<PAGE>
                                                                    Exhbit 10.57

                      ACCELERATION AND EXCHANGE AGREEMENT


     This ACCELERATION AND EXCHANGE AGREEMENT is made as of the 5th day of 
June, 1997 (this "Agreement"), among THE GRAND UNION COMPANY, a Delaware 
corporation (the "Company"), TREFOIL CAPITAL INVESTORS II, L.P., a Delaware 
limited partnership ("Trefoil"), and GE Investment Private Placement Partners 
II, A Limited 

<PAGE>

Partnership, a Delaware limited partnership ("GEI") (GEI together with 
Trefoil, the "Purchasers").

                               WITNESSETH:

     WHEREAS, pursuant to a Stock Purchase Agreement, dated as of July 30, 
1996, as amended by Amendment No. 1 thereto dated as of March 20, 1997, among 
the Company and the Purchasers (as so amended, the "Purchase Agreement"), the 
Company has agreed to sell to the Purchasers, and the Purchasers have agreed 
to purchase from the Company, 2,000,000 shares of the Company's Class A 
Convertible Preferred Stock, par value $1.00 per share, issuable in 
denominations of $50 stated value per share (the "Class A Preferred Shares");

     WHEREAS, the Company and the Purchasers desire, on the terms and subject 
to the conditions set forth herein, to accelerate the Fourth Closing and the 
Fifth Closing (as such terms are defined in the Purchase Agreement); and

     WHEREAS, in order to induce the Purchasers to accelerate the Fourth 
Closing and the Fifth Closing, the Company and the Purchasers have agreed to 
certain other arrangements set forth herein;

     NOW, THEREFORE, in consideration of the premises, obligations and 
agreements contained herein, and for other good 

<PAGE>

and valuable consideration, the receipt and sufficiency of which are hereby 
acknowledged, and subject to and on the terms and conditions herein set 
forth, the parties hereto agree as follows:

                                 ARTICLE 1

                     ACCELERATION AND EXCHANGE; CLOSINGS

     Section 1.1    Definitions.  Certain capitalized terms used in this 
Agreement have the meanings set forth, or referred to, in Sections 8.1 and 
8.2 hereof.

     Section 1.2    Purchase and Sale of Class A Preferred Shares.  On the 
terms and subject to the conditions set forth herein, the purchase and sale 
of the 800,000 Class A Preferred Shares to have occurred pursuant to the 
Purchase Agreement at the Fourth Closing and the Fifth Closing (the 
"Accelerated Shares") shall be accelerated, as contemplated pursuant to 
Section 5.15(b)(1) of the Purchase Agreement.  At the Class A Closing (as 
hereinafter defined), the Company shall, in accordance with and pursuant to 
the Purchase Agreement, sell, assign, transfer, convey and deliver to each of 
the Purchasers, and each of the Purchasers shall purchase, acquire and 
accept, one-half of the Accelerated Shares.  At the Class A Closing, the 
Company shall deliver to the Purchasers, against payment therefor as provided 
herein, certificates representing the Accelerated Shares, in such 
denominations as shall be requested by the Purchasers no less than one 
Business Day prior to the Class A Closing Date.

<PAGE>

     Section 1.3    Purchase Price for Shares. The Purchase Price (as defined 
in the Purchase Agreement) shall be paid to the Company at the Class A 
Closing, against receipt of the Accelerated Shares, by wire transfer of 
immediately available funds to an account designated by the Company in 
writing at least two (2) days prior to the Class A Closing Date.

     Section 1.4    Other Deliveries.  At the Class A Closing, the parties 
shall deliver executed copies of the other documents and instruments required 
by Article 5 and such other documents and instruments as shall be reasonably 
requested by any of the parties hereto.

     Section 1.5.   The Exchange.  On the terms and subject to the conditions 
set forth in this Agreement, at the Exchange Closing (as hereinafter defined):

          (a)  the Company shall issue and deliver to each of the Purchasers 
four hundred thousand (400,000) Class B Preferred Shares.  The Company shall 
deliver to the Purchasers certificates representing the Class B Preferred 
Shares to which the Purchasers are entitled in accordance with this Section, 
in such denominations as shall be requested by the Purchasers no less than 
one Business Day prior to the Exchange Closing Date; and

          (b)  following delivery by the Company of certificates 

<PAGE>

representing the number of shares of Class B Preferred Shares to which the 
Purchasers are entitled pursuant to clause (a) of this Section, each of the 
Purchasers shall assign, transfer, and convey to the Company the four hundred 
thousand (400,000) Class A Preferred Shares acquired at the Class A Closing.  
The Purchasers shall deliver at the Closing certificates representing such 
shares, duly endorsed in blank or accompanied by stock powers duly endorsed 
in blank.

The transactions contemplated by this Section are referred to herein as the 
"Exchange."

     Section 1.6    Consummation of the Sale of the Accelerated Shares and 
the Exchange.  The sale of the Accelerated Shares (the "Class A Closing") 
will be consummated at the offices of Davis Polk & Wardwell, 450 Lexington 
Avenue, New York, New York, on June 16, 1997, or such other date prior to 
July 1, 1997 as the parties hereto shall mutually agree (the "Class A Closing 
Date"), unless this Agreement has been earlier terminated in accordance with 
its terms.  The Exchange (the "Exchange Closing") will be consummated at the 
same place as the Class A Closing, commencing immediately following the 
completion of the Class A Closing on the Class A Closing Date (the "Exchange 
Closing Date").

     Section 1.7.   The Reset Closing.  On the Reset Date (as defined in the 
Certificate of Designation):

<PAGE>

          (a)  The Company shall issue to each of the Purchasers (the "Reset 
Shares") a number of shares of the Company's Common Stock, par value $1.00 
per share (the "Common Stock") equal to one half of the aggregate number of 
Reset Shares, determined in accordance with the following formula, rounded, 
in the case of a fractional result, to the nearest whole share:

          Aggregate
          Number of       =    RCP - $1.50      X      2,000,000 shares
                    ----------------         
          Reset Shares       $3.25 - $1.50             of Common Stock

where "RCP" means the Conversion Price of the Class B Preferred Shares on the 
Reset Date.

          (b)  The delivery of the Reset Shares (the "Reset Closing") will be 
consummated at the offices of Davis Polk & Wardwell, 450 Lexington Avenue, 
New York, New York, on the Reset Date (the "Reset Closing Date").  At the 
Reset Closing, the Company shall deliver to the Purchasers certificates 
representing the Reset Shares to which the Purchasers are entitled in 
accordance with this Section, in such denominations as shall be requested by 
the Purchasers no less than one Business Day prior to the Reset Date.

                                   ARTICLE 2           

               REPRESENTATIONS AND WARRANTIES OF THE COMPANY

<PAGE>

     Section 2.1.   Organization and Qualification; Subsidiaries. The Company 
is a corporation duly organized, validly existing and in good standing under 
the laws of the State of Delaware.  Each of the Company's subsidiaries is a 
corporation duly organized, validly existing and in good standing under the 
laws of the jurisdiction of its incorporation.

     Section 2.2.   Certificate of Incorporation and By-Laws. The Company's 
Certificate of Incorporation and By-Laws as most recently restated and 
subsequently amended to date are in full force and effect.  The Company is 
not in violation of any of the provisions of its Certificate of Incorporation 
or By-Laws.

     Section 2.3.   Capitalization.
     
          (a)  On or prior to the Exchange Closing Date, the Certificate of 
Designation will have been duly adopted and filed with the Secretary of State 
of Delaware.  The Class B Preferred Shares when issued on the Exchange 
Closing Date will be validly issued, fully paid and nonassessable.
     
          (b)  On or prior to the Exchange Closing Date (i) the number of 
shares of Common Stock equal to the number of such shares issuable upon the 
conversion of all Class A Preferred Shares and Class B Preferred Shares (the 
"Conversion Shares"), subject to paragraph (c) of this Section 2.3, shall 
have been 

<PAGE>

reserved for issuance upon such conversion and (ii) 2,000,000 shares of 
Common Stock shall have been reserved for issuance pursuant to Section 1.7 
hereof.  All shares of Common Stock, including the Conversion Shares and the 
Reset Shares, subject to issuance as aforesaid, upon issuance on the terms 
and conditions specified in the instruments pursuant to which they are 
issuable, will be duly authorized, subject to paragraph (c) of this Section 
2.3, validly issued, fully paid and nonassessable.

          (c)  The representations set forth in paragraph (b) of this Section 
2.3 assume that if the total number of Common Shares reserved for issuance or 
issued as (i) Reset Shares, plus (ii) Conversion Shares (including Conversion 
Shares in respect of additional shares of Class A Preferred Shares and Class 
B Preferred Shares paid as dividends on the Class A Preferred Shares and 
Class B Preferred Shares), plus (iii) shares of Common Stock paid as 
dividends on the Class A Preferred Shares and Class B Preferred Shares, plus 
(iv) 900,000 shares of Common Stock issued or to be issued upon exercise of 
certain warrants pursuant to the Warrant Agreement, dated as of June 15, 
1995, between the Company and American Stock Transfer & Trust Company, plus 
(v) 1,000,000 shares of Common Stock issued or to be issued upon exercise of 
options granted under the Company's 1995 Equity Incentive Option Plan or the 
Company's 1995 Non-Employee Directors' Stock Option Plan, shall exceed 
50,000,000 (plus any shares of Common Stock reacquired by the Company and 
canceled), then the Company shall use its best efforts to cause an amendment 

<PAGE>

to the Company's Certificate of Incorporation, increasing the number of 
authorized shares of authorized Common Stock pursuant to its Certificate of 
Incorporation at least to the extent of such excess, to be properly 
authorized, approved, adopted, filed, and made effective.

     Section 2.4.   Authority Relative to this Agreement.  The Company has 
all necessary corporate power and authority to execute and deliver this 
Agreement, the Certificate of Designation, and the Registration Rights 
Amendment (collectively, the "Transaction Documents") and to perform its 
obligations hereunder and thereunder and to consummate the transactions 
contemplated hereby and thereby.  The execution and delivery of each of the 
Transaction Documents by the Company and the consummation by the Company of 
the transactions contemplated thereby have been duly and validly authorized 
by all necessary corporate action, and no other corporate proceedings on the 
part of the Company are necessary to authorize the Transaction Documents or 
to consummate the transactions so contemplated, other than as contemplated by 
Section 4.1.  The Special Committee (the "Special Committee") of the Board of 
Directors (all of such committee members being Disinterested Directors) and 
the Board of Directors of the Company have each determined that it is 
advisable and in the best interest of the holders of the Company's Common 
Stock for the Company to consummate the transactions contemplated by this 
Agreement upon the terms and subject to the conditions herein.  Each of this 
Agreement and 

<PAGE>

each of the other Transaction Documents has been duly and validly executed 
and delivered by the Company and, assuming the due authorization, execution 
and delivery by the Purchasers, constitutes a legal, valid and binding 
obligation of the Company enforceable against the Company in accordance with 
its terms, except that (i) such enforcement may be subject to bankruptcy, 
insolvency, reorganization, moratorium or other similar laws now or hereafter 
in effect relating to creditors' rights, and (ii) the remedy of specific 
performance and injunctive and other forms of equitable relief may be subject 
to equitable defenses and to the discretion of the court before which any 
proceeding therefor may be brought.

     Section 2.5.   No Conflict; Required Filings and Consents.

     (a)  The execution and delivery of the Transaction Documents by the 
Company do not, and the performance of the Transaction Documents by the 
Company and the consummation of the transactions contemplated hereby and 
thereby will not: (i) conflict with or violate the Certificate of 
Incorporation or By-Laws of the Company; (ii) conflict with or violate any 
federal, foreign, state or provincial law, rule, regulation, order, judgment 
or decree (collectively, "Laws") applicable to the Company or any of its 
subsidiaries or by which its or any of their respective properties are bound 
or affected; (iii) result in any breach of or constitute a default (or an 
event that with notice or lapse of time or both would become a default 
under), or impair the 

<PAGE>

Company's or any of its subsidiaries' rights or alter the rights or 
obligations of any third party under, or give to others any rights of 
termination, amendment, acceleration or cancellation of, or result in the 
creation of a Lien on any of the properties or assets of the Company or any 
of its subsidiaries pursuant to, (x) any note, bond, mortgage, indenture, 
real property lease or other material lease, or (y) any material contract, 
agreement, license, permit, franchise or other instrument or obligation, to 
which the Company or any of its subsidiaries is a party or by which the 
Company or any of its subsidiaries or its or any of their respective 
properties are bound or affected or (iv) assuming compliance with Sections 
4.4 and 4.5 hereof, conflict with or violate the Company's obligations under 
Rule 4460(i) of the NASDAQ Stock Market Rules (the "NASDAQ Rules") of the 
NASDAQ Stock Market (the "NASDAQ") or otherwise require the vote or consent 
of the holders of the Company's Common Stock, except as required by Section 
3(a) of the Certificate of Designation.

     (b)  The execution and delivery of the Transaction Documents by the 
Company does not, and the performance of the Transaction Documents by the 
Company will not, require any consent, approval, authorization or permit of, 
or filing with or notification to, any federal, foreign, state or provincial 
governmental or regulatory authority except (i) for applicable requirements, 
if any, of the Securities Act, the Exchange Act, and Blue Sky Laws, (ii) as 
contemplated by Section 4.2, and (iii) for any consent, approval, 
authorization or permit of, or filing with or 

<PAGE>

notification to, any other federal, foreign, state or provincial governmental 
or regulatory authority which will be obtained, filed or provided, as the 
case may be, prior to the Exchange Closing.

     Section 2.6.   Absence of Litigation.  There are no claims, actions, 
suits, proceedings or investigations pending or, to the knowledge of the 
Company, threatened against the Company before any federal, foreign, state or 
provincial court, arbitrator or administrative, governmental or regulatory 
authority or body relating to this Agreement or the transactions contemplated 
by the Transaction Documents or the Purchase Agreement.

     Section 2.7.   Opinion of Financial Advisor.  The Special Committee has 
received from its financial advisor, Donaldson, Lufkin & Jenrette Securities 
Corporation ("DLJ"), its written opinion (the "Fairness Opinion"), in the 
form previously delivered to the Purchasers.

     Section 2.8.   Brokers.  Except for fees payable to DLJ pursuant to the 
terms of that certain engagement letter dated May 22, 1997, between the 
Company and DLJ, a true and complete copy of which has been provided to the 
Purchasers prior to the date hereof, no broker, finder or investment banker 
is entitled to any brokerage, finder's or other fee or commission in 
connection with the transactions contemplated by this Agreement based upon 
arrangements made by or on behalf of the Company or its 

<PAGE>

subsidiaries or affiliates, whether pursuant to the letter dated January 17, 
1996 between DLJ and the Company, in the form filed as Exhibit 10.28 to the 
Company's annual report on Form 10-K for the fiscal year ended March 30, 1996 
(the "DLJ Engagement Letter") or otherwise.  The Company has obtained from 
DLJ an executed DLJ Waiver Letter and has delivered a true and complete copy 
thereof to the Purchasers.

     Section 2.9.   Securities Laws.  Assuming that the Purchasers' 
representations and warranties contained in Section 3 hereof are, and 
continue to be at each Closing hereunder, true and correct, the offer, 
issuance and sale of the Accelerated Shares, the Class B Preferred Shares, 
and the Reset Shares is, and will be as of each Closing hereunder, exempt 
from the registration and prospectus delivery requirements of the Securities 
Act, and have been registered or qualified (or are exempt from registration 
and qualification) under the registration, permit or qualification 
requirements of all applicable Blue Sky Laws.

