SECURITY AGREEMENT
                            (Equipment and Inventory)


DATE:                 , 1996
       ---------- ----

         1.    Grant and Related Data

              1.1 -----------------------------,  ("Debtor"),  hereby  grants to
UNITED  GROCERS,  INC., an Oregon  corporation,  ("Secured  Party"),  a security
interest in the following described personal property:

         All present and hereafter acquired inventory, furniture, trade
         fixtures,  equipment  and all  proceeds  therefrom,  including
         insurance proceeds, accounts receivable,  United Grocers, Inc.
         capital stock and patronage  rebates earned,  contract rights,
         leasehold   improvements,   and  leasehold  interest,  now  or
         hereafter  used  in  connection  with  the  operation  of that
         certain retail grocery business presently known as -----------,
         located at ---------, --------, -------- County, Oregon.

together with all accessories , substitutions,  additions,  replacements, parts,
equipment  and  accessories  now or hereafter  affixed to or used in  connection
therewith ("Collateral"), to secure any and all present and hereinafter incurred
indebtedness, and any renewals and to cover any and all extensions of credit and
also to secure any and all other liabilities, absolute or contingent, primary or
secondary,  direct  or  acquired,  due or to  become  due,  now  or at any  time
hereafter owing by Debtor to Secured Party or its wholly owned subsidiaries.

              1.2 The  Collateral  is  bought  or used  primarily  for  Debtor's
business purposes,  and it will be permanently kept at -------------, ---------,
-------- County, Oregon, which is the address of Debtor's place of business.

              1.3 The  Collateral is not and will not be attached to real estate
so as to become incorporated in and made a part of said real property.

              1.4 As often as Secured Party shall require,  Debtor shall deliver
to Secured  Party such lists,  descriptions  and  designations  of  inventory as
Secured Party may require to identify the nature, extent and location thereof.

         2.  Warranties,  Covenants and  Agreements.  In order to induce Secured
Party to enter into this Security  Agreement and make each loan, Debtor warrants
and covenants to Secured Party that:

              2.1 Organization.  Debtor is a corporation duly organized, validly
existing  and in good  standing  under the las of the State of  Oregon,  has the
necessary  authority  and  power to own and sell the  Collateral  and its  other
assets  and to  transact  the  business  in  which  it is  engaged,  and is duly
qualified to do business in the jurisdiction where the Collateral is located and
in each other jurisdiction in which the conduct of its business or the ownership
of its assets requires such qualification.

<PAGE>

              2.2 Power and  Authority. Debtor has full  power,  authority  and
legal right to execute and deliver this Security  Agreement,  the notes, and the
contracts  to  perform  its  obligations  hereunder  and  thereunder,  to borrow
hereunder and to grant the security interest created by this Security Agreement.

              2.3 Consents and Permits. No consent of any other party (including
any stockholders, trustees or holders of indebtedness), and no consent, license,
approval or authorization of, exemption by, or registration or declaration with,
any  governmental  body,  authority,  bureau or agency is required in connection
with  the  execution,  delivery  or  performance  by  Debtor  of  this  Security
Agreement, the notes or the contracts, or the validity or enforceability of this
Security Agreement, the notes or the contracts.

              2.4 No Legal Bar.  The  execution,  delivery  and  performance  by
Debtor of this Security  Agreement,  the notes and the contracts do not and will
not  violate  any  provision  of  any  applicable  law or  regulation  or of any
judgment,   award,   order,   writ  or  decree  of  any  court  or  governmental
instrumentality,  will not  violate  any  provision  of the charter of Bylaws of
Debtor  and will not  violate  any  provision  of or cause a  default  under any
mortgage, indenture, contract, agreement or other undertaking to which Debtor is
a party or which  purports to be binding  upon Debtor or upon any of its assets,
and will not  result in the  creation  or  imposition  of any lien on any of the
assets of Debtor other than the security interest intended to be created hereby.

