Within the 
limits of time and amount set forth in this Section 2A.1, Borrower may borrow 
and repay, but once repaid may not reborrow, Equipment Loans in amounts of 
not less than One Million Dollars ($1,000,000) each upon, in the case of 
borrowing, giving Bank notice as set forth below of the principal amount 
Borrower intends to borrow.  Borrower authorizes Bank to make Equipment Loans 
based upon telephonic notice or upon such other instructions as Bank receives 
from anyone purporting to be an authorized representative of Borrower, 
received within the times stipulated in the applicable Equipment Note.  Such 
notice shall be given to any of Bank's commercial banking officer's at Bank's 
Lending Office and shall be irrevocable.  Unless otherwise directed by 
Borrower in the disbursement instructions for a particular Equipment Loan, 
Bank will disburse the proceeds of each Equipment Loan by crediting 
borrower's general depository account number 290203056 (or successor account) 
at Bank's Lending Office.  Borrower agrees to use the proceeds of the 
Equipment Loans only to acquire new fixtures and equipment for Borrower's 
supermarkets.

                                          78

<PAGE>

         B.  EQUIPMENT NOTES.  Each Equipment Loan shall be evidenced by, 
bear interest at the rate(s) provided for in, and be payable or prepayable, 
as the case may be, in accordance with the terms of a promissory note in form 
and substance satisfactory to, and issued by Borrower in favor of, Bank 
(individually, an 'Equipment Note' and collectively, the  'Equipment Notes'). 
Borrower's obligations with respect to each Equipment Loan, the interest 
rate(s) applicable to such Equipment Loan (and if a fixed rate, the period 
for which the fixed rate is applicable), and the date such Equipment Loan was 
made and payments thereon received by Bank shall be evidenced by entries made 
by Bank in its books and records or on a schedule on the back of or affixed 
to the Equipment Note evidencing such Equipment Loan, which entries shall 
constitute PRIMA FACIE evidence of the matters noted.  Bank's failure to make 
such entries, however, shall not affect, impair or diminish Borrower's 
obligation  to repay the Equipment Loans, together with interest as provided 
for in the corresponding Equipment Notes."

4.  AMENDMENTS TO SECTION 3 OF THE AGREEMENT.

    (a)  Section 3.1A of the Agreement is hereby amended by substituting the 
reference "Section 2.1B" for the reference "Section 2B" appearing in the 
second line thereof.

    (b)  Section 3.1F of the Agreement is hereby amended by substituting the 
amount "Twenty Million Dollars ($20,000, 000)" for the amount "Nine Million 
Dollars ($9,000,000)" appearing in the third line thereof.

    (c)  Section 3 of the Agreement is hereby further amended by adding a new
Section 3A.1 thereto, which shall read in full as follows:

    "3A.1  TO EACH EQUIPMENT LOAN.  Before Bank is obligated to make any
Equipment Loan hereunder, Bank must have received all of the following, each of
which must be in form and substance satisfactory to Bank:

         A.   EQUIPMENT NOTE.   An original, duly executed Equipment Note
required pursuant to Section 2A.1B;

         B.   AUTHORIZATION.  An Authorization on Bank's form therefor, duly
executed by Borrower, authorizing Bank to disburse the proceeds of the Equipment
Loan as provided herein;

         C.   ARBITRATION AGREEMENT.  An Arbitration Agreement on Bank's form
therefor and relating to the Equipment Note, duly executed by Borrower; and

         D.   OTHER DOCUMENTS.  Such other documents, instruments or agreements
as Bank may reasonable deem necessary."


                                          79


<PAGE>

5.  AMENDMENT TO SECTION 4 OF THE AGREEMENT.  Section 4.10 of the Agreement is
hereby amended to read in full as follows:

    "O.  OTHER CREDITORS.  Except for trade payables arising in the ordinary
course of Borrower's business and except as disclosed in the Financial
Statement, Borrower does not have (i) any obligation or liability (including,
without limitation, pending litigation) which would materially and adversely
affect its business operations, (ii) any Indebtedness other than the Credit and
a $3,000,000 line of credit with City National Bank and (iii) any obligation
under any guaranty of any obligations or any other Person."