     Section 2.10.  NASDAQ Approval.  Prior to the date hereof, the Company 
has prepared and filed with the NASDAQ a request for confirmation that the 
Company may consummate the Closings without approval by the Company's 
stockholders at a meeting without violating the NASDAQ Rules, except as 
required by Section 3(a) of the Certificate of Designation.

<PAGE>

                                   ARTICLE 3         

              REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS

     Each of the Purchasers severally represents and warrants to the Company 
that:

     Section 3.1.   Organization.  Such Purchaser is duly organized, validly 
existing and in good standing under the laws of the jurisdiction of its 
organization.

     Section 3.2.   Due Authorization.  Such Purchaser has all right, power 
and authority to enter into the Transaction Documents to which it is a party 
and to consummate the transactions contemplated hereby and thereby.  The 
execution and delivery of the Transaction Documents to which it is a party by 
such Purchaser and the consummation by such Purchaser of the transactions 
contemplated hereby have been duly authorized by all necessary action on 
behalf of such Purchaser.  The Transaction Documents to which it is a party 
have been duly executed and delivered by such Purchaser and, assuming the due 
authorization, execution and delivery by the other parties thereto, 
constitutes the valid and binding agreement of such Purchaser enforceable in 
accordance with their respective terms, except that (i) such enforcement may 
be subject to bankruptcy, insolvency, reorganization, moratorium or other 
similar laws now or hereafter in effect relating to creditors' rights, and 
(ii) the remedy of 

<PAGE>

specific performance and injunctive and other forms of equitable relief may 
be subject to equitable defenses and to the discretion of the court before 
which any proceeding therefor may be brought.

     Section 3.3.   Acquisition for Investment; Source of Funds. Such 
Purchaser is acquiring the Shares for its own account for the purpose of 
investment and not with a view to or for sale in connection with any 
distribution thereof, and such Purchaser has no present intention or plan to 
effect any distribution of Shares other than in an offering registered under 
the Securities Act or a disposition exempt from registration under the 
Securities Act.

     Section 3.4.   Brokers or Finders.  No agent, broker, investment banker 
or other firm or Person acting on behalf of such Purchaser, including any of 
the foregoing that is an affiliate of such Purchaser, is or will be entitled 
to receive any broker's or finder's fee or any other commission or similar 
fee in connection with any of the transactions contemplated by this 
Agreement, except for the fees to be paid to Shamrock Capital Advisors, Inc. 
("SCA") pursuant to the Management Agreement.

     Section 3.5.   Accredited Investor.  Such Purchaser is an "accredited 
investor" within the meaning of Rule 501(a) under the Securities Act.

                                ARTICLE 4

<PAGE>

                               COVENANTS

     Section 4.1.   Consent of Banks.  The Company shall use its reasonable 
efforts to promptly obtain from Bankers Trust Company, as Agent for the banks 
party to the Company Credit Agreement, a consent of the Required Banks (as 
defined in the Company Credit Agreement) to the transactions contemplated 
hereby and a waiver of any defaults or required prepayments under the Company 
Credit Agreement caused hereby; provided, however, no payment or 
accommodation shall be made by the Company in connection with obtaining the 
foregoing without the Purchasers' consent.
                                
     Section 4.2.   Certificate of Designation.  The Company shall, prior to 
the Class A Closing, cause the Certificate of Designation to be filed with 
the Secretary of State of Delaware.

     Section 4.3.   Issuances of Common Stock.  Prior to the Reset Date, the 
Company shall not (or set a record date in connection therewith) (i) pay a 
dividend or make a distribution on its Common Stock, (ii) subdivide or 
combine its Common Stock, (iii) issue shares of capital stock by 
reclassification of its Common Stock, (iv) issue rights, options or warrants 
to all holders of Common Stock entitling them to subscribe for or purchase 
Common Stock or any other securities of the Company, or (v) issue or 
distribute to all holders of its Common Stock any shares of its capital stock 
or securities convertible into capital stock or evidence of its indebtedness 
or assets.

<PAGE>

     Section 4.4.   Stockholder Notice . Upon delivery by the Purchasers to 
the Company of the Voting and Ratification Agreements described in Section 
4.5 hereof at the completion of the Class A Closing, the Company shall send 
to each of its stockholders a Stockholder Notice, in form and substance 
satisfactory to the Purchasers.

     Section 4.5.   Stockholder Approval.  Immediately following the Class A 
Closing, the Purchasers shall deliver to the Company, Voting and Ratification 
Agreements, substantially in the form of Exhibit G hereto, approving the 
transactions contemplated hereby.

     Section 4.6.   Company Action.  The Company shall take all corporate 
actions necessary to amend its Certificate of Incorporation to the extent 
required as contemplated by Section 2.3(c) hereof.

                                   ARTICLE 5

          CONDITIONS TO THE CLASS A CLOSING AND THE EXCHANGE CLOSING

     Section 5.1.   Conditions to Obligation of Each Party to Effect the 
Class A Closing and the Exchange Closing.  The respective obligations of each 
party to effect the Class A Closing and the Exchange Closing shall be subject 
to the satisfaction at or prior to the Class A Closing Date of the 

<PAGE>

following conditions, unless waived by the Purchasers:
     
          (a)  No Injunctions or Restraints; Illegality.  No temporary 
restraining order, preliminary or permanent injunction or other order issued 
by any court of competent jurisdiction or other legal restraint or 
prohibition preventing the consummation of the sale of the Accelerated 
Shares, the Exchange or the issuance of the Reset Shares shall be in effect, 
nor shall any proceeding brought by any administrative agency or commission 
or other governmental authority or instrumentality, domestic or foreign, 
seeking any of the foregoing be pending; and there shall not be any action 
taken, or any statute, rule, regulation or order enacted, entered, enforced 
or deemed applicable to the sale of the Accelerated Shares, the Exchange, or 
the issuance of the Reset Shares, which makes the consummation of the sale of 
the Accelerated Shares, the Exchange, or the issuance of the Reset Shares, 
illegal.
     
          (b)  Governmental Actions.  There shall not have been instituted, 
pending or threatened any action or proceeding (or any investigation or other 
inquiry that might result in such an action or proceeding) by any 
governmental authority or administrative agency before any governmental 
authority, administrative agency or court of competent jurisdiction, nor 
shall there be in effect any judgment, decree or order of any governmental 
authority, administrative agency or court of competent jurisdiction, in 
either case, seeking to prohibit or 

<PAGE>

limit the Purchaser from exercising all material rights and privileges 
pertaining to its ownership of the Shares.

          (c)  NASDAQ Approval.  The Company shall have received written 
confirmation from NASDAQ that the Company may consummate the Closings without 
approval by the Company's stockholders at a meeting without violating the 
Company's obligations under the NASDAQ Rules, and all conditions to such 
written confirmation, if any, shall have been satisfied.

          (d)  Fairness Opinion.  The Fairness Opinion shall not have been 
modified, amended, revoked or rescinded, and shall be in full force and 
effect.

     Section 5.2.   Additional Conditions to Obligation of the Purchasers at 
the Class A Closing.  The obligations of the Purchasers to effect the Class A 
Closing are also subject to the following conditions, unless waived by the 
Purchasers:
     
          (a)  Representations and Warranties.  The representations and 
warranties of the Company shall have been true and correct when made in all 
respects and shall be true and correct in all respects at and as of the Class 
A Closing Date as if made at and as of such time, except for (i) changes not 
prohibited by this Agreement, or (ii) those representations and warranties 
which address matters only as of a particular date (which shall have been 
true and correct as of such date), and the 

<PAGE>

Purchasers shall have received a certificate to such effect signed by the 
President and the Chief Financial Officer of the Company.
     
          (b)  Agreements and Covenants.  The Company shall have
performed or complied in all material respects with all
agreements and covenants required by the Purchase Agreement, or
this Agreement to be performed or complied with by it at or prior
to the Class A Closing Date, and the Purchasers shall have
received a certificate to such effect signed on behalf of the
Company by the President and the Chief Financial Officer of the
Company.
     
          (c)  Consents Obtained.  All consents, waivers, approvals, 
authorizations or orders required to be obtained, and all filings required to 
be made, by the Company for the due authorization, execution and delivery of 
this Agreement and the consummation by it of the transactions contemplated 
hereby shall have been obtained and made by the Company, including without 
limitation the consent referred to in Section 4.1, except for consents 
required to be obtained under contracts not material to the operation of the 
business of the Company; the Company shall have obtained all required 
approvals and consents, and shall have delivered all required notices, of the 
transfer of ownership or control of the Company as contemplated by the 
Purchase Agreement, with respect to material licenses and permits held by the 
Company or any of its subsidiaries pursuant to any federal, state or 

<PAGE>

local laws governing the sale of alcoholic beverages, pharmaceutical 
products, and cigarettes.
     
          (d)  Opinion of Counsel.  The Purchasers shall have received a 
written opinion of each of Ropes & Gray and Davis Polk & Wardwell, in form 
and substance reasonably satisfactory to the Purchasers, substantially in the 
form of Exhibits B and C hereto, respectively.
     
          (e)  Blue Sky Laws.  The Company shall have received all permits 
and other authorizations necessary under the Blue Sky Laws to issue the 
Shares.
     
          (f)  DLJ Waiver.  The DLJ Waiver Letter shall be in full force and 
effect, and shall not have been amended, modified, revoked or rescinded.
     
          (g)  Stangeland Waiver.  The Stangeland Waiver shall be in full 
force and effect, and shall not have been amended, modified, revoked or 
rescinded.
     
          (h)  Registration Rights Amendment.  The Registration Rights 
Amendment shall be in full force and effect, and shall not have been amended, 
modified, revoked or rescinded.
     
          (i)  Delivery of Shares.  At the Class A Closing, the Company shall 
have delivered the Accelerated Shares against the 

<PAGE>

payment of the Purchase Price.
     
          (j)  Bankruptcy.  The Company shall not on the Class A Closing Date 
be a party to any bankruptcy, insolvency, or reorganization proceedings, 
whether voluntary or involuntary (other than the proceeding pursuant to the 
Reorganization Plan), the Reorganization Plan shall not have been amended, 
modified or rescinded, and shall be in full force and effect.

     Section 5.3.   Additional Conditions to Obligation of the Purchasers  at 
the Exchange Closing.  The obligation of the Purchasers to effect the 
Exchange at the Exchange Closing is also subject to the following condition:

          (a)  Delivery of Shares.  At the Exchange Closing, the Company 
shall have delivered the Class B Preferred Shares.
     
          (b)  Stockholder Notice.  Upon completion of the Class A Closing, 
the Company shall have mailed to its stockholders the Stockholder Notice 
described in Section 4.4 hereof.

     Section 5.4.   Additional Conditions to Obligation of the Company at the 
Exchange Closing.  The obligation of the Company to effect the Exchange at 
the Exchange Closing is also subject to the following conditions, unless 
waived by the Company:
     
          (a)  Representations and Warranties.  The

<PAGE>

representations and warranties of the Purchasers contained in this Agreement 
shall have been true and correct in all respects when made and shall be true 
and correct in all respects on and as of the Exchange Closing Date, except 
for (i) changes contemplated by this Agreement and (ii) those representations 
and warranties which address matters only as of a particular date (which 
shall have been true and correct in all material respects as of such date), 
with the same force and effect as if made on and as of the Closing Date, and 
the Company shall have received a certificate to such effect signed by the 
President and the Chief  Financial Officer of the general partner of each of 
the Purchasers.
     
          (b)  Agreements and Covenants.  The Purchasers shall have performed 
or complied in all material respects with all agreements and covenants 
required by the Purchase Agreement or this Agreement to be performed or 
complied with by them on or prior to the Closing Date, and the Company shall 
have received a certificate to such effect signed by the President and the 
Chief Financial Officer of the general partner of each of the Purchasers.
     
          (c)  Consents Obtained.  All consents, waivers, approvals, 
authorizations or orders required to be obtained, and all filings required to 
be made, by the Purchasers for the due authorization, execution and delivery 
of this Agreement and the consummation by it of the transactions contemplated 
hereby shall have been obtained and made by the Purchasers.

<PAGE>

          (d)  Delivery of Class A Preferred Shares.  After delivery to the 
Purchasers of the Class B Preferred Shares, the Purchasers shall have 
delivered the Class A Preferred Shares to be delivered by the Purchasers 
pursuant to Section 1.5 hereof.

                                 ARTICLE 6

                      TERMINATION; FEES AND EXPENSES

     Section 6.1.   Termination.  Subject to Section 6.2, this Agreement may 
be terminated at any time prior to the Class A Closing Date:
     
          (a)  by mutual written consent duly authorized by the Disinterested 
Directors and the Purchasers; or

          (b)  by either the Purchasers or the Disinterested Directors if the 
Class A Closing and Exchange Closing have not been consummated by June 30, 
1997 (provided that the right to terminate this Agreement under this Section 
6.1(b) shall not be available to any party whose failure to fulfill any 
obligation under the Purchase Agreement or this Agreement has been the cause 
of or resulted in the failure of the Class A Closing and Exchange Closing to 
occur on or before such date); or

          (c)  by either the Purchasers or the Company if a court of 
competent jurisdiction or governmental, regulatory or

<PAGE>

administrative agency or commission shall have issued a nonappealable final 
order, decree or ruling or taken any other action having the effect of 
permanently restraining, enjoining or otherwise prohibiting the transactions 
contemplated by this Agreement.

     Section 6.2.   Fees and Expenses.  All reasonable fees and expenses 
incurred in connection with this Agreement and the transactions contemplated 
hereby shall be paid by the Company, whether or not the sale of the 
Accelerated Shares and the Exchange is consummated; provided, however, that 
with respect to the Purchasers, such reasonable fees and expenses of legal 
counsel shall not exceed $400,000.  Notwithstanding anything to the contrary 
herein, this Section 6.2 shall survive any termination of this Agreement.

                                 ARTICLE 7

                           GENERAL PROVISIONS

     7.1. Effectiveness of Representations and Warranties.  The 
representations, warranties, and agreements of each party hereto in this 
Agreement and in any certificates delivered at or prior to any Closing 
hereunder shall survive indefinitely; provided, however, that all of such 
representations, warranties, and agreements shall terminate upon the 
termination of this agreement in accordance with Section 6.1 hereof except 
that the agreements set forth in Section 6.2 hereof shall survive such 
termination

<PAGE>

indefinitely.

     7.2. Captions.  The captions or headings in this Agreement are for 
convenience and reference only, and in no way define, describe, extend or 
limit the scope or intent of this Agreement.

     7.3  Restrictive Legends.  No restricted shares may be transferred 
without registration under the Securities Act and applicable state securities 
laws unless in the opinion of Davis Polk & Wardwell or other counsel to the 
Company such transfer may be effected without such registration.  Each 
certificate representing restricted shares of Class B Preferred Shares or 
Common Stock issued pursuant to this Agreement shall bear legends in 
substantially the following form:

     The securities represented by this certificate have not been registered 
     under the Securities Act of 1933 (the "Act") or the securities laws of 
     any state and may not be sold or otherwise disposed of except pursuant 
     to an effective registration statement under such Act and applicable 
     state securities laws or an applicable exemption to the registration 
     requirements of such Act or such laws.

     The securities represented by this certificate were issued pursuant to, 
     and the holder hereof is entitled to certain rights and subject to 
     certain obligations contained in, an Acceleration and Exchange 
     Agreement, dated as of June 5, 

<PAGE>

     1997, a copy of which is available for inspection at the principal 
     office of the issuer hereof, and will be furnished without charge to the 
     holder of such securities upon written request.
     