              2.5 No  Defaults.  Debtor  is  not in  default,  and no  event  or
condition exists which after the giving of notice or lapse of time or both would
constitute an event of default, under any mortgage,  lease indenture,  contract,
agreement,  judgment or other  undertaking  to which  Debtor is a party or which
purports to be binding  upon  Debtor or upon any of its  assets,  except for any
such default, event or condition which, individually or in the aggregate,  would
not affect  Debtor's  ability to perform  its  obligations  under this  Security
Agreement or any such  mortgage,  indenture,  contract,  agreement,  judgment or
other undertaking.

              2.6   Enforceability.   This  Security  Agreement  has  been  duly
authorized,  executed and delivered by Debtor and constitutes a legal, valid and
binding  obligation of Debtor,  enforceable in accordance  with its terms.  When
executed and delivered,  each contract and note shall have been duly authorized,
executed and delivered by Debtor and shall constitute a legal, valid and binding
obligation of Debtor, enforceable in accordance with its terms.

              2.7 Laws; Obligations: Operations. Debtor will:

              (a)  duly  observe  and  conform  to  all   requirements   of  any
governmental  authorities  relating  to the  conduct of its  business  or to its
properties or assets  insofar as such  requirements  may have a material  impact
respecting Debtor's obligations under this Security Agreement;

Page 2 --SECURITY AGREEMENT
<PAGE>

              (b) maintain  its  existence as a legal entity and obtain and keep
in full force and effect all rights, licenses and permits which are necessary to
the proper conduct of its business;

              (c) obtain or cause to be obtained  as  promptly  as possible  any
governmental,   administrative  or  agency  approval  and  make  any  filing  or
registration  therewith  which at the time shall be required with respect to the
performance of its obligations under this Security Agreement or the operation of
its business; and

              (d) pay all fees, taxes,  assessments and governmental  charges or
levies imposed upon any of the Collateral.

              2.8 Except for the security  interest granted hereby,  and a grant
of a security  interest in  inventory  and fixtures to United  Resources,  Inc.,
Debtor is the sole owner of the Collateral free from any lien, security interest
or encumbrance, and will defend the Collateral against the claims and demands of
all persons whomsoever.

              2.9  Financial  Condition of Debtor.  The  consolidated  financial
statements  of Debtor  heretofore  delivered  to Secured  Party are complete and
correct,  have been prepared in accordance  with generally  accepted  accounting
principles  consistently  applied,  and present fairly the financial position of
Debtor as at said date and the results of its operations for the period ended on
said  date,  and  there has been no  material  adverse  change in the  financial
condition, business or operations of Debtor since said date.

              2.10 Except as provided  below with respect to  inventory,  Debtor
will  not  sell or  offer  to sell  or  otherwise  transfer  or  dispose  of the
Collateral  or any part  thereof by any interest  herein,  or create or cause or
permit to be created any lien,  encumbrance or security  interest in or upon any
part thereof.

              2.11 While Debtor is not in default hereunder, Debtor may sell the
inventory,  but only in the  ordinary  course of business and only to buyers who
qualify as a buyer in the ordinary course of business.

              2.12  Insurance.  Debtor will keep the  Collateral  fully  insured
against loss or damage by fire, and such other hazards as Secured Party may from
time  to time  require,  with  such  deductible  provisions,  upon  such  terms,
including loss payable and other endorsements,  and in such company or companies
as Secured  Party may  approve;  and Debtor  will  immediately  deliver all such
insurance  policies  to Secured  Party,  to be retained  while any  indebtedness
hereby  secured  remains  owing.  Secured  Party shall hold all such policies in
pledge to secure payment of the  indebtedness  hereby secured,  with irrevocable
authority to adjust any loss, receive and receipt for any sum payable, surrender
any policy,  discharge and release any insurer, endorse any loss or refund check
or draft and, in general,  exercise in the name of Debtor or otherwise,  any and
all rights of Debtor in respect thereto or in respect to the proceeds thereof.