6.  AMENDMENT TO SECTION 5 OF THE AGREEMENT.  Section 5.2 of the Agreement is
hereby amended by substituting the amount "Thirty-Seven Million Five Hundred
Thousand Dollars ($37,500,000)" for the amount "Forty-Seven Million Five Hundred
Thousand Dollars ($47,500,000)" appearing in the second and third lines thereof.

7.  AMENDMENT TO SECTION 5 OF THE AGREEMENT.  Section 6.2 of the Agreement is
hereby amended to read in full as follows:

    "6.2 OTHER INDEBTEDNESS.  Sell or discount any of its accounts or notes
receivable or other evidence of Indebtedness owed to it except to Bank; borrow
any money, incur, assume or permit to exist, directly or indirectly, any
liabilities for borrowed money, or prepay any existing Indebtedness owing to any
Person, except (a) Obligations to Bank, (b) obligations currently shown on
Borrower's Financial Statement referred to in Section 4.1G hereof, (c) trade
debt incurred in the ordinary course of business (d) a $3,000,000 line of credit
with City National Bank and (e) pursuant to written agreements made with and
approved by Bank."

8.  OTHER AMENDMENTS TO THE AGREEMENT.  Bank's address for notices appearing on
the signature page of the Agreement is hereby amended to read in full as
follows:

"Union Bank
Commercial Portfolio Administration
445 South Figueroa Street, 16th Floor
Los Angeles, California 90071
Attention:  Jesus Serrano
            Vice President
Telecopier:  (213) 236-7638

9.  EFFECTIVENESS OF THIS SECOND AMENDMENT.  This Second Amendment shall become
effective as of the date hereof when, and only when, Bank shall have received
all of the following, in form and substance satisfactory to Bank:

    (a)  A counterpart of this Second Amendment, duly executed by Borrower;

    (b)  A replacement Revolving Note, duly executed by Borrower;


                                          80


<PAGE>

    (c)  An Authorization on Bank's form therefor, duly executed by Borrower,
authorizing Bank to disburse the proceeds of the Revolving Loan as provided for
in the Agreement;

    (d)  An Arbitration Agreement on Bank's form therefor and relating to the
replacement Revolving Note, duly executed by Borrower;

    (e)  The Guaranties, executed by Guarantors; and

    (f)  Such other documents, instruments or agreements as Bank may reasonably
deem necessary.

10. RATIFICATION.

    (a)  Except as specifically amended hereinabove, the Agreement shall remain
in full force and effect and is hereby ratified and confirmed; and

    (b)  Upon the effectiveness of this Second Amendment, each reference in the
Agreement to "this Agreement", "hereunder", "herein", "hereof" or words of like
import referring to the Agreement shall mean and be a reference to the Agreement
as amended by this Second Amendment and each reference in the Agreement to the
"Revolving Note" or words of like import referring to the Revolving Note shall
mean and be a reference to the replacement Revolving Note issued pursuant to
this Second Amendment.

11. REPRESENTATIONS AND WARRANTIES.  Borrower represents and warrants as
follows:

    (a)  Each of the representations and warranties contained in Section 4 of
the Agreement, as amended hereby, is hereby reaffirmed as of the date hereof,
each as if set forth herein;

    (b)  The execution, delivery and performance of this Second Amendment are
within Borrower's corporate powers, have been duly authorized by all necessary
corporate action, have received all necessary approvals, if any, and do not
contravene any law or any contractual restriction binding on Borrower.

    (c)  This Second Amendment is, and the replacement Revolving Note when
delivered for value received will be, the legal, valid and binding obligations
of Borrower, enforceable against Borrower in accordance with their terms; and 

    (d)  No event has occurred and is continuing or would result from this
Second Amendment which constitutes an Event of Default under the Agreement, or
would constitute an Event of Default but for the requirement that notice be
given or time elapse or both.