     7.4. Further Assurances.  The Purchasers and the Company
agree to take, or cause to be taken, all reasonable actions as
may be necessary to make effective and consummate the
transactions contemplated by this Agreement.

     7.5. Failure or Indulgence Not Waiver.  No failure or delay on the part 
of any party hereto in the exercise of any right hereunder shall impair such 
right or be construed to be a waiver of, or acquiescence in, any breach of 
any representation, warranty, or agreement herein, nor shall any single or 
partial exercise of any such right preclude any other or further exercise 
thereof or of any other right.

     7.6. Modification and Amendment.  This Agreement may not be changed, 
modified, discharged or amended, except by an instrument signed by all of the 
parties hereto.

     7.7. Successors and Assigns.  This Agreement shall be
binding upon and inure solely to the benefit of each of the
parties hereto.

     7.8. Entire Agreement.  The Purchase Agreement, the Exhibits

<PAGE>

and Schedules thereto, this Agreement and the Exhibits hereto, are intended 
by the parties as a final expression of their agreement and intended to be a 
complete and exclusive statement of the agreement and understanding of the 
parties hereto in respect of the subject matter contained herein and therein. 
There are no restrictions, premises, warranties or undertakings, other than 
those set forth or referred to in the Purchase Agreement or herein and the 
documents or instruments executed or delivered in connection therewith or 
herewith.  This Agreement supersedes all prior agreements and understandings 
between the parties with respect to the acceleration of the purchase of Class 
A Preferred Shares, the exchange of Class A Preferred Shares for Class B 
Preferred Shares and the issuance of the Reset Shares.

     7.9. Governing Law.  This Agreement shall be construed and enforced in 
accordance with the laws of the State of New York.

     7.10.     Counterparts.  This Agreement may be executed in counterparts, 
each of which shall be an original, but all of which together shall 
constitute one and the same instrument.

     7.11.     Notices.  All notices and other communications given or made 
pursuant to this Agreement shall be in writing and shall be deemed to have 
been duly given or made if and when delivered personally, or by overnight 
courier to the parties at the following addresses or sent by electronic 
transmission, with confirmation received, to the telecopy numbers specified 
below

<PAGE>

(or such other address or telecopy number for a party as shall be specified 
by like notice):

     (a)  If to the Purchasers:

          Trefoil Capital Investors II, L.P.
          c/o Shamrock Capital Advisors, Inc.
          4444 Lakeside Drive
          Burbank, CA  91505
          Attn: Stanley P. Gold, President
          Telecopier No.: (818) 845-9718
          Telephone No.: (818) 845-4444
          
          and
          
          GE Investment Private Placement Partners II, A Limited
          Partnership
          3003 Summer Street
          Stamford, CT 06905
          Attn: Michael Pastore
          Telecopier No.: (303) 326-4177
          Telephone No.: (303) 326-2300
          
     With copies to:
     
          Fried, Frank, Harris, Shriver & Jacobson
          350 South Grand Avenue, Suite 3200

<PAGE>

          Los Angeles, CA  90071
          Attn: David K. Robbins, Esq.
          Telecopier No.: (213) 473-2222
          Telephone No.: (213) 473-2005
          
          and
          
          Dewey Ballantine
          1301 Avenue of the Americas
          New York, NY 10019
          Attn: Sanford W. Morhouse, Esq.
          Telecopier No.: (212) 259-6333
          Telephone No.: (212) 259-8000

     (b) if to the Company,

          Chief Executive Officer
          The Grand Union Company
          201 Willowbrook Boulevard
          Wayne, NJ 07470-0966
          Telecopier No.:  (201) 890-6012
          Telephone No.:  (201) 890-6000
     
     With copies to:
     
          Davis Polk & Wardwell
          450 Lexington Avenue

<PAGE>

          New York, New York  10017
          Attn:  William L. Rosoff, Esq.
          Telecopier No.: (212) 450-4800
          Telephone No.: (212) 450-4000

     Section 7.12.  The Purchase Agreement.  The acceleration of the purchase 
and sale of the Class A Preferred Shares as contemplated herein shall for all 
purposes be deemed to be the purchase and sale of Class A Preferred Shares 
pursuant to the Purchase Agreement except that the Fourth and Fifth Closings 
have been accelerated.  For purposes of the indemnification provisions 
contained in Section 8.1 of the Purchase Agreement, in determining damages 
sustained by the Purchasers, such damages shall include any diminution in 
value of the Class B Preferred Shares arising with respect to a breach of a 
representation, warranty, covenant or agreement in the Purchase Agreement.

                                 ARTICLE 8
  
                           CERTAIN DEFINITIONS

     8.1. Definitions.   As used herein, unless the context otherwise 
requires, the following terms have the following respective meanings:

     "Business Day" means any day other than a Saturday, Sunday or any other 
day on which commercial banks are authorized to close in New York, New York.

<PAGE>

     "Certificate of Designation" means the Certificate of Designation of 
Class B Convertible Preferred Stock setting forth the Powers, Preferences, 
Rights, Qualifications, Limitations, and Restrictions of such Class of 
Preferred Stock, substantially in the form attached hereto as Exhibit A.

     "Class B Preferred Shares" means the Class B Convertible Preferred Stock 
having the Powers, Preferences, Rights, Qualifications, Limitations, and 
Restrictions set forth in the Certificate of Designation.

     "Closing" or "Closings" means one or all, as applicable, of the Class A 
Closing, the Class B Closing, and/or the "Reset Closing."

     "Company Credit Agreement" means the amended and restated Credit 
Agreement, dated as of June 15, 1995, as from time to time in effect among 
the Company, the banks party thereto, and Bankers Trust Company as Agent for 
the banks party thereto, and the consent and waiver secured pursuant to 
Section 4.1 hereof.

     "Disinterested Director" shall have the meaning given in the Purchase 
Agreement.

     "DLJ Waiver Letter" means a letter from DLJ substantially in the form 
attached hereto as Exhibit D.

<PAGE>

     "Exchange Act" means the Securities Exchange Act of 1934, as amended, or 
any similar federal statute, and the rules and regulations of the SEC 
thereunder, all as the same shall be in effect from time to time, and a 
reference to a particular section thereof shall be deemed to include a 
reference to the comparable section, if any, of any such similar federal 
statute.

     "Management Agreement" has the meaning given in the Purchase Agreement.

     "Person" means an individual, a partnership (general or limited), 
corporation, joint venture, business trust, cooperative, association or other 
form of business organization, whether or not regarded as a legal entity 
under applicable law, a trust (inter vivos or testamentary), an estate of a 
deceased, insane or incompetent person, a quasi-governmental entity, a 
government or any agency, authority, political subdivision or other 
instrumentality thereof, or any other entity.

     "Registration Rights Amendment" means the Amendment No. 1, of even date 
herewith, to the Registration Rights Agreement, dated as of July 30, 1996, 
among the Company, Trefoil, and GEI, substantially in the form attached 
hereto as Exhibit E.

     "Reorganization Plan" has the meaning given in the Purchase Agreement.

<PAGE>

     "SEC" means the Securities and Exchange Commission or its successor.

     "Securities Act" means the Securities Act of 1933, as amended, or any 
similar federal statute, and the rules and regulations of the SEC thereunder, 
all as the same shall be in effect from time to time, and a reference to a 
particular section thereof shall be deemed to include a reference to the 
comparable section, if any, of any such similar federal statute.

     "Shares" means the Accelerated Shares, the Class B Preferred Shares, 
and/or the Reset Shares, as applicable.

     "Stangeland Partnership" means the Roger and Lilah Stangeland Family 
Limited Partnership.

     "Stangeland Waiver" means the waiver letter, of even date herewith, by 
the Stangeland Partnership to the Company and the Purchasers, relating to the 
Stockholder Agreement, dated as of February 25, 1997, as amended by the 
Amendment No. 1 thereto dated as of March 20, 1997, among Trefoil, GEI, the 
Stangeland Partnership and the Company, substantially in the form attached 
hereto as Exhibit F.

     "Stockholder Notice" means the form of notice to all stockholders of the 
Company describing the transactions

<PAGE>

contemplated hereby and announcing receipt of the written consent of the 
holders of at least a majority of the Company's total voting power 
outstanding, and the approval of the NASDAQ to consummate the transactions 
contemplated hereby, without the approval of the Company's stockholders at a 
meeting held for such purpose, substantially in the form attached hereto as 
Exhibit G.

     Section 8.2.   Other Definitions.  Each of the following terms shall 
have the meanings given them in the Section listed opposite such term below:

          Term                            Section

          "Accelerated Shares"            1.2

          "Agreement"                     Preamble

          "Blue Sky Laws"                 2.5(b)

          "Class A Closing"               1.6

          "Class A Closing Date"          1.6

          "Class A Preferred Shares"      Preamble

          "Common Stock"                  1.7(a)

          "Company"                       Preamble

          "Conversion Shares"             2.3

          "DLJ"                           2.7

          "DLJ Engagement Letter"         2.8

          "Exchange"                      1.5

          "Exchange Closing"              1.6

          "Exchange Closing Date"         1.6

<PAGE>


          "Fairness Opinion"              2.7

          "Fifth Closing"                 Preamble

          "Fourth Closing"                Preamble

          "GEI"                           Preamble

          "Laws"                          2.5(a)

          "NASDAQ"                        2.5(a)

          "NASDAQ Rules"                  2.5(a)

          "Purchase Agreement"            Preamble

          "Purchase Price"                1.3

          "Purchasers"                    Preamble

          "RCP"                           1.7(a)

          "Reset Closing"                 1.7(b)

          "Reset Closing Date"            1.7(b)

          "Reset Date"                    1.7

          "Reset Shares"                  1.7(a)

          "SCA"                           3.4

          "Special Committee"             2.4

          "Transaction Documents"         2.4

          "Trefoil"                       Preamble



                         *        *        *        *

     IN WITNESS WHEREOF, the parties hereto have executed this Acceleration 
and Exchange Agreement or caused this Acceleration and Exchange Agreement to 
be executed as of the day and year first above written.

<PAGE>

                         TREFOIL CAPITAL INVESTORS II, L.P.

                         By:  TREFOIL INVESTORS II, INC.,
                              its managing general partner


                         By:  Michael J. McConnell
                            ---------------------------------
                            Name:  Michael J. McConnell
                            Title:    Vice President



                         GE INVESTMENT PRIVATE PLACEMENT
                         PARTNERS II, A LIMITED PARTNERSHIP

                         By:  GE INVESTMENT MANAGEMENT
                            INCORPORATED, its general partner


                         By:  Don W. Torey
                            ---------------------------------
                            Name:  Don W. Torey
                            Title:    Executive Vice President

<PAGE>

                         THE GRAND UNION COMPANY


                         By:  Jeffrey P. Freimark
                            ----------------------------------
                            Name:  Jeffrey P. Freimark
                            Title:    Executive Vice President,
                                      Chief Financial Officer and
                                      Chief Administrator Officer


List of Exhibits

Exhibit A  Certificate of Designation

Exhibit B  Form of Opinion of Ropes & Gray

Exhibit C  Form of Opinion of Davis Polk & Wardwell

Exhibit D  DLJ Waiver Letter

Exhibit E  Registration Rights Amendment

Exhibit F  Stangeland Waiver

Exhibit G  Form of Voting and Ratification Agreement

<PAGE>

                                                     Exhibit A
                     THE GRAND UNION COMPANY
                                
                   CERTIFICATE OF DESIGNATION
             OF CLASS B CONVERTIBLE PREFERRED STOCK
         SETTING FORTH THE POWERS, PREFERENCES, RIGHTS,
         QUALIFICATIONS, LIMITATIONS AND RESTRICTIONS OF
                  SUCH CLASS OF PREFERRED STOCK


     Pursuant to Section 151 of the General Corporation Law of the State of 
Delaware, The Grand Union Company (the "Corporation"), a corporation 
organized and existing under the General Corporation Law of the State of 
Delaware, in accordance with the provisions of Section 103 thereof, DOES 
HEREBY CERTIFY:

     That pursuant to the authority conferred upon the Board of Directors of 
the Corporation by Article Fourth of the Certificate of Incorporation of the 
Corporation (the "Certificate of Incorporation"), and in accordance with the 
provisions of Section 151 of the General Corporation Law of the State of 
Delaware, the Board of Directors of the Corporation on June 5, 1997, adopted 
the following resolution creating a series of Preferred Stock designated as 
Class B Convertible Preferred Stock (the "Class B Stock"):

     RESOLVED that, pursuant to the authority vested in the Board of 
Directors of the Corporation in accordance with the General Corporation Law 
of the State of Delaware and the provisions of the Certificate of 
Incorporation, a class of authorized Preferred Stock, par value $1.00 per 
share, of the Corporation is hereby 

<PAGE>

created and that the designation and number of shares thereof and the voting 
powers, preferences and relative participating, optional and other special 
rights of the shares of such class, and the qualifications, limitations and 
restrictions thereof, are as follows:

Section 1.     Stated Value.

     The Class B Stock shall consist of 1,400,000 shares, par
value $1.00 per share, each of which shall have a stated value of
$50 per share (the "Stated Value").

Section 2.     Dividends and Distributions.

     (a)  The holders of shares of Class B Stock, in preference to the 
holders of shares of Junior Dividend Stock (as defined in Section 11 hereof), 
shall be entitled to receive, when, as and if declared by the Board of 
Directors, out of the assets of the Corporation legally available therefor, 
dividends at an annual rate of 8.50% of the Stated Value from and after the 
Issue Date (as defined in Section 11 hereof) of such shares as long as shares 
of Class B Stock remain outstanding.  Dividends shall be payable in cash, or 
additional shares of Class B Stock, as provided in paragraph (c) of this 
Section 2, or shares of Common Stock, as provided in paragraph (c) of this 
Section 2.  Dividends shall be computed on the basis of the Stated Value, and 
shall accrue and be payable quarterly, in arrears, on the last Business 

<PAGE>

Day (as defined in Section 11) of March, June, September and December in each 
year (each such date being referred to herein as a "Quarterly Dividend 
Payment Date"), commencing on the first Quarterly Dividend Payment Date after 
the Issue Date of such shares.  To the extent that dividends on the Class B 
Stock are payable in cash, such dividends shall be cumulative.  Accrued 
dividends not paid on any Quarterly Dividend Payment Date shall accrue 
additional dividends at an annual dividend rate of 8.50% until paid in full.

     (b)  Dividends payable pursuant to paragraph (a) of this Section 2 shall 
begin to accrue and be cumulative from the Issue Date of each share of Class 
B Stock, whether or not earned or declared.  The amount of dividends so 
payable shall be determined on the basis of twelve 30-day months and a 
360-day year. Dividends paid on the shares of Class B Stock in an amount less 
than the total amount of such dividends at the time accrued and payable on 
such shares shall be allocated pro rata on a share-by-share basis among all 
such shares at the time outstanding.  The Board of Directors may fix a record 
date for the determination of holders of shares of Class B Stock entitled to 
receive payment of a dividend declared thereon, which record date shall be no 
more than sixty days prior to the date fixed for the payment thereof.