Page 3--SECURITY AGREEMENT
<PAGE>

              2.13  Maintenance of Collateral.  Debtor will, at its own expense,
keep  and  maintain  the  Collateral  or  cause  the  Collateral  to be kept and
maintained  in good repair,  condition and working order and furnish or cause to
be furnished all parts, replacements, mechanisms, devices and servicing required
therefore so that the value,  condition and operating efficiency thereof will at
all times be maintained  and preserved,  fair wear and tear  excepted.  All such
repairs, parts, mechanisms, devices and replacements shall immediately,  without
further act, become part of the Collateral and subject to the security  interest
created  by this  Security  Agreement.  Debtor  will not make or  authorize  any
improvement,   change,   addition  or  alteration  to  the  Collateral  if  such
improvement,  change, addition or alteration will impair the originally intended
function or use of the  Collateral  or impair the value of the  Collateral as it
existed immediately prior to such improvement,  change,  addition or alteration.
Any part added to the  Collateral in connection  with any  improvement,  change,
addition or alteration  shall  immediately,  without further act, become part of
the  Collateral  and subject to the security  interest  created by this Security
Agreement.

              2.14  Inspection/Use  of  Collateral.  Secured Party may enter any
premises in which any of the Collateral  may be kept at any reasonable  time for
the purpose of inspecting the same. Debtor will not permit any use of any of the
Collateral  in violation of any law or ordinance.  Debtor will not,  without the
prior  written  consent of Secured  Party cause or permit the  Collateral or any
part  thereof to be moved from its  present  location  or to be used for hire or
under lease.

              2.15 Taxes.  Debtor will promptly pay when due all taxes,  license
fees  and  governmental  rates  and  charges  upon  or  relating  to  any of the
Collateral or its use and relative to the indebtedness hereby secured.

              2.16 Financial Reporting. Debtor shall provide to Secured Party at
least  quarterly,  and  to  Secured  Party's  officers,   agents,  attorneys  or
accountants,  reasonably complete financial data reflecting the inventory level,
debts and  obligations  of Debtor (not limited to those to Secured  Party),  the
current  accounts  receivable of Debtor,  and all other  information  reasonably
calculated  to  provide  Secured  Party  with  information  with  respect to the
solvency  of the  Debtor,  and to  assure  the  Secured  Party as of its  rights
hereunder to the Collateral.  All such financial  information  shall be accurate
and correct in all material respects and complete insofar as completeness may be
necessary to give the Secured Party true and accurate knowledge of the financial
condition of the Debtor.

              2.17 As further  consideration  for the execution of this Security
Agreement,  Debtor agrees to assign unto Secured Party, as collateral,  Debtor's
interest in the lease,  satisfactory  to Secured  Party,  covering  the premises
wherein the business and chattels are located.  Any breach of said lease,  shall
be deemed a breach of this Security Agreement and so also shall a breach of this
Security  Agreement be deemed a breach of the lease. In the event of a breach of
this Security Agreement or of the lease, and in the event Secured 

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<PAGE>

Party finds it necessary to exercise the right of  possession,  Debtor agrees to
relinquish possession of the premises,  peaceably, to Secured Party, and in such
event,  this indenture shall serve as an assignment of all the right,  title and
interest of Debtor of Debtor's leasehold rights.

              2.18 Optional Advances. At its option, Secured Party may discharge
taxes,  liens,  security  interests  or  other  encumbrances  upon  any  of  the
Collateral,  may place and pay premiums upon  insurance on any of the Collateral
and  may  incur  expenses  for  maintenance  and  preservation  of  any  of  the
Collateral.  Debtor agrees to pay to Secured Party upon demand all sums incurred
or paid for any of said  purposes  with interest from the date on which the same
were  incurred  to the date of  payment  at the rate of 18  percent  per  annum.
Payment thereof is secured by the Collateral.

              2.19  Proceeds  Account.  Upon  default  as  hereinafter  defined,
Debtor,   forthwith,  upon  receipt  of  all  checks,  drafts,  cash  and  other
remittances (hereinafter called proceeds) in part or full payment for any of the
Collateral,  will deposit the proceeds in a cash collateral account as specified
by  Secured  Party,  over  which the  Secured  Party  alone  shall have power of
withdrawal.  Pending such  deposit,  the Debtor shall not commingle any proceeds
with any other  funds or property  of the  Debtor,  but shall hold the  proceeds
separate and apart  therefrom  and upon an express  trust for the Secured  Party
until deposited in the cash collateral account. Credit for proceeds deposited in
the cash  collateral  account  shall be  conditional  upon final  payment of the
deposited item. Once a month, the Secured Party will apply the whole or any part
of the collected  funds on deposit in the cash  collateral  account  against the
principal or interest of the notes and the other  charges  specified,  the order
and method of such application to be in the discretion of the Secured Party. Any
part of the cash  collateral  account  which the Secured  Party elects not to so
apply may be paid over by the Secured Party to the Debtor.