                                          81


<PAGE>

12. GOVERNING LAW.  This Second Amendment shall be deemed a contract under and
subject to, and shall be construed for all purposes and in accordance with, the
laws of the State of California.

13. COUNTERPARTS.  This Second Amendment may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.

WITNESS the due execution hereof as of the date first above written.

                                            ARDEN GROUP, INC.

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



                                            UNION BANK

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


                                          82


<PAGE>

                                   THIRD AMENDMENT
                                  TO LOAN AGREEMENT
                                           
                                            
    THIS THIRD AMENDMENT TO LOAN AGREEMENT  (this "Third Amendment") dated as
of December 18, 1996, is made and entered into by and between ARDEN GROUP, INC.
a Delaware corporation ("Borrower"), and UNION BANK OF CALIFORNIA, N.A.
("Bank").


                                      RECITALS:
                                           
A.  Borrower and Bank are parties to that certain Loan Agreement dated December
23, 1993, as amended by that certain First Amendment dated as of October 31,
1994, Second Amendment dated as of December 20, 1995 (as so amended, the
"Agreement"), pursuant to which Bank agreed to extend the credit facilities to
Borrower outlined therein in the aggregate principal amount at any one time
outstanding not to exceed Nineteen Million Dollars ($19,000,000).

B.  Borrower has requested that Bank agree (i) to extend the Revolving
Termination Date from November 29, 1996 (with effect from and after that date)
to January 15, 1997, (ii) to extend the Equipment Loan Commitment Termination
Date from November 29, 1996 (with effect from and after that date) to January
15, 1997 and (iii) to amend the Agreement in certain other respects.

C.  Bank is willing to so amend the Agreement, but subject to the terms and
conditions of this Third amendment.


                                      AGREEMENT:
                                           
In consideration of the above recitals and of the mutual covenants and 
conditions contained herein, Borrower and Bank agree as follows:

1.  DEFINED TERMS. Initially capitalized terms used herein which are not 
otherwise defined shall have the meanings assigned thereto in the Agreement.

2.  AMENDMENTS TO SECTION 1 OF THE AGREEMENT.

    (a)  Section 1 of the Agreement is hereby amended by adding the new terms 
"THIRD AMENDMENT" and "THIRD AMENDMENT EFFECTIVE DATE" thereto in the 
appropriate alphabetical order, which new terms shall be defined as follows:

    "'THIRD AMENDMENT' shall mean that certain Third Amendment to this
Agreement, dated as of December 18, 1996, by and between Borrower and Bank."


                                          83


<PAGE>

    "THIRD AMENDMENT EFFECTIVE DATE' shall mean the date by which each of the
conditions precedent set forth in Section 5 of the Third amendment has been
satisfied."

3.  AMENDMENTS TO SECTION 2 OF THE AGREEMENT.

    (a)  Section 2.1A of the Agreement is hereby amended by substituting the
date "January 15, 1997" for the date "November 29, 1996" appearing in the second
line thereof.

    (b)  Section 2A.1 of the Agreement is hereby amended by substituting the
date "January 15, 1997" for the date "November 29, 1996" appearing in the second
line thereof.

4.  AMENDMENTS TO SECTION 3 OF THE AGREEMENT.

    (a)  Section 3A.1 C. of the Agreement is hereby amended by substituting the
"Alternative Dispute Resolution Agreement" for the "Arbitration Agreement"
appearing therein.