     (c)  With respect to dividends paid on or prior to the third anniversary 
of the Principal Issue Date (as defined in Section 11), the Corporation shall 
have the option to pay such dividends

<PAGE>

in shares of Class B Stock valued at $50 per share or in whole shares of 
Common Stock valued at Fair Market Value determined as of the close of 
business on the third Business Day immediately preceding the date of payment, 
instead of in cash.  With respect to dividends paid after the third 
anniversary of the Principal Issue Date but on or prior to the fifth 
anniversary of the Principal Issue Date, the Corporation shall have the 
option to pay such dividends in shares of Class B Stock valued at $50 per 
share or in whole shares of Common Stock valued at Fair Market Value 
determined as of the close of business on the third Business Day immediately 
preceding the date of payment, instead of in cash, but only if the 
Corporation is prohibited from paying such dividends in cash under the terms 
of its Bank Credit Agreement or its Senior Notes.  To the extent that the 
Corporation elects to pay any dividends in shares of Common Stock, it shall 
pay a premium in additional shares of Common Stock equal to 33-1/3% of the 
total number of shares of Common Stock that would otherwise be paid as the 
dividend.  After the fifth anniversary of the Principal Issue Date, all 
dividends shall be paid in cash.  The Corporation shall only have the right 
to pay dividends in shares of Common Stock if, on the Quarterly Dividend 
Payment Date in question, the Common Stock is listed and traded on the New 
York Stock Exchange, the American Stock Exchange or the Nasdaq National 
Market System.  In connection with any payment of dividends in shares of 
Common Stock pursuant to this Section 2(c), no fractions of shares of Common 
Stock shall be issued, but in lieu thereof the Corporation shall either 

<PAGE>

(i) deliver a whole share of Common Stock in respect of the fractional share 
which the holder would otherwise have been entitled to upon such dividend 
payment or (ii) pay a cash adjustment in respect of such fractional interest 
in an amount equal to such fractional interest multiplied by the Fair Market 
Value of a share of Common Stock determined as of the close of business on 
the third Business Day immediately preceding the date of payment.

     (d)  The holders of shares of Class B Stock shall not be entitled to 
receive any dividends or other distributions except as provided herein.

Section 3.     Voting Rights.

     In addition to any voting rights provided by law, the holders of shares 
of Class B Stock shall have the following voting rights:

     (a)  In addition to voting rights provided elsewhere in this Section 3, 
and as long as any of the Class B Stock is outstanding, each share of Class B 
Stock shall entitle the holder thereof to vote on all matters, including with 
respect to the election of directors, voted on by holders of Common Stock 
voting together as a single class with other shares entitled to vote at all 
meetings of the stockholders of the Corporation.  With respect to any such 
vote, each share of Class B Stock shall

<PAGE>

entitle the holder thereof to cast the number of votes determined pursuant to 
the next sentence; provided, however, that if more than one share of Class B 
Stock shall be held by any holder of shares of Class B Stock, the total 
number of votes which such holder shall be entitled to cast pursuant to this 
Section 3(a) shall be computed on the basis of the total number of shares of 
Class B Stock held by such holder, with any then remaining fractional share 
disregarded for the purposes of this Section 3(a).  The number of votes which 
each share of the Class B Stock shall entitle the holder thereof to cast 
shall be equal to (i) 6.8966 from the First Issue Date until the Approval 
Date (as defined herein), and (ii) from and after the Approval Date, the 
number of whole votes which could be cast in such vote by a holder of the 
shares of capital stock of the Corporation into which such share of Class B 
Stock is convertible on the record date for such vote.

     (b)  In addition to the voting rights provided elsewhere in this Section 
3, the affirmative vote of the holders of at least a majority of the 
outstanding shares of Class B Stock, voting separately as a single class, in 
person or by proxy, at a special or annual meeting of stockholders called for 
the purpose, shall be necessary to (A) except as contemplated by Section 
2(c), authorize, increase the authorized number of shares of, or issue 
(including on conversion or exchange of any convertible or exchangeable 
securities or by reclassification), any shares of any class or classes, or 
any series of any class or classes, of

<PAGE>

the Corporation's capital stock ranking pari passu with or prior to (either 
as to dividends or upon a change in control of the Corporation, voluntary or 
involuntary liquidation, dissolution or winding up) the Class B Stock, (B) 
except as contemplated pursuant to Section 2(c) or as permitted pursuant to 
Section 10(a), increase the authorized number of shares of, or issue 
(including on conversion or exchange of any convertible or exchangeable 
securities or by reclassification) any shares of, Class B Stock, (C) alter, 
amend or repeal any of the provisions of the Certificate of Incorporation of 
the Corporation which in any manner would alter, change or otherwise 
adversely affect in any way the powers, preferences or rights of the Class B 
Stock, (D) approve the sale, lease or other disposition of all or 
substantially all of the assets of the Corporation and its Subsidiaries (as 
defined in Section 11), or (E) approve any merger of the Corporation with or 
into any other entity or any reorganization, recapitalization, liquidation or 
other similar transaction (including any issuance of equity securities, or 
securities convertible into equity securities by the Corporation, to any 
person (other than the Purchasers and their Affiliates) who would then own on 
a fully diluted basis more than 50% of the total number of votes entitled to 
be cast (giving effect to such issuance) by holders of the Corporation's 
capital stock on all matters, including the election of directors) involving 
the Corporation; provided, however, that the holders of the outstanding 
shares of Class B Stock shall only have a class vote on the transactions 
described in clauses (D) and (E) prior to the 

<PAGE>

earlier of the effectiveness of a registration statement under the Securities 
Act of 1933 relating to all such shares and the date on which less than half 
of the total shares of Class B Stock originally issued (not including any 
shares issued in payment of dividends pursuant to Section 2(c)) remain 
outstanding. Notwithstanding the proviso to the preceding sentence, the 
affirmative vote of the holders of at least a majority of the outstanding 
shares of Class B Stock, voting separately as a single class, in person or by 
proxy, at a special or annual meeting of stockholders called for the purpose, 
shall be necessary to approve any merger of the Corporation with or into any 
other entity or any reorganization, recapitalization, liquidation or other 
similar transaction involving the Corporation where (i) the Class B Stock is 
not remaining outstanding after such transaction under substantially the same 
powers, preferences, rights, qualifications, limitations and restrictions as 
are set forth in this Certificate of Designation or (ii) the cash, stock, 
securities or other property to be received on conversion of one share of 
Class B Stock following such transaction and the application of Section 8(h) 
has a Fair Market Value at the closing of such transaction less than 150% of 
the Conversion Price.  In addition, if the Corporation shall have failed to 
pay in full dividends on the Class B Stock for six consecutive quarters, then 
the size of the Board of Directors of the Corporation shall be increased by 
two, and the holders of shares of Class B Stock, voting together as a single 
class, shall have the right to elect such two directors.  The right to elect 

<PAGE>

such two directors under this Section 3(b) shall terminate upon payment in 
full of all dividends payable on the Class B Stock, at which time the Board 
of Directors shall return to its previous size and the directors elected by 
the holders of the Class B Stock shall be removed.

     (c)  (1)  The rights of holders of shares of Class B Stock to take any 
actions as provided in this Section 3 may be exercised, subject to the DGCL 
(as defined in Section 11 hereof), at any annual meeting of stockholders or 
at a special meeting of stockholders held for such purpose as hereinafter 
provided or at any adjournment or postponement thereof, or by the written 
consent, delivered to the Secretary of the Corporation, of the holders of the 
minimum number of shares required to take such action.

     As long as such right to vote continues (and unless such right has been 
exercised by written consent of not less than the minimum number of shares 
required to take such action), the Chairman of the Board of the Corporation 
may call, and upon the written request of holders of record of 20% of the 
outstanding shares of Class B Stock, addressed to the Secretary of the 
Corporation at the principal office of the Corporation, shall call, a special 
meeting of the holders of shares of Class B Stock entitled to vote as 
provided herein.  The Corporation shall use its best efforts to hold such 
meeting as promptly as practicable, but in any event not later than 120 days 
after delivery of such

<PAGE>

request to the Secretary of the Corporation, at the place and upon the notice 
provided by law and in the Bylaws of the Corporation for the holding of 
meetings of stockholders.

          (2)  At each meeting of stockholders at which the holders of shares 
of Class B Stock shall have the right, voting separately as a single series, 
to take any action, the presence in person or by proxy of the holders of 
record of a majority of the total number of shares of Class B Stock then 
outstanding and entitled to vote on the matter shall be necessary and 
sufficient to constitute a quorum.  At any such meeting or at any adjournment 
or postponement thereof, in the absence of a quorum of the holders of shares 
of Class B Stock, holders of a majority of such shares present in person or 
by proxy shall have the power to adjourn the meeting as to the actions to be 
taken by the holders of shares of Class B Stock from time to time and place 
to place without notice other than announcement at the meeting until a quorum 
shall be present.

     For the taking of any action as provided in Section 3(b) by the holders 
of shares of Class B Stock, each such holder shall have one vote for each 
share of Class B Stock standing in his name on the transfer books of the 
Corporation as of any record date fixed for such purpose or, if no such date 
be fixed, at the close of business on the Business Day next preceding the day 
on which notice is given, or if notice is waived, at the close of business on 
the Business Day next preceding the day on which the

<PAGE>

meeting is held.

Section 4.     Certain Restrictions.

     (a)  As long as any shares of Class B Stock remain outstanding, the 
Corporation shall not: (A) declare or pay dividends, or make any other 
distributions, on any shares of Junior Dividend Stock other than dividends or 
distributions payable in Junior Dividend Stock; or (B) declare or pay 
dividends, or make any other distributions, on any shares of Parity Dividend 
Stock (as defined in Section 11 hereof), except (1) dividends or 
distributions payable in Junior Dividend Stock and (2) dividends or 
distributions paid ratably on the Class B Stock and all Parity Dividend Stock 
on which dividends are payable or in arrears, in proportion to the total 
amounts to which the holders of all shares of the Class B Stock and such 
Parity Dividend Stock are then entitled.

     (b)  As long as any shares of Class B Stock remain outstanding, the 
Corporation shall not redeem, purchase or otherwise acquire for consideration 
any shares of Junior Dividend Stock or Junior Liquidation Stock (as defined 
in Section 11 hereof) or Parity Dividend Stock or Parity Liquidation Stock 
(as defined in Section 11 hereof); provided, however, that (1) the 
Corporation may at any time redeem, purchase or otherwise acquire shares of 
Junior Liquidation Stock or Parity Liquidation Stock in exchange for any 
shares of capital stock of the Corporation that

<PAGE>

rank junior to the Class B Stock as to dividends and upon liquidation, 
dissolution and winding up; (2) the Corporation may accept shares of any 
Parity Liquidation Stock for conversion into shares of capital stock of the 
Corporation that rank junior to the Class B Stock as to dividends and upon 
liquidation, dissolution and winding up; and (3) the Corporation may at any 
time redeem, purchase or otherwise acquire shares as may be required pursuant 
to the Corporation's employee and non-employee director stock plans, as they 
may be amended from time to time, or similar employee stock plans hereafter 
adopted; and provided further, however, that the Corporation (A) may accept 
shares of Class B Stock surrendered for conversion into shares of capital 
stock of the Corporation pursuant to Section 8 hereof, and (B) may redeem 
outstanding shares of Class B Stock pursuant to Section 5 hereof.  Whenever 
quarterly dividends payable on shares of Class B Stock as provided in Section 
2 hereof are not paid in full, thereafter and until all unpaid dividends 
payable, whether or not declared, on the outstanding shares of Class B Stock 
shall have been paid in full, the Corporation shall not redeem or purchase or 
otherwise acquire for consideration any shares of Class B Stock; provided, 
however, that the Corporation (A) may accept shares of Class B Stock 
surrendered for conversion into shares of capital stock of the Corporation 
pursuant to Section 8 hereof, and (B) may elect to redeem outstanding shares 
of Class B Stock pursuant to Section 5(a) hereof.

     (c)  The Corporation shall not permit any Subsidiary of the

<PAGE>

Corporation to purchase or otherwise acquire for consideration any shares of 
capital stock of the Corporation unless the Corporation could, pursuant to 
Section 4(b), purchase such shares at such time and in such manner.

Section 5.     Redemption.

     (a)  On and after the second anniversary of the Principal Issue Date, 
the Corporation shall have the right, at its sole option and election made in 
accordance with Section 5(c), to redeem, out of funds legally available 
therefor, shares of Class B Stock, in whole or in part, at any time and from 
time to time, at a redemption price equal to the Stated Value (except as 
described below), plus an amount per share equal to all accrued and unpaid 
dividends, whether or not declared, to the date of redemption (the 
"Redemption Price"); provided, however, that the Corporation shall not have 
any such right unless (A) if the redemption is to occur between the second 
and third anniversary of the Principal Issue Date, the Redemption Fair Market 
Value (as defined in Section 11 hereof) of the Common Stock, as of the close 
of business on the third Business Day immediately preceding the date on which 
notice of redemption is given, is equal to at least 180% of the Conversion 
Price (as defined in Section 11 hereof), and (B) if the redemption is to 
occur between the third and fifth anniversary of the Principal Issue Date, 
the Redemption Fair Market Value (as defined in Section 11 hereof) of the 
Common Stock, as of the close of business on the third Business Day

<PAGE>

immediately preceding the date on which notice of redemption is given, is 
equal to at least 200% of the Conversion Price (as defined in Section 11 
hereof).  Notwithstanding the foregoing, if the redemption is to occur 
between the fifth and sixth anniversaries of the Principal Issue Date, the 
Redemption Price shall be $51.5938; if the redemption is to occur between the 
sixth and seventh anniversaries of the Principal Issue Date, the Redemption 
Price shall be $51.0625; and if the redemption is to occur between the 
seventh and eighth anniversaries of the Principal Issue Date, the Redemption 
Price shall be $50.5313; in each case plus an amount per share equal to all 
accrued and unpaid dividends, whether or not declared, to the date of 
redemption.  If less than all shares of Class B Stock at the time outstanding 
are to be redeemed, the shares to be redeemed shall be selected pro rata.

     (b)  The Corporation shall redeem, at the Redemption Price, all 
outstanding shares of Class B Stock on June 1, 2005.

     (c)  Notice of any redemption of shares of Class B Stock pursuant to 
this Section 5 shall be mailed at least 30, but not more than 60, days prior 
to the date fixed for redemption to each holder of shares of Class B Stock to 
be redeemed, at such holder's address as it appears on the transfer books of 
the Corporation.  Any such notice shall be irrevocable when given. In order 
to facilitate the redemption of shares of Class B Stock, the Board of 
Directors may fix a record date for the

<PAGE>

determination of Class B Stock to be redeemed, or may cause the transfer 
books of the Corporation for the Class B Stock to be closed, not more than 
sixty days or less than thirty days prior to the date fixed for such 
redemption.

     (d)  On the date of any redemption being made pursuant to this Section 5 
which is specified in a notice given pursuant to Section 5(c), the 
Corporation shall, and at any time after such notice shall have been mailed 
and before the date of redemption the Corporation may deposit for the benefit 
of the holders of shares of Class B Stock to be redeemed the funds necessary 
for such redemption, including the amount necessary to pay all accrued and 
unpaid dividends to the date of redemption, with a bank or trust company in 
the City of New York having a capital and surplus of at least $1,000,000,000. 
 Any moneys so deposited by the Corporation and unclaimed at the end of one 
year from the date designated for such redemption shall revert to the general 
funds of the Corporation.  After such reversion, any such bank or trust 
company shall, upon demand, pay over to the Corporation such unclaimed 
amounts and thereupon such bank or trust company shall be relieved of all 
responsibility in respect thereof and any holder of shares of Class B Stock 
to be redeemed shall look only to the Corporation for the payment of the 
Redemption Price. In the event that moneys are deposited pursuant to this 
paragraph (d) in respect of shares of Class B Stock that are converted in 
accordance with the provisions of Section 8, such moneys shall, upon such 
conversion, revert to the general funds of the

<PAGE>

Corporation and, upon demand, such bank or trust company shall pay over to 
the Corporation such moneys and shall be relieved of all responsibility to 
the holders of such converted shares in respect thereof.  Any interest 
accrued on funds deposited pursuant to this paragraph (d) shall be paid from 
time to time to the Corporation for its own account.