         3.  General Provisions.

              3.1 The obligations  which this Security  Agreement secures may be
evidenced by separate  instruments which may be negotiated,  extended or renewed
by Secured Party without  releasing  Debtor,  the Collateral or any guarantor or
comaker.

              3.2 All of the terms of this  Security  Agreement  and the rights,
remedies  and duties of the parties  hereto shall be governed by the laws of the
State of Oregon or other  applicable  laws.  If any  provision of this  Security
Agreement  is in conflict  with the law of any state  having  jurisdiction,  the
remaining  parts hereof shall be  effective  as if such  provision  had not been
made.

              3.3 If any  interest of Debtor in any of the  Collateral  shall be
transferred or if any indebtedness hereby secured shall be assigned,  the terms,
covenants and  conditions  hereof shall be binding upon and inure to the benefit
of the successors in interest of the parties hereto.

Page 5--SECURITY AGREEMENT
<PAGE>

              3.4 If there be more than one Debtor or a guarantor  or comaker or
more than one  guarantor or comaker,  the liability of all such parties shall be
primary and joint and several.

              3.5 If Secured  Party  shall,  once or often,  extend the time for
paying any indebtedness hereby secured or fail promptly to exercise any right or
remedy it may have for any default hereunder or breach or violation hereof, such
indulgence  or  forebearance  shall not be deemed a waiver of strict  and prompt
performance  by  Debtor of all the terms  and  conditions  hereof  and shall not
preclude Secured Party from thereafter,  without notice, exercising any right or
remedy for any  subsequent  breach or default in  performance of the same or any
other  provision  hereof or for any other breach or  violation of this  Security
Agreement.

              3.6 If any notice is given to Secured Party,  it shall be given by
registered  or  certified  mail  directed  to Secured  Party at the place  where
indebtedness  hereby secured is payable. If any notice is to be given to Debtor,
mailing by  registered  or certified  mail to the address  stated above shall be
sufficient  unless  Secured  Party shall have  received  from  Debtor  notice in
writing of a change of address. Reasonable notice, when such notice is required,
shall be deemed to be five (5) days notice.

              3.7 Debtor will  promptly  notify  Secured Party in writing of any
change in  Debtor's  business  or  residence  address  and agrees to execute any
additional financing statements as Secured Party shall require.

         4. Negative  Covenants.  Without Secured Party's prior written consent,
until all obligations are fully paid,  performed and satisfied and this Security
Agreement is terminated, Debtor covenants that Debtor shall not:

              4.1  merge  or  consolidate  with  or  acquire  any  other  party,
partnership, joint venture or corporation, hereinafter designated "Person"

              4.2  other than in the ordinary course of Debtor's business,  make
any investment in the securities of any Person;

              4.3  declare or pay cash or stock  dividends  upon any of Debtor's
stock or make any  distributions  of  Debtor's  property  or  assets or make any
loans,  advances  and/or  extensions  of  credit  to,  or  investments  in,  any
Person(s),  including, without limitation, any of Debtor's affiliates,  officers
or employees;

              4.4  redeem, retire,  purchase or otherwise  acquire,  directly or
indirectly,  any of  Debtor's  capital  stock,  or make any  material  change in
Debtor's capital structure or in any of Debtor's business  objectives,  purposes
and  operations  which might in any way  adversely  affect the  repayment of the
obligations; and

Page 6--SECURITY AGREEMENT
<PAGE>

              4.5  enter into any transaction  which  materially  and  adversely
affects the Collateral or Debtor's  ability to repay and satisfy its obligations
hereunder.

         5. Default.  Debtor shall be in default  under this Security  Agreement
upon the happening of any of the following events or conditions:

              5.1 If Debtor shall fail to pay, when due, any  obligation  within
five (5) days after the same  becomes due  (whether at the stated  maturity,  by
acceleration or otherwise) of any indebtedness owing by Debtor to Secured Party.