5.  EFFECTIVENESS OF THIS THIRD AMENDMENT.  This Third Amendment shall become
effective as of the date hereof when, and only when, Bank shall have received
all of the following, in form and substance satisfactory to Bank:

    (a)  A counterpart of this Third Amendment, duly executed by Borrower;

    (b)  A replacement Revolving Note, duly executed by Borrower;

    (c)  An Authorization on Bank's form therefor, duly executed by Borrower,
authorizing Bank to disburse the proceeds of the Revolving Loan as provided for
in the Agreement;

    (d)  An Alternative Dispute Resolution Agreement on Bank's form therefor
and relating to the replacement Revolving Note, duly executed by Borrower;

    (e)  Such other documents, instruments or agreements as Bank may reasonably
deem necessary.

6.  RATIFICATION.

    (a)  Except as specifically amended hereinabove, the Agreement shall remain
in full force and effect and is hereby ratified and confirmed; and

    (b)  Upon the effectiveness of this Third Amendment, each reference in the
Agreement to "this Agreement", "hereunder", "herein", "hereof" or words of like
import referring to the Agreement shall mean and be a reference to the Agreement
as amended by this Third Amendment and each reference in the Agreement to the
"Revolving Note" or words of like import referring to the Revolving Note shall
mean and be a reference to the replacement Revolving Note issued pursuant to
this Third Amendment.


                                          84


<PAGE>

7.  REPRESENTATIONS AND WARRANTIES.  Borrower represents and warrants as
follows:

    (a)  Each of the representations and warranties contained in Section 4 of
the Agreement, as amended hereby, is hereby reaffirmed as of the date hereof,
each as if set forth herein;

    (b)  The execution, delivery and performance of this Third Amendment are
within Borrower's corporate powers, have been duly authorized by all necessary
corporate action, have received all necessary approvals, if any, and do not
contravene any law or any contractual restriction binding on Borrower.

    (c)  This Third Amendment is, and the replacement Revolving Note when
delivered for value received will be, the legal, valid and binding obligations
of Borrower, enforceable against Borrower in accordance with their terms; and 

    (d)  No event has occurred and is continuing or would result from this
Third Amendment which constitutes and Event of Default under the Agreement, or
would constitute an Event of Default but for the requirement that notice be
given or time elapse or both.

8.  GOVERNING LAW. This Third Amendment shall be deemed a contract under and
subject to, and shall be construed for all purposes and in accordance with, the
laws of the State of California.

9.  COUNTERPARTS.  This Third Amendment may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.

WITNESS the due execution hereof as of the date first above written.

ARDEN GROUP, INC.

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



UNION BANK OF CALIFORNIA, N.A.

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


                                          85

<PAGE>

                                   FOURTH AMENDMENT
                                  TO LOAN AGREEMENT
                                           
                                            
    THIS FOURTH AMENDMENT TO LOAN AGREEMENT  (this "Fourth Amendment") dated as
of January 13, 1997, is made and entered into by and between ARDEN GROUP, INC. a
Delaware corporation ("Borrower"), and UNION BANK OF CALIFORNIA, N.A. ("Bank").


                                      RECITALS:
                                           
A.  Borrower and Bank are parties to that certain Loan Agreement dated December
23, 1993, as amended by that certain First Amendment dated as of October 31,
1994, Second Amendment dated as of December 20, 1995 and Third Amendment dated
December 18, 1996 (as so amended, the "Agreement"), pursuant to which Bank
agreed to extend the credit facilities to Borrower outlined therein in the
aggregate principal amount at any one time outstanding not to exceed Nineteen
Million Dollars ($19,000,000).

B.  Borrower has requested that Bank agree (i) to extend the Revolving
Termination Date from January 15, 1997 (with effect from and after that date) to
April 30, 1998, (ii) to extend the Equipment Loan Commitment Termination Date
from January 15, 1997 (with effect from and after that date) to April 30, 1998
and (iii) to amend the Agreement in certain other respects.

C.  Bank is willing to so amend the Agreement, but subject to the terms and
conditions of this Fourth amendment.


                                      AGREEMENT:
                                           
In consideration of the above recitals and of the mutual covenants and
conditions contained herein, Borrower and Bank agree as follows:

1.  DEFINED TERMS. Initially capitalized terms used herein which are not
otherwise defined shall have the meanings assigned thereto in the Agreement.