     (e)  Notice of redemption having been given as aforesaid, upon the 
deposit of funds pursuant to Section 5(d) in respect of shares of Class B 
Stock to be redeemed pursuant to this Section 5, notwithstanding that any 
certificates for such shares shall not have been surrendered for 
cancellation, from and after the date of redemption designated in the notice 
of redemption (i) the shares represented thereby shall no longer be deemed 
outstanding, (ii) the rights to receive dividends thereon shall cease to 
accrue, and (iii) all rights of the holders of shares of Class B Stock to be 
redeemed shall cease and terminate, excepting only the right to receive the 
Redemption Price therefor, and the right to convert such shares into shares 
of Common Stock until the close of business on the Fifth Business Day next 
preceding the date of redemption, in accordance with Section 8 hereof.

Section 6.     Reacquired Shares.

     Any shares of Class B Stock converted, redeemed, purchased or otherwise 
acquired by the Corporation in any manner whatsoever shall be retired and 
canceled promptly after the acquisition

<PAGE>

thereof.  All such shares of Class B Stock shall upon their cancellation, in 
accordance with the DGCL, become authorized but unissued shares of Preferred 
Stock of the Corporation and may be reissued as part of another series of 
Preferred Stock of the Corporation, subject to the conditions or restrictions 
on issuance set forth herein.

Section 7.     Liquidation, Dissolution or Winding Up.

     (a)  If the Corporation shall commence a voluntary case under the 
Federal bankruptcy laws or any other applicable Federal or state bankruptcy, 
insolvency or similar law, or consent to the entry of an order for relief in 
an involuntary case under such law or to the appointment of a receiver, 
liquidator, assignee, custodian, trustee, sequestrator (or other similar 
official) of the Corporation or of any substantial part of its property, or 
make an assignment for the benefit of its creditors, or admit in writing its 
inability to pay its debts generally as they become due, or if a decree or 
order for relief in respect of the Corporation shall be entered by a court 
having jurisdiction in the premises in an involuntary case under the Federal 
bankruptcy laws or any other applicable Federal or state bankruptcy, 
insolvency or similar law, or appointing a receiver, liquidator, assignee, 
custodian, trustee, sequestrator (or other similar official) of the 
Corporation or of any substantial part of its property, or ordering the 
winding up or liquidation of its affairs, and any such decree or order shall 
be unstayed and in

<PAGE>

effect for a period of ninety consecutive days and on account of any such 
event the Corporation shall liquidate, dissolve or wind up, or if the 
Corporation shall otherwise liquidate, dissolve or wind up, no distribution 
shall be made (i) to the holders of shares of Junior Liquidation Stock 
unless, prior thereto, the holders of shares of Class B Stock, subject to 
Section 8, shall have received the Liquidation Preference (as defined in 
Section 11 hereof) with respect to each share, or (ii) to the holders of 
shares of Parity Liquidation Stock, except distributions made ratably to the 
holders of the Class B Stock and the Parity Liquidation Stock in proportion 
to the total amounts to which the holders of all such shares of Class B Stock 
and Parity Liquidation Stock would be entitled upon such liquidation, 
dissolution or winding up.  Upon any such liquidation, dissolution or winding 
up, the holders of shares of Class B Stock shall be entitled to receive the 
Liquidation Preference with respect to each such share and no more.

     (b)  Neither the merger or other business combination of the Corporation 
with or into any other Person (as defined in Section 11 hereof) or Persons 
nor the sale of all or substantially all the assets of the Corporation shall 
be deemed to be a liquidation, dissolution or winding up of the Corporation 
for purposes of this Section 7.

Section 8.     Conversion.

<PAGE>

     (a)  Subject to the provisions for adjustment hereinafter set forth, 
each share of Class B Stock shall be convertible at the option of the holder 
thereof into fully paid and nonassessable shares of Common Stock.  The number 
of shares of Common Stock deliverable upon conversion of a share of Class B 
Stock, adjusted as hereinafter provided, is referred to herein as the 
"Conversion Ratio."  The Conversion Ratio shall initially be 20.8333 and the 
Conversion Price shall initially be $2.40.  Upon the Reset Date, the 
Conversion Price shall be adjusted to equal 120% of the Reset Market Value 
and the Conversion Ratio shall be adjusted to equal 50 divided by 120% of the 
Reset Market Value; provided, however, if the Reset Market Value is (i) $2.71 
or greater, the Conversion Price shall be adjusted to equal $3.25 and the 
Conversion Ratio shall be adjusted to equal 15.3846 or (ii) $1.25 or less, 
the Conversion Price shall be adjusted to equal $1.50 and the Conversion 
Ratio shall be adjusted to equal 33.3333.  The Conversion Ratio and the 
Conversion Price are subject to further adjustment from time to time pursuant 
to Section 8(g).

     (b)  Conversion of the Class B Stock may be effected by any such holder 
upon the surrender to the Corporation at the principal office of the 
Corporation in the State of Delaware (the "Transfer Agent") or at the office 
of any agent or agents of the Corporation, as may be designated by the Board 
of Directors of the Corporation, of the certificate for such Class B Stock to 
be converted accompanied by a written notice stating that such

<PAGE>

holder elects to convert all or a specified whole number of such shares in 
accordance with the provisions of this Section 8 and specifying the name or 
names in which such holder wishes the certificate or certificates for shares 
of Common Stock to be issued.  In case such notice shall specify a name or 
names other than that of such holder, such notice shall be accompanied by 
payment of all transfer taxes payable upon the issuance of shares of Common 
Stock in such name or names.  Other than such taxes, the Corporation will pay 
any and all issue and other taxes (other than taxes based on income) that may 
be payable in respect of any issue or delivery of shares of Common Stock on 
conversion of Class B Stock pursuant hereto.  As promptly as practicable, and 
in any event within five Business Days after the surrender of such 
certificate or certificates and the receipt of such notice relating thereto 
and, if applicable, payment of all transfer taxes (or the demonstration to 
the satisfaction of the Corporation that such taxes have been paid), the 
Corporation shall deliver or cause to be delivered (i) certificates 
representing the number of validly issued, fully paid and nonassessable full 
shares of Common Stock to which the holder of shares of Class B Stock being 
converted shall be entitled and (ii) if less than the full number of shares 
of Class B Stock evidenced by the surrendered certificate or certificates is 
being converted, a new certificate or certificates, of like tenor, for the 
number of shares evidenced by such surrendered certificate or certificates 
less the number of shares being converted.  Such conversion shall be deemed 
to have been made at the close of

<PAGE>

business on the date of giving such notice and of such surrender of the 
certificate or certificates representing the shares of Class B Stock to be 
converted (the "Conversion Date") so that the rights of the holder thereof as 
to the shares being converted shall cease except for the right to receive 
shares of Common Stock in accordance herewith, and the Person entitled to 
receive the shares of Common Stock shall be treated for all purposes as 
having become the record holder of such shares of Common Stock at such time.  
The Corporation shall not be required to convert, and no surrender of shares 
of Class B Stock shall be effective for that purpose, while the transfer 
books of the Corporation for the Common Stock are closed for any purpose (but 
not for any period in excess of five days); but the surrender of shares of 
Class B Stock for conversion during any period while such books are so closed 
shall become effective for conversion immediately upon the reopening of such 
books, as if the conversion had been made on the date such shares of Class B 
Stock were surrendered, and at the Conversion Ratio in effect at the date of 
such surrender.

     (c)  In case any shares of Class B Stock are to be redeemed pursuant to 
Section 5, such right of conversion shall cease and terminate as to the 
shares of Class B Stock to be redeemed at the close of business on the fifth 
Business Day next preceding the date fixed for redemption unless the 
Corporation shall default in the payment of the Redemption Price.

     (d)  The Conversion Ratio shall be subject to adjustment

<PAGE>

from time to time in certain instances as hereinafter provided. Upon 
conversion, the holder of shares of Class B Stock shall be entitled to 
receive any accrued and unpaid dividends on the shares of Class B Stock 
surrendered for conversion to the Conversion Date.  Such accrued and unpaid 
dividends shall be payable by the Corporation, at its option, in cash (to the 
extent funds are legally available therefor) or in shares of Common Stock 
valued at the Fair Market Value as of the third Business Day prior to the 
Conversion Date, instead of in cash.

     (e)  In connection with the conversion of any shares of Class B Stock, 
no fractions of shares of Common Stock shall be issued, but in lieu thereof 
the Corporation shall either (i) deliver a whole share of Common Stock in 
respect of the fractional share to which the holder would otherwise have been 
entitled upon such conversion or (ii) pay a cash adjustment in respect of 
such fractional interest in an amount equal to such fractional interest 
multiplied by the Current Market Price per share of Common Stock on the 
Trading Day on which such shares of Class B Stock are deemed to have been 
converted.  If more than one share of Class B Stock shall be surrendered for 
conversion by the same holder at the same time, the number of full shares of 
Common Stock issuable on conversion thereof shall be computed on the basis of 
the total number of shares of Class B Stock so surrendered.

     (f)  The Corporation shall at all times reserve and keep

<PAGE>

available for issuance upon the conversion of the Class B Stock, free from 
any preemptive rights, such number of its authorized but unissued shares of 
Common Stock as will from time to time be sufficient to permit the conversion 
of all outstanding shares of Class B Stock, and shall take all action 
required to increase the authorized number of shares of Common Stock if 
necessary to permit the conversion of all outstanding shares of Class B Stock.

     (g)  The Conversion Ratio will be subject to adjustment from time to 
time as follows:

          (1)  In case the Corporation shall at any time or from time to time 
after the First Issue Date (A) pay a dividend, or make a distribution, on the 
outstanding shares of Common Stock in shares of Common Stock, (B) subdivide 
the outstanding shares of Common Stock, (C) combine the outstanding shares of 
Common Stock into a smaller number of shares or (D) issue by reclassification 
of the shares of Common Stock any shares of capital stock of the Corporation, 
then, and in each such case, the Conversion Ratio in effect immediately prior 
to such event or the record date therefor, whichever is earlier, shall be 
adjusted so that the holder of any shares of Class B Stock thereafter 
surrendered for conversion shall be entitled to receive the number of shares 
of Common Stock or other securities of the Corporation which such holder 
would have owned or have been entitled to receive after the happening of any 
of the events described above, had such shares of Class B Stock been 
surrendered for conversion

<PAGE>

immediately prior to the happening of such event or the record date therefor, 
whichever is earlier.  An adjustment made pursuant to this clause (i) shall 
become effective (x) in the case of any such dividend or distribution, 
immediately after the close of business on the record date for the 
determination of holders of shares of Common Stock entitled to receive such 
dividend or distribution, or (y) in the case of such subdivision, 
reclassification or combination, at the close of business on the day upon 
which such corporate action becomes effective.  No adjustment shall be made 
pursuant to this clause (i) in connection with any transaction to which 
paragraph (h) applies.

          (2)  In case the Corporation shall at any time or from time to time 
after the First Issue Date declare, order, pay or make a dividend or other 
distribution (including, without limitation, any distribution of stock or 
other securities or property or rights or warrants to subscribe for 
securities of the Corporation or any of its Subsidiaries by way of dividend 
or spinoff), on its Common Stock, other than dividends or distributions of 
shares of Common Stock which are referred to in clause (1) of this paragraph 
(g), then the Conversion Ratio shall be adjusted so that the holder of each 
share of Class B Stock shall be entitled to receive, upon the conversion 
thereof, the number of shares of Common Stock determined by multiplying (1) 
the applicable Conversion Ratio on the day immediately prior to the record 
date fixed for the determination of stockholders entitled to receive such 
dividend or distribution by (2) a

<PAGE>

fraction, the numerator of which shall be the Current Market Price per share 
of Common Stock for the period of 20 Trading Days preceding such record date, 
and the denominator of which shall be such Current Market Price per share of 
Common Stock less the Fair Market Value (as defined in Section 11 hereof) per 
share of Common Stock (as determined in good faith by the Board of Directors 
of the Corporation, a certified resolution with respect to which shall be 
mailed to each holder of shares of Class B Stock) of such dividend or 
distribution; provided, however, that in the event of a distribution of 
capital stock of a Subsidiary of the Corporation (a "Spin-Off") made to 
holders of shares of Common Stock, the numerator of such fraction shall be 
the sum of the Current Market Price per share of Common Stock for the period 
of 20 Trading Days preceding the 35th Trading Day after the effective date of 
such Spin-Off and the Current Market Price of the number of shares (or the 
fraction of a share) of capital stock of the Subsidiary which is distributed 
in such Spin-Off in respect of one share of Common Stock for the period of 20 
Trading Days preceding such 35th Trading Day and the denominator of which 
shall be the Current Market Price per share of Common Stock for the period of 
20 Trading Days preceding such 35th Trading Day. An adjustment made pursuant 
to this clause (2) shall be made upon the opening of business on the next 
Business Day following the date on which any such dividend or distribution is 
made and shall be effective retroactively immediately after the close of 
business on the record date fixed for the determination of stockholders 
entitled to receive such dividend or distribution;

<PAGE>

provided, however, that if the proviso to the preceding sentence applies, 
then such adjustment shall be made and be effective as of such 35th Trading 
Day after the effective date of such Spin-Off.  No adjustment shall be made 
pursuant to this clause (2) in connection with any transaction to which 
paragraph (h) applies.

          (3)  For purposes of this paragraph (g), the number of shares of 
Common Stock at any time outstanding shall not include any shares of Common 
Stock then owned or held by or for the account of the Corporation.

          (4)  The term "dividend," as used in this paragraph (g) shall mean 
a dividend or other distribution upon Common Stock of the Corporation.

          (5)  Anything in this paragraph (g) to the contrary 
notwithstanding, the Corporation shall not be required to give effect to any 
adjustment in the Conversion Ratio unless and until the net effect of one or 
more adjustments (each of which shall be carried forward), determined as 
above provided, shall have resulted in a change of the Conversion Ratio by at 
least one one-hundredth of one share of Common Stock, and when the cumulative 
net effect of more than one adjustment so determined shall be to change the 
Conversion Ratio by a least one one-hundredth of one share of common Stock, 
such change in Conversion Ratio shall thereupon be given effect.

<PAGE>

          (6)  The certificate of any firm of independent public accountants 
of recognized standing selected by the Board of Directors of the Corporation 
(which may be the firm of independent public accountants regularly employed 
by the Corporation) shall be presumptively correct for any computation made 
under this paragraph (g).

          (7)  If the Corporation shall take a record of the holders of its 
Common Stock for the purpose of entitling them to receive a dividend or other 
distribution, and shall thereafter and before the distribution to 
stockholders thereof legally abandon its plan to pay or deliver such dividend 
or distribution, then thereafter no adjustment in the number of shares of 
Common Stock issuable upon exercise of the right of conversion granted by 
this paragraph (g) or in the Conversion Ratio then in effect shall be 
required by reason of the taking of such record.

          (8)  There shall be no adjustment of the Conversion Ratio in case 
of the issuance of any stock of the Corporation in a merger, reorganization, 
acquisition or other similar transaction except as set forth in paragraphs 
(g)(1) and (h) of this Section 8.