              5.2 If  Debtor  shall  fail to  perform  promptly  at the time and
strictly in the manner provided by any covenant,  representation  or warranty of
Debtor  contained  in this or any other  agreement  between  Debtor and  Secured
Party.

              5.3  If any warranty, representation,  covenant or statement made
by  Debtor  to  Secured  Party in this or any  other  agreement  is false in any
material respect.

              5.4  If  there  shall  be any  loss,  theft,  substantial  damage,
destruction,  sale or encumbrance to or of any of the Collateral,  or the making
of any levy, seizure or attachment thereof or thereon.

              5.5  If there  shall be any  death,  dissolution,  termination  of
existence,  insolvency,  business failure, appointment of a receiver of any part
of the property of,  assignment for the benefit of creditors by, or commencement
of any proceeding  under any  bankruptcy or insolvency  law, as now or hereafter
constituted, by or against Debtor or any guarantor or surety of Debtor.

              5.6  If Debtor fails to maintain a marketable inventory at cost of
------.--, during  the  term of  Debtor's  indebtedness  to the  Secured  Party,
at ----------, --------, --------- County, Oregon.

           5.7 If Secured Party deems or has reasonable  cause to deem itself
insecure.

         6.  Remedies.

              6.1  Upon an event of default,  as specified in subparagraphs 5.1
through 5.7, and at any time  thereafter,  Secured  Party may,  without  notice,
declare any and all promissory notes immediately due and payable,  together with
all other amounts owing under this or any other  agreement by and between Debtor
and Secured Party  without  demand,  protest or other  nature,  all of which are
expressly waived.

              6.2 If an event of default shall occur and be continuing,  Secured
Party may exercise,  in addition to all other rights and remedies  granted to it
in this Security  Agreement and in any other  instrument or agreement  securing,

Page 7--SECURITY AGREEMENT
<PAGE>

evidencing  or relating to the  obligations,  all rights and remedies of secured
parties under the Uniform  Commercial Code of Oregon.  Debtor agrees that in any
such  event,  Secured  Party  without  demand of  performance  or other  demand,
advertisement  or notice of any kind (except the notice  specified below of time
and place of public or private  sale) to or upon Debtor or any other person (all
and each of which demands,  advertisements  and/or notices are hereby  expressly
waived),  may  forthwith  collect,  receive,  appropriate  and realize  upon the
Collateral,  or any part thereof, and/or may forthwith sell, lease, assign, give
option or options to purchase or otherwise dispose of and deliver the Collateral
(or contract to do so), or any part thereof, in one or more parcels at public or
private sale or sales,  at any of Secured  Party's offices or else where at such
prices as it may deem best, for cash or on credit or for future delivery without
assumption of any credit risk.  Secured Party shall have the right upon any such
public sale or sales, and, to the extent permitted by law, upon any such private
sale or sales, to purchase the whole or any part of the Collateral so sold, free
of any right or equity of redemption in Debtor,  which right or equity is hereby
expressly  released.  Debtor further  agrees,  at Secured  Party's  request,  to
assemble the  Collateral,  make it  available  to Secured  Party at places which
Secured  Party  shall  reasonably  select,   whether  at  Debtor's  premises  or
elsewhere.  Secured  Party shall apply the net proceeds of any such  collection,
recovery,  receipt,  appropriation,  realization  or sale (after  deducting  all
reasonable  costs and expenses of every kind  incurred  therein or incidental to
the care, safekeeping or otherwise of any or all of the Collateral or in any way
relating to the rights of Secured Party hereunder,  including attorneys fees and
legal expenses) to the payment in whole or in part of the  obligations,  in such
order as Secured  Party may elect and only after so applying  such net  proceeds
and after the  payment  by Secured  Party of any other  amount  required  by any
provision of law, need Secured Party account for the surplus, if any, to Debtor.
To the extent  permitted by applicable law,  Debtor waives all claims,  damages,
and demands against Secured Party arising out of the repossession,  retention or
sale of the  Collateral.  Debtor  agrees that no more than ten (10) days' notice
(which  notification  shall  be  deemed  given  when  mailed,  postage  prepaid,
addressed to Debtor at its address set forth in subparagraph  7.2 hereof) of the
time and place of any public sale or of the time after which a private  sale may
take place and that such  notice is  reasonable  notification  of such  matters.
Debtor  shall  be  liable  for any  deficiency  if the  proceeds  of any sale or
disposition  of the  Collateral  are  insufficient  to pay all  amounts to which
Secured Party is entitled.