2.  AMENDMENTS TO SECTION 1 OF THE AGREEMENT.

    (a)  Section 1 of the Agreement is hereby amended by adding the new terms
"FOURTH AMENDMENT" and "FOURTH AMENDMENT EFFECTIVE DATE" thereto in the
appropriate alphabetical order, which new terms shall be defined as follows:

    "'FOURTH AMENDMENT' shall mean that certain Fourth Amendment to this
Agreement, dated as of January 13, 1997, by and between Borrower and Bank."


                                          86


<PAGE>

    "FOURTH AMENDMENT EFFECTIVE DATE' shall mean the date by which each of the
conditions precedent set forth in Section 4 of the Fourth amendment has been
satisfied."

3.  AMENDMENTS TO SECTION 2 OF THE AGREEMENT.

    (a)  Section 2.1A of the Agreement is hereby amended by substituting the
date "April 30, 1998" for the date "January 15, 1997" appearing in the second
line thereof.

    (b)  Section 2A.1 of the Agreement is hereby amended by substituting the
date "April 30, 1998" for the date "January 15, 1997" appearing in the second
line thereof.

4.  EFFECTIVENESS OF THIS FOURTH AMENDMENT.  This Fourth Amendment shall become
effective as of the date hereof when, and only when, Bank shall have received
all of the following, in form and substance satisfactory to Bank:

    (a)  A counterpart of this Fourth Amendment, duly executed by Borrower;

    (b)  A replacement Revolving Note, duly executed by Borrower;

    (c)  An Authorization on Bank's form therefor, duly executed by Borrower,
authorizing Bank to disburse the proceeds of the Revolving Loan as provided for
in the Agreement;

    (d)  An Alternative Dispute Resolution Agreement on Bank's form therefor
and relating to the replacement Revolving Note, duly executed by Borrower;

    (e)  Such other documents, instruments or agreements as Bank may reasonably
deem necessary.

5.  RATIFICATION.

    (a)  Except as specifically amended hereinabove, the Agreement shall remain
in full force and effect and is hereby ratified and confirmed; and

    (b)  Upon the effectiveness of this Fourth Amendment, each reference in the
Agreement to "this Agreement", "hereunder", "herein", "hereof" or words of like
import referring to the Agreement shall mean and be a reference to the Agreement
as amended by this Fourth Amendment and each reference in the Agreement to the
"Revolving Note" or words of like import referring to the Revolving Note shall
mean and be a reference to the replacement Revolving Note issued pursuant to
this Fourth Amendment.


                                          87


<PAGE>

6.  REPRESENTATIONS AND WARRANTIES.  Borrower represents and warrants as
follows:

    (a)  Each of the representations and warranties contained in Section 4 of
the Agreement, as amended hereby, is hereby reaffirmed as of the date hereof,
each as if set forth herein;

    (b)  The execution, delivery and performance of this Fourth Amendment are
within Borrower's corporate powers, have been duly authorized by all necessary
corporate action, have received all necessary approvals, if any, and do not
contravene any law or any contractual restriction binding on Borrower.

    (c)  This Fourth Amendment is, and the replacement Revolving Note when
delivered for value received will be, the legal, valid and binding obligations
of Borrower, enforceable against Borrower in accordance with their terms; and 

    (d)  No event has occurred and is continuing or would result from this
Fourth Amendment which constitutes and Event of Default under the Agreement, or
would constitute an Event of Default but for the requirement that notice be
given or time elapse or both.

7.  GOVERNING LAW. This Fourth Amendment shall be deemed a contract under and
subject to, and shall be construed for all purposes and in accordance with, the
laws of the State of California.

8.  COUNTERPARTS.  This Fourth Amendment may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.

WITNESS the due execution hereof as of the date first above written.

ARDEN GROUP, INC.

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



UNION BANK OF CALIFORNIA, N.A.

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


                                          88