     (h)  In case of any capital reorganization or reclassification of 
outstanding shares of Common Stock (other than a reclassification covered by 
Section 8(g)(1)), or in case of any merger of the Corporation with or into 
another

<PAGE>

Corporation, or in case of any sale or conveyance to another Corporation of 
all or substantially all of the assets or property of the Corporation (each 
of the foregoing being referred to as a "Transaction"), each share of Class B 
Stock then outstanding shall thereafter be convertible into, in lieu of the 
Common Stock issuable upon such conversion prior to consummation of such 
Transaction, the kind and amount of shares of stock and other securities and 
property receivable (including cash or securities of the Surviving Person (as 
defined in Section 11 hereof)) upon the consummation of such Transaction by a 
holder of that number of shares of Common Stock into which one share of Class 
B Stock was convertible immediately prior to such Transaction (including, on 
a pro rata basis, the cash, securities or property received by holders of 
Common Stock in any tender or exchange offer that is a step in such 
Transaction).  In any such case, if necessary, appropriate adjustment (as 
determined by the Board of Directors) shall be made in the application of the 
provisions set forth in this Section 8 with respect to rights and interests 
thereafter of the holders of shares of Class B Stock to the end that the 
provisions set forth herein for the protection of the conversion rights of 
the Class B Stock shall thereafter be applicable, as nearly as reasonably may 
be, to any such other shares of stock and other securities and property 
deliverable upon conversion of the shares of Class B Stock remaining 
outstanding (with such adjustments in the conversion price and number of 
shares issuable upon conversion and such other adjustments in the provisions 
hereof as the Board of Directors shall determine to be 

<PAGE>

appropriate).  In case securities or property other than Common Stock shall 
be issuable or deliverable upon conversion as aforesaid, then all references 
in this Section 8 shall be deemed to apply, so far as appropriate and as 
nearly as may be, to such other securities or property.

     Notwithstanding anything contained herein to the contrary, the 
Corporation will not effect any Transaction unless, prior to the consummation 
thereof, the Surviving Person thereof shall assume, by written instrument 
mailed to each holder of shares of Class B Stock, the obligation to deliver 
to such holder such cash, property or securities to which, in accordance with 
the foregoing provisions, such holder is entitled.

     (i)  In case at any time or from time to time the Corporation shall pay 
any dividend or make any other distribution to the holders of its Common 
Stock, or shall offer for subscription pro rata to the holders of its Common 
Stock any additional shares of stock of any class or any other right, or 
there shall be any capital reorganization or reclassification of the Common 
Stock of the Corporation or merger of the Corporation with or into another 
Corporation, or any sale or conveyance to another Corporation of the property 
of the Corporation as an entirety or substantially as an entirety, or there 
shall be a voluntary or involuntary dissolution, liquidation or winding up of 
the Corporation, then, in any one or more of said cases the Corporation shall 
give at least 20 days prior written notice (the

<PAGE>

time of mailing of such notice shall be deemed to be the time of giving 
thereof) to the registered holders of the Class B Stock at the addresses of 
each as shown on the books of the Corporation maintained by the transfer 
agent thereof as of the date on which (i) the books of the Corporation shall 
close or a record shall be taken for such stock dividend, distribution or 
subscription rights or (ii) such reorganization, reclassification, merger, 
sale or conveyance, dissolution, liquidation or winding up shall take place, 
as the case may be, provided that in the case of any Transaction to which 
paragraph (h) applies the Corporation shall give at least thirty days prior 
written notice as aforesaid. Such notice shall also specify the date as of 
which the holders of the Common Stock of record shall participate in said 
dividend, distribution or subscription rights or shall be entitled to 
exchange their Common Stock for securities or other property deliverable upon 
such reorganization, reclassification, merger, sale or conveyance or 
participate in such dissolution, liquidation or winding up, as the case may 
be.  Failure to give such notice shall not invalidate any action so taken.

Section 9.     Reports As to Adjustments.

     Upon any adjustment of the Conversion Ratio then in effect and any 
increase or decrease in the number of shares of Common Stock issuable upon 
the operation of the conversion set forth in Section 8 hereof, then, and in 
each such case, the Corporation shall promptly deliver to the transfer agent 
of the Class B Stock

<PAGE>

and Common Stock, a certificate signed by the President or a Vice President 
and by the Treasurer or an Assistant Treasurer or the Secretary or an 
Assistant Secretary of the Corporation setting forth in reasonable detail the 
event requiring the adjustment and the method by which such adjustment was 
calculated and specifying the Conversion Ratio then in effect following such 
adjustment and the increased or decreased number of shares issuable upon the 
conversion set forth in Section 8 hereof.  The Corporation shall also 
promptly after the making of such adjustment give written notice to the 
registered holders of the Class B Stock at the address of each holder as 
shown on the books of the Corporation maintained by the Transfer Agent 
thereof, which notice shall state the Conversion Ratio then in effect, as 
adjusted, and the increased or decreased number of shares issuable upon the 
exercise of the right of conversion granted by Section 8 hereof, and shall 
set forth in reasonable detail the method of calculation of each and a brief 
statement of the facts requiring such adjustment.  Where appropriate, such 
notice to holders of the Class B Stock may be given in advance and included 
as part of the notice required under the provisions of Section 8(i) hereof.

Section 10.    Certain Covenants.

     (a)  Following the First Issue Date, and except in payment of dividends 
pursuant to Section 2(c), the Corporation shall not issue additional shares 
of Class B Stock.

<PAGE>

     (b)  Any registered holder of Class B Stock may proceed to protect and 
enforce its rights and the rights of such holders by any available remedy by 
proceeding at law or in equity to protect and enforce any such rights, 
whether for the specific enforcement of any provision in this Certificate of 
Designation, or in aid of the exercise of any power granted herein, or to 
enforce any other proper remedy.

Section 11.    Definitions.

     The following terms shall have the meanings indicated:

     "Affiliate" of any specified Person means any other Person directly or 
indirectly controlling or controlled by or under direct or indirect common 
control with such specified person. For the purposes of this definition, 
"control" (including, with correlative meanings, the terms "controlled by" 
and "under common control with"), as used with respect to any  Person, shall 
mean the possession, directly or indirectly, of the power to direct or cause 
the direction of the management or policies of such Person, whether through 
the ownership of voting securities or by agreement or otherwise.

     "Approval Date" shall mean the earlier of (i) the tenth day following 
the mailing by the Company of a notice to stockholders of receipt by the 
Company of written confirmation of waiver by the NASDAQ of its shareholder 
voting requirements with respect to

<PAGE>

the right of the holders of the Class B Stock to vote such shares on an 
as-converted basis, or (ii) the date of approval by the Company's 
stockholders of the right of the holders of the Class B Stock to vote such 
shares on an as converted basis.

     "Bank Credit Agreement" shall mean the Credit Agreement, dated as of 
June 15, 1995, among the Company, the banks party thereto, and Bankers Trust 
Company as Agent for the bank parties thereto, as amended from time to time, 
and any refinancings, renewals and replacements thereof.

     "Business Day" shall mean any day other than Saturday, Sunday or a day 
on which banking institutions in the State of Delaware are authorized or 
obligated by law or executive order to close.

     "Class A Stock" shall mean the Class A Convertible Preferred Stock, par 
value $1.00 per share, of the Corporation.

     "Conversion Price" shall mean an amount equal to the Stated Value 
divided by the Conversion Ratio (as adjusted pursuant to paragraph (g) of 
Section 8 hereof).

     "Current Market Price," when used with reference to shares of Common 
Stock or other securities on any date, shall mean the volume weighted average 
of the sales prices for shares of Common Stock or such other securities on 
such date and, when used with

<PAGE>

reference to shares of Common Stock or other securities for any period shall 
mean the volume weighted average of the sale prices for shares of Common 
Stock or such other securities for such period.  If the Common Stock is not 
listed or admitted to trading on a national securities exchange or an 
automated quotation system that permits determination of weighted average 
sale prices over a period of time, then "Current Market Price" for any period 
shall mean the average of the last quoted sale price or, if not so quoted, 
the average of the high bid and low asked prices in the over-the-counter 
market, as reported by the National Association of Securities Dealers, Inc. 
Automated Quotation System or such other system then in use, or, if on any 
such date the Common Stock or such other securities are not quoted by any 
such organization, the average of the closing bid and asked prices are 
furnished by a professional market maker making a market in the Common Stock 
or such other securities selected by the Board of Directors of the 
Corporation.  If the Common Stock or such other securities are not publicly 
held or so listed or publicly traded, "Current Market Price" shall mean the 
fair market value per share of Common Stock or of such other securities as 
determined in good faith by the Board of Directors of the Corporation based 
on an opinion of an independent investment banking firm with an established 
national reputation as a valuer of securities, which opinion may be based on 
such assumptions as such firm shall deem to be necessary and appropriate.

<PAGE>

     "DGCL" shall mean the Delaware General Corporation Law, as amended.

     "Exchange Act" shall mean the Securities Exchange Act of 1934, as 
amended, or any similar Federal statute, and the rules and regulations of the 
Securities and Exchange Commission thereunder, all as the same shall be in 
effect at the time. Reference to a particular section of the Exchange Act 
shall include reference to the comparable section, if any, of any such 
similar Federal statute.

     "Fair Market Value" shall mean, as to shares of Common Stock or any 
other class of capital stock or securities of the Corporation or any other 
issuer which are publicly traded, the Current Market Price of such shares or 
securities for the 30 Trading Day period preceding the date as of which the 
Fair Market Value is to be determined.  The "Fair Market Value" of any 
security which is not publicly traded or of any other property shall mean the 
fair value thereof as determined by an independent investment banking or 
appraisal firm experienced in the valuation of such securities or property 
selected in good faith by the Board of Directors of the Corporation or a 
committee thereof, or, if no such investment banking or appraisal firm is in 
the good faith judgment of the Board of Directors or such committee available 
to make such determination, as determined in good faith by the Board of 
Directors of the Corporation or such committee.

<PAGE>

     "First Issue Date" shall mean the first date that any shares of Class B 
Stock are issued.

     "Issue Date" shall mean, with respect to any share of Class B Stock, the 
date on which such share of Class B Stock is issued.

     "Junior Dividend Stock" shall mean (i) the Common Stock and (ii) any 
other capital stock of the Corporation which ranks junior as to dividends to 
the Class B Stock.

     "Junior Liquidation Stock" shall mean (i) the Common Stock and (ii) any 
other capital stock of the Corporation which ranks junior upon liquidation, 
dissolution or winding up to the Class B Stock.

     "Liquidation Preference" with respect to a share of Class B Stock shall 
mean the Stated Value per share, plus an amount equal to all accrued but 
unpaid dividends.

     "NASDAQ" shall mean the NASDAQ Stock Market.

     "NASDAQ Rules" shall mean Rule 4460(i) of the NASDAQ Stock Market Rules 
of the NASDAQ Stock Market.

     "Parity Dividend Stock" shall mean (i) the Class A Stock and (ii) any 
other capital stock of the Corporation ranking on a parity as to dividends 
with the Class B Stock.

<PAGE>

     "Parity Liquidation Stock" shall mean (i) the Class A Stock and (ii) any 
other capital stock of the Corporation ranking on a parity upon liquidation, 
dissolution or winding up with the Class B Stock.

     "Person" shall mean any individual, firm, corporation or other entity, 
and shall include any successor (by merger or otherwise) of such entity.

     "Principal Issue Date" shall mean September 17, 1996.

     "Purchasers" shall mean Trefoil Capital Investors II, L.P., a Delaware 
limited partnership, and GE Investment Private Placement Partners II, A 
Limited Partnership, a Delaware limited partnership.

     "Qualified Person" shall mean any Person that, immediately after giving 
effect to the applicable Transaction, (i) is a solvent corporation or other 
entity organized under the laws of any State of the United States of America 
having its common stock or, in the case of an entity other than a 
corporation, equivalent equity securities, listed on the New York Stock 
Exchange or the American Stock Exchange or quoted by the Nasdaq National 
Market System or any successor thereto or comparable system, and such common 
stock or equivalent equity security continues to meet the requirements for 
such listing or quotation and (ii) is required

<PAGE>

to file, and in each of its three fiscal years immediately preceding the 
consummation of the applicable Transaction (or since its inception) has 
filed, reports with the Securities and Exchange Commission pursuant to 
Section 13 or 15(d) of the Exchange Act.

     "Redemption Fair Market Value" shall mean, as to shares of Common Stock, 
the Current Market Price of such shares or securities for the 60-day period 
preceding the date as of which the Redemption Fair Market Value is to be 
determined.  The "Redemption Fair Market Value" of the Common Stock if it is 
not publicly traded shall mean its Fair Market Value.

     "Required Issue Date" shall mean December 31, 1996.

     "Reset Date" shall mean the first Trading Day after the end of the 20 
Trading Day period utilized to determine the Reset Market Value.

     "Reset Market Value" shall mean the Current Market Price of Common Stock 
for the 20 Trading Day period following the earlier of (i) the date which is 
three Trading Days after public announcement of the  Corporation's results 
for its fiscal quarter ending January 3, 1998 and (ii) February 2, 1998.

     "Senior Notes" shall mean the Corporation's 12% Senior Notes due 2004 
and any other senior indebtedness of the Corporation the

<PAGE>

net proceeds of which are used in full to pay principal, prepayment penalty 
and accrued interest on such principal, the incurrence of which is approved 
by the vote of the holders of a majority of the outstanding shares of Class B 
Stock.

     "Subsidiary" of any Person means any corporation or other entity of 
which a majority of the voting power of the voting equity securities or 
equity interest is owned, directly or indirectly, by such Person.

     "Surviving Person" shall mean the continuing or surviving Person of a 
merger or other business combination, the Person receiving a transfer of all 
or a substantial part of the properties and assets of the Corporation, or the 
Person merging into the Corporation in a merger or other business combination 
in which the Corporation is the continuing or surviving Person, but in 
connection with which the Class B Stock or Common Stock of the Corporation is 
exchanged or converted into the securities of any other Person or cash or any 
other property; provided, however, if such surviving Person is a direct or 
indirect Subsidiary of a Qualified Person, the parent entity that is a 
Qualified Person shall be the Surviving Person.

     "Survivor Common Stock" with respect to any Surviving Person shall mean 
any shares of such Surviving Person of any class or series which has no 
preference or priority in the payment of dividends or in the distribution of 
assets upon any voluntary or

<PAGE>

involuntary liquidation, dissolution or winding up of such Surviving Person 
and which is not subject to redemption by such Surviving Person; provided, 
however, that if at any time there shall be more than one such class or 
series, the shares of each such class and series issuable upon conversion of 
the Class B Stock then being converted shall be substantially in the 
proportion to the total number of shares of each such class and series.

     "Trading Day" means a day on which the principal national securities 
exchange (including, if applicable, the Nasdaq Stock Market) on which the 
Common Stock is listed or admitted to trading is open for the transaction of 
business or, if the Common Stock is not listed or admitted to trading on any 
national securities exchange, a Business Day.

     IN WITNESS WHEREOF, the officers set forth below, acting for and on 
behalf of The Grand Union Company, have hereunto subscribed their names on 
this ___ day of June 1997.

                                   THE GRAND UNION COMPANY



                                   By:

<PAGE>

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


Attest:



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



                                                        Exhibit B
     
     Form of Opinion to be rendered by Ropes & Gray in connection with the 
Fourth and Fifth Closings under the Stock Purchase Agreement, dated as of 
July 30, 1996 (the "Purchase Agreement"), among The Grand Union Company (the 
"Company"), Trefoil Capital Investors II, L.P. ("Trefoil") and GE Investment 
Private Placement Partners II, A Limited Partnership ("GEI" and, collectively 
with Trefoil, the "Purchasers"), as accelerated 

<PAGE>

pursuant to the terms of the Acceleration and Exchange Agreement between the 
Company, Trefoil, and GEI.  Capitalized terms used herein without definition 
have the meanings given in the Opinion Letter of Ropes & Gray delivered in 
connection with the Third Closing on February 25, 1997.
     