              6.3  Debtor  agrees  to pay  all  expenses,  including  reasonable
attorneys fees, incurred by Secured Party in taking, holding, preparing for sale
and selling any of the Collateral,  as well as attorneys fees and court costs in
such amount as shall be adjudged  reasonable for services in the trial court and
for services in any appellate court in any suit or action to require performance
or for the breach of this Security  Agreement or upon any promissory note hereby
secured.

              6.4 In any suit or action to require performance or for the breach
of this  Security  Agreement the court may,  upon  application  of plaintiff and
without  regard to the condition of the property or the adequacy of the security

Page 8--SECURITY AGREEMENT
<PAGE>

for the indebtedness hereby secured and without notice to Debtor or to any other
party,  appoint a receiver to take  possession and care of all of the Collateral
and to collect and receive any and all proceeds and  receivables  arising out of
or generated by the collection  which had heretofore  arisen or accrued or which
may arise or accrue  during the  pendency  of such suit or action,  and that any
amounts so received shall be applied toward payment of the  indebtedness  hereby
secured,  after  first  paying  therefrom  the  charges  and  expenses  of  such
receivership.

         7.  Miscellaneous.

              7.1  No Waiver;  Cumulative  Remedies.  No failure or delay on the
part of the Secured Party in exercising  any right,  remedy,  power or privilege
hereunder  or under the note shall  operate as a waiver  thereof,  nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder or
thereunder preclude any other or further exercise thereof or the exercise of any
other right,  remedy,  power or  privilege.  No right or remedy in this Security
Agreement  is  intended  to be  exclusive  but each shall be  cumulative  and in
addition  to any other  remedy  referred  to herein or  otherwise  available  to
Secured Party at law or in equity;  and the exercise by Secured Party of any one
or more of such remedies shall not preclude the  simultaneous  or later exercise
by Secured Party of any or all such other remedies.  To the extent  permitted by
law, Debtor waives any rights now or hereafter  conferred by statue or otherwise
which  limit or modify  any of Secured  Party's  rights or  remedies  under this
Security Agreement.


              7.2  Notices.  All  notices,  requests and demands to or upon any
part hereto  shall be deemed to have been duly given or made when  delivered  or
when deposited in the United States mail, first class postage prepaid, addressed
to  such  party  as  follows,  or to  such  other  address  as may be  hereafter
designated in writing by such party to the other party hereto:

              Debtor:                                                    
                                      -----------------------------------
                                      DBA
                                          -------------------------------
                                      -----------------------------------
                                      -----------------------------------


              Secured Party:          UNITED GROCERS, INC.
                                      P. O. Box 22187
                                      Portland, OR 97269

              

              7.3   Survival   of    Representations    and   Warranties.    All
representations and warranties made in this Security Agreement shall survive the
execution  and delivery of this  Security  Agreement  and the making of the loan
hereunder.

              7.4  Amendments; Waivers. No provision of this Security Agreement,
the note or any related  agreements,  may be amended or modified in any way, nor
may noncompliance  therewith be waived,  except pursuant to a written instrument
executed by Secured Party and Debtor.

Page 9--SECURITY AGREEMENT
<PAGE>

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

              7.6  Headings. The headings of the paragraphs and subparagraphs 
are for convenience only, are not part of this Security  Agreement and shall not
be deemed to affect the meaning or construction of any of the provisions hereof.

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

              7.8  Merger Clause.  This  Security  Agreement  contains the full,
final and  exclusive  statement of the  agreement  relating to the  transactions
hereby contemplated.