     1.   The Company is duly incorporated, validly existing and in good 
standing under the laws of the State of Delaware, with corporate power and 
authority under such laws perform its obligations under the Purchase 
Agreement, including without limitation to issue and sell the Shares and to 
issue the shares of Common Stock issuable upon conversion of the Shares.
     
     2.   The Shares delivered at this Closing (the "Accelerated Shares") 
have been duly authorized and validly issued and are fully paid and 
non-assessable; and the shares of Common Stock issuable upon the conversion 
of the Accelerated Shares (the "Conversion Shares") have been duly authorized 
and reserved for issuance and, when issued in accordance with the provisions 
of the Company's Certificate of Incorporation, will be validly issued, fully 
paid and nonassessable.

                                                        Exhibit C
     
     Form of Opinion to be rendered by Davis Polk & Wardwell. Capitalized 
terms used herein without definition have the meanings given in the 
Acceleration and Exchange Agreement.

<PAGE>

     1.   The Company is a validly existing corporation in good standing 
under the laws of the State of Delaware, with all requisite corporate power 
and authority to own its properties and assets and to carry on its business.
     
     2.   The Certificate of Designation has been duly authorized and adopted 
by the Company, has been filed with the Secretary of State for the State of 
Delaware and is in full force and effect.
     
     3.   The Company has all requisite corporate power and authority to 
execute and deliver the Transaction Documents to which it is a party and all 
other agreements therein contemplated to be executed by the Company, to 
perform its obligations thereunder, to consummate the transactions 
contemplated thereby and to sell, assign, transfer and deliver the Class B 
Preferred Shares and the Reset Shares to the Purchasers pursuant to the terms 
of the Acceleration and Exchange Agreement.
     
     4.   The Transaction Documents have been duly authorized, executed and 
delivered by the Company, and are the legal, valid and binding obligations of 
the Company and (subject to applicable bankruptcy, insolvency, and other laws 
affecting the enforceability of creditors' rights generally and general 
equitable principles) are enforceable against the Company in accordance with 
their respective terms.

<PAGE>

     5.   The Class B Preferred Shares have been validly authorized and, upon 
delivery to Purchasers pursuant to the Exchange Agreement, will be validly 
issued, fully paid and nonassessable.
     
     6.   The shares of (A) Common Stock to be issued (i) on the Reset Date, 
(ii) upon the conversion of the Class B Preferred Stock, and (iii) as 
dividends on the Preferred Shares in accordance with the terms of the 
Certificate of Designation, and (B) Class B Preferred Stock to be issued as 
dividends on the Preferred Shares in accordance with the terms of the 
Certificate of Designation have been validly authorized and, when such (x) 
Reset Shares are issued in accordance with the Acceleration and Exchange 
Agreement, and (y) such shares of Common Stock are delivered in accordance 
with the terms of the Certificate of Designation upon the conversion of the 
Class B Preferred Stock or the payment of dividends on the Preferred Stock, 
or (z) shares of Class B Preferred Stock are delivered in accordance with the 
terms of the Certificate of Designation as payment of dividends thereon, such 
shares of Common Stock and shares of Preferred Stock will be validly issued, 
fully paid and non-assessable. Depending on a number of factors, including 
the time of the conversion of the Class B Preferred Stock and the form in 
which dividends thereon are  paid, the number of shares of Common Stock 
currently authorized may be insufficient to permit the conversion of all 
securities of the Company convertible into or exercisable for shares of 
Common Stock and the payment of all dividends on

<PAGE>

the Preferred Shares in the form of shares of Common Stock.
     
     7.   The consummation of the Exchange and the issuance of the Reset 
Shares pursuant to the Acceleration and Exchange Agreement and the 
fulfillment of and compliance with the terms and conditions contained in the 
Acceleration and Exchange Agreement with respect to the Exchange and the 
issuance of the Reset Shares will not (a) conflict with any terms, conditions 
or provisions of the Certificate of Incorporation or Bylaws of the Company; 
(b) result in a termination or breach of, or constitute a default under, or 
accelerate or permit the acceleration of any performance required by, any of 
the agreements listed on Schedule A hereto; or (c) violate any federal law or 
laws of the state of New York or the state of Delaware.
     
     8.   To our knowledge after due inquiry, the Company is not a party to, 
subject to or bound by any judgment, award, judicial or administrative order, 
writ, prohibition, or decree (including a consent decree) of any court, 
governmental body or arbitrator, which would prevent the execution, delivery, 
or performance of the Transaction Documents by the Company and all other 
agreements therein contemplated to be entered into by the Company or the 
transfer, conveyance or sale of the Shares by the Company to the Purchasers 
pursuant to the Acceleration and Exchange Agreement.
     
     9.   After due inquiry, we have no knowledge of any litigation, 
arbitration, or governmental proceeding with respect

<PAGE>

to the Company that seeks to prohibit or otherwise challenge the consummation 
of the transactions contemplated by the Transaction Documents, or to obtain 
substantial damages with respect thereto.
     
     With respect to the opinions expressed in paragraph 8
hereof, "after due inquiry" means that we have made inquiry of
Jeff Freimark of the Company.


                                                        Exhibit D
                                                                 
     [Letterhead of Donaldson, Lufkin & Jenrette Securities
                          Corporation]
                                
                                
                                                     June 5, 1997

The Grand Union Company
201 Willowbrook Boulevard
Wayne, NJ 07470-6799

Attention:     Jeffrey P. Freimark
               Chief Financial Officer

Re:       Fee Waiver

Gentlemen:

<PAGE>

      This  letter  is written in connection with our  engagement
letter with The Grand Union Company (the "Company") dated January
17,  1996  (the  "Engagement Letter") and the Company's  proposed
transaction (the "Proposed Transaction") to issue $40,000,000  of
Class  B  Convertible Preferred Stock of the Company  and,  under
certain circumstances, up to 2 million shares of Common Stock  of
the  Company, pursuant to the Acceleration and Exchange Agreement
dated  June  5,  1997,  by and between the  Company  and  Trefoil
Capital  Investors  II, L.P. and GE Investment Private  Placement
Partners II, A Limited Partnership.

      The purpose of this letter is to acknowledge and agree that
Donaldson, Lufkin & Jenrette Securities Corporation hereby waives
any  additional fee or other payment to which it may be  entitled
in  connection  with  the Proposed Transaction  pursuant  to  the
Engagement Letter.

                                   Sincerely,

                                   DONALDSON, LUFKIN & JENRETTE
                                   SECURITIES CORPORATION


                                   By:
                                        -------------------------
                                          Martin C. Murrer
                                          Managing Director


<PAGE>

                                                       EXHIBIT E


               AMENDMENT NO. 1 TO THE REGISTRATION RIGHTS
               AGREEMENT DATED AS OF JULY 30, 1996, AMONG
               THE GRAND UNION COMPANY, TREFOIL CAPITAL
             INVESTORS II, L.P., AND GE INVESTMENT PRIVATE
             PLACEMENT PARTNERS II, A LIMITED PARTNERSHIP

     Amendment (this "Amendment"), dated as of June 5, 1997, to the 
Registration Rights Agreement (the "Registration Rights Agreement"), dated as 
of July 30, 1996, among each of (i) The Grand Union Company, a Delaware 
corporation (the "Company"), and (ii) Trefoil Capital Investors II, L.P., a 
Delaware limited partnership ("Trefoil"), and GE Investment Private Placement 
Partners II, a Limited Partnership, a Delaware limited partnership ("GEI," 
and together with Trefoil, the "Purchasers"). Capitalized terms used herein 
without definitions shall have the meanings given them in the Registration 
Rights Agreement.

     WHEREAS, the Company has entered into an Acceleration and Exchange 
Agreement, dated as of June 5, 1997 (the "Acceleration

<PAGE>

Agreement"), among the Company, Trefoil, and GEI;

     WHEREAS, the Company and the Purchasers desire to amend the Registration 
Rights Agreement for the purpose of facilitating the transactions 
contemplated by the Acceleration Agreement;

     NOW, THEREFORE, in consideration of the foregoing, and the mutual 
agreements and covenants contained herein, the parties hereto agree as 
follows:

     Section 1.  Preamble.  (a) The second paragraph of the preamble is 
hereby amended to read as follows:

     "WHEREAS, pursuant to a Stock Purchase Agreement among the Company and 
the Purchasers (the "Purchase Agreement"), the Company is selling to the 
purchasers up to 2,000,000 shares of the Company's Class A Convertible 
Preferred Stock, issuable in denominations of $50 stated value per share, 
dividends on which may be paid in additional shares of such preferred stock 
(collectively, the "Class A Preferred Shares"), which Class A Preferred 
Shares are convertible into shares of the Company's common stock, par value 
$1.00 per share (the "Common Stock");"

     (b)  The Preamble of the Registration Rights Agreement is hereby amended 
to add a new third paragraph to read as follows:

     "WHEREAS, pursuant to an Acceleration and Exchange Agreement

<PAGE>

(the "Acceleration Agreement"), dated as of June 5, 1997, the Company has 
agreed to issue (i) 800,000 shares of the Company's Class B Convertible 
Preferred Stock, issuable in denominations of $50 stated value per share, 
dividends on which may be paid in additional shares of such preferred stock 
(collectively, the "Class B Preferred Shares," and collectively with the 
Class A Preferred Shares, the "Preferred Shares"), which Class B Preferred 
Shares are convertible into shares of Common Stock, and (ii) up to 2,000,000 
shares of Common Stock under certain circumstances (such shares of the Common 
Stock, together with shares of Common Stock into which the Preferred Shares 
are convertible and shares of Common Stock which may be issued as dividends 
on the Preferred Shares, the "Common Shares" and, collectively with the 
Preferred Shares, the "Securities");

     Section 2.  Definitions.  The definition of the term "Registrable 
Securities" in Section 1.1 of the Registration Rights Agreement is hereby 
amended to read as follows:

     ""Registrable Securities" shall mean any Securities issued at any time 
to any of the Purchasers pursuant to the Purchase Agreement or the 
Acceleration Agreement and any Securities issued at any time as dividends 
upon or on conversion of any of the Securities.  As to any proposed offer or 
sale of Registrable Securities, such securities shall cease to be Registrable 
Securities with respect to such proposed offer or sale when (i) a 
registration statement with respect to the sale of such

<PAGE>

securities shall have become effective under the Securities Act and such 
securities shall have been disposed of in accordance with such registration 
statement or (ii) such securities are permitted to be disposed of pursuant to 
Rule 144(k) (or any successor provision to such Rule) under the Securities 
Act as confirmed in a written opinion of counsel to the Company addressed to 
the Holders, or (iii) such securities shall have been otherwise transferred 
pursuant to an applicable exemption under the Securities Act, new 
certificates for such securities not bearing a legend restricting further 
transfer shall have been delivered by the Company and such securities shall 
be freely transferable to the public without registration or qualification 
under the Securities Act or any state securities or blue sky law then in 
place.

     Section 3.  Miscellaneous.

          (a)  Notices.  Any notice under or relating to this Amendment shall 
be given in writing and shall be deemed sufficiently given when delivered by 
hand or by conformed facsimile transmission, on the second business day after 
a writing is consigned (freight prepaid) to a commercial overnight courier, 
and on the fifth business day after a writing is deposited in the mail, 
postage and other charges prepaid, addressed as follows:

          Trefoil II:         4444 Lakeside Drive

<PAGE>

                              Burbank, California  91505
                              Attention:  Mr. Geoffrey T. Moore
                              Telecopy: (818) 842-3142
          
          with a copy to:     Fried, Frank, Harris, Shriver &
                              Jacobson
                              350 South Grand Avenue
                              Los Angeles, California 90071
                              Attention:  David K. Robbins, Esq.
                              Telecopy:  (213) 473-2222
          
          
          GEI:                GE Investment Management
                              Incorporated
                              3003 Summer Street
                              Stamford, Connecticut  06904
                              Attention:  Michael Pastore, Esq.
                              Telecopy: (203) 326-4177
          
          with a copy to:     Dewey Ballantine
                              1301 Avenue of the Americas
                              New York, New York 10019
                              Attention:  Sanford W. Morhouse, Esq.
                              Telecopy:  (212) 259-6333
          
          the Company:        Chief Executive Officer
                              The Grand Union Company

<PAGE>

                              201 Willowbrook Boulevard
                              Wayne, NJ  07470-0966
                              Telecopy:  (201) 890-6012
          
                              with a copy to:     General Counsel
                              The Grand Union Company
                              201 Willowbrook Boulevard
                              Wayne, New Jersey  07470-0966
                              Telecopy: (201) 890-6012
          
                              and
          
                              Davis Polk & Wardwell
                              450 Lexington Avenue
                              New York, NY 10017
                              Attn:  William L. Rosoff, Esq.
                              Telecopy:  (212) 450-4800
          
                              and
          
                              Fried, Frank, Harris, Shriver &
                              Jacobson
                              350 South Grand Avenue
                              Los Angeles, California 90071
                              Attention:  David K. Robbins, Esq.
                              Telecopy:  (213) 473-2222

<PAGE>

                              and
          
                              Dewey Ballantine
                              1301 Avenue of the Americas
                              New York, New York 10019
                              Attention:  Sanford W. Morhouse, Esq.
                              Telecopy:  (212) 259-6333
          
or to such other address or facsimile number as either party may, from time 
to time, designate in a written notice given in like manner.

          (b)  Binding Effect.  The provisions of this Amendment shall be 
binding upon and inure to the benefit of the parties hereto and their 
respective successors, assigns, heirs, and personal representatives.

          (c)  Modification.  This Amendment may only be modified by a 
written instrument duly executed by each party hereto.

          (d)  Waiver.  Any waiver by either party of a breach of any 
provision of this Amendment shall not operate as or be construed to be a 
waiver of any other breach of such provision or of any breach of any other 
provision of this Amendment.  Any waiver of any provision of this Amendment 
must be in writing.

          (e)  Headings.  The headings to the sections of this

<PAGE>

Amendment are inserted for convenience only and shall not constitute a part 
hereof or affect in any way the meaning or interpretation of this Amendment.

          (f)  Separability.  If any provision of this Amendment
is invalid, illegal or unenforceable, the balance of this
Amendment shall remain in effect, and if any provision is
inapplicable to any person or circumstance, it shall nevertheless
remain applicable to all other persons and circumstances.

          (g)  Counterparts.  This Amendment may be executed in counterparts, 
each of which shall be deemed an original, but all of which together shall 
constitute one and the same instrument.

          (h)  Governing Law.  This Agreement shall be governed by, and 
construed in accordance with, the laws of the State of New York applicable to 
contracts executed and to be fully performed within the State of New York.

          IN WITNESS WHEREOF, the parties have duly executed this Amendment 
No. 1 to the Registration Rights Agreement dated as of July 30, 1996 as of 
the date first written above.

                              TREFOIL CAPITAL INVESTORS II, L.P.
                              By:  Trefoil Investors II, Inc.
                                 its general partner

<PAGE>

                              By:  
                                 ----------------------------------
                                 Name:  Michael J. McConnell
                                 Title: Vice President



                              GE INVESTMENT PRIVATE PLACEMENT
                              PARTNERS II, A LIMITED PARTNERSHIP

                              By:  GE INVESTMENT MANAGEMENT
                                    INCORPORATED, its general partner


                              By:  
                                 ----------------------------------
                                 Name:  Don W. Torey
                                 Title: Executive Vice President



                              THE GRAND UNION COMPANY


                              By:  

<PAGE>

                                 ----------------------------------
                                 Name:  Jeffrey P. Freimark
                                 Title: Executive Vice President,
                                        Chief Financial Officer and
                                         Chief Administrator Officer


                                                       EXHIBIT F
                                                                 
            THE STANGELAND FAMILY LIMITED PARTNERSHIP
                300 North Lake Avenue, Suite 925
                   Pasadena, California  91101
                                
                                                     June 5, 1997

Trefoil Capital Investors II, L.P.   The Grand Union Company
4444 Lakeside Drive                  201 Willowbrook Boulevard
Burbank, California  91505           Wayne, New Jersey  07470-0966
Attn: Geoffrey T. Moore              Attn: Roger Stangeland

GE Investment Private Placement
  Partners II, A Limited Partnership
c/o GE Investment Management
  Incorporated
3003 Summer Street
Stamford, Connecticut  06904
Attn: Michael Pastore, Esq.

<PAGE>

Dear Messrs. Moore, Pastore and Stangeland:

     Reference is made to the  Stockholder Agreement (the "Stockholder 
Agreement"), dated February 25, 1997, among Trefoil Capital Investors II, 
L.P., a Delaware limited partnership ("Trefoil II"), GE Investment Private 
Placement Partners II, A Limited Partnership, a Delaware limited partnership 
("GEIPPPII" and collectively with Trefoil II, the "Purchasers"), The 
Stangeland Family Limited Partnership, a California limited partnership, as 
successor to all of the rights and obligations of Roger Stangeland pursuant 
to an Addendum to Stockholder Agreement dated March 20, 1997 ("Stangeland") 
and The Grand Union Company (the "Company"), and to the Acceleration and 
Exchange Agreement, dated the date hereof, among the Company and the 
Purchasers (the "Acceleration and Exchange Agreement").

     Stangeland hereby acknowledges that the transactions contemplated by the 
Acceleration and Exchange Agreement will not create any Tag-Along Rights in 
favor of Stangeland, individually or collectively, pursuant to Section 2 of 
the Stockholder Agreement.

                             Very truly yours,
                                
                             THE STANGELAND FAMILY LIMITED PARTNERSHIP,

<PAGE>

                                 a California limited partnership

                             By:  THE ROGER AND LILAH STANGELAND
                                  LIVING TRUST
                                  Its:  General Partner

                             By:
                                  -----------------------------
                                  Roger Stangeland, Co-Trustee

                             By:
                                  -----------------------------
                                  Lilah Stangeland, Co-Trustee
                              
                                

                                                                       Exhibit G

                       RATIFICATION AND VOTING AGREEMENT

                                
                                
          RATIFICATION AND VOTING AGREEMENT (the "Agreement"), dated as of 
June --, 1997, among Trefoil Capital Investors II, L.P., a Delaware limited 
partnership ("Trefoil II"), GE Investment Private Placement Partners II, A 
Limited Partnership, a Delaware limited partnership (together with Trefoil 
II, the 

<PAGE>

"Purchasers"), and the shareholders of The Grand Union Company, a 
Delaware corporation (the "Company") named on Schedule I hereto (each, a 
"Stockholder" and collectively, the "Stockholders").

                                  PREAMBLE

                                
          The Company and the Purchasers are parties to a Stock Purchase 
Agreement (the "Purchase Agreement"), dated as of July 30, 1996, which 
provided, among other things, for the acquisition by the Purchasers of shares 
of the Company's Class A Convertible Preferred Stock (the "Class A Preferred 
Stock").  A copy of the Purchase Agreement has previously been made available 
to the Stockholders.

          The Company and the Purchasers are parties to an Acceleration and 
Exchange Agreement (the "Acceleration and Exchange Agreement"), dated as of 
June 5, 1997, which provides, among other things, for the acquisition by the 
Purchasers of shares of the Company's Class B Convertible Preferred Stock 
(the "Class B Preferred Stock").  A copy of the Acceleration and Exchange 
Agreement has previously been made available to the Stockholders.

          As of the date hereof, each of the Stockholders named on Schedule I 
hereto is the beneficial owner of and holds sole voting power with respect to 
shares of Class A Preferred Stock of

<PAGE>

the Company entitled to the number of votes, or the number of shares of the 
common stock of the Company, par value $1.00 per share (the "Common Stock" 
and, together with the number of votes represented by the shares of Class A 
Preferred Stock set forth on Schedule I hereto, the "Voting Securities") set 
forth opposite such Stockholder's name on Schedule I (the "Subject Shares").

          In order to induce the Purchasers to consummate the transactions 
contemplated by the Acceleration and Exchange Agreement (the "Transactions") 
and for other good and valuable consideration, each Stockholder agrees to 
take reasonable steps to facilitate the Transactions and to vote the Subject 
Shares held by it as contemplated by this Agreement.

          ACCORDINGLY, the parties hereto agree as follows:

          1.   Voting in Favor of Acceleration and Exchange Agreement.  Each 
Stockholder agrees to support the Acceleration and Exchange Agreement and the 
Transactions in any reasonable manner, including by taking any reasonable 
action requested by the Purchasers; provided, however, that the foregoing 
shall not be deemed to restrict such Stockholder's ability to transfer or 
dispose of such Subject Shares.  Each Stockholder will vote all of the 
Subject Shares held by it in favor of the Acceleration and Exchange Agreement 
and the Transactions, and against any agreement or course of action that 
would prohibit, delay, interfere with or otherwise be inconsistent with the 
Acceleration

<PAGE>

and Exchange Agreement or the Transactions, (a) at any annual or special 
meeting (or any adjournment or postponement thereof) of the stockholders of 
the Company at which the Acceleration and Exchange Agreement or the 
Transactions are submitted to a vote or (b) at the request of the Purchasers, 
by its written consent.

          2.   Granting of Irrevocable Proxy.  Upon the request of the 
Purchasers, each Stockholder will deliver to one or more persons an 
irrevocable proxy (the "Proxy") with respect to all of the Subject Shares 
held by it, which such Proxy shall be deemed to be coupled with an interest, 
to vote all of the Subject Shares held by it in favor of the Acceleration and 
Exchange Agreement and the Transactions at any annual or special meeting of 
the stockholders of the Company at which the Acceleration and Exchange 
Agreement or the Transactions are submitted to a vote in the same manner and 
with the same effect as if such Stockholder was personally present at such 
meeting.  Any such Proxy shall expire upon the Expiration Date as defined in 
Section 5 hereof.

          3.   Third Party Offers.  Between the date hereof and the 
Expiration Date, each Stockholder agrees that it shall not directly or 
indirectly solicit, initiate or encourage inquiries or proposals, or 
participate in any negotiations leading to any proposal, concerning any 
transaction involving the Company that would cause the Company to fail to 
consummate the Transactions or that would otherwise be inconsistent with, 
violate or breach the terms of this Agreement or the Acceleration and Exchange

<PAGE>

Agreement.  Each Stockholder will promptly advise the Purchasers of any 
offers or proposals it may receive relating to any such transaction.

          4.   Representations and Warranties of the Stockholder. Each 
Stockholder hereby severally, not jointly, represents and warrants to each of 
the Purchasers as follows:
          
               4.1. The Stockholder is validly existing and in good standing 
under the laws of the jurisdiction of its organization.

               4.2. The Stockholder is the sole true and lawful record and 
beneficial owner of the Subject Shares set forth opposite its name on 
Schedule I hereto and has all necessary power and authority to enter into 
this Agreement and to perform such Stockholder's obligations hereunder.
          
               4.3. None of the Subject Shares owned by any Stockholder other 
than the Purchasers and the Roger and Lilah Stangeland Family Limited 
Partnership (the "Stangeland Partnership") is subject to any voting trust or, 
except pursuant to this Agreement, other agreement or arrangement with 
respect to the voting of such Subject Shares.  None of the Subject Shares 
owned by the Purchasers or the Stangeland Partnership is subject to any 
voting trust or, except pursuant to this Agreement, the Stockholders 
Agreement dated as of February 25, 1997, and the

<PAGE>

Addendum thereto, among the Company, the Purchasers and the Stangeland 
Partnership (the "Stangeland Stockholder Agreement") or the Stockholder 
Agreement dated as of July 30, 1996 between the Purchasers, as amended (the 
"Purchasers Stockholder Agreement"), other agreement or arrangement with 
respect to the voting of such Subject Shares.  

               4.4. The execution, delivery and performance of this Agreement 
by the Stockholder and the consummation by it of the transactions 
contemplated hereby have been approved by all necessary action on the part of 
the Stockholder.
          
               4.5. This Agreement is the legal, valid and binding agreement 
of the Stockholder.
          
               4.6. The execution, delivery and performance of this Agreement 
by the Stockholder does not and will not constitute a violation of, conflict 
with or result in a default under (a) any contract, understanding or 
arrangement to which the Stockholder is a party or by which such Stockholder 
is bound, or require the consent of any other person or any party pursuant 
thereto, or (b) any judgment, decree or order applicable to the Stockholder.
          
               4.7. The number of Subject Shares set forth opposite such 
Stockholder's name on Schedule I hereto are the only Voting Securities of the 
Company beneficially owned by the

<PAGE>

Stockholder and the Stockholder owns no options to purchase or rights to 
subscribe for or otherwise acquire any other Voting Securities of the Company 
except for (i) pursuant to the Acceleration and Exchange Agreement, or (ii) 
certain warrants of the Company issued pursuant to the Warrant Agreement 
between the Company and American Stock Transfer & Trust Company, dated as of 
June 15, 1995.
          
          5.   Termination.  This Agreement shall terminate on the earlier of 
(a) the date of the Exchange Closing (as defined in the Acceleration and 
Exchange Agreement) and (b) the tenth (10th) day following termination of the 
Acceleration and Exchange Agreement in accordance with its terms (the 
"Expiration Date").
          
          6.   Remedies.  The parties hereto acknowledge that damages would 
be an inadequate remedy for a breach of the provisions of this Agreement and 
that, in addition to any other remedy available at law, the obligations of 
the Stockholder shall be specifically enforceable.
          
          7.   Miscellaneous.
          
               7.1. Assignment.  This Agreement shall not be assignable by 
the parties hereto, except by operation of law and except that any Proxy 
granted pursuant to the terms of this Agreement may be assigned by the 
Purchasers to any person affiliated with the Purchasers.

<PAGE>

          
               7.2. Amendments.  This Agreement may not be modified, amended, 
altered or supplemented, except upon the execution and delivery of a written 
agreement executed by the Purchasers and the Stockholder.
          
               7.3. Notices.  All notices, requests, claims, demands and 
other communications hereunder shall be given in writing and shall be deemed 
sufficiently given when delivered by hand or by conformed facsimile 
transmission, on the second business day after a writing is consigned 
(freight prepaid) to a commercial overnight courier, and on the fifth 
business day after a writing is deposited in the mail, postage and other 
charges prepaid, addressed as follows:
          
               (a)  If to the Purchasers:
          
               Trefoil Capital Investors II, L.P.
               c/o Shamrock Capital Advisors, Inc.
               4444 Lakeside Drive
               Burbank, CA  91505
               Attn: Stanley P. Gold, President
               Telecopier No.: (818) 845-9718
               Telephone No.: (818) 845-4444
               
               and

<PAGE>

               
               GE Investment Private Placement Partners
               II, A Limited Partnership
               3003 Summer Street
               Stamford, CT 06905
               Attn: Michael Pastore
               Telecopier No.: (303) 326-4177
               Telephone No.: (303) 326-2300
               
               With copies to:
               
               Fried, Frank, Harris, Shriver & Jacobson
               350 South Grand Avenue, Suite 3200
               Los Angeles, CA  90071
               Attn: David K. Robbins, Esq.
               Telecopier No.: (213) 473-2222
               Telephone No.: (213) 473-2000
               
               and
               
               Dewey Ballantine
               1301 Avenue of the Americas
               New York, NY 10019
               Attn: Sanford W. Morhouse, Esq.
               Telecopier No.: (212) 259-6333
               Telephone No.: (212) 259-8000
          
               With copies to:

<PAGE>

               
               Chief Executive Officer
               The Grand Union Company
               201 Willowbrook Boulevard
               Wayne, NJ 07470-0966
               Telecopier No.:  (201) 890-6012
               Telephone No.:  (201) 890-6000
               
               and
               
               Davis Polk &Wardwell
               450 Lexington Avenue
               New York, NY 10017
               Attn: William L. Rosoff, Esq.
               Telecopier No.:  (212) 450-4800
               Telephone No.:  (212) 450-4000
               
          
               (b)  If to the Stockholder, to the address set
forth on Schedule I hereto.
          
               With copies to:
               
               Chief Executive Officer
               The Grand Union Company
               201 Willowbrook Boulevard
               Wayne, NJ 07470-0966

<PAGE>

               Telecopier No.:
               Telephone No.:  (201) 890-6000
               
               and
               
               Fried, Frank, Harris, Shriver & Jacobson
               350 South Grand Avenue, Suite 3200
               Los Angeles, CA  90071
               Attn: David K. Robbins, Esq.
               Telecopier No.: (213) 473-2222
               Telephone No.: (213) 473-2000
               
               and
               
               Dewey Ballantine
               1301 Avenue of the Americas
               New York, NY 10019
               Attn: Sanford W. Morhouse, Esq.
               Telecopier No.: (212) 259-6333
               Telephone No.: (212) 259-8000
               

or to such other address as the Purchasers may have furnished to the 
Stockholders or a Stockholder may have furnished to the Purchasers, in either 
case in writing in accordance herewith, except that notices of change of 
address shall be effective only upon receipt.

<PAGE>

          
               7.4. Governing Law.  This Agreement shall be governed by and 
construed in accordance with the internal laws of the State of New York.
          
               7.5. Severability.  If any term, provision, covenant or 
restriction of this Agreement is held by a court of competent jurisdiction to 
be invalid, void or unenforceable, the remainder of the terms, provisions, 
covenants and restrictions of this Agreement shall continue in full force and 
effect and shall in no way be affected, impaired or invalidated.
          
               7.6. Counterparts.  This Agreement may be executed in several 
counterparts, each of which shall be an original, but all of which together 
shall constitute one and the same Agreement.
                    
          IN WITNESS WHEREOF, the Purchasers and the Stockholders have caused 
this Ratification and Voting Agreement to be duly executed as of the day and 
year first above written.
          
                              TREFOIL CAPITAL INVESTORS II, L.P.
          
                              By:    TREFOIL INVESTORS II, INC.,
                                       its managing general
                                       partner

<PAGE>

          
                              By:
                                 -----------------------------
                                 Name:
                                 Title:
          
                              GE INVESTMENT PRIVATE PLACEMENT
          PARTNERS II, A LIMITED PARTNERSHIP
          
                              By:    GE INVESTMENT MANAGEMENT
                                        INCORPORATED, a general
                                        partner
          
          
          
                              By:
                                 ----------------------------
                                 Name:
                                 Title:
          
          
          Stockholder's Signature Page to Ratification and Voting
Agreement:
          
<PAGE>
          
          
                              ------------------------------
                                         Stockholder
          
          
          
                              By:
                                 --------------------------
                                 Name:
                                 Title:
          
          
                                                       SCHEDULE I


                                                       Currently
                                                       Outstanding
                                     Number of         Voting
                                     Voting            Securities
  Name and Address of                Securities        of the
  Stockholder                        Held              Company
  

  Trefoil Capital Investors II,      7,035,994         28.74%
  L.P.
  c/o Shamrock Capital Advisors,
  Inc.
  4444 Lakeside Drive
  Burbank, CA  91505
  
  GE Investment Private              7,035,994         28.74%
  Placement Partners
  II, A Limited Partnership
  3003 Summer Street
  Stamford, CT 06905