              7.9  Construction. Any provision of this Security  Agreement which
is  prohibited  or  unenforceable   in  any  jurisdiction   shall,  as  to  such
jurisdiction,   be   ineffective   to  the   extent  of  such   prohibition   of
unenforceability  without  invalidating the remaining provisions hereof, and any
such   prohibition   or   unenforceability   shall  not   invalidate  or  render
unenforceable such provision in any other jurisdiction.  To the extent permitted
by law,  Debtor  hereby  waives any provision of law which renders any provision
hereby prohibited or unenforceable in any respect.  This Security  Agreement and
the note shall be governed by, and construed and interpreted in accordance with,
the laws of the State of Oregon.

              7.10 Jurisdiction.  Debtor hereby irrevocably  consents and agrees
that any legal  action,  suit,  or  proceeding  arising  out of or in any way in
connection  with this  Security  Agreement,  may be instituted or brought in the
courts of the State of Oregon, in the County of Multnomah.

              7.11 Purchase Requirements.  Debtor agrees to maintain or cause to
be maintained  the  membership of the store in good standing with United Grocers
in accordance with the Bylaws of United Grocers, Inc., as long as this Agreement
remains in effect.

              7.12 Debtor   acknowledges   and   agrees    that  as  a  material
consideration  and condition  precedent to UG's  extension of credit  hereunder,
Debtor  covenants  and agrees to purchase  goods and  merchandise  from UG for a
period of five (5) years.  Debtor agrees that the weekly purchases from UG shall
be in accordance  with UG credit terms and that the weekly purchase of goods and
merchandise  shall not be less than 55 percent of Debtor's  retail  weekly sales
volume of all goods and merchandise  sold on or from the store(s)'  premises and
UG will supply all of Debtor's  requirements at such prices and on 

Page 10--SECURITY AGREEMENT
<PAGE>

such  terms  asare  reasonably  comparable  to  those  offered  by UG  to  other
purchasers of like kind and like  quantities  carrying on businesses  similar to
that of the Debtor.  If, at any time, the Debtor contends that UG is not able to
supply   particular   goods  or  merchandise   customarily   stocked  by  retail
supermarkets, or that terms offered by UG are not reasonably comparable to those
offered by UG to other purchasers described above, the Debtor shall so advise UG
in writing,  specifying such contention with  particularity.  If, within 20 days
after receipt of such notice,  UG does not offer to supply goods or  merchandise
so specified or does not advise Debtor that the terms and conditions offered are
reasonably comparable to those offered to such other purchasers, Debtor shall be
free to secure such  specified  goods and  merchandise  from any source which it
desires.  If UG asserts  that it is  offering  reasonably  comparable  terms and
Debtor  nonetheless  purchases  from another  source,  such  purchase,  if above
percentage  requirements are not complied with, shall be a default. In the event
of a breach of this  purchase  covenant,  Debtor agrees to pay UG, as liquidated
damages, and not as a penalty or forfeiture, a sum computed as follows:

              (a) The average weekly purchases from the date of the agreement to
the date of the breach shall be determined;

              (b) The  average  weekly  purchases  so  determined  shall then be
multiplied  by the number of weeks from the date of the breach to the end of the
term of the purchase agreement; and

              (c) The computed sum shall be  multiplied  by one and  one-quarter
percent (1 1/4%) to determine the liquidated  damages due and owing UG by reason
of Debtor's default.  Said sum shall become  immediately due and owing within 15
days from date of written  notice of the  liquidated  damage.  Debtor's  default
hereunder shall also be a default under the Security Agreement.

         IN WITNESS  WHEREOF,  the parties  hereto  have  caused  this  Security
Agreement to be duly executed and delivered by their proper and duly  authorized
officers as of the day and year first above written.

         DEBTOR:
                                    ------------------------------------
                                    DBA
                                        --------------------------------
                                    By
                                       ---------------------------------
                                           , President

                                    By
                                       ---------------------------------
                                           , Secretary


                                    INDIVIDUALLY:

 
                                    ------------------------------------

                                    ------------------------------------

         SECURED PARTY:             UNITED GROCERS, INC.

                                    By
                                      ----------------------------------
                                      G. P. Fleming
                                      Assistant Secretary

Page 11--SECURITY AGREEMENT